[Title 17 CFR ]
[Code of Federal Regulations (annual edition) - April 1, 2003 Edition]
[From the U.S. Government Printing Office]



[[Page i]]



                    17


          Parts 200 to 239

                         Revised as of April 1, 2003

Commodity and Securities Exchanges





          Containing a codification of documents of general 
          applicability and future effect
          As of April 1, 2003
          With Ancillaries
          Published by
          Office of the Federal Register
          National Archives and Records
          Administration

A Special Edition of the Federal Register



[[Page ii]]

                                      




                     U.S. GOVERNMENT PRINTING OFFICE
                            WASHINGTON : 2003



  For sale by the Superintendent of Documents, U.S. Government Printing 
                                  Office
  Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; DC area 
                              (202) 512-1800
      Fax: (202) 512-2250 Mail: Stop SSOP, Washington, DC 20402-0001



[[Page iii]]




                            Table of Contents



                                                                    Page
  Explanation.................................................       v

  Title 17:
          Chapter II--Securities and Exchange Commission             3
  Finding Aids:
      Material Approved for Incorporation by Reference........     699
      Table of CFR Titles and Chapters........................     701
      Alphabetical List of Agencies Appearing in the CFR......     719
      List of CFR Sections Affected...........................     729



[[Page iv]]


      


                     ----------------------------

                     Cite this Code:  CFR
                     To cite the regulations in 
                       this volume use title, 
                       part and section number. 
                       Thus,  17 CFR 200.1 refers 
                       to title 17, part 200, 
                       section 1.

                     ----------------------------

[[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

    The contents of the Federal Register are required to be judicially 
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 
issues of the Federal Register. These two publications must be used 
together to determine the latest version of any given rule.
    To determine whether a Code volume has been amended since its 
revision date (in this case, April 1, 2003), 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 
exercised by the user in determining the actual effective date. In 
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, 2001, consult either the List of CFR Sections Affected, 1949-
1963, 1964-1972, 1973-1985, or 1986-2000, published in 11 separate 
volumes. For the period beginning January 1, 2001, a ``List of CFR 
Sections Affected'' is published at the end of each CFR volume.

INCORPORATION BY REFERENCE

    What is incorporation by reference? Incorporation by reference was 
established by statute and allows Federal agencies to meet the 
requirement to publish regulations in the Federal Register by referring 
to materials already published elsewhere. For an incorporation to be 
valid, the Director of the Federal Register must approve it. The legal 
effect of incorporation by reference is that the material is treated as 
if it were published in full in the Federal Register (5 U.S.C. 552(a)). 
This material, like any other properly issued regulation, has the force 
of law.
    What is a proper incorporation by reference? The Director of the 
Federal Register will approve an incorporation by reference only when 
the requirements of 1 CFR part 51 are met. Some of the elements on which 
approval is based are:
    (a) The incorporation will substantially reduce the volume of 
material published in the Federal Register.
    (b) The matter incorporated is in fact available to the extent 
necessary to afford fairness and uniformity in the administrative 
process.
    (c) The incorporating document is drafted and submitted for 
publication in accordance with 1 CFR part 51.
    Properly approved incorporations by reference in this volume are 
listed in the Finding Aids at the end of this volume.
    What if the material incorporated by reference cannot be found? If 
you have any problem locating or obtaining a copy of material listed in 
the Finding Aids of this volume as an approved incorporation by 
reference, please contact the agency that issued the regulation 
containing that incorporation. If, after contacting the agency, you find 
the material is not available, please notify the Director of the Federal 
Register, National Archives and Records Administration, Washington DC 
20408, or call (202) 741-6010.

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). 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.

[[Page vii]]


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 202-741-6000 
or write to the Director, Office of the Federal Register, National 
Archives and Records Administration, Washington, DC 20408 or e-mail 
[email protected].

SALES

    The Government Printing Office (GPO) processes all sales and 
distribution of the CFR. For payment by credit card, call toll free, 
866-512-1800 or DC area, 202-512-1800, M-F, 8 a.m. to 4 p.m. e.s.t. or 
fax your order to 202-512-2250, 24 hours a day. For payment by check, 
write to the Superintendent of Documents, Attn: New Orders, P.O. Box 
371954, Pittsburgh, PA 15250-7954. For GPO Customer Service call 202-
512-1803.

ELECTRONIC SERVICES

    The full text of the Code of Federal Regulations, The United States 
Government Manual, the Federal Register, Public Laws, Public Papers, 
Weekly Compilation of Presidential Documents and the Privacy Act 
Compilation are available in electronic format at www.access.gpo.gov/
nara (``GPO Access''). For more information, contact Electronic 
Information Dissemination Services, U.S. Government Printing Office. 
Phone 202-512-1530, or 888-293-6498 (toll-free). E-mail, 
[email protected].
    The Office of the Federal Register also offers a free service on the 
National Archives and Records Administration's (NARA) World Wide Web 
site for public law numbers, Federal Register finding aids, and related 
information. Connect to NARA's web site at www.archives.gov/federal--
register. The NARA site also contains links to GPO Access.

                              Raymond A. Mosley,
                                    Director,
                          Office of the Federal Register.

April 1, 2003.



[[Page ix]]



                               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, 2003.

    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.

[[Page x]]





[[Page 1]]



              TITLE 17--COMMODITY AND SECURITIES EXCHANGES




                  (This book contains parts 200 to 239)

  --------------------------------------------------------------------
                                                                    Part

chapter ii--Securities and Exchange Commission..............         200

[[Page 3]]



             CHAPTER II--SECURITIES AND EXCHANGE COMMISSION




  --------------------------------------------------------------------
Part                                                                Page
200             Organization; conduct and ethics; and 
                    information and requests................           5
201             Rules of practice...........................         138
202             Informal and other procedures...............         196
203             Rules relating to investigations............         203
204             Rules relating to debt collection...........         205
205             Standards of professional conduct for 
                    attorneys appearing and practicing 
                    before the Commission in the 
                    representation of an issuer.............         223
209             Forms prescribed under the commission's 
                    rules of practice.......................         229
210             Form and content of and requirements for 
                    financial statements, Securities Act of 
                    1933, Securities Exchange Act of 1934, 
                    Public Utility Holding Company Act of 
                    1935, Investment Company Act of 1940, 
                    Investment Advisers Act of 1940, and 
                    Energy Policy and Conservation Act of 
                    1975....................................         230
211             Interpretations relating to financial 
                    reporting matters.......................         325
228             Integrated disclosure system for small 
                    business issuers........................         326
229             Standard instructions for filing forms under 
                    Securities Act of 1933, Securities 
                    Exchange Act of 1934 and Energy Policy 
                    and Conservation Act of 1975--Regulation 
                    S-K.....................................         376
230             General rules and regulations, Securities 
                    Act of 1933.............................         483
231             Interpretative releases relating to the 
                    Securities Act of 1933 and general rules 
                    and regulations thereunder..............         644
232             Regulation S-T--General rules and 
                    regulations for electronic filings......         650
239             Forms prescribed under the Securities Act of 
                    1933....................................         667

[[Page 5]]



PART 200--ORGANIZATION; CONDUCT AND ETHICS; AND INFORMATION AND REQUESTS--Table of Contents




             Subpart A--Organization and Program Management

Sec.
200.1  General statement and statutory authority.
200.2  Statutory functions.

                          General Organization

200.10  The Commission.
200.11  Headquarters Office--Regional and District Office relationships.
200.12  Functional responsibilities.
200.13  Executive Director.
200.13a  The Secretary of the Commission.
200.13b  Director of the Office of Public Affairs, Policy Evaluation, 
          and Research.
200.14  Office of Administrative Law Judges.
200.15  Office of International Affairs.
200.16  Executive Assistant to the Chairman.
200.16a  Inspector General.
200.17  Chief Management Analyst.
200.18  Director of Division of Corporation Finance.
200.19a  Director of the Division of Market Regulation.
200.19b  Director of the Division of Enforcement.
200.19c  Director of the Office of Compliance Inspections and 
          Examinations.
200.20b  Director of Division of Investment Management.
200.20c  Office of Filings and Information Services.
200.21  The General Counsel.
200.21a  The Ethics Counsel.
200.22  The Chief Accountant.
200.23a  Office of Economic Analysis.
200.23b  [Reserved]
200.24  Office of the Comptroller.
200.24a  Director of the Office of Consumer Affairs.
200.25  Office of Administrative and Personnel Management.
200.26  [Reserved]
200.26a  Office of Information Technology.
200.27  The Regional Directors.
200.27a  The District Administrators.
200.28  Issuance of instructions.
200.29  Rules.
200.30-1  Delegation of authority to Director of Division of Corporation 
          Finance.
200.30-3  Delegation of authority to Director of Division of Market 
          Regulation.
200.30-4  Delegation of authority to Director of Division of 
          Enforcement.
200.30-5  Delegation of authority to Director of Division of Investment 
          Management.
200.30-6  Delegation of authority to Regional Directors.
200.30-6a  Delegation of authority to District Administrators.
200.30-7  Delegation of authority to Secretary of the Commission.
200.30-8  [Reserved]
200.30-9  Delegation of authority to hearing officers.
200.30-10  Delegation of authority to Chief Administrative Law Judge.
200.30-11  Delegation of authority to Associate Executive Director of 
          the Office of Filings and Information Services.
200.30-12  [Reserved]
200.30-13  Delegation of authority to Associate Executive Director of 
          the Office of the Comptroller.
200.30-14  Delegation of authority to the General Counsel.
200.30-15  Delegation of authority to Executive Director.
200.30-16  Delegation of authority to Executive Assistant to the 
          Chairman.
200.30-17  Delegation of authority to Director of Office of 
          International Affairs.
200.30-18  Delegation of authority to Director of the Office of 
          Compliance Inspections and Examinations.

              Subpart B--Disposition of Commission Business

200.40  Joint disposition of business by Commission meeting.
200.41  Quorum of the Commission.
200.42  Disposition of business by seriatim Commission consideration.
200.43  Disposition of business by exercise of authority delegated to 
          individual Commissioner.

                       Subpart C--Canons of Ethics

200.50  Authority.
200.51  Policy.
200.52  Copies of the Canons.
200.53  Preamble.
200.54  Constitutional obligations.
200.55  Statutory obligations.
200.56  Personal conduct.
200.57  Relationships with other members.
200.58  Maintenance of independence.
200.59  Relationship with persons subject to regulation.
200.60  Qualification to participate in particular matters.
200.61  Impressions of influence.
200.62  Ex parte communications.
200.63  Commission opinions.
200.64  Judicial review.
200.65  Legislative proposals.
200.66  Investigations.
200.67  Power to adopt rules.
200.68  Promptness.
200.69  Conduct toward parties and their counsel.
200.70  Business promotions.
200.71  Fiduciary relationships.
200.72  Supervision of internal organization.

[[Page 6]]

                   Subpart D--Information and Requests

200.80  Commission records and information.
200.80a  Appendix A--Documentary materials available to the public.
200.80b  Appendix B--SEC releases.
200.80c  Appendix C--Rules and miscellaneous publications available from 
          the Government Printing Office.
200.80d  Appendix D--Other publications available from the Commission.
200.80e  Appendix E--Schedule of fees for records services.
200.80f  Appendix F--Records control schedule.
200.81  Publication of interpretative, no-action and certain exemption 
          letters and other written communications.
200.82  Public availability of materials filed pursuant to Sec. 240.14a-
          8(d) and related materials.
200.83  Confidential treatment procedures under the Freedom of 
          Information Act.

Subpart E [Reserved]

 Subpart F--Code of Behavior Governing Ex Parte Communications Between 
         Persons Outside the Commission and Decisional Employees

200.110  Purpose.
200.111  Prohibitions; application; definitions.
200.112  Duties of recipient; notice to participants.
200.113  Opportunity to respond; interception.
200.114  Sanctions.

Subpart G--Plan of Organization and Operation Effective During Emergency 
                               Conditions

200.200  Purpose.
200.201  Emergency conditions, effective date, and duration.
200.202  Offices, and information and submittals.
200.203  Organization, and delegations of authority.
200.204  Personnel, fiscal, and service functions.
200.205  Effect upon existing Commission organization, delegations, and 
          rules.

  Subpart H--Regulations Pertaining to the Privacy of Individuals and 
             Systems of Records Maintained by the Commission

200.301  Purpose and scope.
200.302  Definitions.
200.303  Times, places and requirements for requests pertaining to 
          individual records in a record system and for the 
          identification of individuals making requests for access to 
          the records pertaining to them.
200.304  Disclosure of requested records.
200.305  Special procedure: Medical records.
200.306  Requests for amendment or correction of records.
200.307  Review of requests for amendment or correction.
200.308  Appeal of initial adverse agency determination as to access or 
          as to amendment or correction.
200.309  General provisions.
200.310  Fees.
200.311  Penalties.
200.312  Specific exemptions.
200.313  Inspector General exemptions.

 Subpart I--Regulations Pertaining to Public Observation of Commission 
                                Meetings

200.400  Open meetings.
200.401  Definitions.
200.402  Closed meetings.
200.403  Notice of Commission meetings.
200.404  General procedure for determination to close meeting.
200.405  Special procedure for determination to close meeting.
200.406  Certification by the General Counsel.
200.407  Transcripts, minutes, and other documents concerning closed 
          Commission meetings.
200.408  Public access to transcripts and minutes of closed Commission 
          meetings; record retention.
200.409  Administrative appeals.
200.410  Miscellaneous.

  Subpart J--Classification and Declassification of National Security 
                        Information and Material

200.500  Purpose.
200.501  Applicability.
200.502  Definition.
200.503  Senior agency official.
200.504  Oversight Committee.
200.505  Original classification.
200.506  Derivative classification.
200.507  Declassification dates on derivative documents.
200.508  Requests for mandatory review for declassification.
200.509  Challenge to classification by Commission employees.
200.510  Access by historical researchers.
200.511  Access by former Presidential appointees.

 Subpart K--Regulations Pertaining to the Protection of the Environment

200.550  Purpose.
200.551  Applicability.
200.552  NEPA planning.
200.553  Draft, final and supplemental impact statements.

[[Page 7]]

200.554  Public availability of information.

Subpart L--Enforcement of Nondiscrimination on the Basis of Handicap in 
    Programs or Activities Conducted by the Securities and Exchange 
                               Commission

200.601  Purpose.
200.602  Application.
200.603  Definitions.
200.604--200.609  [Reserved]
200.610  Self-evaluation.
200.611  Notice.
200.612--200.629  [Reserved]
200.630  General prohibitions against discrimination.
200.631--200.639  [Reserved]
200.640  Employment.
200.641--200.648  [Reserved]
200.649  Program accessibility: Discrimination prohibited.
200.650  Program accessibility: Existing facilities.
200.651  Program accessibility: New construction and alterations.
200.652--200.659  [Reserved]
200.660  Communications.
200.661--200.669  [Reserved]
200.670  Compliance procedures.
200.671--200.699  [Reserved]

 Subpart M--Regulation Concerning Conduct of Members and Employees and 
             Former Members and Employees of the Commission

200.735-1  Purpose.
200.735-2  Policy.
200.735-3  General provisions.
200.735-4  Outside employment and activities.
200.735-5  Securities transactions.
200.735-6  Action in case of personal interest.
200.735-7  Negotiation for employment.
200.735-8  Practice by former members and employees of the Commission.
200.735-9  Indebtedness.
200.735-10  Miscellaneous statutory provisions.
200.735-11  Statement of employment and financial interests.
200.735-12  Special Government employees.
200.735-13  Disciplinary and other remedial action.
200.735-14  Employees on leave of absence.
200.735-15  Interpretive and advisory service.
200.735-16  Delegation.
200.735-17  Administration of the conduct regulation.
200.735-18  Requests for waivers.

  Subpart N--Commission Information Collection Requirements Under the 
              Paperwork Reduction Act: OMB Control Numbers

200.800  OMB control numbers assigned pursuant to the Paperwork 
          Reduction Act



             Subpart A--Organization and Program Management

    Authority: 15 U.S.C. 77s, 78d-1, 78d-2, 78w, 78ll(d), 78mm, 79t, 
77sss, 80a-37, 80b-11, unless otherwise noted.
    Sections 200.27, 200.27a, 200.30-6, and 200.30-6a are also issued 
under 15 U.S.C. 77e, 77f, 77g, 77h, 77j, 77q, 77u, 78e, 78g, 78h, 78i, 
78k, 78m, 78o, 78o-4, 78q, 78q-1, 78t-1, 78u, 77hhh, 77uuu, 80a-41, 80b-
5, and 80b-9.
    Section 200.30-1 is also issued under 15 U.S.C. 77f, 77g, 77h, 77j, 
78c(b) 78l, 78m, 78n, 78o(d).
    Section 200.30-3 is also issued under 15 U.S.C. 78b, 78d, 78f, 78k-
1, 78s, 78q, 78eee, 79d.
    Section 200.30-5 is also issued under 15 U.S.C. 77f, 77g, 77h, 77j, 
78c(b), 78l, 78m, 78n, 78o(d), 80a-8, 80a-20, 80a-24, 80a-29, 80b-3, 
80b-4.

    Source: 27 FR 12712, Dec. 22, 1962, unless otherwise noted.



Sec. 200.1  General statement and statutory authority.

    The Securities and Exchange Commission was created in 1934 under the 
Securities Exchange Act. That Act transferred to the Commission the 
administration of the Securities Act of 1933, formerly administered by 
the Federal Trade Commission. Subsequent laws assigned to the Securities 
and Exchange Commission for administration are: Public Utility Holding 
Company Act of 1935, Trust Indenture Act of 1939, Investment Company Act 
of 1940, and Investment Advisers Act of 1940. In addition, under the 
Bankruptcy Code, the Commission is a statutory party in cases arising 
under chapters 9 and 11. Considered together, the laws administered by 
the Commission provided for the following.
    (a) Public disclosure of pertinent facts concerning public offerings 
of securities and securities listed on national securities exchanges and 
certain

[[Page 8]]

securities traded in the over-the-counter markets.
    (b) Enforcement of disclosure requirements in the soliciting of 
proxies for meetings of security holders by companies whose securities 
are registered pursuant to section 12 of the Securities Exchange Act of 
1934, public utility holding companies, and their subsidiaries and 
investment companies.
    (c) Regulation of the trading in securities on national securities 
exchanges and in the over-the-counter markets.
    (d) Investigation of securities frauds, manipulations, and other 
violations, and the imposition and enforcement of legal sanctions 
therefor.
    (e) Registration, and the regulation of certain activities, of 
brokers, dealers and investment advisers.
    (f) Supervision of the activities of mutual funds and other 
investment companies.
    (g) Administration of statutory standards governing protective and 
other provisions of trust indentures under which debt securities are 
sold to the public.
    (h) Regulation of the purchase and sale of securities, utility 
properties, and other assets by registered public utility holding 
companies and their electric and gas utility subsidiaries; enforcement 
of statutory standards for public utility holding company system 
simplification and integration; and approval of their reorganization, 
mergers and consolidations.
    (i) Protection of the interests of public investors involved in 
bankruptcy reorganization cases and in bankruptcy cases involving the 
adjustment of debts of a municipality.
    (j) Administrative sanctions, injunctive remedies, civil money 
penalties and criminal prosecution. There are also private rights of 
action for investors injured by violations of the Acts.

(15 U.S.C. 78d-1, 78d-2; 11 U.S.C. 901, 1109(a))

[27 FR 12712, Dec. 22, 1962, as amended at 43 FR 13375, Mar. 30, 1978; 
49 FR 12684, Mar. 30, 1984; 60 FR 14623, Mar. 20, 1995; 60 FR 32794, 
June 23, 1995]



Sec. 200.2  Statutory functions.

    Following are brief descriptions of the Commission's functions under 
each of the statutes it administers:
    (a) Securities Act of 1933. (1) Issuers of securities making public 
offerings for sale in interstate commerce or through the mails, directly 
or by others on their behalf, are required to file with the Commission 
registration statements containing financial and other pertinent data 
about the issuer and the offering. A similar requirement is provided 
with respect to such public offerings on behalf of a controlling person 
of the issuer. Unless a registration statement is in effect with respect 
to such securities, it is unlawful to sell the securities in interstate 
commerce or through the mails. (There are certain limited exemptions, 
such as government securities, non-public offerings, and intrastate 
offerings.) The effectiveness of a registration statement may be refused 
or suspended after a hearing if the statement contains material 
misstatements or omissions, thus barring sale of the securities until it 
is appropriately amended. Registration is not a finding by the 
Commission as to the accuracy of the facts disclosed; and it is unlawful 
so to represent. Moreover, registration of securities does not imply 
approval of the issue by the Commission or insure investors against loss 
in their purchase, but serves rather to provide information upon which 
investors may make an informed and realistic evaluation of the worth of 
the securities.
    (2) Persons responsible for filing false information with the 
Commission subject themselves to the risk of fine or imprisonment or 
both; and the issuing company, its directors, officers, and the 
underwriters and dealers and others may be liable in damages to 
purchasers of registered securities if the disclosures in the 
registration statements and prospectus are materially defective. Also 
the statute contains antifraud provisions which apply generally to the 
sale of securities, whether or not registered.
    (b) Securities Exchange Act of 1934. This Act requires the filing of 
registration applications and annual and other reports with national 
securities exchanges and the Commission, by companies whose securities 
are listed on the exchanges. Annual and other reports must be filed also 
by certain companies whose securities are traded

[[Page 9]]

on the over-the-counter markets. These must contain financial and other 
data prescribed by the Commission for the information of investors. 
Material misstatements or omissions are grounds for suspension or 
withdrawal of the security from exchange trading. This Act makes 
unlawful any solicitation of proxies, authorizations, or consents in 
contravention of Commission rules. These rules require disclosure of 
information about the subject of the solicitation to security holders. 
The Act requires disclosure of the holdings and the transactions by an 
officer, director, or beneficial owner of over 10 percent of any class 
of equity security of certain companies. It also requires disclosure of 
the beneficial owners of more than five percent of any class of equity 
securities of a registered company. It provides substantive and 
procedural protection to security holders in third-party and issuer 
tender offers. The Act also provides for the registration with, and 
regulation by, the Commission of national securities exchanges, brokers 
or dealers engaged in an over-the-counter securities business, and 
national associations of such brokers or dealers. It gives the 
Commission rulemaking power with respect to short sales, stabilizing, 
floor trading activities of specialists and odd-lot dealers, and such 
matters as excessive trading by exchange members. The Act authorizes the 
Board of Governors of the Federal Reserve System to prescribe minimum 
margin requirements for listed securities.
    (c) Public Utility Holding Company Act of 1935. This Act authorizes 
the Commission to regulate gas and electric public-utility holding 
companies under standards prescribed for the protection of the public 
interest and the interest of investors and consumers. The Act generally 
limits a public-utility holding company to a single integrated public-
utility system, and requires simple corporate and capital structures. If 
not exempt, a public-utility holding company must register with the 
Commission. Generally, a registered holding company must obtain 
Commission approval before it can issue and sell securities, acquire 
utility securities or assets or any other interest in any business, or 
enter into transactions with its affiliates. It must also comply with 
extensive reporting and record-keeping requirements. Although largely 
free of these requirements, an exempt holding company remains subject to 
the geographic limitations of the Act. The Act permits the acquisition 
of interests in ``exempt wholesale generators'' and ``foreign utility 
companies'' unrelated to a system's utility operations.
    (d) Trust Indenture Act of 1939. This Act safeguards the interests 
of purchasers of publicly-offered debt securities issued under trust 
indentures by requiring the inclusion of certain protective provisions 
in, and the exclusion of certain types of exculpatory clauses from, 
trust indentures. The Act also requires that an independent indenture 
trustee represent the debtors by proscribing certain relationships that 
could conflict with proper exercise of duties.
    (e) Investment Company Act of 1940. This Act establishes a 
comprehensive regulatory framework for investment companies and subjects 
their activities to regulation under standards prescribed for the 
protection of investors. Among other things, the Act provides for the 
registration of investment companies with the Commission; requires them 
to disclose their financial condition and investment policies to their 
shareholders; prohibits them from substantially changing investment 
policies without shareholder approval; bars persons guilty of securities 
fraud from serving as officers or directors; prevents underwriters, 
investment bankers, or brokers from constituting more than a minority of 
the directors of an investment company; requires that management 
contracts be submitted to shareholders for their approval; prohibits 
transactions between investment companies and their directors, officers, 
or affiliated companies or persons, except when approved by the 
Commission; and prohibits investment companies from issuing senior 
securities except under specified terms and conditions. The Act also 
regulates advisory fees, sales and repurchases of securities, exchange 
offers, and other activities of investment companies. The Act authorizes 
the Commission to exempt

[[Page 10]]

any person or class of persons or securities from any provisions of, or 
rules under, the Act and to conduct any investigation it deems necessary 
to determine existing or potential violations of the Act. It also 
authorizes the Commission to prepare reports to security holders on the 
fairness of plans of reorganization, merger, or consolidation. The 
Commission may institute a court action to enjoin acts or practices of 
management involving, among other things, a breach of fiduciary duty and 
the consummation of plans of reorganization, merger, or consolidation 
that are grossly unfair to security holders.
    (f) Investment Advisers Act of 1940. Persons who, for compensation, 
engage in the business of advising others with respect to their security 
transactions must register with the Commission. Their activities in the 
conduct of such business are subject to standards of the act which make 
unlawful those practices which constitute fraud or deceit and which 
require, among other things, disclosure of any interests they may have 
in transactions executed for clients. The Act grants to the Commission 
rule-making power with respect to fraudulent and other activities of 
investment advisers.
    (g) Chapter 11 of the Bankruptcy Code. Chapter 11 of the Bankruptcy 
Code (11 U.S.C. 1101 et seq.) provides for Commission participation as a 
statutory party in reorganization cases. Under section 1109(a) of the 
Bankruptcy Code (11 U.S.C. 1109(a)), which also applies to Chapter 9 
cases regarding municipalities, the Commission ``may raise and may 
appear and be heard on any issue in the case.''

(11 U.S.C. 901, 1109(a))

[27 FR 12712, Dec. 22, 1962, as amended at 49 FR 12684, Mar. 30, 1984; 
60 FR 14624, Mar. 20, 1995]

                          General Organization



Sec. 200.10  The Commission.

    The Commission is composed of five members, not more than three of 
whom may be members of the same political party. The members are 
appointed by the President, with the advice and consent of the Senate, 
for 5-year terms, one term ending each year. The Chairman is designated 
by the President pursuant to the provisions of section 3 of 
Reorganization Plan No. 10 of 1950 (3 CFR, 1949-1953 Comp., p. 1006). 
The Commission is assisted by a staff, which includes lawyers, 
accountants, engineers, financial security analysts, investigators and 
examiners, as well as administrative and clerical employees.



Sec. 200.11  Headquarters Office--Regional and District Office relationships.

    (a)(1) Division and Office Heads in the Headquarters Office (450 
Fifth Street, NW., Washington, DC 20549) have Commission-wide 
responsibility to the Commission for the overall development, policy and 
technical guidance, and policy direction of the operating programs under 
their jurisdiction.
    (2) Each Regional Director is responsible, subject to the 
supervision of the Director of the Division of Enforcement, for the 
direction and supervision of his or her work force and for the execution 
of all programs in his or her region as shown in paragraph (b) of this 
section, in accordance with established policy. Each District 
Administrator is responsible, subject to the supervision of the relevant 
Regional Director, for the direction and supervision of his or her work 
force and for the execution of all programs through his or her office, 
in accordance with established policy.
    (b) Regional Directors and District Administrators of the 
Commission.

Region 1: Northeast Region. Connecticut, Delaware, District of Columbia, 
          Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New 
          York, Pennsylvania, Rhode Island, Vermont, Virginia, West 
          Virginia--Regional Director, 7 World Trade Center, suite 1300, 
          New York, NY 10048.
    Boston District--District Administrator, 73 Tremont Street, suite 
600, Boston, MA 02108.
    Philadelphia District--District Administrator, The Curtis Center, 
suite 1005 E., 601 Walnut Street, Philadelphia, PA 19106.
Region 2: Southeast Region. Alabama, Florida, Georgia, Louisiana, 
          Mississippi, North Carolina, Puerto Rico, South Carolina, 
          Tennessee, Virgin Islands--Regional Director, 1401 Brickell 
          Avenue, suite 200, Miami, FL 33131.

[[Page 11]]

    Atlanta District--District Administrator, 3475 Lenox Road, NE., 
suite 1000, Atlanta, GA 30326.
Region 3: Midwest Region. Illinois, Indiana, Iowa, Kentucky, Michigan, 
          Minnesota, Missouri, Ohio, Wisconsin--Regional Director, 500 
          West Madison Street, suite 1400, Chicago, IL 60661.
Region 4: Central Region. Arkansas, Colorado, Kansas, Nebraska, New 
          Mexico, North Dakota, Oklahoma, South Dakota, Texas, Utah, 
          Wyoming--Regional Director, 1801 California Street, suite 
          4800, Denver, CO 80202.
    Fort Worth District--District Administrator, 801 Cherry Street, 19th 
Floor, Fort Worth, TX 76102. Salt Lake District--District Administrator, 
500 Key Bank Tower, 50 S. Main Street, suite 500, Box 79, Salt Lake 
City, UT 84144.
Region 5: Pacific Region. Alaska, Arizona, California, Guam, Hawaii, 
          Idaho, Montana, Nevada, Oregon, Washington--Regional Director, 
          5670 Wilshire Boulevard, 11th Floor, Los Angeles, CA 90036.
    San Francisco District--District Administrator, 44 Montgomery 
Street, Suite 1100, San Francisco, CA 94104.

    (c) The following geographic allocation determines where registered 
brokers, dealers, transfer agents, clearing agents, registered 
securities associations, investment advisers, and others as designated 
in this chapter must file reports required to be filed in regional or 
district offices:

Northeast Regional Office: New Jersey, New York.
    Boston District Office: Connecticut, Maine, Massachusetts, New 
Hampshire, Rhode Island, Vermont.
    Philadelphia District Office: Delaware, District of Columbia, 
Maryland, Pennsylvania, Virginia, West Virginia.
Southeast Regional Office: Florida, Puerto Rico, Virgin Islands.
    Atlanta District Office: Alabama, Georgia, Louisiana, Mississippi, 
North Carolina, South Carolina, Tennessee.
Midwest Regional Office: Illinois, Indiana, Iowa, Kentucky, Ohio, 
          Michigan, Minnesota, Missouri, Wisconsin.
Central Regional Office: Colorado, Nebraska, New Mexico, North Dakota, 
          South Dakota, Utah, Wyoming.
    Fort Worth District Office: Arkansas, Kansas, Oklahoma, Texas.
Pacific Regional Office: Alaska, Arizona, California, Guam, Hawaii, 
          Idaho, Montana, Nevada, Oregon, Washington.

[27 FR 12712, Dec. 22, 1962, as amended at 28 FR 6970, July 9, 1963; 41 
FR 44696, Oct. 12, 1976; 47 FR 26818, June 22, 1982; 49 FR 12684, Mar. 
30, 1984; 49 FR 13679, Apr. 6, 1984; 52 FR 2677, Jan. 26, 1987; 59 FR 
5943, Feb. 9, 1994; 59 FR 12543, Mar. 17, 1994]



Sec. 200.12  Functional responsibilities.

    This section sets forth the administrative and substantive 
responsibilities of the Division Directors, Office Heads, Regional 
Directors and District Administrators, and certain other Commission 
officers. All Commission officers and other staff members, except 
administrative law judges and the Inspector General, shall perform, in 
addition to the duties herein set forth, such additional duties as the 
chairman of the Commission may assign from time to time. These officers 
also serve as liaison with Government and other agencies concerning 
matters within their respective functional responsibilities.

(15 U.S.C. 77u, 78d, 78d-1)

[37 FR 23826, Nov. 9, 1972, as amended at 59 FR 5943, Feb. 9, 1994; 60 
FR 14624, Mar. 20, 1995]



Sec. 200.13  Executive Director.

    (a) The Executive Director is responsible for developing and 
executing the overall management policies of the Commission for all its 
operating divisions and staff offices. The Executive Director also 
provides executive direction to, and exercises administrative control 
over, the Office of Administrative and Personnel Management, the Office 
of the Comptroller, the Office of Filings and Information Services, the 
Office of Freedom of Information and Privacy Act Operations, and the 
Office of Information Technology. In addition, the Executive Director 
implements the following statutes, regulations, and Executive orders, as 
well as those that the Chairman may designate:
    (1) Paperwork Reduction Act of 1980 (44 U.S.C. 3501 et seq.).

[[Page 12]]

    (2) Small and Disadvantaged Business Utilization Program (15 U.S.C. 
631 et seq.).
    (3) Government Printing and Binding Regulations, U.S. Congress Joint 
Committee on Printing (1977).
    (4) Occupational Safety and Health Programs for Federal Employees 
under Executive Order 12196 of February 26, 1980 (29 CFR 1960.1-
1960.90).
    (5) Federal Managers' Financial Integrity Act of 1982 (31 U.S.C. 
3512).
    (6) National Security Information under Executive Order 12356 of 
April 6, 1982.
    (7) Government Performance and Results Act of 1993 (31 U.S.C. 1101 
et seq.).
    (8) Recommendations of the Report of the National Performance Review 
(September 1993).
    (b) The Executive Director appoints personnel, reviews and approves 
policies and procedures, and assures appropriate resources to implement 
the programs set forth in paragraph (a) of this section, and authorizes 
and transmits reports required by them.
    (c) The Executive Director also designates certifying officers for 
agency payments, prescribes procurement regulations, enters into 
contracts, designates contracting officers, and makes procurement 
determinations.
    (d) As the Chief Operating Officer of the Commission, the Executive 
Director shall be responsible for:
    (1) Implementing the goals of the President and the Chairman and the 
mission of the Commission;
    (2) Providing overall organizational management to improve agency 
performance;
    (3) Assisting the Chairman in promoting ongoing quality improvement, 
developing strategic plans, and measuring results;
    (4) Directing ongoing reengineering of the Commission's 
administrative processes;
    (e) Overseeing Commission-specific application of performance 
measures, procurement reforms, personnel reductions, financial 
management improvements, telecommunications and information technology 
policies, and other government-wide systems reforms adopted as a result 
of the recommendations of the National Performance Review; and
    (f) Reforming the Commission's management practices by incorporating 
the principles of the National Performance Review into day-to-day 
management.

[60 FR 14624, Mar. 20, 1995]



Sec. 200.13a  The Secretary of the Commission.

    (a) The Secretary of the Commission is responsible for the 
preparation of the daily and weekly agendas of Commission business; the 
orderly and expeditious flow of business at formal Commission meetings; 
the maintenance of the Official Minute record of all actions of the 
Commission; and the service of all instruments of formal Commission 
action. He or she is custodian of the official seal of the Commission, 
and also has the responsibility for authenticating documents.
    (b) The Secretary has been delegated responsibilities relating to 
the Commission's rules of practice, administrative proceedings under the 
Commission's statutes, and other responsibilities.
    (c) In addition, he or she administers the Commission's Library.

[50 FR 12239, Mar. 28, 1985]



Sec. 200.13b  Director of the Office of Public Affairs, Policy Evaluation, and Research.

    The Director of the Office of Public Affairs, Policy Evaluation, and 
Research is the chief public information officer for the Commission, and 
oversees activities that communicate the Commission's actions to those 
interested in or affected by them. His or her responsibilities include 
liaison with the news media, dissemination of information to the news 
media and to the general public, supervision of internal and some 
external publications and of audio-visual presentations. 
Responsibilities of the Director, and of his or her staff, include 
special projects that may be deemed appropriate to communicate 
information on Commission actions.

[50 FR 12239, Mar. 28, 1985, as amended at 60 FR 14625, Mar. 20, 1995]

[[Page 13]]



Sec. 200.14  Office of Administrative Law Judges.

    (a) Under the Administrative Procedure Act (5 U.S.C. 551-559) and 
the federal securities laws, the Office of Administrative Law Judges 
conducts hearings in proceedings instituted by the Commission. The 
Administrative Law Judges are responsible for the fair and orderly 
conduct of the proceedings and have the authority to:
    (1) Administer oaths and affirmations;
    (2) Issue subpoenas;
    (3) Rule on offers of proof;
    (4) Examine witnesses;
    (5) Regulate the course of a hearing;
    (6) Hold pre-hearing conferences;
    (7) Rule upon motions; and
    (8) Unless waived by the parties, prepare an initial decision 
containing the conclusions as to the factual and legal issues presented, 
and issue an appropriate order.
    (b) The Chief Administrative Law Judge performs the duties of an 
Administrative Law Judge under the Administrative Procedure Act and the 
duties delegated to him or her by the Commission that are compatible 
with those duties. The Chief Administrative Law Judge is responsible for 
the orderly functioning of the Office of Administrative Law Judges apart 
from the conduct of administrative proceedings and acts as liaison 
between that Office and the Commission.

[60 FR 14625, Mar. 20, 1995]



Sec. 200.15  Office of International Affairs.

    (a) The Office of International Affairs (``OIA'') is responsible for 
the negotiation and implementation of the Commission's bilateral and 
multilateral agreements and understandings with foreign financial 
regulatory authorities. OIA coordinates and participates in activities 
relating to the Commission's international cooperation programs and 
develops initiatives to enhance the Commission's ability to enforce the 
federal securities laws in matters with international elements.
    (b) OIA assists in and facilitates the efforts of the Commission's 
other divisions and offices in responding to international issues and in 
developing legislative, rulemaking and other initiatives relating to 
international securities markets. OIA facilitates the development of 
and, where appropriate, provides advice and presents Commission 
positions relating to international initiatives of other U.S. Government 
departments and agencies affecting regulation of securities markets. OIA 
plans, coordinates and participates in Commission meetings with foreign 
financial regulatory authorities.

[58 FR 52418, Oct. 8, 1993]



Sec. 200.16  Executive Assistant to the Chairman.

    The Executive Assistant to the Chairman assists the Chairman in 
consideration of legal, financial, and economic problems encountered in 
the administration of the Commission's statutes. He or she arranges for 
and conducts conferences with officials of the Commission, members of 
the staff, and/or representatives of the public on matters arising with 
regard to general programs or specific matters. Acting for the Chairman, 
he or she furnishes the initiative, executive direction, and authority 
for staff studies and reports bearing on the Commission's administration 
of the laws and its relations with the public, industry, and the 
Congress. The Executive Assistant is also responsible for assisting 
members of the Commission in the preparation of the opinions of the 
Commission, and to the Commission for the preparation of opinions and 
decisions on motions and certifications of questions and rulings by 
administrative law judges in the course of administrative proceedings 
under Rule 102(e) of the Commission's Rules of Practice (Sec. 201.102(e) 
of this chapter), and in other cases in which the Chairman or the 
General Counsel has determined that separation of functions requirements 
or other circumstances would make inappropriate the exercise of such 
functions by the General Counsel. In cases where, pursuant to a waiver 
by the parties of separation of function requirements, another Division 
or Office of the Commission's staff undertakes to prepare an opinion or 
decision, such Division or Office rather than the Executive Assistant 
will prepare such opinion or decision, although the Executive Assistant 
may assist in such preparation.

[[Page 14]]

The Executive Assistant is further responsible for the exercise of such 
review functions with respect to adjudicatory matters as are delegated 
to him or her by the Commission pursuant to 101 Stat. 1254 (15 U.S.C. 
78d-1, 78d-2) or as may be otherwise delegated or assigned to him or 
her.

[54 FR 18100, Apr. 27, 1989, as amended at 60 FR 32794, June 23, 1995]



Sec. 200.16a  Inspector General.

    (a) Under the Inspector General Act of 1978, as amended, (5 U.S.C. 
app.) the Inspector General performs independent and objective 
investigations and audits relating to the Commission's programs and 
operations. An investigation seeks to detect and prevent waste, fraud, 
and abuse in the Commission's programs and operations, such as 
violations of federal statutes or regulations by contractors and 
Commission employees or the Standards Of Ethical Conduct For Employees 
of the Executive Branch. An audit seeks to determine whether:
    (1) Program goals and results identified in enabling legislation are 
achieved.
    (2) Resources are efficiently and economically used and managed.
    (3) Financial operations are properly conducted.
    (4) Financial reports are fairly presented.
    (5) Applicable laws and regulations are complied with.
    (b) In cooperation with Commission management, the Inspector General 
generally promotes economy, efficiency, and the effectiveness of waste 
or fraud detection and prevention in the Commission's programs and 
operations. The Inspector General also keeps the Congress and the 
Chairman informed about problems and deficiencies in the Commission's 
programs and operations.
    (c) The Inspector General reports to the Chairman, but is 
independent of all other Commission management. In addition, the 
Inspector General independently prepares semi-annual reports to the 
Congress.
    (d) With respect to misconduct of Commission employees and 
contractors, the Inspector General, after consultation with the Ethics 
Counsel, where appropriate, serves as the Commission's liaison with 
other federal audit and investigative agencies, such as the Department 
of Justice and the Executive Council on Integrity and Efficiency.
    (e) Subpoenas issued in the course of an audit or investigation 
conducted by the Office of the Inspector General shall be effected by 
any method prescribed by Sec. 201.232(a) and (c) of this chapter.

[60 FR 14625, Mar. 20, 1995]



Sec. 200.17  Chief Management Analyst.

    The Chief Management Analyst is responsible to the Executive 
Director for overseeing the performance of management analysis tasks 
which pertain, but are not limited, to:
    (a) Agency work methods and procedures;
    (b) Effective personnel and resource allocation and utilization;
    (c) Organizational structures and delegations of authority;
    (d) Management information systems and concepts; and
    (e) The preparation of recurring special reports and analyses.

[60 FR 14625, Mar. 20, 1995]



Sec. 200.18  Director of Division of Corporation Finance.

    The Director of the Division of Corporation Finance is responsible 
to the Commission for the administration of all matters (except those 
pertaining to investment companies registered under the Investment 
Company Act of 1940) relating to establishing and requiring adherence to 
standards of business and financial disclosure with respect to 
securities being offered for public sale pursuant to the registration 
requirements of the Securities Act of 1933 (15 U.S.C. 77a et seq.) or 
the exemptions therefrom; establishing and requiring adherence to 
standards of reporting and disclosure with respect to securities traded 
on national securities exchanges or required to be registered pursuant 
to section 12 (g) of the Securities Exchange Act of 1934 (15 U.S.C. 
78l(g)) and with respect to securities whose issuers are required to 
file reports pursuant to section 15(d) of that Act (15 U.S.C. 78c(d)); 
establishing and

[[Page 15]]

requiring adherence to disclosure and procedural standards in the 
solicitation of proxies for the election of directors and other 
corporate actions; establishing and requiring adherence to standards of 
disclosure with respect to the filing of statements respecting 
beneficial ownership and transaction statements pursuant to sections 13 
(d), (e), and (g) (15 U.S.C. 78m(d), 78m(e), and 78m(g)) of the 
Securities Exchange Act of 1934; administering the disclosure and 
substantive provisions of the Williams Act relating to tender offers; 
and ensuring adherence to enforcement of the standards set forth in the 
Trust Indenture Act of 1939 (15 U.S.C. 77aaa et seq.) regarding 
indenture covering debt securities. Those duties shall include, with the 
exception of enforcement and related activities under the jurisdiction 
of the Division of Enforcement, the responsibility to the Commission for 
the administration of the disclosure requirements and other provisions 
of the Securities Act of 1933, the Securities Exchange Act of 1934, and 
the Trust Indenture Act of 1939, as listed below:
    (a) All matters under the Securities Act of 1933 (15 U.S.C. 77a et 
seq.) including the examination and processing of material filed 
pursuant to the requirements of that Act (except such material filed by 
investment companies registered under the Investment Company Act of 
1940), the interpretation of the provisions of the Securities Act of 
1933, and the proposing to the Commission of rules under that Act.
    (b) All matters, except those pertaining to investment companies 
registered under the Investment Company Act of 1940, arising under the 
Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.) in connection 
with:
    (1) The registration of securities pursuant to section 12 of the Act 
(15 U.S.C. 78l), including the exemptive provisions of section 12(h) (15 
U.S.C. 78l(h)).
    (2) The examination and processing of periodic reports filed 
pursuant to sections 13 and 15(d) of the Act (15 U.S.C. 78m, 78o(d)).
    (3) The examination and processing of proxy soliciting material 
filed pursuant to section 14(a) and information statements filed 
pursuant to section 14(c) of the Act (15 U.S.C. 78n(a), 78n(c)).
    (4) The examination and processing of statements respecting 
beneficial ownership transaction statements and tender offer statements 
filed pursuant to sections 13 (d), (e), and (g) and 14 (d), (e), (f), 
and (g) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(d), 
78m(e), 78m(g), and 78n(d)), and the administration of the other 
protective standards of these provisions.
    (5) The interpretation of the foregoing provisions of the Act, as 
well as Section 16 thereof (15 U.S.C. 78p), and proposing of rules under 
those portions of the Act to the Commission.
    (c) All matters, except those pertaining to investment companies 
registered under the Investment Company Act of 1940, arising under the 
Trust Indenture Act of 1939 (15 U.S.C. 77aaa et seq.).

[41 FR 29374, July 16, 1976, as amended at 50 FR 12239, Mar. 28, 1985; 
60 FR 14625, Mar. 20, 1995]



Sec. 200.19a  Director of the Division of Market Regulation.

    The Director of the Division of Market Regulation is responsible to 
the Commission for the administration and execution of the Commission's 
programs under the Securities Exchange Act of 1934 relating to the 
structure and operation of the securities markets and the prevention of 
manipulation in the securities markets. These responsibilities include 
oversight of the national market system, the national clearance and 
settlement system, and self-regulatory organizations, such as the 
national securities exchanges, registered securities associations, 
clearing agencies, the Municipal Securities Rulemaking Board, and the 
Securities Investor Protection Corporation. Duties also include the 
registration and regulation of brokers, dealers, municipal securities 
dealers, government securities brokers and dealers, transfer agents, and 
securities information processors. The functions involved in the 
regulation of such entities include reviewing proposed rule changes of 
self-regulatory organizations, recommending the adoption and amendment 
of Commission rules, responding to interpretive, exemptive, and no-
action

[[Page 16]]

requests, and conducting inspections, examinations, and market 
surveillance. In addition, the Director shall have the duties specified 
below:
    (a) Administration of all matters arising under the Securities 
Exchange Act of 1934 (15 U.S.C. 78a et seq.), except:
    (1) The examination and processing of applications for registration 
of securities on national securities exchanges pursuant to section 12 of 
the Act (15 U.S.C. 78l).
    (2) The examination and processing of periodic reports filed 
pursuant to sections 13 and 15(d) of the Act (15 U.S.C. 78m, 78o(d)).
    (3) The examination and processing of proxy soliciting material 
pursuant to regulations adopted under section 14 of the Act (15 U.S.C. 
78n).
    (4) The examination and processing of ownership reports filed under 
section 16(a) of the Act (15 U.S.C. 78p(a)).
    (5) The denial or suspension of registration of securities 
registered on national securities exchanges, pursuant to section 
19(a)(2) (15 U.S.C. 78s(a)(2)) by reason of failure to comply with the 
reporting requirements of that Act.
    (6) The enforcement and related activities under the jurisdiction of 
the Division of Enforcement.

(15 U.S.C. 78d, 78d-1, 78d-2, 80a-37)

[37 FR 16792, Aug. 19, 1972, as amended at 43 FR 13376, Mar. 30, 1978; 
60 FR 14625, Mar. 20, 1995]



Sec. 200.19b  Director of the Division of Enforcement.

    The Director of the Division of Enforcement is responsible to the 
Commission for supervising and conducting all enforcement activities 
under the acts administered by the Commission. The Director recommends 
the institution of administrative and injunctive actions arising out of 
such enforcement activities and determines the sufficiency of evidence 
to support the allegations in any proposed complaint. The Director 
supervises the Regional Directors and, in collaboration with the General 
Counsel, reviews cases to be recommended to the Department of Justice 
for criminal prosecution. The Director grants or denies access to 
nonpublic information in the Commission's enforcement files under 
Sec. 240.24c-1 of this chapter; provided that access under that section 
shall be granted only with the concurrence of the head of the division 
or office responsible for the information or the files containing it.

[60 FR 14626, Mar. 20, 1995]



Sec. 200.19c  Director of the Office of Compliance Inspections and Examinations.

    The Director of the Office of Compliance Inspections and 
Examinations (``OCIE'') is responsible for the compliance inspections 
and examinations relating to the regulation of exchanges, national 
securities associations, clearing agencies, securities information 
processors, the Municipal Securities Rulemaking Board, brokers and 
dealers, municipal securities dealers, transfer agents, investment 
companies, and investment advisers, under Sections 15C(d)(1) and 17(b) 
of the Securities Exchange Act of 1934 (15 U.S.C. 78o-5(d)(1) and 
78q(b)), Section 31(b) of the Investment Company Act of 1940 (15 U.S.C. 
80a-30(b)), and Section 204 of the Investment Advisers Act of 1940 (15 
U.S.C. 80b-4).

[60 FR 39644, Aug. 3, 1995]



Sec. 200.20b  Director of Division of Investment Management.

    The Director of the Division of Investment Management is responsible 
to the Commission for the administration of the Commission's 
responsibilities under the Investment Company Act of 1940 and the 
Investment Advisers Act of 1940, the administration and execution of the 
Public Utility Holding Company Act of 1935, and with respect to matters 
pertaining to investment companies registered under the Investment 
Company Act of 1940 and pooled investment funds or accounts, the 
administration of all matters relating to establishing and requiring 
adherence to standards of economic and financial reporting and the 
administration of fair disclosure and related matters under the 
Securities Act of 1933 and the Securities Exchange Act of 1934 and 
enforcement of the standards set forth in the Trust Indenture Act of 
1939 regarding indentures covering debt securities, as listed in 
paragraphs (a) through (e) of

[[Page 17]]

this section. These duties shall include inspections arising in 
connection with such administration but shall exclude enforcement and 
related activities under the jurisdiction of the Division of 
Enforcement.
    (a) The administration of all matters arising under the Investment 
Company Act of 1940 (15 U.S.C. 80a), except those arising under section 
30(h) of the Act (15 U.S.C. 80a-29(h)).
    (b) All matters arising under the Securities Act of 1933 (15 U.S.C. 
77a et seq.) arising from or pertaining to material field pursuant to 
the requirements of that Act by investment companies registered under 
the Investment Company Act of 1940 (15 U.S.C. 80a-1 et seq.) and pooled 
investment funds or accounts.
    (c) All matters arising under the Securities Exchange Act of 1934 
(15 U.S.C. 78a et seq.), except the examination and processing of 
statements of beneficial ownership of securities and changes in such 
ownership filed under section 16(a) (15 U.S.C. 78p(a)) of such Act, 
pertaining to investment companies registered under the Investment 
Company Act of 1940 and pooled investment funds or accounts in 
connection with:
    (1) The registration of securities pursuant to section 12 of the Act 
(15 U.S.C. 78l), including the exemptive provisions of section 12(h) (15 
U.S.C. 78l(h)).
    (2) The examination and processing of periodic reports filed 
pursuant to sections 13 and 15(d) of the Act (15 U.S.C. 78m, 78o(d)).
    (3) The examination and processing of proxy soliciting material 
filed pursuant to section 14(a) and information material filed pursuant 
to section 14(c) of the Act (15 U.S.C. 78n(a), 78n(c)).
    (d) All matters pertaining to investment companies registered under 
the Investment Company Act of 1940 and pooled investment funds or 
accounts arising under the Trust Indenture Act of 1939 (15 U.S.C. 77aaa 
et seq.).
    (e) All matters arising under the Investment Advisers Act of 1940 
(15 U.S.C. 80b-1 et seq.).
    (f) The administration and execution of the Public Utility Holding 
Company Act of 1935 in connection with:
    (1) The administration and processing of proxy solicitation material 
subject to Secs. 240.14a-1--240.14a-14 of this chapter.
    (2) The examination and processing of ownership reports filed under 
section 17(a) of the Act (15 U.S.C. 79q(a)).

[41 FR 29375, July 16, 1976, as amended at 50 FR 5064, Feb. 5, 1985; 60 
FR 14626, Mar. 20, 1995; 67 FR 43535, July 8, 2002]



Sec. 200.20c  Office of Filings and Information Services.

    The Office of Filings and Information Services is responsible for 
the receipt and initial handling of all public documents filed at the 
Commission's headquarters office. The initial handling includes 
determining acceptability, extracting data for EDP input, calculating 
fees, conducting cursory and substantive examinations, assigning filings 
to branches and preparing deficiency correspondence. In addition, the 
Office is responsible for the custody and control of the Commission's 
official records; for the development of plans and implementation of the 
Commission's records management program; for authenticating all 
documents produced for administrative or judicial proceedings; for 
maintaining liaison with the National Archives and Records Service and 
other Government agencies with respect to the Commission's records and 
its records management program. The Office provides filer-support 
services relating to the Commission's EDGAR system and the receipt of 
fees and filings for all types of filers, regardless of filing media. 
The Office also manages the Commission's public reference facilities to 
facilitate public access to electronic filings and ensure that all 
information contained in public filings with the Commission is timely 
made available to investors.

(Sec. 4(b), 48 Stat. 885, sec. 1106(a), 63 Stat. 972, 15 U.S.C. 78d(b); 
secs. 1, 2, 76 Stat. 394, 395, 15 U.S.C. 78d-1, 78d-2; secs. 19, 48 
Stat. 85, 908, 15 U.S.C. 77s; sec. 23(a), 48 Stat. 901, sec. 8, 49 Stat. 
1379, 15 U.S.C. 78w(a); sec. 20, 49 Stat. 833, 15 U.S.C. 78t; sec. 319, 
53 Stat. 1173, 15 U.S.C. 77sss; sec. 38, 54 Stat. 841, 15 U.S.C. 80a-37; 
sec. 211, 54 Stat. 855, sec. 14, 74 Stat. 888, 15 U.S.C. 80b-11; sec. 
15B, 15 U.S.C. 78o-4(a); sec. 17A, 15 U.S.C. 78q-1 (c)(2); 11 U.S.C. 
901, 1109(a))

[43 FR 13376, Mar. 30, 1978, as amended at 49 FR 12685, Mar. 30, 1984; 
60 FR 14626, Mar. 20, 1995]

[[Page 18]]



Sec. 200.21  The General Counsel.

    (a) The General Counsel is the chief legal officer of the 
Commission. He or she is responsible for the representation of the 
Commission in judicial proceedings in which it is involved as a party or 
as amicus curiae, for directing and supervising all civil litigation 
involving the Commission in the United States District Courts, except 
for law enforcement actions filed on behalf of the Commission, for 
directing and supervising the Commission's responsibilities under the 
Bankruptcy Code and all related litigation, and for representing the 
Commission in all cases in appellate courts. The General Counsel is 
responsible for the review of cases which the Division of Enforcement 
recommends be referred to the Department of Justice with a 
recommendation for criminal prosecution. In addition, he or she is 
responsible for advising the Commission at its request or at the request 
of any division director or office head, or on his or her own motion, 
with respect to interpretations involving questions of law; for the 
conduct of administrative proceedings relating to the disqualification 
of lawyers from practice before the Commission; for the preparation of 
the Commission comments to the Congress on pending legislation; and for 
the drafting, in conjunction with appropriate divisions and offices, of 
legislative proposals to be sponsored by the Commission. The General 
Counsel is also responsible for the review and clearance of the form and 
content of articles, treatises, and prepared speeches and addresses by 
members of the staff relating to the Commission or to the statutes and 
rules administered by the Commission. He or she is responsible (with the 
Associate Executive Director of the Office of Administrative and 
Personnel Management) for administering the Commission's Ethics Program, 
and (with the Ethics Counsel) for interpreting subpart M of this part 
and 5 CFR part 2635. He or she serves as Counselor to the Commission and 
its staff with regard to ethical and conflicts of interest questions and 
acts as the Commission's liaison on such matters with the Office of 
Administrative and Personnel Management, the Office of the Inspector 
General and the Department of Justice. The General Counsel also is 
responsible for coordinating and reviewing the interpretive positions of 
the various divisions and offices. In addition, he or she is responsible 
for appropriate disposition of all Freedom of Information Act and 
Privacy Act appeals pursuant to the authority delegated in Sec. 200.30-
14 of this chapter, and is the Commission's advisor with respect to 
legal problems arising under the Freedom of Information Act, the Privacy 
Act, the Federal Reports Act, the Federal Advisory Committee Act, the 
Civil Service laws and regulations, the statutes and rules applicable to 
the Commission's procurement, contracting, fiscal and related 
administrative activities, and other statutes and regulations of a 
similar nature applicable to a number of Government agencies.
    (b) The General Counsel is also responsible for assisting members of 
the Commission in the preparation of the opinions of the Commission, and 
to the Commission for the preparation of opinions and decisions on 
motions and certifications of questions and rulings by administrative 
law judges in the course of administrative law proceedings, except (1) 
in cases where, pursuant to a waiver by the parties of separation of 
function requirements, another Division or Office of the Commission's 
staff undertakes to prepare an opinion or decision, in which cases the 
General Counsel may assist in such preparation, and (2) with respect to 
administrative proceedings against lawyers under Rule 2(e) of the 
Commission's Rules of Practice (Sec. 201.2(e) of this chapter) or other 
cases in which the Chairman or the General Counsel has determined that 
separation of function requirements or other circumstances would make 
inappropriate the exercise of such functions by the General Counsel. In 
the cases described in clause (2), the Executive Assistant to the 
Chairman exercises such functions. The General Counsel deals with 
general problems arising under the Administrative Procedure Act, 
including the revision or adoption of rules of practice. The General 
Counsel is also responsible for the exercise of such review functions 
with respect to adjudicatory matters as are delegated to

[[Page 19]]

him or her by the Commission pursuant to 101 Stat. 1254 (15 U.S.C. 78d-
1, 78d-2) or as may be otherwise delegated or assigned to him or her.
    (c) The General Counsel also is responsible to the Commission for 
the administration of the Government in the Sunshine Act for publicly 
certifying, pursuant to Sec. 200.406, that, in his or her opinion, 
particular Commission meetings may properly be closed to the public. In 
the absence of the General Counsel, the Solicitor to the Commission 
shall be deemed the General Counsel for purposes of Sec. 200.406. In the 
absence of the General Counsel and the Solicitor, the most senior 
Associate General Counsel available shall be deemed the General Counsel 
for purposes of Sec. 200.406. In the absence of the General Counsel, the 
Solicitor, and every Associate General Counsel, the most senior 
Assistant General Counsel available shall be deemed the General Counsel 
for purposes of Sec. 200.406. In the absence of the General Counsel, the 
Solicitor, every Associate General Counsel and every Assistant General 
Counsel, such attorneys as the General Counsel may designate (in such 
order of succession as the General Counsel directs) shall exercise the 
responsibilities imposed by Sec. 200.406.

[43 FR 13376, Mar. 30, 1978, as amended at 47 FR 26821, June 22, 1982; 
47 FR 37077, Aug. 25, 1982; 49 FR 12685, Mar. 30, 1984; 49 FR 13866, 
Apr. 9, 1984; 50 FR 12240, Mar. 28, 1985; 54 FR 18100, Apr. 27, 1989; 54 
FR 24331, June 7, 1989; 60 FR 14626, Mar. 20, 1995]



Sec. 200.21a  The Ethics Counsel.

    (a) The Ethics Counsel within the Office of the General Counsel of 
the Commission shall oversee compliance with subpart M of this part and 
5 CFR part 2635. When appropriate and subject to the authority of, and 
in consultation with, the Inspector General, the Ethics Counsel shall 
inquire into alleged violations of subparts C, F, and M of this part, 
and 5 CFR part 2635.
    (b) Subject to the oversight of the General Counsel or his or her 
delegate, the Ethics Counsel shall:
    (1) Receive and review allegations of misconduct by a Commission 
employee.
    (2) Refer matters involving management questions to Division 
Directors, Office Heads, District Administrators, or Regional Directors, 
and matters involving alleged or apparent employee misconduct to the 
Office of the Inspector General, except for matters involving alleged 
professional misconduct ultimately referable to state professional 
boards or societies.
    (3) Refer complaints that appear to involve a violation of Federal 
criminal statutes, and do not appear to be frivolous, to the Inspector 
General for referral to the Department of Justice under 28 U.S.C. 535.
    (4) Act as liaison with the Office of the Inspector General on 
matters that the Ethics Counsel has referred to that Office, and with 
state or local authorities on matters that, on occasion, the Ethics 
Counsel may refer to them.
    (5) Arrange for the review of proposed publications and prepared 
speeches under Sec. 200.735-4(e).
    (6) Provide advice, counseling, interpretations, and opinions with 
respect to subparts C, F, and M of this part, and 5 CFR part 2635.
    (7) Oversee investigations and refer findings of professional 
misconduct to state professional boards or societies.
    (8) Draft rules and regulations as necessary to implement the 
Commission's Ethics Program.

[60 FR 14626, Mar. 20, 1995]



Sec. 200.22  The Chief Accountant.

    The Chief Accountant of the Commission is the principal adviser to 
the Commission on, and is responsible to the Commission for, all 
accounting and auditing matters arising in the administration of the 
federal securities laws. The Chief Accountant oversees the accounting 
profession's standard-setting and self-regulatory organizations, 
develops or supervises the development of accounting and auditing rules, 
regulations, opinions and policy, and interprets Commission accounting 
policy and positions. The Chief Accountant is responsible for 
recommending the institution of administrative and disciplinary 
proceedings relating to the disqualification of accountants to practice 
before the Commission. The Chief Accountant supervises the procedures

[[Page 20]]

to be followed in the Commission's enforcement activities involving 
accounting and auditing issues and helps resolve differences on 
accounting issues between registrants and the Commission staff.

[60 FR 14626, Mar. 20, 1995]



Sec. 200.23a  Office of Economic Analysis.

    The Office of Economic Analysis is responsible for providing an 
objective economic perspective to understand and evaluate the economic 
dimension of the Commission's regulatory oversight. It performs economic 
analyses of proposed rule changes, current or proposed policies, and 
capital market developments and offers advice on the basis of these 
analyses. The Office also assists the Commission's enforcement effort by 
applying economic analysis and statistical tools to issues raised in 
enforcement cases. It reviews certifications and initial and final 
regulatory flexibility analyses prepared by the operating divisions 
under the Regulatory Flexibility Act.

[60 FR 14627, Mar. 20, 1995]



Sec. 200.23b  [Reserved]



Sec. 200.24  Office of the Comptroller.

    This Office, under the direction of the Associate Executive Director 
of the Office of the Comptroller, is responsible to the Executive 
Director, Chairman and Commission for the internal financial management 
and programming functions of the Securities and Exchange Commission. 
These functions include: budgeting, accounting, payroll and 
adminstrative audit. The Associate Executive Director of the Office of 
the Comptroller, and his or her designees, serve as liaison to the 
Commission before the Office of Management and Budget and Congressional 
Appropriations Committees on appropriation matters, and the Treasury 
Department and the General Accounting Office on financial and progamming 
matters.

(11 U.S.C. 901, 1109(a))

[49 FR 12685, Mar. 30, 1984, as amended at 60 FR 14627, Mar. 20, 1995]



Sec. 200.24a  Director of the Office of Consumer Affairs.

    The Director of the Office of Consumer Affairs is responsible to the 
Chairman for the Commission's investor education and consumer protection 
program. The program includes, but is not limited to:
    (a) Presenting seminars and instructional programs to educate 
investors about the securities markets and their rights as investors; 
preparing and distributing to the public materials describing the 
operations of the securities markets, prudent investor behavior, and the 
rights of investors in disputes they may have with individuals and 
entities regulated by the Commission; and increasing public knowledge of 
the functions of the Commission.
    (b) Implementing and administering a nationwide system for resolving 
investor complaints against individuals and entities regulated by the 
Commission by processing complaints received from individual investors 
and assuring that regulated individual and entities process and respond 
to such complaints.
    (c) Providing information to investors who inquire about individuals 
and entities regulated by the Commission, the operation of the 
securities markets, or the functions of the Commission.
    (d) Advising the Commission and its staff about problems frequently 
encountered by investors and possible solutions to them.
    (e) Transmitting to other offices and divisions of the Commission 
information provided by investors which concerns the responsibilities of 
these offices and divisions.
    (f) Providing for greater consumer input in Commission rulemaking 
proceedings.

[60 FR 14627, Mar. 20, 1995]



Sec. 200.25  Office of Administrative and Personnel Management.

    (a) The Office of Administrative and Personnel Management (OAPM) is 
responsible for providing a wide variety of programs for human 
resources, office services, and other administrative and management 
services for the Commission. The Associate Executive Director

[[Page 21]]

of the Office of Administrative and Personnel Management is responsible 
to the Executive Director and the Chairman of the Commission for 
developing and executing these programs.
    (b) OAPM develops, implements, and evaluates the Commission's 
programs for human resources and personnel management, such as position 
management and pay administration; recruitment, placement, and staffing; 
performance management and employee recognition; employee training and 
career development; employee and labor relations; personnel management 
evaluation; employee benefits and counseling; and the processing and 
maintenance of employee records. OAPM administers the Ethics Program, 
and helps the Office of the Executive Director manage the Senior 
Executive Service Program. It reviews requests, recommendations, and 
justifications for certain awards, recruitment and relocation bonuses, 
retention allowances, special salary rates, and other personnel 
compensation or benefit determinations for sufficiency and compliance 
with law, regulations, and Commission policy. OAPM develops and executes 
programs for office services, such as telecommunications; procurement 
and contracting; property management; contract and lease administration; 
space acquisition and management; management of official vehicles; 
safety programs; emergency preparedness plans; physical security; mail 
receipt and distribution; and publications, printing, and desktop 
publishing.
    (c) With respect to human resources management, the Associate 
Executive Director of the Office of Administrative and Personnel 
Management is the Commission's liaison with the Office of Personnel 
Management, other agencies, professional organizations, educational 
institutions, and private industry. He or she is also the Printing 
Liaison with the Joint Committee on Printing, and the Contract Officer.

[60 FR 14627, Mar. 20, 1995]



Sec. 200.26  [Reserved]



Sec. 200.26a  Office of Information Technology.

    The Office of Information Technology is responsible for the 
analysis, design programming, operation, and maintenance of all ADP 
systems; developing and implementing long-range ADP plans and programs; 
coordinating all ADP and systems analysis activities being considered or 
carried out by other divisions and offices, and furnishing such 
organizations with appropriate assistance and support; providing 
technical advice to the staff in connection with development of 
Commission rules and regulations having ADP implications; facilitating 
the Commission's surveillance of ADP in the securities industry; 
evaluating and recommending new information processing concepts and 
capabilities for application within the Commission; and, development of 
microcomputer and office automation capabilities and support within the 
Commission.

(15 U.S.C. 78d-1, 78d-2; 11 U.S.C. 901, 1109(a))

[43 FR 13377, Mar. 30, 1978, as amended at 49 FR 12685, Mar. 30, 1984; 
60 FR 14627, Mar. 20, 1995]



Sec. 200.27  The Regional Directors.

    Each Regional Director is responsible for executing the Commission's 
programs within his geographic region as set forth below, subject to 
review by the Director of the Division of Enforcement and policy 
direction and review by the other Division Directors, the General 
Counsel, and the Chief Accountant. The Regional Directors 
responsibilities include particularly the investigation of transactions 
in securities on national securities exchanges, in the over-the-counter 
market, and in distribution to the public; the examination of members of 
national securities exchanges and registered brokers and dealers, 
transfer agents, investment advisers and investment companies including 
the examination of reports filed under Sec. 240.17a-5 of this chapter; 
the examination and processing of filings under Secs. 230.251 to 230.264 
of this chapter issued pursuant to section 3(b) of the Securities Act of 
1933; the examination and processing of filings under Sec. 239.28 of 
this chapter and any related filings under the Trust Indenture Act of 
1939; the prosecution of injunctive actions in U.S. District Courts and 
administrative proceedings before Administrative Law Judges; the

[[Page 22]]

rendering of assistance to U.S. Attorneys in criminal cases; and the 
making of the Commission's facilities more readily available to the 
public in that region. In addition, the Northeast Regional Director is 
responsible for the Commission's participation in cases under chapters 9 
and 11 of the Bankruptcy Code in the Northeast Region, excepting 
Delaware, District of Columbia, Maryland, Virginia, and West Virginia; 
the Southeast Regional Director is responsible for such participation in 
the Southeast Region, as well as Delaware, District of Columbia, 
Maryland, Virginia, and West Virginia; the Midwest Regional Director is 
responsible for such participation in the Midwest and Central Regions, 
excepting Utah; and the Pacific Regional Director is responsible for 
such participation in the Pacific Region and Utah.

(15 U.S.C. 77u, 78d, 78d-1; 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. 13, 15(d), 23(a), 48 Stat. 894, 895, 90k; sec. 203(a), 49 Stat. 
704; secs. 3, 8, 49 Stat. 1377, 1379; secs. 4, 6, 10, 78 Stat. 569, 570-
574, 580; sec. 2, 82 Stat. 454; secs. 1, 2, 84 Stat. 1497; secs. 10, 18, 
89 Stat. 119, 155; sec. 308(b), 90 Stat. 57; (15 U.S.C. 77f, 77g, 77h, 
77j, 77s(a), 78m, 78o(d), 78w(a)); 11 U.S.C. 901, 1109(a))

[37 FR 23826, Nov. 9, 1972, as amended at 44 FR 21566, Apr. 10, 1979; 49 
FR 12685, Mar. 30, 1984; 50 FR 12240, Mar. 28, 1985; 59 FR 5943, Feb. 9, 
1994; 60 FR 14627, Mar. 20, 1995]



Sec. 200.27a  The District Administrators.

    Each District Administrator is responsible for executing the 
Commission's programs as set forth below, subject to review by the 
appropriate Regional Director and policy direction and review by the 
relevant Division Directors, the General Counsel, and the Chief 
Accountant in Washington, DC. The District Administrators' 
responsibilities include particularly the investigation of transactions 
in securities on national securities exchanges, in the over-the-counter 
market, and in distribution to the public; the examination of members of 
national securities exchanges and registered brokers and dealers, 
transfer agents, investment advisers and investment companies including 
the examination of reports filed under Sec. 240.17a-5 of this chapter; 
the prosecution of injunctive actions in U.S. District Courts and 
administrative proceedings before Administrative Law Judges; the 
rendering of assistance to U.S. Attorneys in criminal cases; and the 
making of the Commission's facilities more readily available to the 
public in that district.

[59 FR 5943, Feb. 9, 1994]



Sec. 200.28  Issuance of instructions.

    (a) Within the spheres of responsibilities heretofore set forth, 
Division and Office Heads, and all Regional Administrators may issue 
such definitive instructions as may be necessary pursuant to this 
section.
    (b) All existing procedures and authorizations not inconsistent with 
this section shall continue in effect until and unless modified by 
definitive instructions issued pursuant to this paragraph.



Sec. 200.29  Rules.

    The individual operating divisions shall have the initial 
responsibility for proposing amendments to existing rules or new rules 
under the statutory provisions within the jurisdiction of the particular 
division. Where any such proposals presents a legal problem or is a 
matter of first impression, or involves a matter of enforcement policy 
or questions involving statutes other than those administered by the 
Commission, or may have an effect on prior judicial precedent or pending 
litigation, submission of the proposal should be made to the Office of 
the General Counsel for an expression of opinion prior to presentation 
of the matter to the Commission.



Sec. 200.30-1  Delegation of authority to Director of Division of Corporation Finance.

    Pursuant to the provisions of Pub. L., No. 87-592, 76 Stat. 394 (15 
U.S.C. 78d-1, 78d-2), the Securities and Exchange Commission hereby 
delegates, until the Commission orders otherwise, the following 
functions to the Director of the Division of Corporation Finance, to be 
performed by him or under his direction by such person or persons as may 
be designated from time to time by the Chairman of the Commission:
    (a) With respect to registration of securities pursuant to the 
Securities Act

[[Page 23]]

of 1933 (15 U.S.C. 77a et seq.), and Regulation C thereunder 
(Sec. 230.400 et seq. of this chapter):
    (1) To determine the effective dates of amendments to registration 
statements filed pursuant to section 8(c) of the Act (15 U.S.C. 77h(c)).
    (2) To consent to the withdrawal of registration statements or 
amendments or exhibits thereto, pursuant to Rule 477 (Sec. 230.477 of 
this chapter), and to issue orders declaring registration statements 
abandoned, pursuant to Rule 479 (Sec. 230.479 of this chapter).
    (3) To grant applications for confidential treatment of contract 
provisions pursuant to Rule 406 (Sec. 230.406 of this chapter) under the 
Act; to issue orders scheduling hearings on such applications and to 
deny any such application as to which the applicant waives his right to 
a hearing, provided such applicant is advised of his right to have such 
denial reviewed by the Commission.
    (4) To accelerate the use or publication of any summary prospectus 
filed with the Commission pursuant to section 10(b) of the Act (15 
U.S.C. 77j(b)) and Rule 431(g) (Sec. 230.431(g) of this chapter) 
thereunder.
    (5) To take the following action pursuant to section 8(a) of the Act 
(15 U.S.C. 77h(a)):
    (i) To determine registration statements to be effective within 
shorter periods of time than 20 days after the filing thereof;
    (ii) To consent to the filing of amendments prior to the effective 
dates of registration statements as part thereof, or to determine that 
amendments filed prior to the effective dates of registration statements 
have been filed pursuant to orders of the Commission, so as to be 
treated as parts of the registration statements for the purpose of 
section 8(a) of the Act (15 U.S.C. 77h(a));
    (iii) To determine to be effective applications for qualification of 
trust indentures filed with registration statements.
    (6) Pursuant to instructions as to financial statements contained in 
forms adopted under the Act:
    (i) To permit the omission of one or more financial statements 
therein required or the filing in substitution therefor of appropriate 
statements of comparable character, or
    (ii) To require the filing of other financial statements in addition 
to, or in substitution for, the statements therein required.
    (7) Acting pursuant to section 4(3) of the Act (15 U.S.C. 77d(3)) or 
Rule 174 thereunder (Sec. 230.174 of this chapter), to reduce the 40-day 
period or the 90-day period with respect to transactions referred to in 
section 4(3)(b) of the Act (15 U.S.C. 77d(3)(B)).
    (8) To act on applications to dispense with any written consents of 
an expert pursuant to Rule 437 (Sec. 230.437 of this chapter).
    (b) With respect to the Securities Act of 1933 (15 U.S.C. 77a et 
seq.) and Regulation A thereunder (Sec. 230.251 et seq. of this 
chapter):
    (1) to authorize the granting of applications under Rule 262 
(Sec. 230.262 of this chapter) upon a showing of good cause that it is 
not necessary under the circumstances that an exemption under Regulation 
A be denied;
    (2) to authorize the issuance of orders qualifying offering 
statements pursuant to Rule 252(g) (Sec. 230.252(g) of this chapter); 
and
    (3) to issue orders declaring offering statements withdrawn or 
abandoned pursuant to Rule 259 (Sec. 230.259 of this chapter).
    (c) With respect to the Securities Act of 1933 (15 U.S.C. 77a et 
seq.) and Regulation D thereunder (Sec. 230.501 et seq. of this 
chapter), to authorize the granting of applications under Rule 
505(b)(2)(iii)(C), (Sec. 230.505(b)(2)(iii)(C) of this chapter) and 
under Rule 507(b) (Sec. 230.507(b) of this chapter) upon the showing of 
good cause that it is not necessary under the circumstances that the 
exemption under Regulation D be denied.
    (d) With respect to the Trust Indenture Act of 1939 (15 U.S.C. 77aaa 
et seq.):
    (1) To determine to be effective prior to the 20th day after filing 
thereof applications for qualification of indentures filed on Form T-3 
(Sec. 269.3 of this chapter) pursuant to section 307 of the Act (15 
U.S.C. 77ggg), and Rule 7a-1 thereunder (Sec. 260.7a-1 of this chapter);
    (2) To authorize the issuance of orders exempting certain securities 
from the Act under sections 304(c) and (d)

[[Page 24]]

thereof (15 U.S.C. 77ddd(c) and 77ddd(d)) and Sec. 260.4c-1 and 
Sec. 260.4d-7 of this chapter.
    (3) In cases in which opportunity for hearing is waived, to 
authorize the issuance of orders determining that a trusteeship under an 
indenture to be qualified and another indenture is not so likely to 
involve a material conflict of interest as to make it necessary to 
disqualify the trustee pursuant to section 310(b)(1)(ii) of the Act (15 
U.S.C. 77jjj(b)(1)(ii)) and Rule 10b-2 thereunder (Sec. 260.10b-2 of 
this chapter).
    (4) To authorize the issuance of orders exempting any person, 
registration statement, indenture, security or transaction, or any class 
or classes of persons, registration statements, indentures, securities, 
or transactions from the requirements of one or more provisions of the 
Act pursuant to section 304(d) of the Act (15 U.S.C. 77ddd(d)) and rule 
4d-7 thereunder (17 CFR 260.4d-7 of this chapter).
    (5) To determine to be effective prior to the 10th day after filing 
thereof an application for determining the eligibility under section 
310(a) of the Act of a person designated as trustee for delayed 
offerings of debt securities under the Securities Act pursuant to 
section 305(b)(2) of the Act and rule 5b-1 [17 CFR 260.5b-1 of this 
chapter] thereunder.
    (6) To authorize the issuance of an order permitting a foreign 
person to act as sole trustee under qualified indentures under section 
310(a) of the Act (15 U.S.C. 77jjj(a)) and Sec. 260.10a-1 through 
Sec. 260.10a-5 of this chapter.
    (7) To issue notices with respect to applications for, and authorize 
the issuance of orders granting, a stay of a trustee's duty to resign 
pursuant to section 310(b) of the Act and Rule 10b-4 [17 CFR 260.10b-4 
of this chapter] thereunder.
    (e) With respect to the Securities Exchange Act of 1934 (15 U.S.C. 
78a et seq.):
    (1) To determine to be effective applications for registration of 
securities on a national securities exchange prior to 30 days after 
receipt of a certification pursuant to section 12(d) of the Act (15 
U.S.C. 78l(d));
    (2) Pursuant to instructions as to financial statements contained in 
forms adopted under the Act:
    (i) To extend the time for filing or to permit the ommission of one 
or more financial statements therein required or the filing in 
substitution therefor of appropriate statements of comparable character.
    (ii) To require the filing of other financial statements in addition 
to, or in substitution for, the statements therein required;
    (3)(i) To grant and deny applications for confidential treatment 
filed pursuant to section 24(b) of the Act (15 U.S.C. 78x(b)) and Rule 
24b-2 thereunder (Sec. 240.24b-2 of this chapter);
    (ii) To revoke a grant of any such application for confidential 
treatment.
    (4) To authorize the use of forms of proxies, proxy statements, or 
other soliciting material within periods of time less than that 
prescribed in Secs. 240.14a-6, 240.14a-8(d), and 240.14a-11 of this 
chapter; to authorize the filing of information statements within 
periods of time less than that prescribed in Sec. 240.14c-5a of this 
chapter; and to authorize the filing of information under Sec. 240.14f-1 
of this chapter within periods of time less than that prescribed 
therein.
    (5) To grant or deny applications filed pursuant to section 12(g)(1) 
of the Act (15 U.S.C. 78l(g)(1)) for extensions of time within which to 
file registration statements pursuant to that section, provided the 
applicant is advised of his right to have any such denial reviewed by 
the Commission.
    (6) To accelerate at the request of the issuer the effective date of 
registration statements filed pursuant to section 12(g) of the Act (15 
U.S.C. 78l(g)).
    (7) To issue notices of applications for exemptions and to grant 
exemptions under section 12(h) of the Act (15 U.S.C. 78l(h)).
    (8) At the request of the issuer to accelerate the termination of 
registration of any class of equity securities as provided in section 
12(g)(4) of the Act (15 U.S.C. 78l(g)(4)) or as provided in 
Sec. 240.12g-4(a) of this chapter.
    (9) Upon receipt of a notification from the Secretary of the 
Treasury designating a security for exemption pursuant to section 
3(a)(12), to issue

[[Page 25]]

public releases announcing such designation.
    (10) To issue public releases listing those foreign issuers which 
appear to be current in submitting the information specified in Rule 
12g3-2(b) (Sec. 240.12g3-2(b)).
    (11) To grant exemptions from Rule 14d-10 (Sec. 240.14d-10 of this 
chapter) pursuant to Rule 14d-10(e) (Sec. 240.14d-10(e) of this chapter.
    (12) To grant an exemption from Sec. 240.14b-2(b) or Sec. 240.14b-
2(c), or both, of this chapter.
    (13) To determine with respect to a tender or exchange offer 
otherwise eligible to be made pursuant to rule 14d-1(b) (Sec. 240.14d-
1(b) of this chapter) whether, in light of any exemptive order granted 
by a Canadian federal, provincial or territorial regulatory authority, 
application of certain or all of the provisions of sections 14(d)(1) 
through 14(d)(7) of the Exchange Act, Regulation 14D and Schedules 14D-1 
and 14D-9 thereunder, and rule 14e-1 of Regulation 14E, to such offer is 
necessary or appropriate in the public interest.
    (14) To administer the provisions of Sec. 240.24c-1 of this chapter; 
provided that access to nonpublic information as defined in such section 
shall be provided only with the concurrence of the head of the 
Commission division or office responsible for such information or the 
files containing such information.
    (15) To administer the provisions of Section 24(d) of the Act (15 
U.S.C. 78x(d)).
    (16) To grant requests for exemptions from:
    (i) Tender offer provisions of sections 13(e) and 14(d)(1) through 
14(d)(7) of the Act (15 U.S.C. 78m(e) and 78n(d)(1) through 78n(d)(7)), 
Rule 13e-3 (Sec. 240.13e-3 of this chapter) and Rule 13e-4 
(Sec. 240.13e-4 of this chapter), Regulation 14D (Secs. 240.14d-1 
through 240.14d-11 of this chapter) and Schedules 13E-3, TO, and 14D-9 
(Secs. 240.13e-100, 240.14d-100 and 240.14d-101 of this chapter) 
thereunder, pursuant to Sections 14(d)(5), 14(d)(8)(C) and 36(a) of the 
Act (15 U.S.C. 78n(d)(5), 78(d)(8)(C), and 78mm(a)); and
    (ii) The tender offer provisions of Rules 14e-1, 14e-2 and 14e-5 of 
Regulation 14E (Secs. 240.14e-1, 240.14e-2 and 240.14e-5 of this 
chapter) pursuant to section 36(a) of the Act (15 U.S.C. 78mm(a)).
    (f) Notwithstanding anything in the foregoing:
    (1) Matters arising under the Investment Company Act of 1940 (15 
U.S.C. 80a-1 et seq.), the Securities Act of 1933 (15 U.S.C. 77a et 
seq.), the Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.) and 
the Trust Indenture Act of 1939 (15 U.S.C. 77aaa et seq.) pertaining to 
investment companies registered under the Investment Company Act of 1940 
are not within the scope of the functions delegated to the Director of 
the Division of Corporation Finance, except those arising under section 
30(f) of the Investment Company Act of 1940 (15 U.S.C. 80a-29(f));
    (2) In any case in which the Director of the Division of Corporation 
Finance believes it appropriate, he may submit the matter to the 
Commission.
    (g) With respect to the Securities Act of 1933 (15 U.S.C. 77a et 
seq.) and Rule 701 thereunder (Sec. 230.701 of this chapter), to 
authorize the granting of applications under Rule 703(b) 
(Sec. 230.703(b) of this chapter) upon a showing of good cause that it 
is not necessary under the circumstances that an exemption under Rule 
701 be denied.
    (h) With respect to the Securities Act of 1933 (15 U.S.C. 77a et 
seq.) and Rule 144A thereunder (Sec. 230.144A of this chapter), taking 
into account then-existing market practices, to designate any securities 
or classes of securities to be securities that will not be deemed ``of 
the same class as securities listed on a national securities exchange or 
quoted in a U.S. automated inter-dealer quotation system'' within the 
meaning of Rule 144A(d)(3)(i) (Sec. 230.144A(d)(3)(i) of this chapter).
    (i) With respect to the Securities Act of 1933 (15 U.S.C. 77a et 
seq.) and Regulation S thereunder (Sec. 230.901 et seq. of this 
chapter), and in consultation with the Director of the Division of 
Market Regulation, to designate any foreign securities exchange or non-
exchange market as a ``designated offshore securities market'' within 
the meaning of Rule 902(a) (Sec. 230.902(a) of this chapter).
    (j) With respect to the Securities Act of 1933 (15 U.S.C. 77a et 
seq.), the Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.), the 
Trust Indenture Act of 1939

[[Page 26]]

(15 U.S.C. 77aaa et seq.), and Regulation S-T thereunder (part 232 of 
this chapter), to grant or deny a request submitted pursuant to Rule 
13(b) of Regulation S-T (Sec. 232.13(b) of this chapter) to adjust the 
filing date of an electronic filing.
    (k) With respect to the Securities Act of 1933 (15 U.S.C. 77a et 
seq.), the Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.), the 
Trust Indenture Act of 1939 (15 U.S.C. 77aaa et seq.), and Regulation S-
T thereunder (part 232 of this chapter), to set the terms of, and grant 
or deny as appropriate, continuing hardship exemptions, pursuant to Rule 
202 of Regulation S-T, (Sec. 232.202 of this chapter), from the 
electronic submission requirements of Regulation S-T (part 232 of this 
chapter).

[41 FR 29375, July 16, 1976]

    Editorial Note: For Federal Register citations affecting 
Sec. 200.30-1 see the List of CFR Sections Affected, which appears in 
the Finding Aids section of the printed volume and on GPO Access.



Sec. 200.30-3  Delegation of authority to Director of Division of Market Regulation.

    Pursuant to the provisions of Pub. L. 87-592, 76 Stat. 394, 15 
U.S.C. 78d-1, 78d-2), the Securities and Exchange Commission hereby 
delegates, until the Commission orders otherwise, the following 
functions to the Director of the Division of Market Regulation to be 
performed by him or under his direction by such person or persons as may 
be designated from time to time by the Chairman of the Commission:
    (a) With respect to the Securities Exchange Act of 1934 (15 U.S.C. 
78a et seq.):
    (1) To approve the withdrawal or striking from listing and 
registration of securities registered on any national securities 
exchange pursuant to section 12(d) of the Act (15 U.S.C. 78l(d)) and 
Rules 12d2-1 and 12d2-2 thereunder (Secs. 240.12d2-1 and 240.12d2-2 of 
this chapter);
    (2) To extend unlisted trading privileges and to deny applications 
for unlisted trading privileges by national securities exchanges 
pursuant to section 12(f)(2) of the Act, 15 U.S.C. 78l(f)(2), and Rule 
12f-1 thereunder, 17 CFR 240.12f-1, provided that any applicant exchange 
denied unlisted trading privileges is advised of its right to have such 
denial reviewed by the Commission.
    (3) Pursuant to section 15(b) of the Act (15 U.S.C. 78o(b)):
    (i) To authorize the issuance of orders granting registration of 
brokers or dealers within forty-five days of the filing of an 
application for registration as a broker or dealer (or within such 
longer period as to which the applicant consents);
    (ii) To authorize the issuance of orders canceling registrations of 
brokers or dealers, or pending applications for registration, if such 
brokers or dealers or applicants for registration are no longer in 
existence or have ceased to do business as brokers or dealers;
    (4) Pursuant to Rule 19h-1 (Sec. 240.19h-1 of this chapter):
    (i) To grant applications with respect to membership in, association 
with a member of, or participation in, a self-regulatory organization 
and for other relief as to persons who are subject to an applicable 
disqualification where such relationships or other relief have been 
approved or recommended by a self-regulatory organization;
    (ii) To extend the time for Commission consideration of notices for 
admission to membership or participation in a self-regulatory 
organization or association with a member of persons subject to a 
statutory disqualification pursuant to paragraph (a)(7) of that rule.
    (5) Pursuant to Rule 17a-5(1)(3) (Sec. 240.17a-5(1)(3) of this 
chapter), to consider applications, by brokers and dealers for 
exemptions from, and extension of time within which to file, reports 
required by Rule 17a-5 (Sec. 240.17a-5 of this chapter), and to grant, 
and to authorize the issuance of orders denying, such applications 
provided such applicant is advised of his right to have such denial 
reviewed by the Commission.
    (6) Pursuant to Rules 14e-4(c), 14e-5(d), and 15c2-11(h) 
(Secs. 240.14e-4(c), 240.14e-5(d), and 240.15c2-11(h) of this chapter), 
and Rules 101(d), 102(e), 104(j), and 105(c) of Regulation M 
(Secs. 242.101(d), 242.102(e), 242.104(j), and 242.105(c) of this 
chapter), to grant requests for exemptions from Rules 14e-4, 14e-5, and 
15c2-11 (Secs. 240.14e-4, 240.14e-5, and 240.15c2-11 of this chapter), 
and Rules

[[Page 27]]

101, 102, 104, and 105 of Regulation M (Secs. 242.101, 242.102, 242.104, 
and 242.105 of this chapter).
    (7) Pursuant to Rule 15c3-1 (Sec. 240.15c3-1 of this chapter):
    (i) To approve lesser equity requirements in specialist or market 
maker accounts pursuant to Rule 15c3-1(a)(6)(iii)(E) (Sec. 240.15c3-
1(a)(6)(iii)(E) of this chapter);
    (ii) To grant exemptions from Rule 15c3-1 (Sec. 240.15c3-1 of this 
chapter) pursuant to Rule 15c3-1(b)(3) (Sec. 240.15c3-1(b)(3) of this 
chapter);
    (iii) To grant temporary exemptions upon specified terms and 
conditions from the debt equity requirements of Rule 15c3-
1(d)(Sec. 240.15c3-1(d) of this chapter);
    (iv) To approve a change in election of the alternative capital 
requirement pursuant to Rule 15c3-1(f)(1) (i) and (ii) (Sec. 240.15c3-
1(f)(1) (i) and (ii) of this chapter); and
    (v) To review applications of OTC derivatives dealers filed pursuant 
to Appendix F of Sec. 240.15c3-1f of this chapter, and to grant or deny 
such applications in full or in part.
    (8) Pursuant to Rule 17a-10(d) (Sec. 240.17a-10(d) of this chapter), 
to consider applications by broker-dealers for extensions of time in 
which to file reports required by Rule 17a-10(Sec. 240.17a-10 of this 
chapter), and to grant, and to authorize the issuance of orders denying, 
such applications provided such applicant is advised of his right to 
have such denial reviewed by the Commission. Any extension granted shall 
not be for more than 150 days after the close of the calendar year for 
which the report on Form X-17A-10 (Sec. 249.618 of this chapter) is 
made.
    (9) Pursuant to Rule 10b-17(b)(2) (Sec. 240.10b-17(b)(2) of this 
chapter), to review applications of various issuers for exemption from 
the notice requirements of Rule 10b-17 (Sec. 240.10b-17 of this chapter) 
and to grant or deny such applications, with authority to issue orders 
granting and denying same, provided each applicant is advised of his 
right to have a denial reviewed by the Commission.
    (10) Pursuant to Rule 15c3-3 (Sec. 240.15c3-3 of this chapter) to 
find and designate as control locations for purposes of Rule 15c3-
3(c)(7) (Sec. 240.15c3-3(c)(7) of this chapter) certain broker-dealer 
accounts which are adequate for the protection of customer securities.
    (11) [Reserved]
    (12) Pursuant to Rule 19b-4 (Sec. 240.19b-4) of this chapter, to 
publish notices of proposed rule changes filed by self-regulatory 
organizations and to approve such proposed rule changes.
    (13) Pursuant to section 15B(a) of the Act [15 U.S.C. 78o-4(a)], to 
authorize the issuance of orders granting registration of municipal 
securities dealers within forty-five days of the filing of an 
application for registration as a municipal securities dealer (or within 
such longer period as to which the applicant consents).
    (14) Pursuant to section 17A(c)(2) of the Act (15 U.S.C. 78q-
1(c)(2)), to authorize the issuance of orders accelerating registration 
of transfer agents for which the Commission is the appropriate 
regulatory agency before the expiration of thirty days following the 
dates on which applications for registration as a transfer agent are 
filed.
    (15) Pursuant to Rule 10a-1(f) [Sec. 240.10a-1(f)] to grant requests 
for exemptions from Rule 10a-1;
    (16) Pursuant to sections 17A(b)(1), 17A(b)(2) and 19(a) of the Act 
(15 U.S.C. 78q-1(b)(1), 78q-1(b)(2) and 78s(a)), to publish notice of 
the filing of applications for registration and for exemption from 
registration as a clearing agency.
    (17) Pursuant to Rule 17f-2 (Sec. 240.17f-2 of this chapter).
    (i) To disapprove a ``Notice Pursuant to Rule 17f-2'' pursuant to 
Rule 17f-2(e) (Sec. 240.17f-2(e) of this chapter).
    (ii) To grant exemptions upon specified terms, conditions and 
periods, for classes of persons subject to Rule 17f-2 pursuant to Rule 
17f-2(g) (Sec. 240.17f-2(g) of this chapter).
    (iii) To approve amendments to plan of a registered national 
securities exchange or a national securities association submitted 
pursuant to Rule 17f-2(c) (Sec. 240.17f-2(c) of this chapter).
    (18) Pursuant to Rule 17d-1 (Sec. 240.17d-1 of this chapter) to 
designate one self-regulatory organization responsible for the 
examination of brokers and dealers which are members of more than one 
such organization to insure compliance

[[Page 28]]

with applicable financial responsibility rules.
    (19)(i) To grant and deny applications for confidential treatment 
filed pursuant to section 24(b) of the Act (15 U.S.C. 78x(b)) and Rule 
24b-2 thereunder (240.24b-2 of this chapter);
    (ii) To revoke a grant of confidential treatment for any such 
application.
    (20) Pursuant to sections 8(c) and 15(c)(2) of the Act (15 U.S.C. 
78h(c) and 78o(2)) and paragraphs (g) of Rules 8c-1 and 15c2-1 
thereunder, to make findings that the agreements, safeguards, and 
provisions of registered clearing agencies are adequate for the 
protection of investors.
    (21) Under section 17A(c)(4)(B) of the Act (15 U.S.C. 78q-
1(c)(4)(B)), to set terms and conditions upon which transfer agents 
registered with the Commission may withdraw from registration as a 
transfer agent by filing a written notice of withdrawal.
    (22) Under section 17A(c)(4)(B) of the Act (15 U.S.C. 78q-
1(c)(4)(B)), to authorize the issuance of orders canceling registrations 
of transfer agents registered with the Commission or denying 
applications for registration as a transfer agent with the Commission, 
if such transfer agents are no longer in existence or are not engaged in 
business as transfer agents.
    (23) Pursuant to section 17(b) of the Act (15 U.S.C. 78q(b)), prior 
to any examination of a registered clearing agency, registered transfer 
agent, or registered municipal securities dealer whose appropriate 
regulatory agency is not the Commission, to notify and consult with the 
appropriate regulatory agency for such clearing agency, transfer agent, 
or municipal securities dealer.
    (24) Pursuant to section 17(c)(3) of the Act, 15 U.S.C. 78q(c)(3), 
in regard to clearing agencies, transfer agents and municipal securities 
dealers for which the Commission is not the appropriate regulatory 
agency, (i) to notify the appropriate regulatory agency of any 
examination conducted by the Commission of any such clearing agency, 
transfer agent, or municipal securities dealer; (ii) to request from the 
appropriate regulatory agency a copy of the report of any examination of 
any such clearing agency, transfer agent, or municipal securities dealer 
conducted by such appropriate regulatory agency and any data supplied to 
it in connection with such examination; and (iii) to furnish to the 
appropriate regulatory agency on request a copy of the report of any 
examination of any such clearing agency, transfer agent, or municipal 
securities dealer conducted by the Commission and any data supplied to 
it in connection with such examination.
    (25) Pursuant to Rule 17f-1 (Sec. 240.17f-1 of this chapter), to 
designate persons not subject to Sec. 240.17f-1 as reporting 
institutions upon specified terms, conditions, and time periods.
    (26) [Reserved]
    (27) To approve amendments to the joint industry plan governing the 
consolidated transaction reporting declared effective by the Commission 
pursuant to Rule 11Aa(3-1) (Sec. 240.11Aa3-1 of this chapter) or its 
predecessor, Rule 17a-15, and to grant exemptions from Rule 11Aa3-1 
pursuant to Rule 11Aa3-1(g) (Sec. 240.11Aaa3-1(g) of this chapter) to 
exchanges trading listed securities that are designated as national 
market system securities until such times as a Joint Reporting Plan for 
such securities is filed and approved by the Commission.
    (28) To grant exemptions from Rule 11Ac1-1 (``Rule'') 
(Sec. 240.11Ac1-1), pursuant to paragraph (e) of the rule.
    (29) To issue supplemental orders modifying the terms upon which 
self-regulatory organizations are authorized to act jointly in planning, 
developing, operating or regulating facilities of a national market 
system in accordance with the terms of amendments to plans which plans 
have been previously approved by the Commission under section 
11A(a)(3)(B) of the Securities Exchange Act of 1934.
    (30) Pursuant to section 17(a) of the Act, 15 U.S.C. 78q, to approve 
amendments to the plans which are consistent with the reporting 
structure of Rules 17a-5(a)(4) and 17a-10(b) filed by self-regulatory 
organizations pursuant to Rules 17a-5(a)(4) and 17a-10(b).
    (31) Pursuant to section 19(b)(2) of the Act, 15 U.S.C. 78s(b)(2), 
to extend for a period not exceeding 90 days from the date of 
publication of notice of the filing of a proposed rule change pursuant 
to section 19(b)(1) of the Act, 15

[[Page 29]]

U.S.C. 78s(b)(1), the period during which the Commission must by order 
approve the proposed rule change or institute proceedings to determine 
whether the proposed rule change should be disapproved.
    (32) Under Sec. 240.10b-10(f) of this chapter, to grant exemptions 
from Sec. 240.10b-10 of this chapter.
    (33) Pursuant to Rule 17a-6 (Sec. 240.17a-6 of this chapter) to 
approve record destruction plans and amendments thereto filed by a 
national securities exchange or a national securities association.
    (34) Pursuant to Rule 17d-2 (Sec. 240.17d-2 of this chapter) to 
publish notice of plans and plan amendments filed pursuant to Rule 17d-2 
and to approve such plans and plan amendments.
    (35) Under Sec. 240.13e-4(h)(8) of this chapter:
    (i) To grant exemptions from Sec. 240.13e-4 of this chapter; and
    (ii) To determine with respect to a tender or exchange offer 
otherwise eligible to be made pursuant to rule 13e-4(g) (Sec. 240.13e-
4(g) of this chapter) whether, in light of any exemptive order granted 
by a Canadian federal, provincial or territorial regulatory authority, 
application of certain or all of the provisions of section 13(e)(1) and 
rule 13e-4 and Schedule 13E-4 thereunder to such offer is necessary or 
appropriate in the public interest.
    (36) To grant exemptions from Rule 11Ac1-2 (Sec. 240.11Ac1-2 of this 
chapter), pursuant to Rule 11Ac1-2(g) (Sec. 240.11Ac1-2(g) of this 
chapter).
    (37) Pursuant to Rule 11Aa2-1, 17 CFR 240.11Aa2-1, to publish notice 
of the filing of a designation plan with respect to national market 
system securities, or any proposed amendment thereto, and to approve 
such plan or amendment.
    (38) To disclose:
    (i) To the Comptroller of the Currency, the Board of Governors of 
the Federal Reserve System, the Federal Deposit Insurance Corporation, 
and the state banking authorities, information and documents deemed 
confidential regarding registered clearing agencies and registered 
transfer agents; and
    (ii) To the Department of Treasury, information and documents deemed 
confidential regarding possible laundering of money through or by 
brokers or dealers, including compliance by brokers or dealers with the 
Currency and Foreign Transactions Reporting Act of 1970, as amended.
    (39) Under Sec. 240.9b-1 of this chapter:
    (i) To enable distribution of an options disclosure document or 
amendment to an options disclosure document to the public prior to the 
time required in the Rule or to lengthen the period before distribution 
can be made;
    (ii) To require refiling of an amendment to an options disclosure 
document pursuant to the procedure set forth in Sec. 240.9b-1(b)(2)(i) 
of this chapter.
    (40) Pursuant to section 15B(b)(2)(B) of the Act, 15 U.S.C., 78o-
4(b), to review and, where appropriate, approve the selection by the 
Municipal Securities Rulemaking Board (``Board'') of public 
representatives to serve on the Board.
    (41) Pursuant to Rule 6a-2(c) (Sec. 240.6a-2 of this chapter) to 
exempt registered national securities exchanges from the filing 
requirements imposed by Rule 6a-2 with respect to certain affiliates and 
subsidiaries of the exchange.
    (42) Under Sec. 240.11Aa3-2(f) of this chapter, to grant or deny 
exemptions from Sec. 240.11Aa3-2 of this chapter.
    (43) To grant or deny exemptions from Rule 17Ad-14 (Sec. 240.17Ad-14 
of this chapter), pursuant to Rule 17Ad-14(d) (Sec. 240.17Ad-14(d) of 
this chapter). (Pub. L. 87-592, 76 Stat. 394, 15 U.S.C 78d-1, 78d-2).
    (44) To review, publish notice of, and where appropriate, approve 
plans, and amendments to plans, submitted by self-regulatory 
organizations pursuant to Rule 19d-1(c) under the Act (Sec. 240.19d-
1(c)).
    (45) To grant exemptions from Rule 3b-9 under the Act. (Sec. 240.3b-
9(c) of this chapter).
    (46) Pursuant to section 15(b)(9) of the Act, 15 U.S.C. 78o(b)(9) to 
review and, where appropriate, grant exemptions from the requirement of 
section 15(b)(8) of the Act, 15 U.S.C. 78o(b)(8).
    (47) Pursuant to section 15(a)(2) of the Act, 15 U.S.C. 78o(a)(2), 
to review and, either unconditionally or on specified terms and 
conditions, grant exemptions from the broker-dealer registration 
requirements of section 15(a)(1) of the Act, 15 U.S.C. 78o(a)(1), to

[[Page 30]]

government securities brokers or government securities dealers that have 
registered with the Commission under section 15(a)(2) of the Act, 15 
U.S.C. 78o-5(a)(2), solely with respect to effecting any transactions 
in, or inducing or attempting to induce the purchase or sale of, any 
security principally backed by a guaranty of the United States.
    (48) Pursuant to paragraph (d) of Rule 15c2-12 (17 CFR 15c2-12), to 
grant or deny exemptions, either unconditionally or on specified terms 
and conditions, from Rule 15c2-12.
    (49) Pursuant to section 11A(b) of the Act and Rule 11Ab2-1 
thereunder (17 CFR 11Ab2-1), to publish notice of and, by order, grant 
under section 11A(b) of the Act and Rule 11Ab2-1 thereunder: 
Applications for registration as a securities information processor; and 
exemptions from that section and any rules or regulations promulgated 
thereunder, either conditionally or unconditionally.
    (50) Pursuant to sections 17A(b) and 19(a) of the Act (15 U.S.C. 
78q-1(b) and 78s(a)):
    (i) To authorize the issuance of orders granting an extension to a 
temporary clearing agency registration, for up to two years or such 
longer period as the clearing agency consents.
    (ii) To authorize the issuance of orders granting the withdrawal of 
an application to become a registered clearing agency, at any time prior 
to final determination of such application by the Commission, upon 
submission of a request for such withdrawal by applicant.
    (51) Pursuant to paragraph (a)(4) of Sec. 240.9b-1 of this chapter, 
to authorize the issuance of orders designating securities as 
``standardized options.''
    (52) Pursuant to Rules 17h-1T and 17h-2T of the Act (Secs. 240.17h-
1T and 240.17h-2T of this chapter):
    (i) To designate certain broker-dealers as Reporting Brokers or 
Dealers; or and
    (ii) To grant or deny an exemption, conditionally or 
unconditionally, to a broker or dealer pursuant to section 17(h) of the 
Act.
    (53) To administer the provisions of Sec. 240.24c-1 of this chapter; 
provided that access to nonpublic information as defined in such section 
shall be provided only with the concurrence of the head of the 
Commission division or office responsible for such information or the 
files containing such information.
    (54) To administer the provisions of Section 24(d) of the Act (15 
U.S.C. 78x(d)).
    (55) Pursuant to Sec. 240.15c6-1 of this chapter, taking into 
account then existing market practices, to exempt contracts for the 
purchase or sale of any securities from the requirements of 
Sec. 240.15c6-1(a) of this chapter.
    (56) Pursuant to Sec. 270.17Ad-16 of this chapter, to designate by 
order the appropriate qualified registered securities depository.
    (57) Pursuant to Section 19(b)(2)(B) of the Act, 15 U.S.C. 
78s(b)(2)(B), to institute proceedings to determine whether a proposed 
rule change of a self-regulatory organization should be disapproved.
    (58) Pursuant to Section 19(b)(3)(C) of the Act, 15 U.S.C. 
78s(b)(3)(C), to abrogate a change in the rules of a self-regulatory 
organization and require that it be refiled in accordance with Section 
19(b)(1), 15 U.S.C. 78s(b)(1), and reviewed in accordance with Section 
19(b)(2), 15 U.S.C. 78s(b)(2), of the Act.
    (59) Pursuant to paragraph (e)(6)(iii) of Rule 19b-4 (Sec. 240.19b-4 
of this chapter), to reduce the period before which a proposed rule 
change can become operative, and to reduce the period between an SRO 
submission of a filing and a pre-filing notification.
    (60) To grant exemptions from Rule 17a-23 (Sec. 240.17a-23 of this 
chapter), pursuant to Rule 17a-23(i) (Sec. 240.17a-23(i) of this 
chapter).
    (61) To grant exemptions from Rule 11Ac1-4 (``Rule'') 
(Sec. 240.11Ac1-4), pursuant to paragraph (d) of the rule.
    (62) From January 2, 1997 through February 17, 1997, to modify for a 
period not to exceed 60 days, the effective date or the compliance date 
of Rule 11Ac1-1 (Sec. 240.11Ac1-1) or Rule 11Ac1-4 (Sec. 240.11Ac1-4), 
or amendments to Rule 11Ac1-1 or Rule 11Ac1-4, with respect to any party 
affected by such rules.
    (63) Pursuant to section 36 of the Act (15 U.S.C. 78mm) to review 
and, either unconditionally or on specified terms

[[Page 31]]

and conditions, grant or deny exemptions from section 11(d)(1) of the 
Act (15 U.S.C. 78k(d)(1)).
    (64) Pursuant to Sec. 240.15a-1(b)(1) of this chapter, to issue 
orders identifying other permissible securities activities in which an 
OTC derivatives dealer may engage.
    (65) Pursuant to Sec. 240.15a-1(b)(2) of this chapter, to issue 
orders determining that a class of fungible instruments that are 
standardized as to their material economic terms is within the scope of 
eligible OTC derivative instrument.
    (66) Pursuant to Sec. 240.17a-12 of this chapter:
    (i) To authorize the issuance of orders requiring OTC derivatives 
dealers to file, pursuant to Sec. 240.17a-12(a)(ii) of this chapter, 
monthly, or at such times as shall be specified, Part IIB of Form X-17A-
5 (Sec. 249.617 of this chapter) and such other financial and 
operational information as shall be specified.
    (ii) Pursuant to Sec. 240.17a-12(n) of this chapter, to consider 
applications by OTC derivatives dealers for exemptions from, and 
extensions of time within which to file, reports required by 
Sec. 240.17a-12 of this chapter, and to grant or deny such applications.
    (67) To issue orders under Rules 15b3-1(c)(4), 15b6-1(e), 15Ba2-
2(e)(4), 15Bc3-1(e), 15Ca2-1(c)(4), and 15Cc1-1(d) (17 CFR 240.15b3-
1(c)(4), 240.15b6-1(e), 240.15Ba2-2(e)(4), 240.15Bc3-1(e), 240.15Ca2-
1(c)(4), and 240.15Cc1-1(d)).
    (68) Pursuant to Section 36(a) of the Act, 15 U.S.C. 78mm(a), to 
grant requests for exemptions from the tender offer provisions of Rule 
14e-1 of Regulation 14E (Sec. 240.14e-1 of this chapter).
    (69) Pursuant to paragraph (c) of Rule 11Ac1-5 (17 CFR 240.11Ac1-5), 
to grant or deny exemptions, conditionally or unconditionally, from any 
provision or provisions of Rule 11Ac1-5.
    (70) Pursuant to paragraph (d) of Rule 11Ac1-6 (17 CFR 240.11Ac1-6), 
to grant or deny exemptions, conditionally or unconditionally, from any 
provision or provisions of Rule 11Ac1-6.
    (71) Pursuant to paragraph (c) of Rule 11Ac1-7 (17 CFR 240.11Ac1-7), 
to grant exemptions, conditionally or unconditionally, from any 
provision or provisions of Rule 11Ac1-7.
    (72) Pursuant to Sections 15(a)(2) and 36 of the Act (15 U.S.C. 
78o(a)(2) and 78mm), to review and, either unconditionally or on 
specified terms and conditions, to grant or deny exemptions to any bank, 
savings association, or savings bank from the broker-dealer registration 
requirements of Section 15(a)(1) of the Act (15 U.S.C. 78o(a)(1)) or any 
applicable provision of this Act (15 U.S.C. 78c et seq.) and the rules 
and regulations thereunder based solely on such bank's, savings 
association's, or savings bank's status as a broker or dealer.
    (73) Pursuant to section 6(a) of the Act, 15 U.S.C. 78f(a), and Rule 
6a-1 thereunder, 17 CFR 240.6a-1:
    (i) To publish a notice of filing of an application for registration 
as a national securities exchange, or for exemption from registration 
based on limited volume;
    (ii) To publish amendments to an application for registration as a 
national securities exchange, or for exemption from registration based 
on limited volume; and
    (iii) To extend deadlines for submission of comments to an 
application for registration as a national securities exchange, or for 
exemption from registration based on limited volume; and amendments to 
an application for registration as a national securities exchange, or 
for exemption from registration based on limited volume.
    (74) Pursuant to section 36 of the Act (15 U.S.C. 78mm) to review 
and, either unconditionally or on specified terms and conditions, grant, 
or deny exemptions from rule 17a-25 of the Act (Sec. 240.17a-25 of this 
chapter).
    (75) Pursuant to Section 19(b)(7)(A) of the Act, 15 U.S.C. 
78s(b)(7)(A), to publish notices of proposed rule changes filed by self-
regulatory organizations relating to security futures products.
    (76) Pursuant to Section 19(b)(7)(C) of the Act, 15 U.S.C. 
78s(b)(7)(C), to abrogate a change in the rules of a self-regulatory 
organization relating to security futures products and require that it 
be refiled in accordance with Section 19(b)(1) of the Act, 15 U.S.C. 
78s(b)(1).
    (77) Pursuant to Section 6(g)(3) of the Act, 15 U.S.C. 78f(g)(3), to 
publish acknowledgement of receipt of a notice of

[[Page 32]]

registration as a national securities exchange for the sole purpose of 
trading security futures products under Section 6(g) of the Act and Rule 
6a-4 of the Act (17 CFR 240.6a-4).
    (b) To designate officers empowered to administer oaths and 
affirmations, subpoena witnesses, compel their attendance, take 
evidence, and require the production of any books, papers, 
correspondence, memoranda, contracts, agreements, or other records in 
the course of investigations instituted by the Commission pursuant to 
section 21(b) of the Securities Exchange Act of 1934 (15 U.S.C. 78u(b)).
    (c) In nonpublic investigatory proceedings within the responsibility 
of the Director or Deputy Director, to grant requests of persons to 
procure copies of the transcript of their testimony given pursuant to 
Rule 6 of the Commission's rules relating to investigations as in effect 
subsequent to November 16, 1972 (17 CFR 203.6).
    (d) To notify the Securities Investor Protection Corporation 
(``SIPC'') of facts concerning the activities and the operational and 
financial condition of any registered broker or dealer which is or 
appears to be a member of SIPC and which is in or approaching financial 
difficulty within the meaning of section 5 of the Securities Investor 
Protection Act of 1970, as amended, 15 U.S.C. 78aaa et seq.
    (e) To determine whether, and issue orders regarding, proposals for 
designation of a contract market for futures trading on an index or 
group of securities meet the eligibility criteria set forth under 
section 2(a)(1)(B)(ii) of the Commodity Exchange Act, 7 U.S.C. 2(a).
    (f) With respect to the Securities Investor Protection Act of 1970, 
as amended, 15 U.S.C. 78aaa et seq. (``SIPA''):
    (1) Pursuant to Section 3(a)(2)(B) of SIPA, to:
    (i) Extend for a period not exceeding 90 days from the date of the 
filing of the determination by the Securities Investor Protection 
Corporation (``SIPC'') that a registered broker-dealer is not a SIPC 
member because it conducts its principal business outside the United 
States and its territories and possessions, the period during which the 
Commission must affirm, reverse or amend any determination by SIPC; and
    (ii) Affirm such determination filed by SIPC.
    (2) Pursuant to Section (3)(e)(1) of SIPA, to:
    (i) Determine whether proposed bylaw changes filed by SIPC should 
not be disapproved or whether the proposed bylaw change is a matter of 
such significant public interest that public comment should be obtained, 
in which case the Division will notify SIPC of such finding and publish 
notice of the proposed bylaw change in accordance with Section 3(e)(2) 
of SIPA; and
    (ii) Accelerate the effective date of proposed bylaw changes filed 
by SIPC.
    (3) Pursuant to Section (3)(e)(2) of SIPA, to publish notice of 
proposed rule changes filed by SIPC.
    (g) Notwithstanding anything in the foregoing, in any case in which 
the Director of the Division of Market Regulation believes it 
appropriate, he may submit the matter to the Commission.

[37 FR 16795, Aug. 19, 1972]

    Editorial Note: For Federal Register citations affecting 
Sec. 200.30-3 see the List of CFR Sections Affected, which appears in 
the Finding Aids section of the printed volume and on GPO Access.

    Effective Date Note: At 68 FR 12783, Mar. 17, 2003, Sec. 200.30-3 
was amended by revising paragraph (a)(10), effective Apr. 16, 2003. For 
the convenience of the user, the revised text is set forth as follows:

Sec. 200.30-3  Delegation of authority to Director of Division of Market 
          Regulation.

                                * * * * *

    (a) * * *
    (10)(i) Pursuant to Rule 15c3-3 (Sec. 240.15c3-3 of this chapter) to 
find and designate as control locations for purposes of Rule 15c3-
3(c)(7) (Sec. 240.15c3-3(c)(7) of this chapter) certain broker-dealer 
accounts which are adequate for the protection of customer securities.
    (ii) Pursuant to section 36(a) of the Act (15 U.S.C. 78mm(a)) to 
review and, either unconditionally or on specified terms and conditions, 
grant or deny exemptions from the collateral requirements of paragraph 
(b)(3) of Rule 15c3-3 of the Act (Sec. 240.15c3-3 of this chapter) for a 
type of collateral after concluding that the characteristics of such 
collateral are substantially comparable to the

[[Page 33]]

characteristics of a type of collateral previously exempted by the 
Commission.

                                * * * * *



Sec. 200.30-4  Delegation of authority to Director of Division of Enforcement.

    Pursuant to the provisions of Pub. L. No. 100-181, 101 Stat. 1254, 
1255 (15 U.S.C. 78d-1, 78d-2), the Securities and Exchange Commission 
hereby delegates, until the Commission orders otherwise, the following 
functions to the Director of the Division of Enforcement to be performed 
by him or under his direction by such other person or persons as may be 
designated from time to time by the Chairman of the Commission.
    (a)(1) To designate officers empowered to administer oaths and 
affirmations, subpena witnesses, compel their attendance, take evidence, 
and require the production of any books, papers, correspondence, 
memoranda, contracts, agreements, or other records in the course of 
investigations instituted by the Commission pursuant to section 19(b) of 
the Securities Act of 1933 (15 U.S.C. 77s(b)), section 21(b) of the 
Securities Exchange Act of 1934 (15 U.S.C. 78u(b)), section 18(c) of the 
Public Utility Holding Company Act of 1935 (15 U.S.C. 79r(c)), section 
42(b) of the Investment Company Act of 1940 (15 U.S.C. 80a-41(b)) and 
section 209(b) of the Investment Advisers Act of 1940 (15 U.S.C. 80b-
9(b)).
    (2) In nonpublic investigative proceedings, to grant requests of 
persons to procure copies of the transcript of their testimony under 
Sec. 203.6 of this chapter.
    (3) To terminate and close all investigations authorized by the 
Commission pursuant to section 20 of the Securities Act of 1933 (15 
U.S.C. 77t), section 21 of the Securities Exchange Act of 1934 (15 
U.S.C. 78u), section 18 of the Public Utility Holding Company Act of 
1935 (15 U.S.C. 79r), section 42 of the Investment Company Act of 1940 
(15 U.S.C. 80a-41) and section 209 of the Investment Advisers Act of 
1940 (15 U.S.C. 80b-9).
    (4) To terminate the authority to administer oaths and affirmations, 
subpoena witnesses, compel their attendance, take evidence, and require 
the production of any books, papers, correspondence, memoranda, 
contracts, agreements, or other records in the course of investigations 
instituted by the Commission pursuant to section 19(b) of the Securities 
Act of 1933 (15 U.S.C. 77s(b)), section 21(b) of the Securities Exchange 
Act of 1934 (15 U.S.C. 78u(b)), section 18(c) of the Public Utility 
Holding Company Act of 1935 (15 U.S.C. 79r(c)), section 42(b) of the 
Investment Company Act of 1940 (15 U.S.C. 80a-41(b)) and section 209(b) 
of the Investment Advisers Act of 1940 (15 U.S.C. 80b-9(b)).
    (5) To grant or deny applications made pursuant to Rule 193 of the 
Commission's Rules of Practice, Sec. 201.193 of this chapter, provided, 
that, in the event of a denial, the applicant shall be notified that 
such a denial may be appealed to the Commisson for review.
    (6) To notify the Securities Investor Protection Corporation 
(``SIPC'') of facts concerning the activities and the operational and 
financial condition of any registered broker or dealer which is or 
appears to be a member of SIPC and which is in or approaching financial 
difficulty within the meaning of section 5 of the Securities Investor 
Protection Act of 1970, as amended, 15 U.S.C. 78aaa et seq.
    (7) To administer the provisions of Sec. 240.24c-1 of this chapter; 
provided that access to nonpublic information as defined in such section 
shall be provided only with the concurrence of the head of the 
Commission division or office responsible for such information or the 
files containing such information.
    (8) Pursuant to Rule 204-2(j)(3)(ii) (Sec. 275.204-2(j)(3)(ii) of 
this chapter) under the Investment Advisers Act of 1940 (15 U.S.C. 80b-1 
et seq.), to make written demands upon non-resident investment advisers 
subject to the provisions of such rule to furnish to the Commission 
true, correct, complete and current copies of any or all books and 
records which such non-resident investment advisers are required to 
make, keep current or preserve pursuant to any provision of any rule or 
regulation of the Commission adopted under the Investment Advisers Act 
of 1940, or any part of such books and

[[Page 34]]

records which may be specified in any such demand.
    (9) To administer the provisions of Section 24(d) of the Securities 
Exchange Act of 1934 (15 U.S.C. 78x(d)).
    (10) To institute subpoena enforcement proceedings in federal court 
to seek an order compelling the production of documents or an 
individual's appearance for testimony pursuant to subpoenas issued 
pursuant to paragraph (a)(1) of this section in connection with 
investigations pursuant to section 19(b) of the Securities Act of 1933 
(15 U.S.C. 77s(b)), section 21(b) of the Securities Exchange Act of 1934 
(15 U.S.C. 78u(b)), section 18(c) of the Public Utilities Holding 
Company Act of 1935 (15 U.S.C. 79r(c)), section 42(b) of the Investment 
Company Act of 1940 (15 U.S.C. 80a-41(b)) and section 209(b) of the 
Investment Advisers Act of 1940 (15 U.S.C. 80b-9(b)).
    (11) To authorize staff to appear in federal bankruptcy court to 
preserve Commission claims in connection with investigations pursuant to 
section 19(b) of the Securities Act of 1933 (15 U.S.C. 77s(b)), section 
21(b) of the Securities Exchange Act of 1934 (15 U.S.C. 78u(b)), section 
18(c) of the Public Utility Holding Company Act of 1935 (15 U.S.C. 
79r(c)), section 42(b) of the Investment Company Act of 1940 (15 U.S.C. 
80a-41(b)) and section 209(b) of the Investment Advisers Act of 1940 (15 
U.S.C. 80b-9(b)).
    (12) Pursuant to Section 36 of the Securities Exchange Act of 1934 
(15 U.S.C. 78mm) to review and, either unconditionally or on specified 
terms and conditions, grant, or deny exemptions from rule 17a-25 of the 
Act (Sec. 240.17a-25 of this chapter), provided that the Division of 
Market Regulation is notified of any such granting or denial of an 
exemption.
    (b) Notwithstanding anything in the foregoing, in any case in which 
the Director of the Division of Enforcement believes it appropriate, he 
may submit the matter to the Commission.

[37 FR 16796, Aug. 19, 1972, as amended at 37 FR 25166, Nov. 28, 1972; 
40 FR 14748, Apr. 2, 1975; 44 FR 22716, Apr. 17, 1979; 44 FR 50835, Aug. 
30, 1979; 44 FR 76774, Dec. 28, 1979; 45 FR 7781, Feb. 5, 1980; 47 FR 
26822, June 22, 1982; 49 FR 12206, Mar. 29, 1984; 52 FR 12148, Apr. 15, 
1987; 54 FR 24331, June 7, 1989; 58 FR 52419, Oct. 8, 1993; 59 FR 23794, 
May 9, 1994; 60 FR 14628, Mar. 20, 1995; 60 FR 32794, June 23, 1995; 61 
FR 20721, May 8, 1996; 66 FR 35842, July 9, 2001]



Sec. 200.30-5  Delegation of authority to Director of Division of Investment Management.

    Pursuant to the provisions of Pub. L. 87-592, 76 Stat. 394 (15 
U.S.C. 78d-1, 78d-2), the Securities and Exchange Commission hereby 
delegates, until the Commission orders otherwise, the following 
functions to the Director of the Division of Investment Management, to 
be performed by him or under his direction by such person or persons as 
may be designated from time to time by the Chairman of the Commission:
    (a) With respect to the Investment Company Act of 1940 (15 U.S.C. 
80a-1 et seq.):
    (1) Except as otherwise provided in this section, to issue notices, 
under Sec. 270.0-5 of this chapter, with respect to applications for 
orders under the Act and the rules and regulations thereunder and, with 
respect to section 8(f) of the Act (15 U.S.C. 80a-8(f)), in cases where 
no application has been filed, where, upon examination, the matter does 
not appear to the Director to present significant issues that have not 
been previously settled by the Commission or to raise questions of fact 
or policy indicating that the public interest or the interest of 
investors warrants that the Commission consider the matter.
    (2) Except as otherwise provided in this section, to authorize the 
issuance of orders where a notice, under Sec. 270.0-5 of this chapter, 
has been issued and no request for a hearing has been received from any 
interested person

[[Page 35]]

within the period specified in the notice and the Director believes that 
the matter presents no significant issues that have not been previously 
settled by the Commission and it does not appear to the Director to be 
necessary in the public interest or the interest of investors that the 
Commission consider the matter.
    (3) To permit the withdrawal of applications pursuant to the Act (15 
U.S.C. 80a-1 et seq.)
    (4) In connection with the mailing of reports to stockholders and 
the filing with the Commission of registration statements and of 
reports:
    (i) To grant reasonable extensions of time, upon a showing of good 
cause and that it would not be contrary to the public interest or 
inconsistent with the protection of investors; and
    (ii) To deny requests for extensions of time, provided the applicant 
is advised that he can request Commission review of any such denial.
    (5) [Reserved]
    (6) To authorize the issuance of orders granting confidential 
treatment pursuant to section 45(a) of the Act (15 U.S.C. 80a-44(a)) 
where applications for confidential treatment are made regarding matters 
of disclosure in registration statements filed pursuant to section 8 of 
the Act (15 U.S.C. 80a-8), or in reports filed pursuant to section 30 of 
the Act (15 U.S.C. 80a-29), but only when the Commission has previously 
by order granted confidential treatment to the same information.
    (7) To issue notices, pursuant to Rule 0-5(a) (Sec. 270.0-5(a) of 
this chapter) with respect to applications for temporary and permanent 
orders under section 9(c) of the Investment Company Act of 1940 (15 
U.S.C. 80a-9(c)), and to conditionally or unconditionally exempt 
persons, for a temporary period not exceeding 60 days, from section 9(a) 
of the Investment Company Act of 1940 (15 U.S.C. 80a-9(a)), if, on the 
basis of the facts then set forth in the application, it appears that:
    (i)(A) The prohibitions of section 9(a), as applied to the 
applicant, may be unduly or disproportionately severe, or (B) the 
applicant's conduct has been such as not to make it against the public 
interest or the protection of investors to grant the temporary 
exemption; and
    (ii) Granting the temporary exemption would protect the interests of 
the investment companies being served by the applicant by allowing time 
for the orderly consideration of the application for permanent relief or 
the orderly transition of the applicant's responsibilities to a 
successor, or both.
    (8) To issue--
    (i) Notices, pursuant to Rule 0-5(a) (Sec. 270.0-5(a) of this 
chapter), with respect to applications for permanent orders under 
section 9(c) of the Act [15 U.S.C. 80a-9(c)], and, orders, pursuant to 
paragraph (a)(2) of this section, that exempt conditionally or 
unconditionally persons from section 9(a) of the Act [15 U.S.C. 80a-
9(a)], if, on the basis of the facts then set forth in the application, 
it appears that:
    (A) The prohibitions of section 9(a) of the Act, as applied to the 
applicant, may be unduly or disproportionately severe, or the 
applicant's conduct has been such as not to make it against the public 
interest or the protection of investors to grant the exemption;
    (B) The prohibitions arise under section 9(a)(3) of the Act solely 
because the applicant employs, or will employ, a person who is 
disqualified under section 9(a) (1) or (2) of the Act; and,
    (C) The employee does not and will not serve in any capacity 
directly related to providing investment advice to, or acting as 
depositor for, any registered investment company, or acting as principal 
underwriter for any registered open-end company, registered unit 
investment trust or registered face amount certificate company.
    (ii) Temporary orders under section 9(c) of the Act [15 U.S.C. 80a-
9(c)], exempting conditionally or unconditionally persons from section 
9(a) of the Act [15 U.S.C. 80a-9(a)], if, on the basis of the 
application, it appears that:
    (A) The prohibitions arise under section 9(a)(3) of the Act solely 
because the applicant employs a person who is disqualified under section 
9(a) (1) or (2) of the Act; and
    (B) Applicant meets the requirements of paragraphs (a)(8)(i) (A) and 
(C) of this section.

[[Page 36]]

    (b) With respect to matters pertaining to investment companies 
registered under the Investment Company Act of 1940 (15 U.S.C. 80a et 
seq.), pooled investment funds or accounts, and the general assets or 
separate accounts of insurance companies, all arising under the 
Securities Act of 1933 (15 U.S.C. 77a et seq.), the Securities Exchange 
Act of 1934 (15 U.S.C. 78a et seq.), and the Trust Indenture Act of 1939 
(15 U.S.C. 77aaa et seq.), the same functions as are delegated to the 
Director of the Division of Corporation Finance in regard to companies 
other than such investment companies in paragraphs (a), (e), and (f) of 
Sec. 200.30-1.
    (b-1) With respect to the Securities Act of 1933. (1) To issue 
notices with respect to applications for orders under section 3(a)(2) 
exempting from section 5 interests or participations issued in 
connection with stock bonus, pension, profit-sharing, or annuity plans 
covering employees some or all of whom are employees within the meaning 
of section 401(c)(1) of the Internal Revenue Code of 1954 where, upon 
examination, the matter does not appear to him to present issues not 
previously settled by the Commission or to raise questions of fact or 
policy indicating that the public interest or the interest of investors 
requires that a hearing be held.
    (2) To authorize the issuance of orders where a notice has been 
issued and no request for a hearing has been received from any 
interested person within the period specified in the notice and the 
matter involved presents no issue that he believes has not been settled 
previously by the Commission and it does not appear to him to be 
necessary in the public interest or the interest of investors that a 
hearing be held.
    (b-2) With respect to post-effective amendments filed pursuant to 
Sec. 230.485(a) or Sec. 230.486(a) of this chapter:
    (1) To suspend the operation of paragraph (a) of such sections and 
to issue written notices to registrants of such suspensions;
    (2) To determine such amendments to be effective within shorter 
periods of time than the sixtieth day after the filing thereof.
    (b-3) With respect to post-effective amendments filed pursuant to 
Sec. 230.485(b) or Sec. 230.486(b) of this chapter:
    (1) To approve additional purposes for post-effective amendments 
which shall be eligible for immediate effectiveness pursuant to 
paragraph (b) of such sections.
    (2) To suspend the operation of paragraph (b) of such sections and 
to issue written notices to registrants of such suspensions.
    (b-4) With respect to registration statements filed pursuant to 
paragraph (a) of Rule 487 under the Act (17 CFR 230.487(a)):
    (1) To suspend the operation of said paragraph (a) and to issue 
written notices to registrants of such suspensions.
    (b-5) With respect to registration statements filed pursuant to 
paragraph (a) of rule 488 under the Act (17 CFR 230.488(a)):
    (1) To suspend the operation of said paragraphs and to issue written 
notices to registrants of such suspensions;
    (2) To determine such amendments to be effective within shorter 
periods of time than the thirtieth day after the filing thereof.
    (c) With respect to the Securities Act of 1933 and Regulation E 
thereunder (Sec. 230.601 et seq. of this chapter):
    (1) To authorize the offering of securities:
    (i) Less than ten days subsequent to the filing with the Commission 
of a notification on Form 1-E (Sec. 239.200 of this chapter) pursuant to 
Rule 604(a) (Sec. 230.604(a) of this chapter);
    (ii) Less than ten days subsequent to the filing of an amendment to 
a notification on Form 1-E (Sec. 239.200 of this chapter) pursuant to 
Rule 604(c) (Sec. 230.604(c) of this chapter).
    (2) To authorize the use of a revised or amended offering circular 
less than ten days subsequent to the filing thereof pursuant to Rule 
605(e) (Sec. 230.605(e) of this chapter).
    (3) To authorize the use of communications specified in paragraphs 
(a), (b) and (c) of Rule 607 (Sec. 230.607 of this chapter), less than 
five days subsequent to the filing thereof.
    (4) To permit the withdrawal of any notification, or any exhibit or 
other

[[Page 37]]

documents filed as a part thereof, pursuant to Rule 604(d) 
(Sec. 230.604(d) of this chapter).
    (c-1) With respect to the Securities Exchange Act of 1934: (1) To 
grant and deny applications filed pursuant to section 24(b) of the 
Securities Exchange Act of 1934 (15 U.S.C. 78x(b)) and Rule 24b-2 
thereunder (Sec. 240.24b-2 of this chapter) for confidential treatment 
of information filed pursuant to section 13(f) of that Act (15 U.S.C. 
78m(f)) and Rule 13f-1 thereunder (Sec. 240.13f-1 of this chapter).
    (2) To revoke a grant of confidential treatment for any such 
application.
    (3) To administer the provisions of Sec. 240.24c-1 of this chapter; 
provided that access to nonpublic information as defined in such section 
shall be provided only with the concurrence of the head of the 
Commission division or office responsible for such information or the 
files containing such information.
    (4) To administer the provisions of section 24(d) of the Act (15 
U.S.C. 78x(d)).
    (d) To issue certifications to investment companies that are 
principally engaged in the furnishing of capital to corporations that 
are principally engaged in the development or exploitation of 
inventions, technological improvements, new processes, or products not 
previously generally available, under Section 851(e) of the Internal 
Revenue Code of 1986 (26 U.S.C. 851(e)), where applications from the 
investment companies do not present issues that have not been previously 
settled by the Commission and do not require a hearing.
    (e) With respect to the Investment Advisers Act of 1940 (15 U.S.C. 
80b-1 to 80b-22):
    (1) Pursuant to section 203(c) of the Act (15 U.S.C. 80b-3(c)): To 
authorize the issuance of orders granting registration of investment 
advisers within 45 days of the filing of an application for registration 
as an investment adviser (or within such longer period as to which the 
applicant consents).
    (2) Pursuant to section 203(h) of the Act (15 U.S.C. 80b-3(h)), to 
authorize the issuance of orders canceling registration of investment 
advisers, or applications for registration, if such investment advisers 
or applicants for registration are no longer in existence, not engaged 
in business as investment advisers, or are prohibited from registering 
as investment advisers under Section 203A of the Act (15 U.S.C. 80b-3a).
    (3) To issue notices, under Sec. 275.0-5 of this chapter, with 
respect to applications for orders under the Act and the rules and 
regulations thereunder where, upon examination, the matter does not 
appear to the Director to present significant issues that have not been 
previously settled by the Commission or to raise questions of fact or 
policy indicating that the public interest or the interest of investors 
warrants that the Commission consider the matter.
    (4) To authorize the issuance of orders where a notice, pursuant to 
Sec. 275.0-5 of this chapter, has been issued, no request for a hearing 
has been received from any interested person within the period specified 
in the notice, and the Director believes that the matter presents no 
significant issues that have not been previously settled by the 
Commission and it does not appear to the Director to be necessary in the 
public interest or the interest of investors that the Commission 
consider the matter.
    (5) To permit the withdrawal of applications pursuant to the Act (15 
U.S.C. 80b-1 et seq.).
    (6) Pursuant to Rule 204-2(j)(3)(ii) (Sec. 275.204-2(j)(3)(ii) of 
this chapter), to make written demands upon non-resident investment 
advisers subject to the provisions of such rule to furnish to the 
Commission true, correct, complete and current copies of any or all 
books and records which such non-resident investment advisers are 
required to make, keep current or preserve pursuant to any provision of 
any rule or regulation of the Commission adopted under the Act, or any 
part of such books and records which may be specified in any such 
demand.
    (7) Pursuant to section 203A(d) of the Act (15 U.S.C. 80b-3a(d)), to 
set the terms of, and grant or deny as appropriate, continuing hardship 
exemptions under Sec. 275.203-3 of this chapter.
    (f) With respect to the Public Utility Holding Company Act of 1935 
(15 U.S.C. 79 et seq.):

[[Page 38]]

    (1) To issue notices with respect to applications or declarations 
under the following sections of the Act:
    (i) Section 2(a)(3), 15 U.S.C. 79(b)(a)(3).
    (ii) Section 2(a)(4), 15 U.S.C. 79b(a)(4).
    (iii) Section 2(a)(7), 15 U.S.C. 79b(a)(7).
    (iv) Section 2(a)(8), 15 U.S.C. 79b(a)(8).
    (v) Section 3(a), 15 U.S.C. 79c(a).
    (vi) Section 3(b), 15 U.S.C. 79c(b).
    (vii) Section 5(d), 15 U.S.C. 79e(d).
    (viii) Section 6(b), 15 U.S.C. 79f(b).
    (ix) Section 7, 15 U.S.C. 79g.
    (x) Section 9(c)(3), 15 U.S.C. 79i(c)(3).
    (xi) Section 10, 15 U.S.C. 79j.
    (xii) Section 11(e), 15 U.S.C. 79k(e).
    (xiii) Section 12(b), 15 U.S.C. 79l(b).
    (xiv) Section 12(c), 15 U.S.C. 79l(c).
    (xv) Section 12(d), 15 U.S.C. 79l(d).
    (xvi) Section 12(e), 15 U.S.C. 79l(e).
    (xvii) Section 12(f), 15 U.S.C. 79l(f).
    (xviii) Section 12(g), 15 U.S.C. 79l(g).
    (xix) Section 13(b), 15 U.S.C. 79m(b).
    (xx) Section 13(c), 15 U.S.C. 79m(c).
    (xxi) Section 13(d), 15 U.S.C. 79m(d).
    (xxii) Section 13(e), 15 U.S.C. 79m(e).
    (xxiii) Section 13(f), 15 U.S.C. 79m(f).
    (xxiv) Section 32, 15 U.S.C. 79ff.
    (xxv) Section 33, 15 U.S.C. 79gg.
    (2) To authorize the issuance of orders where a notice has been 
issued and no request for a hearing has been received from any 
interested person within the period specified in the notice and the 
matter involved presents no issue that the director believes has not 
previously been settled by the Commission and it does not appear to the 
director to be necessary in the public interest or the interest of 
investors or consumers that a hearing be held; section 20(c) of the Act 
(15 U.S.C. 79t(c));
    (3) To permit the withdrawal of applications or declarations filed 
pursuant to the Act (15 U.S.C. 79a et seq.);
    (4) Upon a showing of good cause and that it would not be contrary 
to the public interest or inconsistent with the protection of investors 
or consumers, to grant reasonable extensions of time with respect to the 
time for the filing with the Commission of registration statements and 
of reports pursuant to section 20(a) of the Act (15 U.S.C. 79t(a)) and 
Rules 1(b), 1(c), 2, 24, and 29 (Secs. 250.1(b), 250.1(c), 250.2, 250.4, 
and 250.29 of this chapter) thereunder;
    (5) To permit the filing of preliminary registration statements 
pursuant to section 5(c) of the Act (15 U.S.C. 79e(c));
    (6) To authorize the destruction of records pursuant to the 
provisions of General Instruction 1(f) (Sec. 257.1(f) of this chapter) 
to the appendix of the Uniform System of Accounts for Public Utility 
Holding Companies (Sec. 257.1 et seq. of this chapter) and pursuant to 
provisions of General Requirement 1(e) (Sec. 256a.0-1(e) of this 
chapter) of the Uniform System of Accounts for Mutual Service Companies 
and Subsidiary Service Companies (Sec. 256.00-1 et seq., of this 
chapter);
    (7) To authorize the discontinuance of reporting of information 
otherwise required to be reported under sections 5(b), 13(c), 13(e), 
13(f), 14, and 20(a) of the Act (15 U.S.C. 79e(b), 79m(c), 79m(e), 
79m(f), 79n, 79t(a));
    (8) To grant extensions of time for filing registration statements 
and reports pursuant to sections 5(b), 13(c), 13(d), 13(f), 14, and 
20(a) of the Act (15 U.S.C. 79e(b), 79m(c), 79m(d), 79m(f), 79n, 
79t(a)).
    (g) Notwithstanding anything in the foregoing:
    (1) The Director of the Division of Investment Management shall have 
the same authority with respect to the Securities Act of 1933 (15 U.S.C. 
77a et seq.), Secs. 230.251-230.263, and Secs. 230.651-230.703(T) of 
this chapter as that delegated to each Regional Director in Sec. 200.30-
6 (b) and (c).
    (2) In any case in which the Director of the Division of Investment 
Management believes it appropriate, he may submit the matter to the 
Commission.
    (h) With respect to the Investment Company Act of 1940 (15 U.S.C. 
80a et seq.), the Securities Act of 1933 (15 U.S.C. 77a et seq.), the 
Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.), the Trust 
Indenture Act of 1939 (15 U.S.C. 77aaa et seq.), and Regulation S-T 
thereunder (part 232 of this chapter), to grant or deny a request 
submitted under Regulation S-T to adjust the filing date of an 
electronic filing.
    (i) With respect to the Investment Company Act of 1940 (15 U.S.C. 
80a et seq.) and rule 8b-25 thereunder (Sec. 270.8b-25), the Securities 
Act of 1933 (15 U.S.C. 77a et seq.), the Securities Exchange

[[Page 39]]

Act of 1934 (15 U.S.C. 78a et seq.), the Trust Indenture Act of 1939 (15 
U.S.C. 77aaa et seq.), and Regulation S-T thereunder (part 232 of this 
chapter), to set the terms of, and grant or deny as appropriate, 
continuing hardship exemptions under rule 202 of Regulation S-T 
(Sec. 232.202 of this chapter) from the electronic submission 
requirements of Regulation S-T (part 232 of this chapter).
    (j) With respect to the Public Utility Holding Company Act of 1935 
(15 U.S.C. 79a et seq.) and Regulation S-T (part 232 of this chapter), 
to grant or deny a request to adjust the filing date of a filing 
submitted under Regulation S-T.
    (k) With respect to the Public Utility Holding Company Act of 1935 
(15 U.S.C. 79a et seq.) and Regulation S-T (part 232 of this chapter), 
to set the terms of, and grant or deny as appropriate, continuing 
hardship exemptions pursuant to rule 202 of Regulation S-T 
(Secs. 232.202 of this chapter) from the electronic submission 
requirements of Regulation S-T (part 232 of this chapter).

[41 FR 29376, July 16, 1976]

    Editorial Note: For Federal Register citations affecting 
Sec. 200.30-5 see the List of CFR Sections Affected, which appears in 
the Finding Aids section of the printed volume and on GPO Access.



Sec. 200.30-6  Delegation of authority to Regional Directors.

    Pursuant to the provisions of Pub. L. 87-592, 76 Stat. 394, the 
Securities and Exchange Commission hereby delegates, until the 
Commission orders otherwise, the following functions to each Regional 
Director, to be performed by him or under his direction by such person 
or persons as may be designated from time to time by the Chairman of the 
Commission:
    (a) With respect to the Securities Exchange Act of 1934, 15 U.S.C. 
78 et seq.:
    (1) Pursuant to section 15(b)(2)(C) of the Act (15 U.S.C. 
78o(b)(2)(C)):
    (i) To delay until the second six month period from registration 
with the Commission, the inspection of newly registered broker-dealers 
that have not commenced actual operations within six months of their 
registration with the Commission; and
    (ii) To delay until the second six month period from registration 
with the Commission, the inspection of newly registered broker-dealers 
to determine whether they are in compliance with applicable provisions 
of the Act and rules thereunder, other than financial responsibility 
rules.
    (2) Pursuant to Rule 0-4 (Sec. 240.0-4 of this chapter), to disclose 
to the Comptroller of the Currency, the Board of Governors of the 
Federal Reserve System and the Federal Deposit Insurance Corporation and 
to the state banking authorities, information and documents deemed 
confidential regarding registered clearing agencies and registered 
transfer agents; Provided That, in matters in which the Commission has 
entered a formal order of investigation, such disclosure shall be made 
only with the concurrence of the Director of the Division of Enforcement 
or his or her delegate, and the General Counsel or his or her delegate.
    (b) With respect to the Investment Advisers Act of 1940, 15 U.S.C. 
80b-1 et seq.: Pursuant to Rule 204-2(j)(3)(ii) (Sec. 275.204-
2(j)(3)(ii) of this chapter), to make written demands upon non-resident 
investment advisers subject to the provisions of such rule to furnish to 
the Commission true, correct, complete and current copies of any or all 
books and records which such non-resident investment advisers are 
required to make, keep current or preserve pursuant to any provision of 
any rule or regulation of the Commission adopted under the Investment 
Advisers Act of 1940, or any part of such books and records which may be 
specified in any such demand.
    (c) In nonpublic investigatory proceedings within the responsibility 
of the Regional Director, to grant requests of persons to procure copies 
of the transcript of their testimony given pursuant to Rule 6 of the 
Commission's rules relating to investigations as in effect subsequent to 
November 16, 1972 (17 CFR 203.6).
    (d) To notify the Securities Investor Protection Corporation 
(``SIPC'') of facts concerning the activities and the operational and 
financial condition of any registered broker or dealer which is or 
appears to be a member of SIPC and which is in or approaching financial 
difficulty within the meaning of section 5 of the Securities Investor

[[Page 40]]

Protection Act of 1970, as amended, 15 U.S.C. 78aaa et seq.
    (e) Notwithstanding anything in the foregoing, in any case in which 
the Regional Director believes it appropriate, he may submit the matter 
to the Commission.

(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. 
308(a)(2), 90 Stat. 57; secs. 3(b), 12, 13, 14, 15(d), 23(a), 48 Stat. 
882, 892, 894, 895, 901; secs. 203(a), 1, 3, 8, 49 Stat. 704, 1375, 
1377, 1379; sec. 202, 68 Stat. 686; secs. 4, 5, 6(d), 78 Stat. 569, 570-
574; secs. 1, 2, 3, 82 Stat. 454, 455; secs. 28(c), 1, 2, 3, 4, 5, 84 
Stat. 1435, 1497; sec. 105(b), 88 Stat. 1503; secs. 8, 9, 10, 89 Stat. 
117, 118, 119; sec. 308(b), 90 Stat 57; sec. 18, 89 Stat. 155; secs. 
202, 203, 204, 91 Stat. 1494, 1498-1500; sec. 20(a), 49 Stat. 833; sec. 
319, 53 Stat. 1173; sec. 38, 54 Stat. 841; 15 U.S.C. 77f, 77g, 77h, 77j, 
77s(a), 78c(b), 78l, 78m, 78n, 78o(d), 78w(a), 79t(a), 77sss(a), 80a-37; 
secs. 3(b), 19(a), 48 Stat. 75, 85; sec. 209, 48 Stat. 908; c. 122, 59 
Stat. 167; Pub. L. 91-565, 84 Stat. 1480; 15 U.S.C. 77c(b), 77s(a), 78d-
1, 78n, 80a-37; secs. 2, 17 and 23 thereof (15 U.S.C. 78b, 78q and 78w))

[28 FR 2856, Mar. 22, 1963, as amended at 36 FR 7659, Apr. 23, 1971. 
Redesignated at 37 FR 16792, Aug. 19, 1972]

    Editorial Note: For Federal Register citations affecting 
Sec. 200.30-6 see the List of CFR Sections Affected, which appears in 
the Finding Aids section of the printed volume and on GPO Access.



Sec. 200.30-6a  Delegation of authority to District Administrators.

    Pursuant to the provisions of Pub. L. 87-592, 76 Stat. 394, 15 
U.S.C. 78d-1, the Securities and Exchange Commission hereby delegates, 
until the Commission orders otherwise, the following functions to each 
District Administrator, to be performed by him or her or under his or 
her direction by such person or persons as may be designated from time 
to time by the Chairman of the Commission:
    (a) With respect to the Securities Exchange Act of 1934 (15 U.S.C. 
78a et seq.):
    (1) Pursuant to section 15(b)(2)(C) of the Act (15 U.S.C. 
78o(b)(2)(C)):
    (i) To delay until the second six-month period from registration 
with the Commission the inspection of newly registered broker-dealers 
that have not commenced actual operations within six months of their 
registration with the Commission; and
    (ii) To delay until the second six-month period from registration 
with the Commission the inspection of newly registered broker-dealers to 
determine whether they are in compliance with applicable provisions of 
the Act and rules thereunder, other than financial responsibility rules.
    (2) Pursuant to Rule 0-4 (Sec. 240.0-4 of this chapter), to disclose 
to the Comptroller of the Currency, the Board of Governors of the 
Federal Reserve System and the Federal Deposit Insurance Corporation and 
to the state banking authorities, information and documents deemed 
confidential regarding registered clearing agencies and registered 
transfer agents, Provided That, in matters in which the Commission has 
entered a formal order of investigation, such disclosure shall be made 
only with the concurrence of the Director of the Division of Enforcement 
or his or her delegate and the General Counsel or his or her delegate.
    (b) With respect to the Investment Advisers Act of 1940 (15 U.S.C. 
80b-1 et seq.): Pursuant to Rule 204-2(j)(3)(ii) (Sec. 275.204-
2(j)(3)(ii) of this chapter), to make written demands upon non-resident 
investment advisers subject to the provisions of such rule to furnish to 
the Commission true, correct, complete and current copies of any or all 
books and records which such non-resident investment advisers are 
required to make, keep current or preserve pursuant to any provisions of 
any rule or regulation of the Commission adopted under the Investment 
Advisers Act of 1940, or any part of such books and records which may be 
specified in such demand.
    (c) In nonpublic investigatory proceedings within the responsibility 
of the District Administrator, to grant requests of persons to procure 
copies of the transcript of their testimony given pursuant to Rule 6 of 
the Commission Rules Relating to Investigations (Sec. 203.6 of this 
chapter).
    (d) To notify the Securities Investor Protection Corporation 
(``SIPC'') of facts concerning the activities and the operational and 
financial condition of any registered broker or dealer which is or 
appears to be a member of SIPC and which is in or approaching financial 
difficulty within the meaning of

[[Page 41]]

Section 4 of the Securities Investor Protection Act of 1970 as amended 
(15 U.S.C. 78aaa et seq.).
    (e) Notwithstanding anything in the foregoing, in any case in which 
the District Administrator believes it appropriate, he or she may submit 
the matter to the Commission.

[59 FR 5943, Feb. 9, 1994]



Sec. 200.30-7  Delegation of authority to Secretary of the Commission.

    Pursuant to the provisions of Pub. L. 87-592, 76 Stat. 394 (15 
U.S.C. 78d-1), the Securities and Exchange Commission hereby delegates, 
until the Commission orders otherwise, the following functions to the 
Secretary of the Commission to be performed by him or under his 
direction by such person or persons as may be designated from time to 
time by the Chairman of the Commission:
    (a) With respect to proceedings conducted pursuant to the Securities 
Act of 1933, 15 U.S.C. 77a et seq., the Securities Exchange Act of 1934, 
15 U.S.C. 78a et seq., the Public Utility Holding Company Act of 1935, 
15 U.S.C. 79a et seq., the Trust Indenture Act of 1939, 15 U.S.C. 77aaa 
et seq., the Investment Company Act of 1940, 15 U.S.C. 80a-1 et seq., 
and the Investment Advisers Act of 1940, 15 U.S.C. 80b-1 et seq.:
    (1) To fix the time and place for hearings and oral arguments before 
the Commission pursuant to Rule 451 of the Commission's Rules of 
Practice, Sec. 201.451 of this chapter;
    (2) In appropriate cases to extend and reallocate the time 
prescribed in Rule 451(c) of the Commission's Rules of Practice, 
Sec. 201.451(c) of this chapter;
    (3) To postpone or adjourn hearings or otherwise adjust the date for 
commencement of hearings before the Commission pursuant to Rule 161 of 
the Commission's Rules of Practice, Sec. 201.161 of this chapter, and to 
advance such hearings;
    (4) To grant or deny extensions of time within which to file papers 
with the Commission under Rule 161 of the Commission's Rules of 
Practice, Sec. 201.161 of this chapter.
    (5) To permit the filing of briefs with the Commission exceeding 60 
pages in length, pursuant to Rule 450(c) of the Commission's Rules of 
Practice, Sec. 201.450(c) of this chapter;
    (6) To certify records of proceedings upon which are entered orders 
the subject of review in courts of appeals pursuant to section 9 of the 
Securities Act of 1933, 15 U.S.C. 77i, section 25 of the Securities 
Exchange Act of 1934, 15 U.S.C. 78y, section 24 of the Public Utility 
Holding Company Act of 1935, 15 U.S.C. 79x, section 322(a) of the Trust 
Indenture Act of 1939, 15 U.S.C. 77vvv, section 43 of the Investment 
Company Act of 1940, 15 U.S.C. 80a-42, and section 213 of the Investment 
Advisers Act of 1940, 15 U.S.C. 80b-13;
    (7) Except where the Commission otherwise directs, to issue findings 
and orders pursuant to offers of settlement which the Commission has 
determined should be accepted;
    (8) To issue findings and orders taking the remedial action 
described in the order for proceedings where a respondent expressly 
consents to such action, fails to appear, or defaults in the filing of 
an answer required to be filed and to grant a request, based upon a 
showing of good cause, to vacate an order or default, so as to permit 
presentation of a defense;
    (9) To designate officers of the Commission to serve notices of and 
orders for proceedings and decisions and orders in such proceedings, the 
service of which is required by Rules 141 and 150 of the Commission's 
Rules of Practice, Secs. 201.141 and 201.150 of this chapter;
    (10) To set the date for sanctions to take effect if an initial 
decision is not appealed and becomes final pursuant to Rule 360(d) or if 
an initial decision is affirmed pursuant to Rule 411;
    (11) To publish pursuant to Rule 612 of the Commission's Rules of 
Practice, Sec. 201.612 of this chapter, notices of plans of disgorgement 
and, if no negative comments are received, to issue orders approving 
proposed plans of disgorgement pursuant to Rule 613 of the Commission's 
Rules of Practice, Sec. 201.613 of this chapter. Upon the motion of the 
staff for good cause shown, to approve the publication of proposed plans 
of disgorgement that omit plan elements required by Rule 611 of the 
Commission's Rules of Practice, Sec. 201.611 of this chapter.

[[Page 42]]

    (12) To issue orders instituting previously authorized 
administrative proceedings pursuant to sections 15(b)(4) or (6), 15B, 
15C, or 17A of the Securities Exchange Act of 1934 (15 U.S.C. 78o(b)(4) 
or (6), 78o-4, 78o-5, or 78q-1), and section 203(e) or (f) of the 
Investment Advisers Act of 1940 (15 U.S.C. 80b-3(e) or (f)), based on 
the entry of an injunction or a criminal conviction, and to issue 
findings and orders in such cases where a respondent consents to a bar 
from association.
    (b) To order the making of private investigations pursuant to 
section 21(a) of the Securities Exchange Act of 1934, on request of the 
Division of Corporation Finance or the Division of Enforcement, with 
respect to proxy contests subject to section 14 of that Act and 
regulation 14A thereunder, and tender offers filed pursuant to section 
14(d) of the Act.
    (c) Notwithstanding anything in the foregoing, in any case in which 
the Secretary of the Commission believes it appropriate he or she may 
submit the matter to the Commission.

[35 FR 17989, Nov. 24, 1970. Redesignated at 37 FR 16792, Aug. 19, 1972, 
and amended at 38 FR 12913, May 17, 1973; 40 FR 46107, Oct. 6, 1975; 43 
FR 13377, Mar. 30, 1978; 60 FR 14629, Mar. 20, 1995; 60 FR 32794, June 
23, 1995; 61 FR 5939, Feb. 15, 1996; 61 FR 13689, Mar. 28, 1996; 61 FR 
15338, Apr. 5, 1996; 67 FR 30326, May 6, 2002]



Sec. 200.30-8  [Reserved]



Sec. 200.30-9  Delegation of authority to hearing officers.

    Pursuant to the provisions of Section 4A of the Securities Exchange 
Act of 1934 (15 U.S.C. 78d-1), the Securities and Exchange Commission 
hereby delegates, until the Commission orders otherwise, to each 
Administrative Law Judge (``Judge'') the authority:
    (a) To make an initial decision in any proceeding at which the Judge 
presides in which a hearing is required to be conducted in conformity 
with the Administrative Procedure Act (5 U.S.C. 557) unless such initial 
decision is waived by all parties who appear at the hearing and the 
Commission does not subsequently order that an initial decision 
nevertheless be made by the Judge, and in any other proceeding in which 
the Commission directs the Judge to make such a decision; and
    (b) To issue, upon entry pursuant to Rule 531 of the Commission's 
Rules of Practice, Sec. 201.531 of this chapter, of an initial decision 
on a permanent order, a separate order setting aside, limiting or 
suspending any temporary sanction, as that term is defined in Rule 
101(a)(11) of the Commission's Rules of Practice, Sec. 201.101(a) of 
this chapter, then in effect in accordance with the terms of the initial 
decision.

[60 FR 32794, June 23, 1995]



Sec. 200.30-10  Delegation of authority to Chief Administrative Law Judge.

    Pursuant to the provisions of Pub. L. 87-592, 76 Stat. 394 (15 
U.S.C. 78d-1), the Securities and Exchange Commission hereby delegates, 
until the Commission orders otherwise, the following functions to the 
Chief Administrative Law Judge or to such administrative law judge or 
administrative law judges as may be designated by the Chief 
Administrative Law Judge in his absence, or as otherwise designated by 
the Chairman of the Commission in the absence of the Chief 
Administrative Law Judge:
    (a) With respect to proceedings conducted before an administrative 
law judge, pursuant to the Securities Act of 1933, 15 U.S.C. 77a et 
seq., the Securities Exchange Act of 1934, 15 U.S.C. 78a et seq., the 
Public Utility Holding Company Act of 1935, 15 U.S.C. 79a et seq., the 
Trust Indenture Act of 1939, 15 U.S.C. 77aaa et seq., the Investment 
Company Act of 1940, 15 U.S.C. 80a-1 et seq., and the Investment 
Advisers Act of 1940, 15 U.S.C. 80b-1 et seq.:
    (1) After a proceeding has been authorized, to fix the time and 
place for hearing pursuant to Rule 200 of the Commission's Rules of 
Practice, Sec. 201.200 of this chapter;
    (2) To designate administrative law judges pursuant to Rule 110 of 
the Commission's Rules of Practice, Sec. 201.110 of this chapter;
    (3) To postpone or adjourn hearings or otherwise adjust the date for 
commencement of hearings pursuant to Rule 161 of the Commission's Rules 
of Practice, Sec. 201.161 of this chapter, or to advance or cancel such 
hearings, if necessary;
    (4) To grant extensions of time within which to file papers pursuant 
to

[[Page 43]]

Rule 161 of the Commission's Rules of Practice, Sec. 201.161 of this 
chapter;
    (5) To permit the filing of briefs exceeding 60 pages in length, 
pursuant to Rule 450(c) of the Commission's Rules of Practice, 
Sec. 201.450(c) of this chapter;
    (6) In the event the designated presiding administrative law judge 
is unavailable to issue subpenas requiring the attendance and testimony 
of witnesses and subpenas requiring the production of documentary or 
other tangible evidence at any designated place of hearing upon request 
therefor by any party, pursuant to Rule 232 of the Commission's Rules of 
Practice, 201.232 of this chapter;
    (7) Pursuant to sections 15(b)(1)(B), 15B(a)(2)(B), and 19(a)(1)(B) 
of the Securities Exchange Act of 1934 and section 203(c)(2)(B) of the 
Investment Advisers Act of 1940 to grant extensions of time for 
conclusion of proceedings instituted to determine whether applications 
for registration as a broker or dealer, municipal securities dealer, 
national securities exchange, registered securities association, or 
registered clearing agency, or as an investment adviser should be 
denied.
    (b) With respect to proceedings under the Equal Access to Justice 
Act, 5 U.S.C. 504, to make assignments as provided in Sec. 201.37(b) of 
this chapter, respecting applications made pursuant to that Act.
    (c) Notwithstanding anything in the foregoing, in any case in which 
the Chief Administrative Law Judge believes it appropriate he or she may 
submit the matter to the Commission.

(15 U.S.C. 77u, 78d, 78d-1, 78d-2, 76 Stat. 394, as amended, secs. 25(1) 
and 25(2), 89 Stat. 163)

[37 FR 23827, Nov. 9, 1972, as amended at 41 FR 21183, May 24, 1976; 43 
FR 13378, Mar. 30, 1978; 54 FR 53051, Dec. 27, 1989; 60 FR 32794, June 
23, 1995]



Sec. 200.30-11  Delegation of authority to Associate Executive Director of the Office of Filings and Information Services.

    Under Pub. L. 87-592, 76 Stat. 394 (15 U.S.C. 78d-1, 78d-2), the 
Securities and Exchange Commission hereby delegates the following 
functions to the Associate Executive Director of the Office of Filings 
and Information Services to be performed by him or her or under his or 
her direction by such person or persons as the Chairman of the 
Commission may designate from time to time:
    (a) With respect to the Securities Exchange Act of 1934 (15 U.S.C. 
78a et seq.):
    (1) Under section 15(b) of the Act (15 U.S.C. 78o(b)):
    (i) To authorize the issuance of orders granting registration of 
brokers or dealers within 45 days of the acceptance of an application 
for registration as a broker or dealer (or within such longer period as 
to which the applicant consents);
    (ii) To grant registration of brokers or dealers sooner than 45 days 
after acceptance of an application for registration;
    (iii) To authorize the issuance of orders canceling registrations of 
brokers or dealers, or pending applications for registration, if such 
brokers or dealers or applicants for registration are no longer in 
existence or are not engaged in business as brokers or dealers; and
    (iv) To determine whether notices of withdrawal from registration on 
Form BDW shall become effective sooner than the normal 60-day waiting 
period.
    (2) Under section 15B(a) of the Act (15 U.S.C. 78o-4(a)):
    (i) To authorize the issuance of orders granting registration of 
municipal securities dealers within 45 days of the filing of acceptable 
applications for registration as a municipal securities dealer (or 
within such longer period as to which the applicant consents); and
    (ii) To grant registration of municipal securities dealers sooner 
than 45 days after receipt by the Commission of acceptable applications 
for registration.
    (3) Under section 15B(c) of the Act (15 U.S.C. 78o-4(c)):
    (i) To authorize the issuance of orders canceling registrations of 
municipal securities dealers, or pending applications for registration, 
if such municipal securities dealers or applicants for registration are 
no longer in existence or are not engaged in business as municipal 
securities dealers; and
    (ii) To determine whether notices of withdrawal from registration on 
Form MSDW shall become effective sooner than the normal 60-day waiting 
period.

[[Page 44]]

    (4) Under section 15C(a) of the Act (15 U.S.C. 78o-5(a)):
    (i) To authorize the issuance of orders granting registration of 
government securities brokers or government securities dealers for which 
the Commission is the appropriate regulatory agency within 45 days of 
the acceptance of an application for registration as a government 
securities broker or government securities dealer (or within such longer 
period as to which the applicant consents); and
    (ii) To grant registration of government securities brokers or 
government securities dealers for which the Commission is the 
appropriate regulatory agency sooner than 45 days after acceptance of an 
application for registration.
    (5) Under section 15C(c) of the Act (15 U.S.C. 78o-5(c)):
    (i) To authorize the issuance of orders canceling registrations of 
government securities brokers or government securities dealers 
registered with the Commission, or pending applications for 
registration, if such government securities brokers or government 
securities dealers or applicants for registration are no longer in 
existence or are not engaged in business as government securities 
brokers or government securities dealers; and
    (ii) To determine whether notices of withdrawal from registration on 
Form BDW shall become effective sooner than the normal 60-day waiting 
period.
    (6) Under section 17A(c) of the Act (15 U.S.C. 78q-1(c)):
    (i) To authorize the issuance of orders granting registration of 
transfer agents within 45 days of the filing of acceptable applications 
for registration as a transfer agent (or within such longer period as to 
which the applicant consents);
    (ii) To grant registration of transfer agents sooner than 45 days 
after receipt by the Commission of acceptable applications for 
registration;
    (iii) To authorize the issuance of orders canceling registrations of 
transfer agents, or pending applications for registration, if such 
transfer agents or applicants for registration are no longer in 
existence or are not engaged in business as transfer agents; and
    (iv) To determine whether notices of withdrawal from registration on 
Form TA-W shall become effective sooner than the normal 60-day waiting 
period.
    (b) With respect to the Investment Advisers Act of 1940 (15 U.S.C. 
80b-1 et seq.):
    (1) Under section 203(c) of the Act (15 U.S.C. 80b-3(c)):
    (i) To authorize the issuance of orders granting registration of 
investment advisers within 45 days of the filing of acceptable 
applications for registration as an investment adviser (or within such 
longer period as to which the applicant consents); and
    (ii) To grant registration of investment advisers sooner than 45 
days after receipt by the Commission of acceptable applications for 
registration.
    (2) Under section 203(h) of the Act (15 U.S.C. 80b-3(h)), to 
authorize the issuance of orders canceling registrations of investment 
advisers, or pending applications for registration, if such investment 
advisers or applicants for registration are no longer in existence or 
are not engaged in business as investment advisers.
    (c) With respect to the Securities Investor Protection Act of 1970 
(15 U.S.C. 78aaa et seq.):
    (1) To cause a written notice to be sent by registered or certified 
mail, upon receipt of a copy of a notice sent by or on behalf of the 
Securities Investor Protection Corporation that a broker or dealer has 
failed to timely file any report or information or to pay when due all 
or any part of an assessment as required under section 10(a) of this 
Act, to such delinquent member advising such member that it is unlawful 
for him or her under the provisions of such section of the Act to engage 
in business as a broker-dealer while in violation of such requirements 
of the Act and requesting an explanation in writing within ten days 
stating what he or she intends to do in order to cure such delinquency;
    (2) To authorize formerly delinquent brokers or dealers, upon 
receipt of written confirmation from or on behalf of the Securities 
Investor Protection Corporation that the delinquencies referred to in 
paragraph (c)(1) of this section have been cured, and upon having

[[Page 45]]

been advised by the appropriate regional or district office of this 
Commission and the Division of Enforcement and Division of Market 
Regulation that there is no objection to such member being authorized to 
resume business, and upon there appearing to be no unusual or novel 
circumstances which would warrant direct consideration of the matter by 
this Commission, to resume business as registered broker-dealers as 
provided in section 10(a) of this Act.
    (d) Notwithstanding anything in the foregoing, in any case in which 
the Associate Executive Director of the Office of Filings and 
Information Services believes it appropriate, he or she may submit the 
matter to the Commission.
    (e) To authenticate all Commission documents produced for 
administrative or judicial proceedings.

(Sec. 1, 76 Stat. 394, 15 U.S.C. 78d-1, 78d-2; sec. 10(a), 84 Stat. 
1655, 15 U.S.C. 78jjj(a); sec. 15B, 15 U.S.C. 78o-4(a); sec. 17A, 15 
U.S.C. 78q-1(c)(2); 11 U.S.C. 901, 1109(a))

[41 FR 1740, Jan. 12, 1976, as amended at 41 FR 32736, Aug. 5, 1976; 42 
FR 56727, Oct. 28, 1977; 49 FR 12686, Mar. 30, 1984; 55 FR 11168, Mar. 
27, 1990; 59 FR 5944, Feb. 9, 1994; 60 FR 14629, Mar. 20, 1995; 65 FR 
57447, Sept. 22, 2000]



Sec. 200.30-12  [Reserved]



Sec. 200.30-13  Delegation of authority to Associate Executive Director of the Office of the Comptroller.

    Pursuant to the provisions of Pub. L. 94-29, 89 Stat. 163, Pub. L. 
87-592, 76 Stat. 395, 15 U.S.C. 78d-1, 78d-2, the Securities and 
Exchange Commission hereby delegates, until the Commission orders 
otherwise, the following function to the Associate Executive Director of 
the Office of the Comptroller, to be performed by him or under his 
direction by such person or persons as may be designated from time to 
time by the Chairman of the Commission: The compromise and collection of 
Federal claims as required by the Federal Claims Collection Act of 1966, 
31 U.S.C. 951 et seq., in conformance with standards and procedures 
jointly promulgated by the Attorney General and Comptroller General, 4 
CFR 101.1--105.7.

(Sec. 25, 89 Stat. 163, 15 U.S.C. 78d-1; Sec. 2, 76 Stat. 395 15 U.S.C. 
78d-2)

[44 FR 3473, Jan. 17, 1979, as amended at 60 FR 14630, Mar. 20, 1995]



Sec. 200.30-14  Delegation of authority to the General Counsel.

    Pursuant to the provisions of Pub. L. 101-181, 101 Stat. 1254, 101 
Stat. 1255, 15 U.S.C. 78d-1, 15 U.S.C. 78d-2, and 5 U.S.C. 
552a(d)(2)(B)(ii), the Securities and Exchange Commission hereby 
delegates, until the Commission orders otherwise, the following 
functions to the General Counsel of the Commission, to be performed by 
him or her or under his or her direction by such person or persons as 
may be designated from time to time by the Chairman of the Commission:
    (a) Grant waivers of imputed disqualification requested pursuant to 
17 CFR 200.735-8(d).
    (b) Determine whether the Commission will submit, after consultation 
with any Division or Office of the Commission designated by the 
Commission, and amicus curiae brief in private litigation on issues 
previously considered and designated by the Commission as appropriate 
for the exercise of delegated authority. A list of the issues designated 
by the Commission as subject to this delegated authority and, where 
determined by the Commission, the position to be taken on each such 
issue, may be obtained on request addressed to Securities and Exchange 
Commission, Washington, DC 20549.
    (c) Determine the appropriate disposition of all Freedom of 
Information Act and confidential treatment appeals in accordance with 
Secs. 200.80(d)(6), 200.80(e)(4), 200.83(e), 200.83(f), and 200.83(h).
    (d) Determine the appropriate disposition of all Privacy Act appeals 
and related matters in accordance with Secs. 200.304 (a) and (c); 
200.307 (a) and (b); 200.308(a) (4)-(10); 200.308(b) (1)-(4); and 
200.309(e) (1) and (2).
    (e) File notices of appearance in bankruptcy reorganization cases 
under section 1109(a) of the Bankruptcy Code involving debtors, the 
securities of

[[Page 46]]

which are registered or required to be registered under section 12 of 
the Securities Exchange Act.
    (f) Approve non-expert, non-privileged, factual testimony by present 
or former staff members, and the production of non-privileged documents, 
when validly subpoenaed; and assert governmental privileges on behalf of 
the Commission in litigation where the Commission appears as a party or 
in response to third party subpoenas.
    (g)(1) With respect to proceedings conducted pursuant to the 
Securities Act of 1933 (15 U.S.C. 77a et seq.), the Securities Exchange 
Act of 1934 (15 U.S.C. 78a et seq.), the Public Utility Holding Company 
Act of 1935 (15 U.S.C. 79a et seq.), the Trust Indenture Act of 1939 (15 
U.S.C. 77aaa et seq.), the Investment Company Act of 1940 (15 U.S.C. 
80a-1 et seq.), the Investment Advisers Act of 1940 (15 U.S.C. 80b-1 et 
seq.),the Securities Investor Protection Act of 1970 (15 U.S.C. 78aaa et 
seq.) and the provisions of Rule 102(e) of the Commission's Rules of 
Practice (Sec. 201.102(e) of this chapter);
    (i) To consider an application for review of an interlocutory ruling 
which an administrative law judge has refused to certify, and to deny 
such application upon determining that the administrative law judge did 
not err in refusing to certify the matter.
    (ii) To consider an interlocutory ruling which an administrative 
judge has certified, and to affirm such ruling upon determining that 
such action is appropriate.
    (iii) To issue any order pursuant to an initial decision as to any 
person who has not filed a petition for review within the time provided, 
or has withdrawn his appeal, where the Commission has not on its own 
motion ordered that the initial decision be reviewed.
    (iv) Except where the Commission otherwise directs, to issue 
findings and orders pursuant to offers of settlement which the 
Commission has determined should be accepted.
    (v) To grant petitions for review of initial decisions by a hearing 
officer.
    (vi) To grant motions of staff counsel to discontinue administrative 
proceedings as to a particular respondent who has died or cannot be 
found, or because of a mistake in the identity of a respondent named in 
the order for proceedings.
    (vii) To grant requests for the submission of late or additional 
briefs, or the acceptance of affidavits or other material for inclusion 
in the record or in support of motions or petitions addressed to the 
Commission.
    (viii) To issue an order dismissing an application for review upon 
the request of the applicant that the application be withdrawn.
    (ix) To issue an order dismissing an exemptive application upon the 
request of the applicant that the application be withdrawn.
    (x) To determine motions to consolidate proceedings pending before 
the Commission.
    (xi) To determine whether to permit or require that a record of 
proceedings be supplemented with additional evidence.
    (xii) To determine requests for leave to file an opposition to a 
petition for review filed pursuant to the provisions of Rule 411 of the 
Commission's Rules of Practice, Sec. 201.411 of this chapter.
    (xiii) To issue a briefing schedule order pursuant to Rule 450 of 
the Commission's Rules of Practice, Sec. 201.450 of this chapter.
    (xiv) To determine motions for expedited briefing schedules.
    (xv) To issue an order raising, pursuant to the provisions of Rule 
411(d) of the Commission's Rules of Practice, Sec. 201.411(d) of this 
chapter, any matter relating to whether any sanction, and if so what 
sanction, is in the public interest.
    (2) With respect to proceedings conducted pursuant to the Securities 
Act of 1933 (15 U.S.C. 77a et seq.), the Securities Exchange Act of 1934 
(15 U.S.C. 78a et seq.), the Investment Company Act of 1940 (15 U.S.C. 
80a-1 et seq.), the Investment Advisers Act of 1940 ( 15 U.S.C. 80b-1 et 
seq.), the Securities Investor Protection Act of 1970 (15 U.S.C. 78aaa 
et seq.) and the provisions of Rule 102(e) of the Commission's Rules of 
Practice (Sec. 201.102(e) of this chapter), to issue findings and orders 
taking the remedial action described in the order for proceedings where 
the respondents expressly consent to such action, fail to appear or 
default in the filing of answers required to be filed; or to grant a

[[Page 47]]

request, based upon a showing of good cause, to vacate an order of 
default, so as to permit presentation of a defense.
    (3) With respect to proceedings conducted pursuant to the Securities 
Exchange Act of 1934 (15 U.S.C. 78a et seq.), to issue an order 
dismissing an application for review of a denial by a self-regulatory 
organization of an application by a person subject to statutory 
disqualification to become associated with a member firm upon receipt of 
notice from the self-regulatory organization that the firm is no longer 
a member of the self-regulatory organization.
    (4) With respect to proceedings under Sections 19 (d), (e) and (f) 
of the Securities Exchange Act of 1934 (15 U.S.C. 78s (d), (e) and (f)), 
to determine that an application for review under those sections has 
been abandoned, under the provisions of Rule 420, Sec. 201.420 of this 
chapter, or otherwise, and to issue an order dismissing the application 
in such event.
    (5) With respect to proceedings conducted or reviewed pursuant to 
the Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.), the 
Investment Company Act of 1940 (15 U.S.C. 80a-1 et seq.), the Investment 
Advisers Act of 1940 ( 15 U.S.C. 80b-1 et seq.) and the provisions of 
Rule 102(e) of the Commission's Rules of Practice, Sec. 201.102(e) of 
this chapter, to determine applications to stay Commission orders 
pending appeal of those orders to the federal courts and to determine 
applications to vacate such stays.
    (6) With respect to review proceedings pursuant to Sections 19 (d), 
(e), and (f) of the Securities Exchange Act of 1934 (15 U.S.C. 78s (d), 
(e), and (f)), to determine applications for a stay of action taken by a 
self-regulatory organization pending Commission review of that action 
and to determine applications to vacate such stays.
    (7) In connection with Commission review of actions taken by self-
regulatory organizations, pursuant to Sections 19 (d), (e) and (f) of 
the Securities Exchange Act of 1934 (15 U.S.C. 78s (d), (e) and (f)), to 
grant or deny requests for oral argument in accordance with the 
provisions of Rule 451, Sec. 201.451 of this chapter.
    (h) Notwithstanding anything in paragraph (g) of this section, the 
functions described in paragraph (g) of this section are not delegated 
to the General Counsel with respect to proceedings in which the Chairman 
or the General Counsel determines that separation of functions 
requirements or other circumstances would make inappropriate the General 
Counsel's exercise of such delegated functions. With respect to such 
proceedings, such functions are delegated to the Executive Assistant to 
the Chairman pursuant to Sec. 200.30-16 of this chapter.
    (i) Notwithstanding anything in paragraph (g) of this section, in 
any case described in paragraph (g) of this section in which the General 
Counsel believes it appropriate, he or she may submit the matter to the 
Commission.
    (j) With respect to the Securities Exchange Act of 1934 (15 U.S.C. 
78a et seq.):
    (1) To administer the provisions of Sec. 240.24c-1 of this chapter; 
provided that access to nonpublic information as defined in such section 
shall be provided only with the concurrence of the head of the 
Commission division or office responsible for such information or the 
files containing such information.
    (2) To administer the provisions of section 24(d) of the Act (15 
U.S.C. 78x(d)).
    (k) To refer matters and information concerning possible 
professional misconduct to state bar associations and other state 
professional boards or societies.
    (l) File applications in district court under Section 21(e)(1) of 
the Securities Exchange Act of 1934 (15 U.S.C. 78u(e)(1)) to obtain 
orders commanding persons to comply with Commission orders.

[47 FR 20288, May 12, 1982, as amended at 49 FR 13866, Apr. 9, 1984; 49 
FR 43951, Nov. 1, 1984; 53 FR 17458, May 17, 1988; 54 FR 18101, Apr. 27, 
1989; 54 FR 33500, Aug. 15, 1989; 58 FR 8541, Feb. 16, 1993; 58 FR 
52419, Oct. 8, 1993; 59 FR 39680, Aug. 4, 1994; 60 FR 14630, Mar. 20, 
1995; 60 FR 32794, June 23, 1995; 61 FR 56892, Nov. 5, 1996; 65 FR 
12469, Mar. 9, 2000; 67 FR 56220, Sept. 3, 2002]



Sec. 200.30-15  Delegation of authority to Executive Director.

    Under Pub. L. 100-181, 101 Stat. 1254 (15 U.S.C. 78d-1, 78d-2), the 
Securities

[[Page 48]]

and Exchange Commission hereby delegates, until the Commission orders 
otherwise, the following functions to the Executive Director to be 
performed by him or her or under his or her direction by persons 
designated by the Chairman of the Commission: To identify and implement 
additional changes within the Commission that will promote the 
principles and standards of the National Performance Review and the 
strategic and quality management approaches described by the Federal 
Quality Institute's ``Presidential Award for Quality'' or its successor 
awards.

[60 FR 14630, Mar. 20, 1995]



Sec. 200.30-16  Delegation of authority to Executive Assistant to the Chairman.

    Pursuant to the provisions of Pub. L. 101-181, 101 Stat. 1254, 101 
Stat. 1255, 15 U.S.C. 78d-1, and 15 U.S.C. 78d-2, the Securities and 
Exchange Commission hereby delegates, until the Commission orders 
otherwise, the following functions to the Executive Assistant to the 
Chairman (or to such other person or persons designated pursuant to 
paragraph (c) of this section), to be performed by such Executive 
Assistant or under the Executive Assistant's direction by such person or 
persons as may be designated from time to time by the Chairman of the 
Commission (or by such other person or persons designated pursuant to 
paragraph (c) of this section):
    (a) The functions otherwise delegated to the General Counsel under 
Sec. 200.30-14(g) of this chapter, with respect to any proceeding in 
which the Chairman or the General Counsel has determined, pursuant to 
Sec. 200.30-14(h) of this chapter, that separation of functions 
requirements or other circumstances would make inappropriate the General 
Counsel's exercise of such delegated functions.
    (b) Notwithstanding anything in paragraph (a) of this section, in 
any proceeding described in paragraph (a) of this section in which the 
Executive Assistant believes it appropriate, the Executive Assistant may 
submit the matter to the Commission.
    (c) Notwithstanding anything in this section, the functions 
otherwise delegated to the Executive Assistant respecting any proceeding 
in which the Chairman or the Executive Assistant determines that the 
Executive Assistant's exercise of such delegated functions would be 
inappropriate, are hereby delegated to such person or persons, not under 
the Executive Assistant's supervision, as may be designated by the 
Chairman.

[54 FR 18102, Apr. 27, 1989, as amended at 59 FR 39681, Aug. 4, 1994]



Sec. 200.30-17  Delegation of authority to Director of Office of International Affairs.

    Pursuant to the provisions of Pub. L. 100-181, 101 Stat. 1254, 1255 
(15 U.S.C. 78d-1, 78d-2), the Securities and Exchange Commission hereby 
delegates, until the Commission orders otherwise, the following 
functions to the Director of the Office of International Affairs to be 
performed by the Director or under the Director's direction by such 
other person or persons as may be designated from time to time by the 
Chairman of the Commission:
    (a) To administer the provisions of Sec. 240.24c-1 of this chapter; 
provided that access to nonpublic information as defined in such section 
shall be provided only with the concurrence of the head of the 
Commission division or office responsible for such information or the 
files containing such information.
    (b) To administer the provisions of section 24(d) of the Securities 
Exchange Act of 1934 (15 U.S.C. 78x(d)).

[58 FR 52419, Oct. 8, 1993]



Sec. 200.30-18  Delegation of authority to Director of the Office of Compliance Inspections and Examinations.

    Pursuant to the provisions of Pub. L. 100-181, 101 Stat. 1254, 1255 
(15 U.S.C. 78d-1, 78d-2), the Securities and Exchange Commission hereby 
delegates, until the Commission orders otherwise, the following 
authority to the Director of the Office of Compliance Inspections and 
Examinations (``OCIE'') to be performed by the Director or by such other 
person or persons as may be designated from time to time by the Chairman 
of the Commission:
    (a) To administer the provisions of Sec. 240.24c-1 of this chapter; 
provided that

[[Page 49]]

access to nonpublic information as defined in such Section shall be 
provided only with the concurrence of the head of the Commission 
division or office responsible for such information or the files 
containing such information.
    (b) Pursuant to the Securities Exchange Act of 1934 (``the Exchange 
Act'') (15 U.S.C. 78a et seq.):
    (1) To grant and deny applications for confidential treatment filed 
pursuant to Section 24(b) of the Exchange Act (15 U.S.C. 78x(b)) and 
Rule 24b-2 thereunder (Sec. 240.24b-2 of this chapter); and
    (2) To revoke a grant of confidential treatment for any such 
application.
    (c) Pursuant to Section 17(b) of the Exchange Act (15 U.S.C. 
78q(b)), prior to any examination of a registered clearing agency, 
registered transfer agent, or registered municipal securities dealer 
whose appropriate regulatory agency is not the Commission, to notify and 
consult with the appropriate regulatory agency for such clearing agency, 
transfer agent, or municipal securities dealer.
    (d) Pursuant to Section 17(c)(3) of the Exchange Act (15 U.S.C. 
78q(c)(3)), in regard to clearing agencies, transfer agents and 
municipal securities dealers for which the Commission is not the 
appropriate regulatory agency:
    (1) To notify the appropriate regulatory agency of any examination 
conducted by the Commission of any such clearing agency, transfer agent, 
or municipal securities dealer;
    (2) To request from the appropriate regulatory agency a copy of the 
report of any examination of any such clearing agency, transfer agent, 
or municipal securities dealer conducted by such appropriate regulatory 
agency and any data supplied to it in connection with such examination; 
and
    (3) To furnish to the appropriate regulatory agency on request a 
copy of the report of any examination of any such clearing agency, 
transfer agent, or municipal securities dealer conducted by the 
Commission and any data supplied to it in connection with such 
examination.
    (e) To administer the provisions of Section 24(d) of the Exchange 
Act (15 U.S.C. 78x(d)).
    (f) To notify the Securities Investor Protection Corporation 
(``SIPC'') of facts concerning the activities and the operational and 
financial condition of any registered broker or dealer which is or 
appears to be a member of SIPC and which is in or approaching financial 
difficulty within the meaning of Section 5 of the Securities Investor 
Protection Act of 1970, as amended, 15 U.S.C. 78aa et seq.
    (g) Pursuant to Section 15(b)(2)(C) of the Exchange Act (15 U.S.C. 
78o(b)(2)(C)):
    (1) To delay until the second six month period from registration 
with the Commission the inspection of newly registered broker-dealers 
that have not commenced actual operations within six months of their 
registration with the Commission; and
    (2) To delay until the second six month period from registration 
with the Commission the inspection of newly registered broker-dealers to 
determine whether they are in compliance with applicable provisions of 
the Exchange Act and rules thereunder, other than financial 
responsibility rules.
    (h) Pursuant to Section 36 of the Exchange Act (15 U.S.C. 78mm) to 
review and, either unconditionally or on specified terms and conditions, 
grant, or deny exemptions from rule 17a-25 of the Act (Sec. 240.17a-25 
of this chapter), provided that the Division of Market Regulation is 
notified of any such granting or denial of an exemption.
    (i) With respect to the Investment Advisers Act of 1940 (``Advisers 
Act'') (15 U.S.C. 80b-1 et seq.):
    (1) Pursuant to Section 203(h) of the Advisers Act (15 U.S.C.80b-
3(h)), to authorize the issuance of orders cancelling registration of 
investment advisers, or applications for registration, if such 
investment advisers or applicants for registration are no longer in 
existence or are not engaged in business as investment advisers; and
    (2) Pursuant to Rule 204-2(j)(3)(ii) (Sec. 275.204-2(j)(3)(ii) of 
this chapter), to make written demands upon non-resident investment 
advisers subject to the provisions of such rule to furnish to the 
Commission true, correct, complete, and current copies of any or all 
books and records which such non-resident investment advisers are 
required

[[Page 50]]

to make, keep current, or preserve pursuant to any provision of any rule 
or regulation of the Commission adopted under the Advisers Act, or any 
part of such books and records which may be specified in any such 
demand.
    (j) Notwithstanding anything in the foregoing, in any case in which 
the Director of the OCIE believes it appropriate, the Director may 
submit the matter to the Commission.

[60 FR 39644, Aug. 3, 1995, as amended at 66 FR 35842, July 9, 2001]



              Subpart B--Disposition of Commission Business

    Authority: 5 U.S.C. 552b; 15 U.S.C. 78d-1 and 78w.

    Source: 42 FR 14692, Mar. 16, 1977, unless otherwise noted.



Sec. 200.40  Joint disposition of business by Commission meeting.

    Any meeting of the Commission that is subject to the provisions of 
the Government in the Sunshine Act, 5 U.S.C. 552b, shall be held in 
accordance with subpart I of this part. The Commission's Secretary shall 
prepare and maintain a Minute Record reflecting the official action 
taken at such meetings.

[60 FR 17202, Apr. 5, 1995]



Sec. 200.41  Quorum of the Commission.

    A quorum of the Commission shall consist of three members; provided, 
however, that if the number of Commissioners in office is less than 
three, a quorum shall consist of the number of members in office; and 
provided further that on any matter of business as to which the number 
of members in office, minus the number of members who either have 
disqualified themselves from consideration of such matter pursuant to 
Sec. 200.60 or are otherwise disqualified from such consideration, is 
two, two members shall constitute a quorum for purposes of such matter.

[60 FR 17202, Apr. 5, 1995]



Sec. 200.42  Disposition of business by seriatim Commission consideration.

    (a) Whenever the Commission's Chairman, or the Commission member 
designated as duty officer pursuant to Sec. 200.43, is of the opinion 
that joint deliberation among the members of the Commission upon any 
matter is unnecessary in light of the nature of the matter, 
impracticable, or contrary to the requirements of agency business, but 
is of the view that such matter should be the subject of a vote of the 
Commission, such matter may be disposed of by circulation of any 
relevant materials concerning the matter among all Commission members. 
Each participating Commission member shall report his or her vote to the 
Secretary, who shall record it in the Minute Record of the Commission. 
Any matter circulated for disposition pursuant to this subsection shall 
not be considered final until each Commission member has reported his or 
her vote to the Secretary or has reported to the Secretary that the 
Commissioner does not intend to participate in the matter.
    (b) Whenever any member of the Commission so requests, any matter 
circulated for disposition pursuant to Sec. 200.42(a) shall be withdrawn 
from circulation and scheduled instead for joint Commission 
deliberation.

[42 FR 14692, Mar. 16, 1977, as amended at 59 FR 53936, Oct. 27, 1994. 
Redesignated and amended at 60 FR 17202, Apr. 5, 1995]



Sec. 200.43  Disposition of business by exercise of authority delegated to individual Commissioner.

    (a) Delegation to duty officer. (1) Pursuant to the provisions of 
Pub. L. No. 87-592, 76 Stat. 394, as amended by section 25 of Pub. L. 
94-29, 89 Stat. 163, the Commission hereby delegates to an individual 
Commissioner, to be designated as the Commission's ``duty officer'' by 
the Chairman of the Commission (or by the Chairman's designee) from time 
to time, all of the functions of the Commission; Provided, however, That 
no such delegation shall authorize the duty officer (i) to exercise the 
function of rulemaking, as defined in the Administrative Procedure Act 
of 1946, as codified, 5 U.S.C. 551 et seq., with reference to general 
rules as distinguished from rules of particular applicability; (ii) to 
make any rule, pursuant to section 19(c) of the Securities Exchange Act 
of 1934; or (iii) to preside at the taking of evidence as described

[[Page 51]]

in section 7(a) of the Administrative Procedure Act, 5 U.S.C. 556(b), 
except that the duty officer may preside at the taking of evidence with 
respect to the issuance of a temporary cease-and-desist order as 
provided by Rule 511(c) of the Commission's Rules of Practice, 
Sec. 201.511(c) of this chapter.
    (2) To the extent feasible, the designation of a duty officer shall 
rotate, under the administration of the Secretary, on a regular weekly 
basis among the members of the Commission other than the Chairman.
    (b) Exercise of duty officer authority. (1) The authority delegated 
by this rule shall be exercised when, in the opinion of the duty 
officer, action is required to be taken which, by reason of its urgency, 
cannot practicably be scheduled for consideration at a Commission 
meeting. After consideration of a staff recommendation involving such a 
matter, the duty officer shall forthwith report his or her action 
thereon to the Secretary.
    (2) The duty officer may, when in his or her opinion it would be 
proper and timely, exercise the authority delegated in this section to 
initiate by order a nonpublic formal investigative proceeding pursuant 
to section 19(b) of the Securities Act of 1933 (15 U.S.C. 77s(b)), 
section 21(b) of the Securities Exchange Act of 1934 (15 U.S.C. 78u(b)), 
section 18(c) of the Public Utility Holding Company Act of 1935 (15 
U.S.C. 79r(c)), section 42(b) of the Investment Company Act of 1940 (15 
U.S.C. 80a-41(b)), section 209(b) of the Investment Advisers Act of 1940 
(15 U.S.C. 80b-9(b)), and part 203 (Rules Relating to Investigations) of 
this title (17 CFR part 203). After consideration of a staff 
recommendation for initiation by order of a nonpublic formal 
investigative proceeding, the duty officer shall forthwith report his or 
her action thereon to the Secretary.
    (3) In any consideration of Commission business by a duty officer, 
the provisions of subpart I herein, Sec. 200.400 et seq., shall not 
apply, whether or not the duty officer, in exercising his or her 
authority, consults with, or seeks the advice of, other members of the 
Commission individually.
    (c) Commission affirmation of duty officer action. (1) Any action 
authorized by a duty officer pursuant to Sec. 200.43(a) shall be either 
(i) circulated to the members of the Commission for affirmation pursuant 
to Sec. 200.42; or (ii) scheduled for affirmation at a Commission 
meeting at the earliest practicable date consistent with the procedures 
in subpart I.
    (2)(i) The Commission may, in its discretion, at any time review any 
unaffirmed action taken by a duty officer, either upon its own 
initiative or upon the petition of any person affected thereby. The vote 
of any one member of the Commission, including the duty officer, shall 
be sufficient to bring any such unaffirmed action taken by a duty 
officer before the Commission for review.
    (ii) A person or party adversely affected by any unaffirmed action 
taken by a duty officer shall be entitled to seek review by the 
Commission of the duty officer's unaffirmed actions, but only in the 
event that the unaffirmed action by the duty officer (A) denies any 
request for action pursuant to sections 8(a) or 8(c) of the Securities 
Act of 1933, or the first sentence of section 12(d) of the Securities 
Exchange Act of 1934; (B) suspends trading in a security pursuant to 
section 12(k) of the Securities Exchange Act of 1934; or (C) is pursuant 
to any provision of the Securities Exchange Act of 1934 in a case of 
adjudication, as defined in section 551 of Title 5, U.S. Code, not 
required by that Act to be determined on the record after notice and 
opportunity for hearing (except to the extent there is involved a matter 
described in section 554(a) (1) through (6) of Title 5, United States 
Code).
    (3) Affirmed or unaffirmed action taken by the duty officer shall be 
deemed to be, for all purposes, the action of the Commission unless and 
until the Commission directs otherwise. Rule 26 of the Commission's 
rules of practice, 17 CFR 201.26, shall not apply to duty officer 
action.

[42 FR 14692, Mar. 16, 1977, as amended at 59 FR 53936, Oct. 27, 1994. 
Redesignated and amended at 60 FR 17202, Apr. 5, 1995; 60 FR 32795, June 
23, 1995]

[[Page 52]]



                       Subpart C--Canons of Ethics

    Authority: Secs. 19, 28, 48 Stat. 85, 901, as amended, sec. 20, 49 
Stat. 833, sec. 319, 53 Stat. 1173, secs. 38, 211, 54 Stat. 841, 855; 15 
U.S.C. 77s, 78w, 79t, 77sss, 80a-37, 80b-11.

    Source: 25 FR 6725, July 15, 1960, unless otherwise noted.



Sec. 200.50  Authority.

    The Canons of Ethics for Members of the Securities and Exchange 
Commission were approved by the Commission on July 22, 1958.



Sec. 200.51  Policy.

    It is characteristic of the administrative process that the Members 
of the Commission and their place in public opinion are affected by the 
advice and conduct of the staff, particularly the professional and 
executive employees. It shall be the policy of the Commission to require 
that employees bear in mind the principles specified in the Canons.



Sec. 200.52  Copies of the Canons.

    The Canons have been distributed to employees of the Commission. In 
addition, executive and professional employees are issued copies of the 
Canons upon entrance on duty.



Sec. 200.53  Preamble.

    (a) Members of the Securities and Exchange Commission are entrusted 
by various enactments of the Congress with powers and duties of great 
social and economic significance to the American people. It is their 
task to regulate varied aspects of the American economy, within the 
limits prescribed by Congress, to insure that our private enterprise 
system serves the welfare of all citizens. Their success in this 
endeavor is a bulwark against possible abuses and injustice which, if 
left unchecked, might jeopardize the strength of our economic 
institutions.
    (b) It is imperative that the members of this Commission continue to 
conduct themselves in their official and personal relationships in a 
manner which commands the respect and confidence of their fellow 
citizens. Members of this Commission shall continue to be mindful of, 
and strictly abide by, the standards of personal conduct set forth in 
its regulation regarding Conduct of Members and Employees and Former 
Members and Employees of the Commission, which is set forth in subpart M 
of this part 200, most of which has been in effect for many years, and 
which was originally codified in 1953.
    (c) However, in addition to the continued observance of those 
principles of personal conduct, it is fitting and proper for the members 
of the Commission to restate and resubscribe to the standards of conduct 
applicable to its executive, legislative and judicial responsibilities.

[25 FR 6725, July 15, 1960, as amended at 31 FR 13533, Oct. 20, 1966]



Sec. 200.54  Constitutional obligations.

    The members of this Commission have undertaken in their oaths of 
office to support the Federal Constitution. Insofar as the enactments of 
the Congress impose executive duties upon the members, they must 
faithfully execute the laws which they are charged with administering. 
Members shall also carefully guard against any infringement of the 
constitutional rights, privileges, or immunities of those who are 
subject to regulation by this Commission.



Sec. 200.55  Statutory obligations.

    In administering the law, members of this Commission should 
vigorously enforce compliance with the law by all persons affected 
thereby. In the exercise of the rulemaking powers delegated this 
Commission by the Congress, members should always be concerned that the 
rulemaking power be confined to the proper limits of the law and be 
consistent with the statutory purposes expressed by the Congress. In the 
exercise of their judicial functions, members shall honestly, fairly and 
impartially determine the rights of all persons under the law.



Sec. 200.56  Personal conduct.

    Appointment to the office of member of this Commission is a high 
honor and requires that the conduct of a member, not only in the 
performance of the duties of his office but also in his everyday life, 
should be beyond reproach.

[[Page 53]]



Sec. 200.57  Relationships with other members.

    Each member should recognize that his conscience and those of other 
members are distinct entities and that differing shades of opinion 
should be anticipated. The free expression of opinion is a safeguard 
against the domination of this Commission by less than a majority, and 
is a keystone of the commission type of administration. However, a 
member should never permit his personal opinion so to conflict with the 
opinion of another member as to develop animosity or unfriendliness in 
the Commission, and every effort should be made to promote solidarity of 
conclusion.



Sec. 200.58  Maintenance of independence.

    This Commission has been established to administer laws enacted by 
the Congress. Its members are appointed by the President by and with the 
advice and consent of the Senate to serve terms as provided by law. 
However, under the law, this is an independent Agency, and in performing 
their duties, members should exhibit a spirit of firm independence and 
reject any effort by representatives of the executive or legislative 
branches of the government to affect their independent determination of 
any matter being considered by this Commission. A member should not be 
swayed by partisan demands, public clamor or considerations of personal 
popularity or notoriety; so also he should be above fear of unjust 
criticism by anyone.



Sec. 200.59  Relationship with persons subject to regulation.

    In all matters before him, a member should administer the law 
without regard to any personality involved, and with regard only to the 
issues. Members should not become indebted in any way to persons who are 
or may become subject to their jurisdiction. No member should accept 
loans, presents or favors of undue value from persons who are regulated 
or who represent those who are regulated. In performing their judicial 
functions, members should avoid discussion of a matter with any person 
outside this Commission and its staff while that matter is pending. In 
the performance of his rule-making and administrative functions, a 
member has a duty to solicit the views of interested persons. Care must 
be taken by a member in his relationship with persons within or outside 
of the Commission to separate the judicial and the rule-making functions 
and to observe the liberties of discussion respectively appropriate. 
Insofar as it is consistent with the dignity of his official position, 
he should maintain contact with the persons outside the agency who may 
be affected by his rule-making functions, but he should not accept 
unreasonable or lavish hospitality in so doing.



Sec. 200.60  Qualification to participate in particular matters.

    The question in a particular matter rests with that individual 
member. Each member should weigh carefully the question of his 
qualification with respect to any matter wherein he or any relatives or 
former business associates or clients are involved. He should disqualify 
himself in the event he obtained knowledge prior to becoming a member of 
the facts at issue before him in a quasi-judicial proceeding, or in 
other types of proceeding in any matter involving parties in whom he has 
any interest or relationship directly or indirectly. If an interested 
person suggests that a member should disqualify himself in a particular 
matter because of bias or prejudice, the member shall be the judge of 
his own qualification.



Sec. 200.61  Impressions of influence.

    A member should not, by his conduct, permit the impression to 
prevail that any person can improperly influence him, that any person 
unduly enjoys his favor or that he is affected in any way by the rank, 
position, prestige, or affluence of any person.



Sec. 200.62  Ex parte communications.

    All proceedings required to be determined by the Commission on the 
record shall be determined by the members solely upon the record and the 
arguments of the parties or their counsel properly made in the regular 
course of such proceeding. A member shall at all times comply with the

[[Page 54]]

Commission's Code of Behavior governing ex parte communications between 
persons outside the Commission and decisional employees, Sec. 200.110 et 
seq.

[28 FR 4446, May 3, 1963]



Sec. 200.63  Commission opinions.

    The opinions of the Commission should state the reasons for the 
action taken and contain a clear showing that no serious argument of 
counsel has been disregarded or overlooked. In such manner, a member 
shows a full understanding of the matter before him, avoids the 
suspicion of arbitrary conclusion, promotes confidence in his 
intellectual integrity and may contribute some useful precedent to the 
growth of the law. A member should be guided in his decisions by a deep 
regard for the integrity of the system of law which he administers. He 
should recall that he is not a repository of arbitrary power, but is 
acting on behalf of the public under the sanction of the law.



Sec. 200.64  Judicial review.

    The Congress has provided for review by the courts of the decisions 
and orders by this Commission. Members should recognize that their 
obligation to preserve the sanctity of the laws administered by them 
requires that they pursue and prosecute, vigorously and diligently but 
at the same time fairly and impartially and with dignity, all matters 
which they or others take to the courts for judicial review.



Sec. 200.65  Legislative proposals.

    Members must recognize that the changing conditions in a volatile 
economy may require that they bring to the attention of the Congress 
proposals to amend, modify or repeal the laws administered by them. They 
should urge the Congress, whenever necessary, to effect such amendment, 
modification or repeal of particular parts of the statutes which they 
administer. In any action a member's motivation should be the common 
weal and not the particular interests of any particular group.



Sec. 200.66  Investigations.

    The power to investigate carries with it the power to defame and 
destroy. In determining to exercise their investigatory power, members 
should concern themselves only with the facts known to them and the 
reasonable inferences from those facts. A member should never suggest, 
vote for, or participate in an investigation aimed at a particular 
individual for reasons of animus, prejudice or vindictiveness. The 
requirements of the particular case alone should induce the exercise of 
the investigatory power, and no public pronouncement of the pendency of 
such an investigation should be made in the absence of reasonable 
evidence that the law has been violated and that the public welfare 
demand it.



Sec. 200.67  Power to adopt rules.

    In exercising its rule-making power, this Commission performs a 
legislative function. The delegation of this power by the Congress 
imposes the obligation upon the members to adopt rules necessary to 
effectuate the stated policies of the statute in the interest of all of 
the people. Care should be taken to avoid the adoption of rules which 
seek to extend the power of the Commission beyond proper statutory 
limits. Its rules should never tend to stifle or discourage legitimate 
business enterprises or activities, nor should they be interpreted so as 
unduly and unnecessarily to burden those regulated with onerous 
obligations. On the other hand, the very statutory enactments evidence 
the need for regulation, and the necessary rules should be adopted or 
modifications made or rules should be repealed as changing requirements 
demand without fear or favor.



Sec. 200.68  Promptness.

    Each member should promptly perform the duties with which he is 
charged by the statutes. The Commission should evaluate continuously its 
practices and procedures to assure that it promptly disposes of all 
matters affecting the rights of those regulated. This is particularly 
desirable in quasi-judicial proceedings. While avoiding arbitrary action 
in unreasonably or unjustly forcing matters to trial, members should 
endeavor to hold counsel to

[[Page 55]]

a proper appreciation of their duties to the public, their clients and 
others who are interested. Requests for continuances of matters should 
be determined in a manner consistent with this policy.



Sec. 200.69  Conduct toward parties and their counsel.

    Members should be temperate, attentive, patient and impartial when 
hearing the arguments of parties or their counsel. Members should not 
condone unprofessional conduct by attorneys in their representation of 
parties. The Commission should continuously assure that its staff 
follows the same principles in their relationships with parties and 
counsel.



Sec. 200.70  Business promotions.

    A member must not engage in any other business, employment or 
vocation while in office, nor may he ever use the power of his office or 
the influence of his name to promote the business interests of others.



Sec. 200.71  Fiduciary relationships.

    A member should avoid service as a fiduciary if it would interfere 
or seem to interfere with the proper performance of his duties, or if 
the interests of those represented require investments in enterprises 
which are involved in questions to be determined by him. Such 
relationships would include trustees, executors, corporate directors, 
and the like.



Sec. 200.72  Supervision of internal organization.

    Members and particularly the Chairman of the Commission should 
scrutinize continuously its internal organization in order to assure 
that such organization handles all matters before it efficiently and 
expeditiously, while recognizing that changing times bring changing 
emphasis in the administration of the laws.



                   Subpart D--Information and Requests

    Authority: 5 U.S.C. 552, as amended, 15 U.S.C. 77f(d), 77s, 
77ggg(a), 78m(F)(3), 78w, 79t, 79v(a), 77sss, 80a-37, 80a-44(a), 80a-
44(b), 80b-10(a), 80b-11.
    Section 200.80 also issued under 5 U.S.C. 552b; 15 U.S.C. 78d-1, 
78d-2; 78a et seq.; 11 U.S.C. 901, 1109(a).
    Section 200.80a also issued under 5 U.S.C. 552b.
    Sections 200.80b and 200.80c also issued under 11 U.S.C. 901, 
1109(a).
    Section 200.82 also issued under 15 U.S.C. 78n.
    Section 200.83 also issued under Exec. Order 12,600, 3 CFR, 1987 
Comp., p. 235.



Sec. 200.80  Commission records and information.

    (a)(1) Information published in the Federal Register. Except as 
provided in paragraph (b) of this section the following materials are 
published in the Federal Register for the guidance of the public:
    (i) Description of the Commission's central and field organization 
and the established places at which, the employees from whom, and the 
methods whereby the public may obtain information, make submittals or 
requests, or obtain decisions;
    (ii) Statements of the general course and method by which the 
Commission's functions are channeled and determined, including the 
nature and requirements of all formal and informal procedures available;
    (iii) Rules of procedure, descriptions of forms available or the 
places at which forms may be obtained, and instructions as to the scope 
and contents of all papers, reports, or examinations;
    (iv) Substantive rules of general applicability adopted as 
authorized by law, and statements of general policy or interpretations 
of general applicability formulated and adopted by the Commission;
    (v) Each amendment, revision, or repeal of the foregoing; and
    (vi) The notice of Commission meetings described in Sec. 200.403, 
but only to the extent, and under the conditions, specified in 
Sec. 200.403.
    (2) Records available for public inspection and copying; documents 
published and indexed. Except as provided in paragraph (b) of this 
section, the following materials are available for public inspection and 
copying during normal business hours at the public reference room 
located at 450 Fifth Street, NW., Room 1024, Washington, DC and at the 
Northeast and Midwest Regional Offices of the Commission,

[[Page 56]]

and, except for indices, they are published weekly in a document 
entitled ``SEC Docket'' (see paragraph (e)(8)(ii) of this section):
    (i) Final opinions of the Commission, including concurring and 
dissenting opinions, as well as orders made by the Commission in the 
adjudication of cases;
    (ii) Statements of policy and interpretations which have been 
adopted by the Commission and are not published in the Federal Register;
    (iii) Administrative staff manuals and instructions to staff that 
affect a member of the public;
    (iv) A record of the final votes of each member of the Commission in 
every Commission proceeding concluded after July 1, 1967;
    (v) Current indices (published quarterly or more frequently) 
providing identifying information to the public as to the materials made 
available pursuant to paragraphs (a)(2) (i), (ii), and (iii) of this 
section which have been issued, adopted or promulgated after July 1, 
1967, and such other indices as the Commission may determine; and
    (vi) Copies and a general index of all records which have been 
released to any person under the Freedom of Information Act and which, 
because of the nature of their subject matter, the Commission determines 
have become or are likely to become the subject matter of subsequent 
requests for substantially the same records.
    (3) Records created on or after November 1, 1996, which are required 
to be available for public inspection and copying under paragraph (a)(2) 
of this section, shall be made available on the Internet.
    (4) Other records available upon request. Except with respect to the 
records made available under paragraphs (a) (1) and (2) of this section, 
and subject to the provisions of paragraph (b) of this section, 
pertaining to nonpublic matters, the Commission, upon request for 
records which (i) reasonably describes such records and (ii) is made in 
accordance with the rules set forth in paragraphs (d) and (e) of this 
section, stating the time, place, fees (if any) and procedures to be 
followed, shall make the records promptly available to any person. A 
compilation of records generally available at the public reference room 
at the principal office of the Commission appears below as appendix A to 
this subpart (17 CFR 200.80a). Most of the records described in appendix 
A to this section are provided to the public pursuant to the Securities 
Act of 1933, 15 U.S.C. 77f(d), the Securities Exchange Act of 1934, 15 
U.S.C. 78m(f)(3), the Public Utility Holding Company Act of 1935, 15 
U.S.C. 79v(a), the Investment Company Act of 1940, 15 U.S.C. 80a-
44(a)(b), and the Investment Advisers Act of 1940, 15 U.S.C. 80b-10(a). 
Arrangements can be made through the Public Reference Branch as 
explained in paragraph (c) of this section for materials to be copied by 
the Commission's contract copying service at fees found in appendix E to 
this section.
    (5) Records available with identifying details deleted. To the 
extent required to prevent a clearly unwarranted invasion of personal 
privacy, identifying details may be deleted from materials made public 
as set forth in paragraphs (a) (1), (2), and (3), of this section, e.g., 
apparently defamatory statements made about any person, information 
received by or given to the Commission in confidence, or any contents of 
personnel and medical and similar files. In addition, certain materials 
which are considered to be nonpublic, as described in paragraph (b) of 
this section may, as authorized by the Commission from time to time, be 
made available for public inspection and copying in an abridged or 
summary form or with identifying details deleted.
    (b) Nonpublic matters. Certain records are nonpublic, but any 
reasonably segregable portion of a record shall be provided to any 
person requesting such record in accordance with paragraphs (d) and (e) 
of this section and after deletion of the portions which are considered 
nonpublic under paragraph (b) of this section. Except for such 
reasonably segregable portions of records, the Commission will generally 
not publish or make available to any person matters that are:
    (1)(i) Specifically authorized under criteria established by an 
executive order to be kept secret in the interest of national defense or 
foreign policy,

[[Page 57]]

and (ii) are in fact properly classified pursuant to such executive 
order.
    (2) Related solely to the internal personnel rules and practices of 
the Commission or any other agency, including, but not limited to:
    (i) Operation rules, guidelines, and manuals of procedure for 
investigators, attorneys, accountants, and other employees other than 
those which establish legal requirements to which members of the public 
are expected to conform; or
    (ii) Hiring, termination, promotion, discipline, compensation, or 
reward of any Commission employee or member, the existence, 
investigation, or disposition of a complaint against any Commission 
employee or member, the physical or mental condition of any Commission 
employee or member, the handling of strictly internal matters, matters 
which would tend to infringe on the privacy of the staff or members of 
the Commission, or similar subjects.
    (3) Specifically exempted from disclosure by statute (other than 5 
U.S.C. 552): Provided, That such statute (i) requires that the matters 
be withheld from the public in such a manner as to leave no discretion 
on the issue, or (ii) establishes particular criteria for withholding or 
refers to particular types of matters to be withheld.
    (4) Disclose trade secrets and commercial or financial information 
obtained from a person and privileged or confidential, including, but 
not limited to:
    (i) Information contained in letters of comment in connection with 
registration statements, applications for registration or other material 
filed with the Commission, replies thereto, and related material which 
is deemed to have been submitted to the Commission in confidence or to 
be confidential at the instance of the registrant or person who has 
filed such material unless the contrary clearly appears; and
    (ii) Information contained in any document submitted to or required 
to be filed with the Commission where the Commission has undertaken 
formally or informally to receive such submission or filing for its use 
or the use of specified persons only, such as preliminary proxy material 
filed pursuant to Rule 14a-6 under the Securities Exchange Act (17 CFR 
240.14a-6) or preliminary information statements filed pursuant to Rule 
14c-5 (17 CFR 240.14c-5) before definitive material has been filed with 
the Commission, reports filed pursuant to Rule 316(a) under the 
Securities Act (17 CFR 230.316(a)), agreements filed pursuant to Rule 
15c3-1d(c)(6)(i) under the Securities Exchange Act (17 CFR 240.15c3-
1d(c)(6)(i)), schedules filed pursuant to Part II of Form X-17A-5 (17 
CFR 249.617) in accordance with Rule 17a-5(b)(3) under the Securities 
Exchange Act (17 CFR 240.17a-5(b)(3)), statements filed pursuant to Rule 
17a-5(k)(1) under the Securities Exchange Act (17 CFR 240.17a-5(k)(1)), 
and confidential reports filed pursuant to Rules 17a-10 and 17a-12 under 
the Securities Exchange Act (17 CFR 240.17a-10 and 240.17a-12); and
    (iii) Information contained in reports, summaries, analyses, 
letters, or memoranda arising out of, in anticipation of or in 
connection with an examination or inspection of the books and records of 
any person or any other investigation.
    (5) Interagency or intra-agency memoranda or letters, including 
generally records which reflect discussions between or consideration by 
members of the Commission or members of its staff, or both, of any 
action taken or proposed to be taken by the Commission or by any member 
of its staff, and specifically, reports, summaries, analyses, 
conclusions, or any other work product of members of the Commission or 
of attorneys, accountants, analysts, or other members of the 
Commission's staff, prepared in the course of an inspection of the books 
or records of any person whose affairs are regulated by the Commission, 
or prepared otherwise in the course of an examination or investigation 
or related litigation conducted by or on behalf of the Commission, 
except those which by law would routinely be made available to a party 
other than an agency in litigation with the Commission.
    (6) Personnel and medical files and similar files the disclosure of 
which would constitute a clearly unwarranted invasion of personal 
privacy, including those concerning all employees of the

[[Page 58]]

Commission and those concerning persons subject to regulation by the 
Commission.
    (7) Records or information compiled for law enforcement purposes to 
the extent that the production of such records or information:
    (i) Could reasonably be expected to interfere with enforcement 
activities undertaken or likely to be undertaken by the Commission or 
the Department of Justice, or any United States Attorney, or any 
Federal, state, local, foreign governmental authority or foreign 
securities authority, any professional association, or any securities 
industry self-regulatory organization;
    (ii) Would deprive a person of a right to a fair trial or an 
impartial adjudication;
    (iii) Could reasonably be expected to constitute an unwarranted 
invasion of personal privacy;
    (iv) Could reasonably be expected to disclose the identity of a 
confidential source including a state, local or foreign agency or 
authority or any private institution which furnished information on a 
confidential basis, and, in the case of a record or information compiled 
by a criminal law enforcement authority in the course of a criminal 
investigation, or by an agency conducting a lawful national security 
intelligence investigation, information furnished by a confidential 
source;
    (v) Would disclose techniques or procedures or would disclose 
guidelines for law enforcement investigations or prosecutions if such 
disclosure could reasonably be expected to risk circumvention of the 
law; or
    (vi) Could be reasonably expected to endanger the life or physical 
safety of any individual.
    (8) Contained in, or related to, any examination, operating, or 
condition report prepared by, on behalf of, or for the use of, the 
Commission, any other Federal, state, local, or foreign governmental 
authority or foreign securities authority, or any securities industry 
self-regulatory organization, responsible for the regulation or 
supervision of financial institutions.
    (9) Geological and geophysical information and data, including maps, 
concerning wells.
    (c)(1) Public reference facilities. In order to disseminate records, 
including those listed in appendix A to this section, the Commission has 
a specially staffed and equipped public reference room located at 450 
Fifth Street NW., Room 1024, Washington, DC and public reference 
facilities in its Northeast and Midwest Regional Offices . Copying 
machines, which are available to requesters on a self-service or 
contractor-operated basis, can be used to make immediate copies up to 
8\1/2\x11 inches in size of materials that are available for inspection 
in the Washington, DC, Northeast and Midwest Regional Offices. Fees and 
levels of service are set out in the Commission's schedule of fees in 
appendix E to this section and in information available from the public 
reference room. The Commission accepts only written requests for copies 
of documents.
    (i) The public reference room in Washington has available for public 
inspection all of the publicly available records of the Commission as 
described in paragraph (a) of this section. In addition, upon request, 
such records will be sent to the Commission's Northeast and Midwest 
Regional Offices for inspection in the public reference facilities at 
those offices, if the records are not needed by the Commission or the 
staff in connection with the performance of official duties. Also upon 
request, and only when suitable arrangements can be made with respect to 
the transportation, storage, and inspection of records, records may be 
sent to any other Commission office for inspection at that office, if 
the records are not needed by the Commission or the staff in connection 
with the performance of official duties. When records are sent to 
another office at the request of a member of the public, the requestor 
shall be charged all costs incurred by the Commission in transporting 
the records.
    (ii) All regional and district offices of the Commission have 
available for public examination the materials set forth in paragraph 
(a)(2) of this section and the SEC Docket, SEC News Digest and other SEC 
publications. Blank forms as well as other general information about the 
operations of the Commission described in paragraph (a)(1) of

[[Page 59]]

this section may also be available at particular regional and district 
offices.
    (iii) In the Northeast and Midwest Regional Offices, microfiche of 
all recent registration statements filed pursuant to the Securities Act 
of 1933, registration statements and periodic reports filed pursuant to 
the Securities Exchange Act of 1934, and periodic reports filed pursuant 
to the Investment Company Act from 1969 to date are available for 
inspection and reproduction.
    The addresses of the Commission's regional and district offices are:

Northeast Regional Office. 7 World Trade Center, Suite 1300, New York, 
          NY 10048. Office hours--9 a.m. to 5:30 p.m. E.S.T.
    Boston District Office--73 Tremont Street, Suite 600, Boston, MA 
02108. Office hours--9 a.m. to 5:30 p.m. E.S.T.
    Philadelphia District Office--The Curtis Center, Suite 1005 E., 601 
Walnut Street, Philadelphia, PA 19106. Office hours--9 a.m. to 5:30 p.m. 
E.S.T.
Southeast Regional Office. 1401 Brickell Avenue, Suite 200, Miami, FL 
          33131. Office hours--9 a.m. to 5:30 p.m. E.S.T.
    Atlanta District Office--3475 Lenox Road, NE., Suite 1000, Atlanta, 
GA 30326. Office hours--9 a.m. to 5:30 p.m. E.S.T.
Midwest Regional Office. 500 West Madison Street, Suite 1400, Chicago, 
          IL 60661. Office hours--8:45 a.m. to 5:15 p.m. C.S.T.
Central Regional Office. 1801 California Street, Suite 4800, Denver, CO 
          80202. Office hours--8 a.m. to 4:30 p.m. M.S.T.
    Fort Worth District Office--801 Cherry Street, 19th Floor, Fort 
Worth, TX 76102. Office hours--8:30 a.m. to 5 p.m. C.S.T.
    Salt Lake District Office--500 Key Bank Tower, 50 S. Main Street, 
Suite 500, Box 79, Salt Lake City, UT 84144. Office hours--8 a.m. to 
4:30 p.m. M.S.T.
Pacific Regional Office. 5670 Wilshire Boulevard, 11th Floor, Los 
          Angeles, CA 90036. Office hours 8:30 a.m. to 5 p.m. P.S.T.
    San Francisco District Office--44 Montgomery Street, Suite 1100, San 
Francisco, CA 94104. Office hours--8:30 a.m. to 5 p.m. P.S.T.

    (2) Public reference inquiries. Inquiries concerning the nature and 
extent of records available at the Commission's public reference room in 
Washington or at its other public reference facilities may be made in 
person or in writing. The addresses of all Commission Regional and 
District Offices are set forth at paragraph (c)(1) of this section. 
Written inquiries may be addressed to the Securities and Exchange 
Commission, Public Reference Branch, 450 Fifth Street, NW., Washington, 
DC 20549.
    (3) Electronic filings made through the Electronic Data Gathering, 
Analysis, and Retrieval system are publicly available through the 
Commission's Web site (http://www.sec.gov).
    (d) Requests for Commission records and copies thereof--(1) Time and 
place of requests for access to Commission records. Requests for access 
to records available through the Commission's public reference 
facilities may be made in person during normal business hours at those 
facilities or by mail directed to the Public Reference Branch, 
Securities and Exchange Commission, Washington, DC 20549. In addition, 
access to agency records not available in the public reference 
facilities may be requested pursuant to the Freedom of Information Act. 
Such requests must be in writing, should be clearly and prominently 
identified by a legend on the first page, such as ``Freedom of 
Information Act Request'', and should be addressed to the Freedom of 
Information Act Officer, SEC, Operations Center, 6432 General Green Way, 
Alexandria, VA 22312-2413. The request may also be made by facsimile 
(703-914-1149) or by Internet (foia/[email protected]).
    (2) Requests for copies of records. Requests for copies of 
Commission records available through the Commission's public reference 
facilities, including those listed in appendix A to this section, may be 
made directly to the appropriate facility either in person or by mail 
addressed to the Securities and Exchange Commission, Public Reference 
Branch, Washington, DC 20549. Levels of service and charges for copies 
are set out in the Commission's schedule of fees in appendix E to this 
section. Requests for copies of materials to which access has been 
granted pursuant to a Freedom of Information Act request will be 
processed pursuant to regulations found in this section in paragraphs 
(e)(9) and (e)(10) and at charges set out in appendix E to this section.
    (3) Description of requested records. Each request for Commission 
records or copies thereof shall reasonably describe the records sought 
with sufficient specificity with respect to names,

[[Page 60]]

dates and subject matter to permit the records to be located among the 
records maintained by or for the Commission. A person who has requested 
Commission records or copies thereof will be promptly advised if the 
records cannot be located on the basis of the description given and that 
further identifying information must be provided before his request can 
be satisfied.
    (4) Normal availability. Records maintained in the Commission's 
public reference facilities or copies thereof will normally be made 
available in keeping with levels of service and fees set out in appendix 
E to this section. Records requested pursuant to the Freedom of 
Information Act will be made available as described in paragraphs (e)(9) 
and (e)(10) of this section.
    (5) Initial determination; multi-track processing, and denials.--(i) 
Time within which to respond. When a request complies with the 
procedures in this section for requesting records under the Freedom of 
Information Act, a response shall be sent within 20 business days from 
the date the Office of Freedom of Information and Privacy Act Operations 
receives the request, except as described in paragraphs (d)(5)(ii) and 
(d)(5)(iii) of this section. If that Office has identified the requested 
records, the response shall state that the records are being withheld, 
in whole or in part, under a specific exemption or are being released.
    (ii) Voluminous records. The amount of separate and distinct records 
which are demanded in a single request or the amount of time or work (or 
both) involved may be such that the review of the records cannot be 
completed within 20 business days, as prescribed in paragraph (d)(5)(i) 
of this section. In such a case, the Office of Freedom of Information 
and Privacy Act Operations shall inform the requester of the approximate 
volume of the records and give him or her the option of limiting the 
scope of the request to qualify for 20-day processing or placing the 
request in the Commission's first-in, first-out (FIFO) system for 
reviewing voluminous records. In the latter case, the Office will inform 
the requester of the approximate time when the review will start. The 
FIFO system allows the Commission to serve all those requesting 
voluminous records on a first-come, first-served basis, such that all 
releasable records sought will be released at one time, unless the 
requester specifically requests that releasable records be released 
piecemeal as they are processed.
    (iii) Expedited processing. The Office of Freedom of Information and 
Privacy Act Operations shall grant a request for expedited processing if 
the requester demonstrates a compelling need for the records. 
``Compelling need'' means that a failure to obtain the requested records 
on an expedited basis could reasonably be expected to pose an imminent 
threat to an individual's life or physical safety or, if the requester 
is primarily engaged in disseminating information, an urgency to inform 
the public of actual or alleged Federal government activity. A 
compelling need shall be demonstrated by a statement, certified to be 
true and correct to the best of the requester's knowledge and belief. 
The Office of Freedom of Information and Privacy Act Operations shall 
notify the requester of the decision to grant or deny the request for 
expedited treatment within ten business days of the date of the request. 
A request for records that has been granted expedited processing shall 
be processed as soon as practicable.
    (iv) Notice of denial. Any notification of denial of any request for 
records shall state the name and title or position of the person 
responsible for the denial of the request, the reason for the decision, 
and the right of the requester to appeal to the General Counsel. The 
decision shall estimate the volume of records that are being withheld in 
their entirety, unless giving such an estimate would harm an interest 
protected by the applicable exemption. The amount of information 
redacted shall be indicated on the released portion of the record and, 
if technically feasible, at the place where the redaction is made.
    (v) Form of releasable records. Releasable records shall be made 
available in any form or format requested if they are readily 
reproducible in that form or format.

[[Page 61]]

    (6) Administrative review. Any person who has received no response 
to a request within the period prescribed in paragraph (d)(5) of this 
section or within an extended period permitted under paragraph (d)(7) of 
this section, or whose request has been denied under paragraph (d)(5) of 
this section, may appeal the adverse decision or failure to respond to 
the General Counsel.
    (i) The appeal shall be in writing, shall be clearly and prominently 
identified on the envelope or other cover and at the top of the first 
page by a legend such as ``Freedom of Information Act Appeal,'' and 
shall identify the record in the form in which it was originally 
requested.
    (ii) The appeal must be mailed to the Office of Freedom of 
Information and Privacy Act Operations, SEC, Operations Center, 6432 
General Green Way, Alexandria, VA 22312-2413 or delivered to Room 1418 
at that address, and a copy of it must be mailed to the General Counsel, 
Securities and Exchange Commission, 450 Fifth Street, NW, Washington, DC 
20549 or delivered to Room 1012-B at that address.
    (iii) The appeal may include such facts and cite such legal or other 
authorities as the person submitting the appeal may consider 
appropriate.
    (iv) The General Counsel shall have the authority to grant or deny 
all appeals, in whole or in part, and to release as an exercise of 
discretion records exempt from mandatory disclosure under 5 U.S.C. 
552(b). In appropriate cases he or she may, in his or her sole and 
unfettered discretion, refer appeals to the Commission for 
determination.
    (v) A determination with respect to any appeal shall be made within 
twenty days (excepting Saturdays, Sundays and legal public holidays) 
after the receipt of such appeal or within such extended period as may 
be permitted in accordance with paragraph (d)(7) of this section.
    (vi) A denial of an appeal in whole or in part shall set forth the 
basis for the denial, and shall advise the requester that judicial 
review of the decision is available in accordance with 5 U.S.C. 
552(a)(4).
    (7) Extension of time to consider requests and to consider 
administrative appeals. In unusual circumstances, as specified in this 
paragraph, the time limits prescribed in either paragraphs (d) (5) or 
(6) of this section may be extended by written notice to the person 
making a request for a record or a copy, setting forth the unusual 
circumstances for such extension and the date on which a determination 
is expected to be dispatched. No such notice shall specify a date that 
would result in an extension for more than ten business days, except as 
provided in paragraph (d)(8) of this section. As used in this paragraph, 
``unusual circumstances'' means, but only to the extent reasonably 
necessary to the proper processing of the particular request:
    (i) The need to search for and collect the requested records from 
field facilities or other establishments that are separate from the 
office processing the request. (Many records of the Commission are 
stored in Federal Records Centers in accordance with law--including many 
of the documents which have been on file with the Commission for more 
than 2 years--and cannot be made available for several days after a 
request has been made. Other records may temporarily be located at a 
regional or district office of the Commission. Any person who has 
requested for personal examination a record stored at the Federal 
Records Center or temporarily located in a regional or district office 
of the Commission will be notified when and where the record will be 
made available to him. Any person who has ordered a copy of such record 
will be provided with a copy as soon as practicable). Some records have 
been disposed of in accordance with the Commission's Records Control 
Schedule (17 CFR 200.80(f)).
    (ii) The need to search for, collect, and appropriately examine a 
voluminous amount of separate and distinct records which are demanded in 
a single request. (While every reasonable effort will be made fully to 
comply with each request as promptly as possible on a first-come, first-
served basis, work done to search for, collect and appropriately examine 
records in response to a request for a large number of records

[[Page 62]]

will be contingent upon the availability of processing personnel in 
accordance with an equitable allocation of time to all members of the 
public who have requested or wish to request records.)
    (iii) The need for consultation, which shall be conducted with all 
practicable speed, with another agency having a substantial interest in 
the determination of the request or among two or more components within 
the Commission having substantial subject-matter interest therein.
    (8) Inability to meet time limits. If a request for records cannot 
be processed within the time prescribed under paragraph (d)(7) of this 
section, the Commission shall so notify and give the requester an 
opportunity to modify the request so that it may be processed within 
that time or to arrange an alternative time for processing the request 
or a modified request.
    (i) Records in use for another member of the public. Any record 
being inspected by or copied for another member of the public will be 
made available as soon as practicable.
    (ii) Records in use by a member of the Commission or its staff. 
Although every effort will be made to make a record in use by a member 
of the Commission or its staff available when requested, it may 
occasionally be necessary to delay making such a record available when 
doing so at the time the request is made would seriously interfere with 
the work of the Commission or its staff.
    (iii) Missing or lost records. Any person who has requested a record 
or copy will be notified if the record sought cannot be found. If he so 
requests, he will be notified if it should subsequently be located.
    (9) Misdirected written requests. The Commission cannot assure that 
a timely or satisfactory response will be given to written requests for 
inspection or copies of records that are directed to the Commission 
other than in the manner prescribed in paragraphs (d) (1) and (2) of 
this section. Any staff member who receives a written request for 
records should promptly forward the request to the Freedom of 
Information Act Officer. Misdirected requests for records will be 
considered to have been received for purposes of paragraph (d) of this 
section only when they have been actually received by the Freedom of 
Information Act Officer. The Commission will not entertain any appeal 
from an alleged denial or failure to comply with a misdirected request, 
unless it is clearly shown that the request was in fact received by the 
Freedom of Information Act Officer.
    (e) Fees for records services. A current schedule of fees for record 
services, including locating, reviewing, and making records available, 
attestations and copying, appears in appendix E to this subpart D, 17 
CFR 200.80e. Copies of the current schedule of fees may also be obtained 
upon request made in person, by telephone or by mail from the public 
reference room or at any regional or district office of the Commission.
    (1) Services provided without charge. Generally, up to one-half hour 
of staff time devoted to searching for and reviewing Commission records 
will be provided without charge. Where a request for records pursuant to 
the Freedom of Information Act is determined not to serve a commercial 
purpose as defined in paragraph (e)(10)(ii) of this section, a total of 
two staff hours of search and review and one hundred pages of 
duplication as defined in paragraphs (e)(9)(i), (e)(9)(ii) and 
(e)(9)(iii) of this section, respectively, shall be made available 
without charge in the form most economical for the government.
    (2) Services for which fees are charged. For records available 
through the Commission's public reference facilities, requestors may 
make arrangements for duplication in accordance with provisions of the 
Commission's dissemination contract. Copies of that contract, which 
contain tables of charges, may be inspected in the public reference 
room, 450 Fifth Street, NW., Room 1024, Washington, DC. A complete 
schedule of services offered by the contractor and fees charged for 
those services is available through the Commission's public reference 
facilities. Fees for services provided in connection with requests made 
pursuant to the Freedom of Information Act shall be assessed as set out 
in appendix E to this section and in keeping with guidelines

[[Page 63]]

and procedures described in paragraphs (e)(9) and (e)(10) of this 
section.
    (3) Requests requiring large expenditures. A request for Commission 
records may state that the requesting person is willing to pay fees up 
to a stated limit for services to be provided in locating, reviewing and 
making available requested records. In such circumstances, no work will 
be done that will result in fees beyond the stated limit without further 
written authorization. If no limit is initially stated by the person 
requesting records or copies, services in locating and making available 
the requested records will not be done so as to exceed fees of $28 
(exclusive of applicable copying charges) without the express written 
authorization by the requesting person, and he will be so informed.
    (4) Waiver or reduction of fees. (i) The Office of Freedom of 
Information and Privacy Act Operations may waive or reduce search, 
review, and duplication fees if:
    (A) Disclosure of the requested records is in the public interest 
because it is likely to contribute significantly to public understanding 
of the operations or activities of the government; and
    (B) Disclosure is not primarily in the commercial interest of the 
requester.
    (ii) The Office of Freedom of Information and Privacy Act Operations 
will determine whether disclosure is likely to contribute significantly 
to public understanding of the operations or activities of the 
government based upon four factors:
    (A) Whether the subject of the requested records concerns the 
operations and activities of the Federal government;
    (B) Whether the requested records are meaningfully informative on 
those operations or activities so that their disclosure would likely 
contribute to increased public understanding of specific operations or 
activities of the government;
    (C) Whether disclosure will contribute to the understanding of the 
public at large, rather than the understanding of the requester or a 
narrow segment of interested persons; and
    (D) Whether disclosure would contribute significantly to public 
understanding of the governmental operations or activities.
    (iii) The Office of Freedom of Information and Privacy Act 
Operations will determine whether disclosure of the requested records is 
not primarily in the commercial interest of the requester based upon two 
factors:
    (A) Whether disclosure would further any commercial interests of the 
requester; and
    (B) Whether the public interest in disclosure is greater than the 
requester's commercial interest.
    (iv) If only a portion of the requested records satisfies both the 
requirements for a waiver or reduction of fees, a waiver or reduction of 
fees will be granted for only that portion.
    (v) A request for a waiver or reduction of fees may be a part of a 
request for records. Such requests should address all the factors 
identified in paragraphs (e)(4)(ii) and (e)(4)(iii) of this section.
    (vi) Denials of requests for a waiver or reduction of fees may be 
appealed to the General Counsel in accordance with the procedure set 
forth in paragraph (d)(6) of this section.
    (5) Records obtained from Federal Records Centers. When, to fill a 
request for inspection or copying, records are required to be obtained 
from a Federal Records Center, fees, in addition to those provided on 
the Commission's current schedule of fees, will be charged to the extent 
authorized or required by rules or regulations promulgated by the 
National Archives and Records Administration.
    (6) Attestations. In addition to any other fees or charges which may 
apply, a fee will be charged for records attestations as provided in the 
Commission's current schedule of fees. The seal of the Commission will 
be affixed to all attestations without additional charge.
    (7) Copying services. Copies of records filed with or retained by 
the Commission, or portions thereof, will be provided subject to fees 
established by agreement between the Commission and a private contractor 
as set forth in the Commission's current schedule of fees and, where 
applicable, procedures and guidelines for Freedom of Information Act 
requests as set out in paragraphs (e)(9) and (e)(10) of this section.

[[Page 64]]

    (i) Facsimile copies. Requests for facsimile copies may be made 
either in person at the Commission's Washington, DC, Northeast, or 
Midwest public reference rooms, or by mail addressed to the Securities 
and Exchange Commission, Public Reference Room, 450 Fifth Street, NW., 
room 1024, Washington, DC 20549. The contractor will send copies 
directly to the purchaser unless attestation is requested. Persons who 
request copies of documents through the public reference room will be 
billed by the contractor at regulated prices, and will be billed 
separately by the Commission for search, review and attestation charges, 
if any. Copies of documents requested directly from the contractor or 
from any other information service or vendor are not subject to 
regulated prices. Special classes of copying services, such as 
telecopies, not listed herein or in the current schedule of fees posted 
in the public reference room, are not provided or regulated by the 
Commission, but may be obtained from private vendors at market prices.
    (ii) Microfiche copies. A contractor also makes available to the 
public microfiche copies of certain public documents on file with the 
Commission, at prices and on terms governed by its contract with the 
Commission. Microfiche services include subscription microfiche service 
on an annual basis. Microfiche subscription prices are regulated by the 
Commission whether requested through the public reference room or 
directly from the contractor. Certain other microfiche services are 
provided at prices that are regulated by the Commission only if ordered 
through the Commission's public reference room. The Commission will 
accept only subscription requests made in writing, although the 
contractor may elect to accept subscription requests by telephone. All 
microfiche subscription charges are payable directly to the contractor, 
whether placed through the Commission or not. Information concerning the 
types and cost of regulated microfiche services may be obtained by 
writing to the Commission at its public reference room located at 450 
Fifth Street, NW., room 1024, Washington, DC 20549.
    (iii) Transcripts of public hearings. Copies of the transcripts of 
recent public hearings may be obtained from the reporter subject to the 
fees established annually by contract between the Commission and the 
reporter. Copies of that contract, which contains tables of charges, may 
be inspected in the public reference room, 450 Fifth Street, NW., Room 
1024, Washington, D.C. and in each regional and district office. Copies 
of other public transcripts may be obtained, in the manner of other 
Commission records, subject to the charges referred to in paragraph 
(e)(7)(i) of this section.
    (8) Releases and publications. (i) The Commission's decisions, 
reports, orders, rules and regulations are published initially in the 
form of releases and distributed.
    (ii) The Commission publishes daily the SEC News Digest, which 
summarizes the releases published by the Commission each day, contains 
Commission announcements, and lists certain filings with the Commission. 
The Commission publishes weekly the SEC Docket, which prints the full 
text of every Commission release.
    (iii) The Commission publishes an annual report to the Congress 
which sets forth the results of the Commission's operations during the 
past fiscal year under the various statutes committed to its charge. 
Copies may be obtained from the Superintendent of Documents, U.S. 
Government Printing Office, Washington, DC 20402.
    (iv) The Commission also makes other information in the fields of 
securities and finance, including economic studies, available to the 
public through the issuance of releases on specific subject matters.
    (v) A classification of the releases available from the Commission 
appears below as appendix B to this section. Other publications 
available from the Commission are set forth in appendix C to this 
section. Copies of rules, regulations, and miscellaneous publications 
set forth in appendix D to this section may be purchased from the 
Superintendent of Documents, U.S. Government Printing Office, 
Washington, DC 20402.

[[Page 65]]

    (9) Fees for services required for processing Freedom of Information 
Act Requests. In cases where records are requested pursuant to the 
Freedom of Information Act and according to procedures set forth in 
paragraph (d)(1) of this section, fees shall be charged as set out in 
the Commission's current schedule of fees, appendix E to this section, 
for services as described in the following:
    (i) Search. The term ``search'' includes all time spent looking for 
material manually or by using electronic data processing equipment that 
is responsive to a request, as distinguished from ``review'' as defined 
at paragraph (e)(9)(ii) of this section. Searching for requested and 
specifically identified information, as described in paragraph (d)(1) of 
this section, includes the cost of staff time devoted to the search as 
indicated in appendix E to this section and direct costs for use of 
Commission electronic data processing equipment.
    (ii) Review. The term ``review'' refers to the process of examining 
documents located in response to a request to determine whether any 
portion of any document is permitted to be withheld pursuant to 
provisions of the Freedom of Information Act. It also includes 
processing any documents for disclosure, e.g., doing all that is 
necessary to excise material from and otherwise prepare them for 
release.
    (iii) Duplication. The term ``duplication'' refers to producing 
paper or microform copies of records. The Commission shall charge for 
duplication as established by agreement between the Commission and a 
private contractor. These charges are currently set out in appendix E to 
this section. Such charges shall be set so as not to exceed the direct 
cost that would be incurred by the Commission if it were to perform such 
services itself, as calculated to include the salary of operators, the 
cost of reproduction machinery, the cost of material and any other 
direct costs incurred by the Commission in copying materials responsive 
to a Freedom of Information Act request.
    (iv) Partial exemption from fee provisions. No fees shall be charged 
for the first two hours of search time and the first one hundred pages 
of materials for requesters described in paragraphs (e)(10)(i) and 
(e)(10)(iii) of this section.
    (v) Minimum fee. Fees will not be charged if the normal cost of 
collecting a fee would be equal to or greater than the fee itself.
    (10) Classification of Freedom of Information Act requesters for 
purposes of assessing fees. Parties requesting records pursuant to the 
Freedom of Information Act will be classified and charged fees described 
in appendix E to this section as follows:
    (i) The following types of requesters shall be charged for 
duplication of records as described in paragraph (e)(9)(iii) of this 
section as qualified in paragraph (e)(9)(iv) of this section: 
Educational institutions requesting information for purposes of 
scholarly research; non-commercial scientific institutions requesting 
information for purposes of scientific research; and representatives of 
the news media requesting information concerning current events or 
matters of current interest to the general public.
    (ii) Commercial requesters, defined as parties other than those 
mentioned in paragraph (e)(10)(i) of this section who are requesting 
information to be used in any way which could reasonably be expected to 
result in corporate or personal financial gain or profit, shall be 
charged for search, review and duplication of records as described in 
paragraphs (e)(9)(i), (e)(9)(ii) and (e)(9)(iii), respectively, of this 
section.
    (iii) All parties other than those described in paragraphs 
(e)(10)(i) and (e)(10)(ii) of this section requesting access to such 
records shall be charged for search and duplication of records as 
described in paragraphs (e)(9)(i) and (e)(9)(iii) of this section, 
respectively, as qualified in paragraph (e)(9)(iv) of this section.
    (11) Appeal of classification. Classification under the provisions 
of paragraph (e)(10) of this section may be appealed to the General 
Counsel in accordance with the procedure set forth in paragraph (d)(6) 
of this section.
    (12) Aggregation of requests. If the Freedom of Information Act 
Officer reasonably believes that a requester or group of requesters 
acting in concert is attempting to divide one request into a series of 
requests for the purpose of

[[Page 66]]

evading the assessment of fees, those requests may be aggregated and 
charges assessed accordingly.
    (13) Advance payment. The Freedom of Information Act Officer may 
require advance payment of fees expected to be incurred in connection 
with a request, but only when the subject requester has failed to make 
timely payment in the past, or when the estimated processing costs 
exceed $250.00 and the requester has no previous payment records or has 
failed to make timely payment in the past. Processing in such cases 
shall be delayed until advance payment is received and statutory time 
limits will be appropriately extended.
    (14) Interest on unpaid bills. On the 31st day following the date of 
a bill to a requester, the Commission may begin assessing interest on 
the unpaid amount at the rate prescribed in section 3717 of title 31 of 
the U.S. Code. Interest will accrue from the date of the bill.

[40 FR 8799, Mar. 3, 1975]

    Editorial Note: For Federal Register citations affecting 
Sec. 200.80, see the List of CFR Sections Affected, which appears in the 
Finding Aids section of the printed volume and on GPO Access.



Sec. 200.80a  Appendix A--Documentary materials available to the public.

                     [See footnotes at end of table]
------------------------------------------------------------------------
                Description                     Pursuant to section--
------------------------------------------------------------------------
                         Securities Act of 1933
 
------------------------------------------------------------------------
Registration statement providing financial  6
 and other information concerning
 securities offered for public sale, filed
 under Regulation C (17 CFR 230.400 et
 seq.).
Prospectuses (selling circulars) in         10
 connection with registration statement.
Periodic reports (annual, quarterly, and    (\1\)
 current) to keep reasonably current the
 information in registration statement.
Requests for extension of time to file      (\2\)
 information, document, or report.
Reports of sales of registered securities   19(a), 20(a)
 and use of proceeds thereunder by first
 time registrants.
Report by issuers of securities quoted on   (\1\)
 NASDAQ Inter-Dealer Quotation System.
Preliminary data (prospectus, circular      3(b)
 letters, etc.) to oil offering
 (Regulation B) (17 CFR 230.300 et seq.).
Offering sheets for oil or gas rights and   3(b)
 royalties under Regulation B for
 exemption from registration provisions
 (17 CFR 230.300 et seq.).
Notifications of exemption from             3(b)
 registration filed under Regulation A, E,
 and F (17 CFR 230.251, 230.601, 230.651
 et seq.).
Offering circulars and written              3(b)
 advertisements or other communications
 under Regulations A, E, and F (17 CFR
 230.251, 230.601, 230.651 et seq.).
Report of sales and use of proceeds         3(b)
 (Regulations A and E) (17 CFR 230.251,
 230.601 et seq.).
Consent by non-resident to service of       3(b)
 process (Regulation A) (17 CFR 230.251 et
 seq.).
Application for relief from disability      3(b)
 under Regulations A and F (17 CFR 230.651
 et seq.).
Notice of proposed resale of restricted     4(1), 4(4)
 securities and resale of securities by
 control persons (17 CFR 230.144).
Notice of proposed sale by non-controlling  3(b)
 person of restricted securities of
 issuers which do not satisfy all of the
 conditions of Rule 144 (17 CFR 230.237).
Notice of sale of securities by closely     3(b)
 held issuers (issuers with 100 or less
 beneficial owners) other than investment
 companies, registered or required to be
 registered under the Investment Company
 Act of 1940 (17 CFR 230.240).
------------------------------------------------------------------------


                     [See footnotes at end of table]
------------------------------------------------------------------------
                Description                     Pursuant to section--
------------------------------------------------------------------------
                     Securities Exchange Act of 1934
 
------------------------------------------------------------------------
Registration statement (securities listed   12(b)
 on a national securities exchange).
Registration statement (securities traded   12(g)
 over-the-counter).
Exemption from section 12(g), 13, 14, 15,   12(h)
 or 16.
Information by a foreign issuer             12(g)(3)
 temporarily exempt from section 12(g).
Certification of exchange approving         12(d)
 securities for listing and registration.
Periodic reports (annual, quarterly and     13(a)
 current) to keep current the information
 in the above registration statements.
Request for extension of time to file       12(b)
 information, document, or report.
Correspondence between the Commission and   13(a), 15(d)
 registrants that are delinquent in filing
 certain required reports.
Report by issuers of securities quoted on   15(d), 13(a)
 NASDAQ Inter-Dealer Quotation System.
Certificate of termination of Registration  (\3\)
 for a class of security.
Notices of suspension of trading..........  12(d)
Application to withdraw or strike a         12(d)
 security from listing and registration on
 a national securities exchange.
Notification by an exchange of the          12(a)
 admission to trading of a substituted or
 additional class of security.
Definitive proxy soliciting materials       14(a)
 filed under Regulation 14A (17 CFR
 240.14a-1 et seq.).

[[Page 67]]

 
Distribution of information to security     14(c)
 holders from whom proxies are not
 solicited filed under Regulation C (17
 CFR 230.400 et seq.).
Acquisitions, tender offers and             13(d), 14(d)
 solicitations. (17 CFR 240.14d-1 et seq.).
Initial statement of beneficial ownership   16(a)
 of equity securities by officers,
 directors and principal stockholders of
 issuers having listed equity securities;
 and changes in such ownership.
Application for permission to extend        12(f)
 unlisted trading privileges, notification
 of changes, and notification of
 termination or suspension.
Application for registration as a broker    15(b)
 and dealer, and amendments or supplements
 to such application.
Reports of financial condition of           17
 registered brokers and dealers.
Application for registration as a transfer  17A(c)
 agent and amendments to such application.
Application for registration as a           15B(a)
 municipal securities dealer.
Application for registration or exemption   11A(b)
 as a securities information processor.
Application for registration or exemption   17A(b)
 as a clearing agency.
Irrevocable appointment of agent for        23(a)
 service of process, pleadings and other
 papers.
Notice by non-resident broker or dealer     17
 specifying address of place in United
 States where copies of books and records
 are located and undertaking to furnish to
 Commission, upon demand, copies of books
 and records he is required to maintain.
Subordination agreements..................  15
Initial assessment and information form     15(b)(8)
 for registered brokers and dealers not
 members of a registered national
 securities association.
Annual assessment and information form for  15(b)(8)
 registered brokers and dealers not
 members of a registered national
 securities association.
Reports of market makers and other          17(a)
 registered broker-dealers in securities
 traded on national securities exchanges.
Reports by registered brokers and dealers   17(a)
 who are OTC Market in Makers in any OTC
 Margin Securities.
Proposed rule changes by all self-          19(b)
 regulatory organizations.
Notice as to stated policies, practices     19(b)
 and interpretations of self-regulatory
 organizations.
Application by an exchange for              6(a)
 registration or exemption from
 registration as a national securities
 exchange.
Annual amendments and supplemental          6(e)
 material filed to keep reasonably current
 the information contained in application
 for registration or exemption.
Record disposal plan of national            17
 securities exchanges.
Application for listing securities on an    12(b)
 exempted exchange.
Periodic reports to keep reasonably         13
 current the information contained in
 application for listing securities on
 exempted exchange.
Certification of exempted exchange          12(d)
 approving securities for listing.
Application for registration as a national  15A
 securities association or affiliated
 securities association.
Annual supplement consolidated to keep      15A
 reasonably current the information in the
 above application.
Report of changes in membership status of   17, 19
 any of its members required of national
 securities exchanges and registered
 national securities associations.
Application by a national securities        15A(b)(4)
 association or a broker or dealer for
 admission or continuance of a broker or
 dealer as member of a national securities
 association, notwithstanding a
 disqualification under section 15A(b)(4).
Application for review of disciplinary      15A(g)
 action or denial of membership by
 registered securities association.
Reports on stabilizing activities           17
 pertaining to a fixed price offering of
 securities registered or to be registered
 under the Securities Act of 1933, or
 offered or to be offered pursuant to an
 exemption under Regulation A (17 CFR
 230.251 et seq.), or being or to be
 otherwise offered if aggregate offering
 price exceeds $500,000.
Plans by exchanges authorizing payment of   10
 special commission in connection with a
 distribution of securities on exchanges.
Suspensions of trading of securities        15(c)(5)
 otherwise than on a national securities
 exchange.
Annual and supplemental reports of the      17
 Municipal Securities Rulemaking Board.
------------------------------------------------------------------------


                     [See footnotes at end of table]
------------------------------------------------------------------------
                Description                     Pursuant to section--
------------------------------------------------------------------------
               Public Utility Holding Company Act of 1935
 
------------------------------------------------------------------------
Notification of registration and            5(a), 5(b)
 registration statement by public utility
 holding companies providing financial and
 other information concerning the issue
 and sale of securities.
Annual reports by registered holding        5(d)
 companies to keep reasonably current
 information in the registration statement.
Application for an order of the Commission  5(d)
 declaring registrant has ceased to be a
 holding company.
Statement by a person employed or retained  12(i)
 by a registered holding company or
 subsidiary thereof, of subject matter in
 respect of which retained or employed;
 and annual statement thereafter.
Application for exemption from provisions   2(a)(3), 2(a)(4),
 of the Act and applications for             2(a)(7)(B), 2(a)(8)(B),
 declaratory orders regarding status of      3(a), (b)
 company under Act by holding companies,
 subsidiaries, and other companies.

[[Page 68]]

 
Twelve-month statement by bank claiming     3(a), (d)
 exemption under the Act.
Application for approval of mutual service  13(b)
 company or declaration with respect to
 organization and conduct of business of
 subsidiary service company.
Statement executed by financial             17(c)
 institution authorizing representative to
 serve as officer or director of holding
 company or subsidiary, filed by
 representative.
Initial statement of beneficial ownership   17(a)
 of securities filed by officers and
 directors of registered public utility
 holding companies, and changes in such
 ownership.
Annual reports by mutual and subsidiary     13
 service companies.
Application by interested persons for       11(f)
 approval of reorganization plans required
 in court proceedings for reorganization
 of registered holding companies and
 subsidiaries.
Application by or on behalf of persons      11(f)
 requesting approval of payment of fees,
 expenses or remuneration for services
 rendered in connection with a proceeding
 in reorganization in a U.S. Court
 involving registered holding companies or
 subsidiaries.
Notices of intention regarding proposed     11, 12(d), 12(f)
 sale of securities and other assets not
 requiring filing of application or
 declaration.
Statements in justification of fees and     6(b), 7, 9, 10, 12(d)
 expenses proposed to be paid.
Reports to stockholders by registered       14, 15
 holding company or subsidiary thereof and
 annual reports submitted by registered
 holding company or subsidiary thereof to
 a State commission covering operations
 not reported to Federal Power Commission.
------------------------------------------------------------------------


                     [See footnotes at end of table]
------------------------------------------------------------------------
                Description                     Pursuant to section--
------------------------------------------------------------------------
                       Trust Indenture Act of 1939
 
------------------------------------------------------------------------
Statement of eligibility and qualification  305, 307
 of corporations or individuals as
 trustees under qualified indenture under
 which debt security has been or is to be
 issued.
Application for qualification of indenture  307
 under which security (bonds, debentures,
 notes and similar debt securities) has
 been or is to be issued.
Application for exemption from provisions   304(c), (d)
 of the Act in certain cases.
Application re conflict of interest of      310(b)(1)
 trustees.
Reports by indenture trustee to indenture   313
 security holders with respect to
 eligibility and qualification under
 section 310.
Application relative to affiliations        310(b)(3), 310(b)(6)
 between trustees and underwriters.
------------------------------------------------------------------------


                     [See footnotes at end of table]
------------------------------------------------------------------------
                Description                     Pursuant to section--
------------------------------------------------------------------------
                     Investment Advisers Act of 1940
 
------------------------------------------------------------------------
Application for registration as investment  203(c), 204
 adviser or to amend or supplement such an
 application.
Application for exemption and other relief  206A
Irrevocable appointment of agent for        211(a)
 service of process, pleadings and other
 papers.
Notice by non-resident investment adviser   204
 specifying address of place in United
 States where copies of books and records
 are located, or.
Undertaking by non-resident investment      204
 adviser to furnish to Commission, upon
 demand, copies of any books or records he
 is required to maintain.
------------------------------------------------------------------------


                     [See footnotes at end of table]
------------------------------------------------------------------------
                Description                     Pursuant to section--
------------------------------------------------------------------------
                     Investment Company Act of 1940
 
------------------------------------------------------------------------
Notification of registration of investment  8(a), 8(b)
 company, and registration statement
 covering an offering of securities of
 investment company evidencing an interest
 in a portfolio of securities in which the
 investment company invests.
Periodic reports (annual and quarterly) to  30(a), 30(b)(1)
 keep reasonably current the information
 in above registration statement.
Periodic or interim reports to security     30(b)(2)
 holders of registered investment
 companies.
Application for order of the Commission     8(f)
 determining registrant has ceased to be
 an investment company.
Fidelity bond, resolution of board of       17(g)
 directors, notice of cancellation or
 termination of bond for officers and
 employees of investment companies who
 have access to its securities or funds.
Waiver of indemnification of officers and   17(h), 17(i)
 directors of investment companies.
Report of independent auditors examining    17(f)
 records of investment companies.
Application by other than registrant for    35(d)
 order of Commission declaring corporate
 name of registrant is misleading or
 deceptive.
Request by company for certificate to be    (\4\)
 issued to Secretary of Treasury.
Proxy soliciting material.................  20(a) \5\
Initial statement of beneficial ownership   30(f)
 of securities by officers, directors and
 other specified insiders of registered
 closed-end investment companies, and
 changes in such ownership.

[[Page 69]]

 
Application for exemption from provisions   2(a)(9), 3(b)(2), 6 (b),
 of the Act and other relief.                (c), (d), 7 (d), 10 (e),
                                             (f), 11 (a), (c), 12 (d)
                                             (1), (d)(2), 14(a), 15 (a),
                                             16(a), 17 (a), (b), (d),
                                             (e), 18(i), 22(d), 23 (b)
                                             (5), (c)(3), 24(d), 26(a)
                                             (2)(C), 28(c), 35(d), and
                                             others.
Statement of transactions--exemption from   10(f)
 provisions of section 10(f).
Application for an ineligible person to     9(b)
 serve as officer, director, etc. of a
 registered investment company.
Request for advisory report of the          25(b)
 Commission relating to the reorganization
 of registered investment company.
Report of repurchase of its own securities  23(c)
 by a closed-end company.
Sales literature regarding securities of    24(b)
 certain investment companies.
Statement of the Federal Savings and Loan   6(a)(4)
 Corporation relating to the exemption of
 certain issuers.
Report submitted pursuant to an order of    ............................
 the Commission.
Documents and records resulting from        33
 derivative or representative law suits.
------------------------------------------------------------------------
Footnotes:
\1\ Section 15(d)--Securities Exchange Act of 1934.
\2\ Section 12(b)--Securities Exchange Act of 1934.
\3\ Section 12(g)--Securities Exchange Act of 1934.
\4\ Section 851(e)(1) of the Internal Revenue Code of 1954 is
  applicable.
\5\ Regulation 14 under the Securities Exchange Act of 1934 is
  applicable (17 CFR 240.14a-1 et seq.).

                              Miscellaneous

    Requests or petitions that a change in the Commission's rules, 
regulations or forms be made; comments on proposed rules, regulations or 
forms; issuance, amendment or repeal of rules, regulations or forms 
promulgated under the various Acts administered by the Commission.
    Requests for no-action and interpretative letters and responses 
thereto.
    Transcripts of proceedings in public hearings including testimony, 
exhibits received in evidence, intermediate decisions, oral arguments, 
motions, briefs, exceptions.
    Commission findings, opinions, orders, rulings and notices issued 
for public release.
    Final opinions of the Commission, including concurring and 
dissenting opinions, as well as orders made by the Commission in the 
adjudication of cases.
    A record of the final votes of each member of the Commission in 
every Commission proceedings concluded after July 1, 1967.
    Hearings and comments on proposed rules or statements of policy, 
etc., except where the writer requests that his comments not be made 
public.
    Periodic reports filed by the International Bank for Reconstruction 
and Development under Regulation BW--Rules 1 to 4, section 15(a) of the 
Bretton Woods Agreement Act (17 CFR part 285).
    Periodic reports filed by the Inter-American Development Bank, 
pursuant to Regulation IA (17 CFR part 286) adopted pursuant to section 
11(a) of the Inter-American Bank Act.
    Periodic reports filed by the Asian Development Bank, pursuant to 
Regulation AD (17 CFR part 287) adopted pursuant to section 11(a) of the 
Asian Development Bank Act.
    Copies of papers filed in court, and papers and documents received 
from courts, are primarily for the use of the Commission attorneys and 
other members of the staff. These may not always be complete and 
accurate and may contain nonpublic staff notations. However, in 
appropriate situations, with the approval of the Office of the General 
Counsel, examination of such material may be made or copies obtained as 
a matter of courtesy.
    Statements of policy and interpretations which have been adopted by 
the Commission and are not published in the Federal Register.
    Administrative staff manuals and instructions to the staff that 
affect a member of the public.
    Reports by the Commission to the Congress as a whole.
    Notices of Commission meetings announced to the public as described 
in Sec. 200.403; announcements of Commission action to close a meeting, 
or any portion thereof, as described in Sec. 200.404(b) and 
Sec. 200.405(c); and certifications by the General Counsel, pursuant to 
Sec. 200.406, that a Commission meeting, or any portion thereof, may be 
closed to the public.

[41 FR 44696, Oct. 12, 1976, as amended at 42 FR 14693, Mar. 16, 1977]



Sec. 200.80b  Appendix B--SEC releases.

    Free mailing list distribution of releases has been discontinued by 
the Commission because of rising costs and staff limitations. However, 
the texts of all releases under the various Acts, the corporate 
reorganization releases, and the litigation releases are contained in 
the SEC Docket, which may be purchased through the Superintendent of 
Documents as described in Sec. 200.80c of this part. The Statistical 
series releases are contained in the SEC Monthly Statistical Review, 
which also can be obtained by purchase through the Superintendent of 
Documents.

[40 FR 1009, Jan. 6, 1975, as amended at 49 FR 12686, Mar. 30, 1984; 52 
FR 24148, June 29, 1987; 52 FR 48193, Dec. 21, 1987]

[[Page 70]]



Sec. 200.80c  Appendix C--Rules and miscellaneous publications available from the Government Printing Office.

    (a) The current rules of the Commission are not published by the 
Commission in pamphlet form. All SEC public rules and regulations, 
including its Rules of Practice, are contained in title 17 of the Code 
of Federal Regulations, which also is available for purchase from the 
Superintendent of Documents, Government Printing Office, Washington, DC 
20402. New rules and rules changes, and other Commission releases, 
except statistical releases, also are published in the Federal Register 
as they are adopted.
    (b) Copies of the following miscellaneous publications may be 
purchased from the Superintendent of Documents, Government Printing 
Office, Washington, DC 20402. Please address to him directly all 
inquiries, orders and payments concerning the following publications:
    1. Reports.
    SEC Annual Report to the Congress.
    2. Periodicals.
    Official Summary. A monthly summary of securities transactions and 
holdings reported under the provisions of the Securites Exchange Act of 
1934, the Public Utility Holding Company Act of 1935, and the Investment 
Company Act of 1940 by officers, directors, and certain other persons.

SEC Monthly Statistical Review. A monthy publication containing data on 
round-lot and odd-lot share volume in stock exchanges, OTC volume in 
selected securities, block distributions, securities registrations and 
offerings, net change in corporate securities outstanding, working 
capital of U.S. corporations, assets of non-insured pension funds, Rule 
144 filings and 8K reports.

Directory of Companies Filing Annual Reports with the Securities and 
Exhange Commission under the Securities Exchange Act of 1934. Published 
annually. Lists companies alphabetically and classified by industry 
groups according to the Standard Industrial Classification Manual of the 
Bureau of the Budget.

[40 FR 1010, Jan. 6, 1975, as amended at 49 FR 12686, Mar. 30, 1984; 52 
FR 24148, June 29, 1987; 52 FR 48193, Dec. 21, 1987]



Sec. 200.80d  Appendix D--Other publications available from the Commission.

    (a) Limited amounts of the following materials among others are 
available free of charge upon request to the Commission's Publications 
Section, Public Reference Branch, 202-272-7460:
    Work of the Securities and Exchange Commission.
    Blank copies of all forms used under each of the Acts administered 
by the Commission.
    (b) Facsimile copies of other SEC publications which are out of 
print may be obtained through the Commission's Public Reference Section, 
at the cost of the copying service to be performed by the commercial 
copier employed to do the copying. Purchasers of copies will be billed 
by the copier. An example of the publications which are available in 
this way is the Litigation Actions and Proceedings Bulletin.

[52 FR 24148, June 29, 1987; 52 FR 48193, Dec. 21, 1987]



Sec. 200.80e  Appendix E--Schedule of fees for records services.

    Search and review services: Up to one half hour total--No fee. For 
each one half hour or fraction thereof of chargeable service--up to GS-
11 employee performing service: $8.00; GS-12 or above employee 
performing service: $14.00.

Attestation with Commission seal: $4.00

Duplication services: The following duplication services are available. 
The stated time for delivery in each case begins to run only after 
receipt of the material by the contractor; if files cannot immediately 
be made available by the Commission, the time of shipment will be 
affected.

    Regular service. Paper copies of original paper copies, or from 
microfiche accessible to the contractor, will be shipped within seven 
calendar days after the contractor receives the order and material at 
$0.24 per page, exclusive of any applicable shipment cost and sales 
taxes.

Other services. The Commission's dissemination contractor also provides 
a wide range of additional regulated dissemination services through the 
Commission's public reference rooms. Two offsite services also are 
provided at prices that are regulated: microfiche subscriptions and 
watch services. Information concerning the availability of all 
dissemination services may be obtained by writing to the Commission's 
public reference room located at 450 Fifth Street, NW., room 1024, 
Washington, DC 20549 or calling 202-272-3100. Copies made pursuant to 
requests submitted to the Commission's public reference room will be 
filled by the contractor and sent directly to the purchaser, unless 
attestation is requested. The contractor will bill the purchaser 
directly for the cost of copies plus postage or other delivery charges, 
and applicable taxes. Purchasers shall make full payment directly to the 
contractor for these services. Search, review or attestation

[[Page 71]]

charges will be billed separately by the Commission.

[52 FR 24148, June 29, 1987; 52 FR 48193, Dec. 21, 1987, as amended at 
55 FR 41189, Oct. 10, 1990; 57 FR 48970, Oct. 29, 1992; 58 FR 64120, 
Dec. 6, 1993]



Sec. 200.80f  Appendix F--Records control schedule.

------------------------------------------------------------------------
    File No.                Type of filing             Retention period
------------------------------------------------------------------------
                         Securities Act of 1933
 
------------------------------------------------------------------------
2-33             Registration statements and          30 years.
                  amendments thereto (Regulation C).
2-33             Periodic reports (annual,            30 years.
                  quarterly, current, and proxy
                  material).
9-               Notice of proposed resale of         21 years.
                  restricted securities and resale
                  of securities by control persons
                  (Form 144).
15-              Notice of sale of securities         6 years.
                  pursuant to Rule 242 (Form 242).
                  (Obsolete).
18-              Applications for exemption from      10 years.
                  section 5 registration for
                  interests or participations issued
                  in connection with Keogh Plans
                  (section 3(a)(2)).
19-              Notice of sale of securities         6 years.
                  pursuant to section 4(6) of the
                  Securities Act of 1933 (Form
                  4(6)). (Obsolete).
20-              Offering sheets for oil or gas       15 years.
                  royalties--Regulation B (Schedules
                  A, B, C).
20-              Reports of sale (accorded            7 years.
                  confidential treatment) (Form 1-G).
20-              Reports after termination of         7 years.
                  offering (Form 3-G).
21-              Notice of sale for offerings under   6 years.
                  Regulation D and section 4(6)
                  (Form D).
24-              Notification of exemption from       Until completion
                  registration (Regulation A).         or termination of
                                                       offering plus 10
                                                       years or order of
                                                       the Commission
                                                       permanently
                                                       suspending
                                                       exemption,
                                                       whichever comes
                                                       first.
29-              Report of issuers of sale of         6 years.
                  securities deemed not to involve
                  any public offering (Form 146).
                  (Obsolete).
92-              Application for relief from          Until when final
                  disability (Regulation A).           action on appeal
                                                       is taken plus 10
                                                       years.
94-              Notification of exemption for        10 years.
                  assessment or assessable stock
                  (Regulation F).
95-              Notification of exemption for        Until completion
                  securities issued by a small         or termination of
                  business investment company          offering plus 5
                  (Regulation E).                      years or until
                                                       order of
                                                       Commission
                                                       permanently
                                                       suspending
                                                       exemption,
                                                       whichever comes
                                                       first.
96-              Application for relief from          Until final action
                  disability (Regulation F).           on appeal is
                                                       taken plus 5
                                                       years.
98-              Notice of proposed sale by non-      6 years.
                  controlling person of restricted
                  securities of issuers which do not
                  satisfy all of the conditions of
                  Rule 144.
100-             Notification of exemption pursuant   6 years.
                  to Rule 236.
 
------------------------------------------------------------------------
                     Securities Exchange Act of 1934
 
------------------------------------------------------------------------
0-1              Registration statements (sections    30 years.
                  12(b) and 12(g), exemptions
                  thereunder).
0-1              Periodic reports (annual,            30 years.
                  quarterly, current and proxy
                  materials).
3-               Applications for continuance in      10 years.
                  membership and applications for
                  review of disciplinary actions
                  (self-regulatory organizations).
4-281            Consolidated quotation system plan   For as long as
                  and amendments.                      plan remains
                                                       approved plus 6
                                                       years.
4-208            Intermarket trading system plan and  For as long as
                  amendments.                          plan remains
                                                       approved plus 6
                                                       years.
5-               Acquisitions, tender offers and      20 years.
                  solicitations.
6-               Reports of beneficial ownership of   6 years.
                  securities (Forms 3, 4, & 5).
7-               Applications for permission to       10 years.
                  extend unlisted trading privileges
                  and related applications pursuant
                  to Rule 12(f).
8-               Applications for registration as     For as long as
                  broker, dealer, municipal            broker-dealer is
                  securities broker, or government     registered with
                  securities broker or dealer and      the Commission
                  related reports.                     plus 50 years.
8-00-2A          Annual audit report (fiscal or       For as long as
                  calendar year basis) (Form X-17A-    broker-dealer is
                  5). (Non-public) Supplemental        registered with
                  report detailing Securities          the Commission
                  Investor Protection Corporation      plus 13 years.
                  assessment payment or overpayments
                  (Rule 17a-5). (Non-public).
8-00-2A-19       Reports of changes in membership of  For as long as
                  any of its members required of       broker-dealer is
                  national securities exchanges and    registered with
                  registered national securities       the Commission
                  associations (Form X-17A-19).        plus 6 years.
                  (Public).

[[Page 72]]

 
8-00-3X          Examination/inspection reports of
                  brokers and dealers, investment
                  companies and investment advisors
                   1. Exam reports:
                     a. Home Office.................  13 years.
                     b. Regional Offices............  13 years.
                   2. Exam workpapers...............  13 years.
8-00-9           Uniform application for securities   For as long as
                  and commodities industry             broker-dealer is
                  representative and/or agent;         registered with
                  certification for associated         the Commission
                  persons engaged in securities        plus 50 years.
                  activities outside the
                  jurisdiction of the United States;
                  annual assessment form for
                  registered brokers and dealers not
                  members of a registered national
                  securities association (Forms U-4,
                  SECO 2-F, SECO-4, 5).
8-2A10           Annual report of revenue and         10 years.
                  expenses filed by exchange
                  members, brokers and dealers (Form
                  X-17A-10). (Obsolete).
8-2A12           Report by registered brokers and     6 years.
                  dealers who are over-the-counter
                  market makers in any OTC margin
                  securities (Form X-17A-12).
8-2A16(1), -     Notification by qualified market     6 years.
 2A16(2)          makers at least five business days
                  before such broker-dealers obtain
                  third market maker exempt credit
                  pursuant to Regulation U; and
                  quarterly report by broker and
                  dealer, who during a calendar
                  quarter is or has been qualified
                  as a third market maker (Forms X-
                  17A-16(1); X-17A-16(2)) (Obsolete).
8-2A17           Quarterly report filed by every      6 years.
                  broker-dealer block positioner who
                  has filed a notice pursuant to
                  paragraph (a) of Rule 17a-17 (Form
                  X-17A-17) (Obsolete).
10-              Applications by an exchange for      For as long as
                  registration as a national           exchange is
                  securities exchange.                 registered with
                                                       the Commission
                                                       plus 6 years.
13-              Applications for listing securities  10 years.
                  on an exempted exchange, periodic
                  reports.
14-              Annual reports of issuers having     10 years.
                  securities listed on an exempted
                  exchange.
16-              Application for registration as a    For as long as
                  national securities association or   association is
                  affiliated securities associations.  registered with
                                                       the Commission
                                                       plus 6 years.
17-              Reports on stabilizing activities    6 years.
                  (Form X-17A-1). (Obsolete).
23-              Applications for exemption pursuant  Until closed plus
                  to paragraph (g) of Rule 11Aa3-1.    6 years.
26-              Plans by exchanges authorizing       For as long as
                  payment of special commission in     exchange is
                  connection with a distribution of    registered with
                  securities on exchanges (Rule 10b-   the Commission
                  2(d)).                               plus 50 years.
27-              Applications for exemption from      10 years.
                  section 13(f).
28-              Reports by institutional investment  4 years.
                  managers of information with
                  respect to accounts over which
                  they exercise discretion. (Form
                  13F).
80-              Annual and supplemental reports of   Indefinitely
                  Municipal Securities Rulemaking      (contingent).
                  Board (Rule 17a-21).
81-              Exemptions from registration under   10 years.
                  section 12(g).
82-              Exemptions--American depositary      10 years.
                  receipts.
83-1             Periodic reports and related         3 years.
                  correspondence by the Inter-
                  American Development Bank.
83-2             Periodic reports by the Asian        3 years.
                  Development Bank.
84-              Application for registration as a    For as long as
                  transfer agent (non-bank) and        transfer agent is
                  amendments thereto.                  registered with
                                                       the Commission
                                                       plus 50 years.
85-              Application for registration as a    For as long as
                  transfer agent (bank) and            transfer agent is
                  amendments thereto (Form TA-1).      registered with
                                                       the Commission
                                                       plus 50 years.
86-              Application for registration as a    For as long as
                  municipal securities dealer which    municipal
                  is a bank or separately              securities dealer
                  identifiable department or           is registered
                  division of a bank (Form MSD).       with the
                                                       Commission plus
                                                       50 years.
87-              Application for registration as a    For as long as
                  securities information processor     securities
                  and amendments thereto (Form SIP).   information
                                                       processor is
                                                       registered with
                                                       the Commission
                                                       plus 50 years.
88-              Application for exemption as a       For as long as
                  securities information processor     securities
                  correspondence.                      information
                                                       processor is
                                                       registered with
                                                       the Commission
                                                       plus 50 years.
89-              Waiver for foreign issuers           10 years.
                  furnished by American depositary
                  receipts; waiver of information
                  furnished by American depositary
                  receipts regarding foreign issuers
                  for Form F-6; waiver of Rule 12g3-
                  2(b) reporting requirements,
                  annual reports to shareholders, F-
                  6 waiver, proxy.
89-              Other waivers for foreign issuers    3 years.
                  furnished by American depositary
                  receipts..
128-8            Reports of disciplinary actions by   6 years.
                  stock exchanges (Rule 19d-1).
205-3c           Reports of disciplinary actions by   6 years.
                  NASD (Rule 19d-1).
500-             Suspension of trading of securities  10 years.
                  other than on a national
                  securities exchange.

[[Page 73]]

 
600-             Applications for registration as a   For as long as
                  (non-bank) clearing agency;          clearing agency
                  amendments thereto.                  is registered
                                                       with the
                                                       Commission plus
                                                       50 years.
600-9            Reports of disciplinary actions by   6 years.
                  clearing agencies (Rule 19d-1).
601-             Applications for exemption from      For as long as
                  registration as a (non-bank)         clearing agency
                  clearing agency.                     has reporting
                                                       requirements with
                                                       the Commission
                                                       plus 20 years.
SR               Proposed rule changes and notice as  For as long as
                  to stated policies and               self-regulatory
                  interpretations by self-regulatory   organization is
                  organizations.                       registered with
                                                       the Commission
                                                       plus 6 years.
XX               Reports for missing, lost or         Indefinitely.
                  counterfeit securities (Form X-17F-
                  1A).
------------------------------------------------------------------------
               Public Utility Holding Company Act of 1935
 
------------------------------------------------------------------------
12-              Statements pursuant to section       2 years.
                  12(i) by persons employed or
                  retained by a registered holding
                  company or subsidiary thereof
                  (Forms U-12(I)-A & B).
30-              Notification and registration by     For as long as
                  public utility holding companies,    holding company
                  annual supplements.                  has reporting
                                                       requirements with
                                                       the Commission
                                                       plus 10 years.
31-              Statement of exemption from the Act  For as long as
                  by Commission order.                 company relies on
                                                       exemption plus 10
                                                       years.
32-              Exemption of purchaser, assignee,    Until lease is
                  etc. of leased facilities (Form      terminated or
                  U7D).                                cancelled plus 5
                                                       years.
33-1             Annual statement by banks holding    2 years.
                  public utility securities but
                  claiming exemption under Rule 3.
34-              Annual statement by banks holding    2 years.
                  public utility securities but
                  claiming exemption under Rule 3
                  (Form U-3A3-1).
37-              Applications and declarations for    For as long as
                  authorization of service companies   service company
                  (Form U-13-1).                       is part of a
                                                       registered
                                                       holding company
                                                       plus 5 years.
38-              Statement under Rule 70(a)(1)        For as long as
                  executed by financial authorizing    officer/director
                  representative to serve as officer/  serves plus 3
                  director of holding company, filed   years.
                  by representative.
40-              Certificates of notification by      3 years.
                  registered holding companies and
                  subsidiaries of security issues
                  exempted from section 6(a) by
                  section 6(b) or exempt under Rule
                  47(b) and not the subject of an
                  order of the Commission (Form U-6B-
                  2).
49-              Annual report by mutual and          For as long as
                  subsidiary service companies (Form   service company
                  U-13-60).                            is part of a
                                                       registered
                                                       holding company
                                                       system plus 15
                                                       years.
50-              Order granting or withdrawing        Until close plus 3
                  exemptions from rules and related    years.
                  correspondence.
52-              Application for approval or          Until closed plus
                  reorganization under section 11(f).  3 years.
54-              Divestment of securities, assets or  Until closed plus
                  control (section 11(e)).             3 years.
55-              Application for approval of fees     Until closed plus
                  incurred in connection with plan     3 years.
                  under section 11(f).
59-              Simplification of corporate          Until closed plus
                  structure, sections 11(b) (1) and    3 years.
                  (2).
62-              Report by an affiliate service       For as long as
                  company or one engaged principally   service company
                  in the performance of services       is part of a
                  (Form U-13E-1).                      registered
                                                       holding company
                                                       system plus 4
                                                       years.
68-              Declaration with respect to          10 years.
                  solicitations regarding
                  reorganizations of registered
                  holding companies or subsidiaries
                  subject to Rule 62 (Form U-R-1).
69-              Annual statements by holding         2 years.
                  companies claiming exemption
                  pursuant to Rule 2 (intrastate or
                  predominantly operating companies
                  (Form U-3A-2).
70-              Applications and declarations        Until closed plus
                  pursuant to sections 6(b), 7, 9,     3 years.
                  9(c)(3), 10, 12(b), 12(c), 12(d),
                  12(f) and applicable rules
                  thereunder (Form U-1).
72-              Report of communication with         2 years.
                  stockholders.
 
------------------------------------------------------------------------
                       Trust Indenture Act of 1939
 
------------------------------------------------------------------------
22-              Statements of eligibility and        Until indenture is
                  qualification of corporations or     terminated or
                  individuals as trustees under        cancelled plus 30
                  qualified indenture under which      years.
                  debt security has been or is to be
                  issued and exemptions thereto.
25-              Applications relative to             Until applicable
                  affiliations between trustees and    indenture is
                  underwriters (Rule 10b-3).           terminated or
                                                       cancelled plus 33
                                                       years.
93-              Reports of indenture trustee to      1 year.
                  indenture security holders with
                  respect to eligibility and
                  qualification under Section 310.
 
------------------------------------------------------------------------

[[Page 74]]

 
                     Investment Advisers Act of 1940
 
------------------------------------------------------------------------
801-             Application for registration as      For as long as
                  investment adviser and related       investment
                  correspondence.                      adviser is
                                                       registered with
                                                       the Commission
                                                       plus 9 years.
803-             Application for exemption from       For as long as
                  registered and other relief.         investment
                                                       adviser conducts
                                                       business under an
                                                       exemption plus 6
                                                       years.
 
------------------------------------------------------------------------
                     Investment Company Act of 1940
 
------------------------------------------------------------------------
90-              Notice of sales of securities by     6 years.
                  closed-end issuers (issuers with
                  100 or less beneficial owners)
                  other than investment companies,
                  registered or required to be
                  registered.
811-             Notifications and registration       For as long as
                  statements.                          registrant is
                                                       registered with
                                                       the Commission
                                                       plus 30 years.
811-             Periodic reports (annual,            10 years.
                  quarterly, semi-annual, proxy
                  material).
812-             Applications for exemption and       10 years.
                  other relief.
812-             Application by foreign management    For as long as
                  investment companies for order       registrant has
                  permitting registration.             reporting
                                                       requirement with
                                                       the Commission
                                                       plus 33 years.
813-             Applications for exemption of an     For as long as
                  employee's security company          registrant has
                  (Section (b)).                       reporting
                                                       requirement with
                                                       the Commission
                                                       plus 33 years.
814-             Notice of intent to elect to be      2 years from
                  subject to sections 55 and 65.       filing date.
814-             Notification of withdrawal of        2 years from
                  election to be subject to sections   filing date.
                  55 through 65.
814-             Notification of election to be       30 years or for as
                  subject to sections 55 through 65.   long as a class
                                                       of the issuer's
                                                       equity securities
                                                       is registered
                                                       under the
                                                       Securities
                                                       Exchange Act of
                                                       1934 plus 10
                                                       years, whichever
                                                       comes first.
816-             Request for advisory report re       6 years.
                  reorganization of registered
                  investment company (17 CFR
                  270.02), and related
                  correspondence.
817-             Report of repurchase of securities   6 years.
                  by closed-end investment company.
818-             Sales literature regarding           6 years.
                  securities of certain investment
                  companies.
819-             Statement of the Federal Savings     6 years.
                  and Loan Corporation relating to
                  the exemption of certain issuers.
820-             Reports showing that companies have  6 years.
                  complied with requirements of the
                  rule in purchasing new issues of
                  securities from underwriters.
821-             Reports by registered small          10 years from date
                  business investment companies and    of such
                  affiliated banks, with respect to    action(s).
                  investments.
 
------------------------------------------------------------------------
                     Miscellaneous Files and Reports
 
------------------------------------------------------------------------
3-               Disciplinary proceedings (broker-    25 years.
                  dealer and investment adviser).
3-               Administrative proceeding stop       For as long as
                  orders.                              registrant has
                                                       reporting
                                                       requirement with
                                                       the Commission
                                                       plus 30 years.
4-               102(e) proceedings (previously 2(e)  25 years.
                  proceedings) (chaned to 3-).
4-               Miscellaneous studies, general       25 years.
                  conferences, roundtable, etc.,
                  authorized by the Commission.
111-             Federal government agencies          30 years.
                  miscellaneous correspondence.
119-             Securities violation files           Until date of last
                  (information regarding persons       reported action
                  against whom actions were reported   plus 10 years.
                  on charges of violating state or
                  federal laws in the purchase and
                  sale of securities.
122-2            Members of Congress (inquiries       1 year after
                  relating to various subjects).       expiration of
                                                       term in office.
122-3            Correspondence and other materials   30 years.
                  between the various Senate
                  Committees and the Commission.
122-4            Correspondence and other materials   30 years.
                  between the various House
                  Committees and the Commission.
122-6            Correspondence and other materials   30 years.
                  between Congressional Commissions
                  and Joint Committees and the
                  Commission.
123-13           Correspondence relating to the       30 years.
                  development of a Canadian
                  Extradition Treaty.
124-             Stock exchanges (General             For as long as
                  Correspondence).                     exchange is
                                                       registered with
                                                       the Commission.
124-1            Legislation and Laws: Drafts and     30 years.
                  comments concerning suggested
                  amendments to the various Acts
                  administered by the Commission.
124-6

[[Page 75]]

 
124-11
124-20
124-7, 124-7a    Subject files--Drafts, comments and  30 years.
                  correspondence concerning proposed
                  legislation submitted by the
                  Senate and the House to the
                  Commission for comment.
124-7b           Drafts of bills not yet reported in  30 years.
                  Congress that are submitted to the
                  Commission for comment.
132-3            General Correspondence--Active       10 years.
                  companies. Inquiries and
                  complaints concerning companies
                  registered under the various Acts
                  administered by the Commission.
132-3            General Correspondence--Inactive     6 years.
                  companies (no longer required to
                  file reports with the Commission).
                  Inquiries and complaints
                  concerning companies registered
                  under the various Acts
                  administered by the Commission.
132-3            General Correspondence--             6 years.
                  Miscellaneous. Requests for
                  interpretation of rules and
                  regulations under the Acts
                  administered by the Commission.
140-             Drafts, internal memoranda,          30 years.
                  correspondence concerning rules
                  and regulations under each of the
                  Acts administered by the
                  Commission.
206-, 207- to    Reorganization proceedings under     30 years.
 215-, 917-       Chapters IX, X, XI of the
                  Bankruptcy Act in which the
                  Commission participates.
265-             Advisory Committees established by   30 years.
                  the Commission (correspondence,
                  questionnaires, reports).
Confidential     Periodic reports and other           10 years.
 treatment        materials containing contracts,
 materials        commercial and financial
                  information, disclosure of which
                  would impair the value thereof,
                  submitted under confidential cover.
CHR              SEC Chairman's Subject Case Files..  20 years.
CHR              SEC Chairman's Chronological Files   Chairman's tenure
                  for Period 1972 to Present.          in office plus 3
                                                       years.
CHR               SEC Chairman's General Subject      Chairman's tenure
                  File.                                in office plus 3
                                                       years.
COMM              SEC Commissioners' Files            Commissioner's
                  (excluding Chairman), 1934 to        tenure in office
                  Present.                             plus 1 year.
ENF              Investigative Case Files--Closed...  Until closed plus
                                                       25 years.
ENF              Investigative Case Files--Inactive.  Until inactive
                                                       plus 25 years.
LIT              Litigation files:                    ..................
                   1. Briefs........................  25 years.
                   2. File contents other than        10 years.
                  briefs.
S7               Issuance, amendment or rescission    30 years
                  of rules under the various Acts--    (permanent).
                  public comments and views,
                  transcript of hearings,
                  correspondence.
XX               Reports of internal inquiries:       ..................
                   1. Supporting documentation......  Until date of
                                                       final action plus
                                                       5 years, if no
                                                       report is issued,
                                                       or until date of
                                                       final report plus
                                                       5 years.
                   2. Final reports.................  5 years.
------------------------------------------------------------------------


[60 FR 50091, Sept. 28, 1995]



Sec. 200.81  Publication of interpretative, no-action and certain exemption letters and other written communications.

    (a) Except as provided in paragraphs (b) and (c) of this section, 
every letter or other written communication requesting the staff of the 
Commission to provide interpretative legal advice with respect to any 
statute administered by the Commission or any rule or regulation adopted 
thereunder; or requesting a statement that, on the basis of the facts 
stated in such letter or other communication, the staff would not 
recommend that the Commission take any enforcement action; or requesting 
an exemption, on the basis of the facts stated in such letter, from the 
provisions of the Securities Exchange Act of 1934 (15 U.S.C. 78a et 
seq.) or any rule or regulation thereunder, where the issuance of an 
order granting such exemption does not require public notice and an 
opportunity for hearing; together with any written response thereto, 
shall be made available for inspection and copying by any person as soon 
as practicable after the response has been sent or given to the person 
requesting it.
    (b) Any person submitting such letter or other written communication 
may also submit therewith a request that it be accorded confidential 
treatment for

[[Page 76]]

a specified period of time, not exceeding 120 days from the date the 
response, together with a statement setting forth the considerations 
upon which the request for such treatment is based. If the staff 
determines that the request is reasonable and appropriate it will be 
granted and the letter or other communication will not be made available 
for public inspection or copying until the expiration of the specified 
period. If it appears to the staff that the request for confidential 
treatment should be denied, the staff shall so advise the person making 
the request and such person may withdraw the letter or other 
communication within 30 days thereafter. In such case, no response will 
be sent or given and the letter or other communication shall remain in 
the Commission's files but will not be made public. If such letter or 
other communication is not so withdrawn, it shall be deemed to be 
available for public inspection and copying together with any written 
response thereto.

    Note: All letters or other written communications requesting 
interpretative advice, a no-action position, or an exemption shall 
indicate prominently, in a separate caption at the beginning of the 
request, each section of the Act and each rule to which the request 
relates. If more than one section or rule is involved, a separate copy 
of the request shall be submitted for each section or rule involved and 
an additional copy for the use of the staff of the Commission.

    (c) This section shall not apply, however, to letters of comment or 
other communications relating to the accuracy or adequacy of any 
registration statement, report, proxy, or information statement or other 
document filed with the Commission, or relating to the extent to which 
such statement, report, or document complies with any applicable 
requirement. Further, this section shall not apply to applications or 
other written communications filed pursuant to Sec. 240.24b-2 that 
relate to objections to public disclosure of information filed with the 
Commission or any exchange.

[35 FR 17779, Nov. 19, 1970, as amended at 53 FR 12413, Apr. 14, 1988; 
53 FR 32605, Aug. 26, 1988]



Sec. 200.82  Public availability of materials filed pursuant to Sec. 240.14a-8(d) and related materials.

    Materials filed with the Commission pursuant to Rule 14a-8(d) under 
the Securities Exchange Act of 1934 (17 CFR 240.14a-8(d)), written 
communications related thereto received from any person, and each 
related no-action letter or other written communication issued by the 
staff of the Commission, shall be made available to any person upon 
request for inspection or copying.

[37 FR 20558, Sept. 30, 1972]



Sec. 200.83  Confidential treatment procedures under the Freedom of Information Act.

    (a) Purpose. This section provides a procedure by which persons 
submitting information in any form to the Commission can request that 
the information not be disclosed pursuant to a request under the Freedom 
of Information Act, 5 U.S.C. 552. This section does not affect the 
Commission's right, authority, or obligation to disclose information in 
any other context. This section is procedural only and does not provide 
rights to any person or alter the rights of any person under the Freedom 
of Information Act or any other applicable statute or regulation.
    (b) Scope. The provisions of this section shall apply only where no 
other statute or Commission rule provides procedures for requesting 
confidential treatment respecting particular categories of information 
(see, e.g., 17 CFR 240.24b-2) or where the Commission has not specified 
that an alternative procedure be utilized in connection with a 
particular study, report, investigation, or other matter. The provisions 
of this section shall not apply to any record which is contained in or 
is part of a personnel, medical or similar file relating to a Commission 
member or employee which would normally be exempt from disclosure 
pursuant to section 552(b)(6) of title 5, U.S. Code.
    (c) Written request for confidential treatment to be submitted with 
information. (1) Any person who, either voluntarily or pursuant to any 
requirement of law, submits any information or causes or permits any 
information to be submitted to the Commission, which information is 
entitled to confidential

[[Page 77]]

treatment and for which no other specific procedure exists for according 
confidential treatment, may request that the Commission afford 
confidential treatment under the Freedom of Information Act to such 
information for reasons of personal privacy or business confidentiality, 
or for any other reason permitted by Federal law, and should take all 
steps reasonably necessary to ensure, as nearly as practicable, that at 
the time the information is first received by the Commission (i) it is 
supplied segregated from information for which confidential treatment is 
not being requested, (ii) it is appropriately marked as confidential, 
and (iii) it is accompanied by a written request for confidential 
treatment which specifies the information as to which confidential 
treatment is requested.
    (2) A person who submits a record to the Commission for which he or 
she seeks confidential treatment must clearly mark each page or 
segregable portion of each page with the words ``Confidential Treatment 
Requested by [name]'' and an identifying number and code, such as a 
Bates-stamped number. In his or her written confidential treatment 
request, the person must refer to the record by identifying number and 
code.
    (3) In addition to giving a copy of any written request for 
confidential treatment to the Commission employee receiving the record 
in question, the person requesting confidential treatment must send a 
copy of the request (but not the record) by mail to the Office of 
Freedom of Information and Privacy Act Operations, SEC, Operations 
Center, 6432 General Green Way, Alexandria, VA 22312-2413. The legend 
``FOIA Confidential Treatment Request'' must clearly and prominently 
appear on the top of the first page of the written request, and the 
written request must contain the name, address, and telephone number of 
the person requesting confidential treatment. The person requesting 
confidential treatment is responsible for informing the Office of 
Freedom of Information and Privacy Act Operations promptly of any 
changes in address, telephone number, or representation.
    (4) In some circumstances, such as when a person is testifying in 
the course of a Commission investigation or providing a record requested 
in the course of a Commission examination or inspection, it may be 
impracticable to submit a written request for confidential treatment at 
the time the record is first given to the Commission. In no 
circumstances can the need to comply with the requirements of this 
section justify or excuse any delay in submitting any record to the 
Commission. The person testifying or otherwise submitting the record 
must inform the Commission employee receiving it, at the time the record 
is submitted or as soon thereafter as possible, that he or she is 
requesting confidential treatment. The person must then submit a written 
confidential treatment request within 30 days from the date of the 
testimony or the submission of the record. Any confidential treatment 
request submitted under this paragraph must also comply with paragraph 
(c)(3) of this section.
    (5) Where confidential treatment is requested by the submitter on 
behalf of another person, the request must identify that person and 
provide the telephone number and address of that person or the person's 
responsible representative if the submitter would be unable to provide 
prompt substantiation of the request at the appropriate time.
    (6) No determination on a request for confidential treatment will be 
made until the Office of Freedom of Information and Privacy Act 
Operations receives a request for disclosure of the record.
    (7) A confidential treatment request will expire ten years from the 
date the Office of Freedom of Information and Privacy Act Operations 
receives it, unless that Office receives a renewal request before the 
confidential treatment request expires. The renewal request must be sent 
by mail to the Office of Freedom of Information and Privacy Act 
Operations, SEC, Operations Center, 6432 General Green Way, Alexandria, 
VA 22312-2413, and must clearly identify the record for which 
confidential treatment is sought. A renewal request will likewise expire 
ten years from the date that Office receives it,

[[Page 78]]

unless that Office receives another timely renewal request which 
complies with the requirements of this paragraph.
    (8) A confidential treatment request shall be nonpublic. If an 
action is filed in a Federal court, however, by either the Freedom of 
Information requester (under 5 U.S.C. 552(a)(4) and Sec. 200.80(d)(6)) 
or by the confidential treatment requester (under paragraph (e)(5) of 
this section), the confidential treatment request may become part of the 
court record.
    (d) Substantiation of request for confidential treatment. (1) If it 
is determined that records which are the subject of a request for access 
under the Freedom of Information Act are also the subject of a request 
for confidential treatment under this rule and no other grounds appear 
to exist which would justify the withholding of the records [e.g., 
Freedom of Information Act Exemption 7(A), 5 U.S.C. 552(b)(7)(A)], the 
Commission's Freedom of Information Act Officer promptly shall so inform 
the person requesting confidential treatment or, in the case of a 
request made on behalf of a person other than the submitter, the person 
identified as able to provide substantiation, by telephone, facsimile or 
certified mail and require that substantiation of the request for 
confidential treatment be submitted in ten calendar days. Failure to 
submit a written substantiation within ten calendar days from the time 
of notification, or any extension thereof, may be deemed a waiver of the 
confidential treatment request and the confidential treatment 
requester's right to appeal an initial decision denying confidential 
treatment to the Commission's General Counsel as permitted by paragraph 
(e) of this section.
    (2) Substantiation of a request for confidential treatment shall 
consist of a statement setting forth, to the extent appropriate or 
necessary for the determination of the request for confidential 
treatment, the following information regarding the request:
    (i) The reasons, concisely stated and referring to specific 
exemptive provisions of the Freedom of Information Act, why the 
information should be withheld from access under the Freedom of 
Information Act;
    (ii) The applicability of any specific statutory or regulatory 
provisions which govern or may govern the treatment of the information;
    (iii) The existence and applicability of any prior determinations by 
the Commission, other Federal agencies, or a court, concerning 
confidential treatment of the information;
    (iv) The adverse consequences to a business enterprise, financial or 
otherwise, that would result from disclosure of confidential commercial 
or financial information, including any adverse effect on the business' 
competitive position;
    (v) The measures taken by the business to protect the 
confidentiality of the commercial or financial information in question 
and of similar information, prior to, and after, its submission to the 
Commission;
    (vi) The ease or difficulty of a competitor's obtaining or compiling 
the commercial or financial information;
    (vii) Whether the commercial or financial information was 
voluntarily submitted to the Commission and, if so, whether and how 
disclosure of the information would tend to impede the availability of 
similar information to the Commission;
    (viii) The extent, if any, to which portions of the substantiation 
of the request for confidential treatment should be afforded 
confidential treatment; and
    (ix) Such additional facts and such legal and other authorities as 
the requesting person may consider appropriate.
    (e) Appeal from initial determination that confidential treatment is 
not warranted. (1) In a preliminary decision, which shall be sent by 
mail or facsimile, or both, the Office of Freedom of Information and 
Privacy Act Operations will inform the confidential treatment requester 
whether it intends to grant confidentiality in whole or in part and give 
the requester ten calendar days from the date of the preliminary 
decision to submit supplemental arguments if the requester disagrees 
with the preliminary decision. A final decision, which shall also be 
sent by mail or facsimile, or both, no sooner than ten calendar days 
from the date of the preliminary decision, shall inform

[[Page 79]]

the Freedom of Information Act requester and the confidential treatment 
requester of his or her right to appeal an adverse decision to the 
Commission's General Counsel within ten calendar days from the date of 
the final decision. Records, which the Freedom of Information and 
Privacy Act Officer determines to be releasable, may be released to the 
Freedom of Information Act requester ten calendar days after the date of 
the final decision. However, if within those ten calendar days, the 
Freedom of Information and Privacy Act Officer receives an appeal from 
the confidential treatment requester, he or she shall inform the Freedom 
of Information Act requester that an appeal is pending and that the 
records will not be released until the appeal is resolved.
    (2) Any appeal of a denial of a request for confidential treatment 
shall be in writing, and shall be clearly and prominently identified on 
the envelope or other cover and at the top of the first page by the 
legend ``FOIA Confidential Treatment Appeal.'' The appeal must be sent 
by mail to the Office of Freedom of Information and Privacy Act 
Operations, SEC, Operations Center, 6432 General Green Way, Alexandria, 
VA 22312-2413, or by facsimile (703-914-1149). A copy of the appeal must 
be mailed to the General Counsel, Securities and Exchange Commission, 
450 Fifth Street, NW., Washington, DC 20549. The person requesting 
confidential treatment may supply additional substantiation of the 
request for confidential treatment in connection with the appeal to the 
General Counsel.
    (3) The General Counsel shall have the authority to consider all 
appeals from decisions of the Freedom of Information Act Officer with 
respect to confidential treatment. All appeals taken under this section 
will be considered by the General Counsel as expeditiously as 
circumstances permit. Although other procedures may be employed, to the 
extent possible, the General Counsel will decide the matter on the basis 
of the affidavits and other documentary evidence submitted by the 
interested persons and such other information as is brought to the 
attention of the General Counsel. The General Counsel shall also have 
the authority to enter and vacate stays under the circumstances set 
forth in paragraph (e)(5) of this section. In appropriate cases the 
General Counsel may, in his or her sole and unfettered discretion, refer 
appeals and questions concerning stays under paragraph (e)(5) of this 
section to the Commission for decision.
    (4) If it is determined that confidential treatment is not warranted 
with respect to all or any part of the information in question, the 
person requesting confidential treatment will be so informed by 
telephone, if possible, with a facsimile or certified mail letter 
directed to the person's last known address. Disclosure of the 
information under the Freedom of Information Act will occur ten calendar 
days after notice to the person requesting confidential treatment, 
subject to any stay entered pursuant to paragraph (e) (5) of this 
section.
    (5) If within that ten calendar day period the General Counsel has 
been notified that the person requesting confidential treatment has 
commenced an action in a Federal court concerning the determination to 
make such information publicly available, the General Counsel will stay 
making the public disclosure of the information pending final judicial 
resolution of the matter. The General Counsel may vacate a stay under 
this section either on his or her own motion or at the request of a 
person seeking access to the information under the Freedom of 
Information Act. If the stay is vacated, the information will be 
released under the Freedom of Information Act ten calendar days after 
the person requesting confidential treatment is notified of this action 
by telephone, if possible, with a facsimile or certified mail letter 
sent to the person's last known address, unless the court orders 
otherwise.
    (f) Initial determination that confidential treatment is warranted. 
If it is determined by the Commission's Freedom of Information Act 
Officer that confidential treatment is warranted, the person submitting 
the information and the person requesting access to the information 
under the Freedom of Information Act will be so informed by mail. The 
person requesting access, pursuant to the Freedom of Information Act, 
will also be informed of the right to appeal the determination to the 
General

[[Page 80]]

Counsel. Any such appeal must be taken in accordance with the provisions 
of the Freedom of Information Act and Commission rules thereunder. See 
17 CFR 200.80(d)(6).
    (g) Confidential treatment request and substantiation as nonpublic. 
Any confidential treatment request and substantiation of it shall be 
nonpublic. If an action is filed in a Federal court, however, by either 
the Freedom of Information Act requester (under 5 U.S.C. 552(a)(4) and 
Sec. 200.80(d)(6)) or by the confidential treatment requester (under 
paragraph(e)(5) of this section), both request and substantiation may 
become part of the public court record.
    (h) Effect of no prior request for confidentiality. (1) If access is 
requested under the Freedom of Information Act to information which is 
submitted to the Commission on or after October 20, 1980 with respect to 
which no request for confidential treatment has been made pursuant to 
either paragraph (c)(1) or (c)(5) of this section, it will be presumed 
that the submitter of the information has waived any interest in 
asserting an exemption from disclosure under the Freedom of Information 
Act for reasons of personal privacy or business confidentiality, or for 
other reasons.
    (2) Notwithstanding paragraph (h)(1) of this section, in appropriate 
circumstances, any person who would be affected by the public disclosure 
of information under the Freedom of Information Act may be contacted by 
Commission personnel to determine whether the person desires to make a 
request for confidential treatment. Any request for confidential 
treatment that is asserted in response to such inquiry shall be made in 
accordance with provisions of this section.
    (i) Extensions of time limits. Any time limit under this section may 
be extended in the discretion of the Commission, the Commission's 
General Counsel, or the Commission's Freedom of Information Act Officer 
for good cause shown.
    (j) Electronic filings. Confidential treatment requests shall be 
submitted in paper format only, whether or not the person making the 
request is an electronic filer.
    (k) In their discretion, the Commission, the Commission's General 
Counsel, and the Freedom of Information Act Officer may use alternative 
procedures for considering requests for confidential treatment.

[45 FR 62421, Sept. 19, 1980, as amended at 47 FR 20289, May 12, 1982; 
58 FR 14659, Mar. 18, 1993; 65 FR 55184, 55185, Sept. 13, 2000]

Subpart E [Reserved]



 Subpart F--Code of Behavior Governing Ex Parte Communications Between 
         Persons Outside the Commission and Decisional Employees

    Authority: 15 U.S.C. 77s, 78w, 79t, 77sss, 80a-37, 80b-11; 5 U.S.C. 
557.



Sec. 200.110  Purpose.

    This code is adopted in conformity with section 4 of the Government 
in the Sunshine Act, Pub. L. 94-409, and is designed to insulate the 
administrative process from improper influence.

[42 FR 14690, Mar. 16, 1977]



Sec. 200.111  Prohibitions; application; definitions.

    (a) Prohibited communications. In any agency proceeding which is 
subject to this subpart, except to the extent required for the 
disposition of ex parte matters as authorized by law:
    (1) No interested person outside the agency shall make or knowingly 
cause to be made to any member of the Commission or decisional employee 
an ex parte communication relevant to the merits of the proceeding; and
    (2) No member of the Commission or decisional employee shall make or 
knowingly cause to be made to any interested person outside the agency 
an ex parte communication relevant to the merits of the proceeding.
    (b) Proceedings to which prohibitions apply. This subpart shall 
apply to all proceedings subject to 5 U.S.C. 557(a), including 
suspension proceedings instituted pursuant to the provisions of 
Regulations A, B, E, and F of the Securities Act of 1933 (Sec. 230.251 
et seq. of this chapter), all review proceedings instituted pursuant to 
section 19(g) of the

[[Page 81]]

Securities Exchange Act of 1934, and all other proceedings where an 
evidentiary hearing has been ordered pursuant to a statutory provision 
or rule of the Commission and where the action of the Commission must be 
taken on the basis of an evidentiary record. In addition, this subpart 
shall apply to any other proceeding in which the Commission so orders.
    (c) Period during which prohibitions apply. (1) The prohibitions in 
Sec. 200.111 (a) shall begin to apply when the Commission issues an 
order for hearing; Provided,
    (i) That in suspension proceedings pursuant to Regulations A, B, E 
and F of the Securities Act of 1933 (Sec. 230.251 et seq. of this 
chapter), these prohibitions shall commence when the Commission enters 
an order temporarily suspending the exemption; and
    (ii) That in proceedings under section 19(d) of the Securities 
Exchange Act of 1934 these prohibitions shall commence from the time 
that a copy of an application for review has been served by the 
Secretary upon the self-regulatory organization; and
    (iii) In no case shall the prohibitions in Sec. 200.111(a) begin to 
apply later than the time at which a proceeding is noticed for hearing 
unless the person responsible for the communication has knowledge that 
it will be noticed, in which case the prohibitions shall apply beginning 
at the time of his or her acquisition of such knowledge.
    (2) The prohibitions in Sec. 200.111(a) shall continue until the 
time to file a petition for rehearing from the final order of the 
Commission has expired. In the event a petition for rehearing is filed, 
these prohibitions shall cease if and when the petition for rehearing is 
denied.
    (3) The Commission may, by specific order entered in a particular 
proceeding, determine that these prohibitions shall commence from some 
date earlier than the time specified in this paragraph (c) or shall 
continue until a date subsequent to the time specified herein.
    (d) Definitions. As used in this subpart:
    (1) Ex parte communication means an oral or written communication 
not on the public record with respect to which reasonable prior notice 
to all participants to the proceeding is not given, but it shall not 
include requests for status reports on any matter or proceeding. In 
addition, an ex parte communication shall not include:
    (i) Any written communication of which copies are served by the 
communicator contemporaneously with the transmittal of the communication 
in accordance with requirements of Rule 150 of the Commission's Rules of 
Practice, Sec. 201.150 of this chapter, upon all participants to the 
proceeding (including the interested Division or Office of the 
Commission); or
    (ii) Any oral communication where 48 hours advance written notice is 
given to all participants to the proceeding (including the interested 
division of the Commission).
    (2) Participants to the proceeding means all parties to the 
proceeding (including the interested Division or Office of the 
Commission) and any other persons who have been granted limited 
participation pursuant to the provisions of Rule 210(c) of the 
Commission's Rules of Practice, Sec. 201.210(c) of this chapter.
    (3) Decisional employee means: (i) The administrative law judge 
assigned to the proceeding in question; and
    (ii) All members of the staff of the Office of Opinions and Review; 
and
    (iii) The legal and executive assistants to members of the 
Commission; and
    (iv) Any employee of the Commission who has been specifically named 
by order of the administrative law judge or the Commission in the 
proceeding to assist thereafter in making or recommending a particular 
decision; and
    (v) Any other employee of the Commission who is, or may reasonably 
be expected to be, involved in the decisional process of the proceeding.

[42 FR 14690, Mar. 16, 1977, as amended at 60 FR 32795, June 23, 1995]



Sec. 200.112  Duties of recipient; notice to participants.

    (a) Duties of recipient. A member of the Commission or decisional 
employee who receives, or who make or knowingly causes to be made, a 
communication prohibited by this section, or who receives or makes a 
communication

[[Page 82]]

which he or she concludes should, in fairness, be brought to the 
attention of all participants to the proceeding, shall transmit to the 
Commission's Secretary, who shall place on the public record of the 
proceeding:
    (1) All such written communications; and
    (2) Memoranda stating the substance of all such oral communications; 
and
    (3) All written responses, and memoranda stating the substance of 
all oral responses, to the materials described in paragraphs (a) (1) and 
(2) of this section.
    (b) Notice to participants. The Secretary shall send copies of the 
communication to all participants to the proceeding with respect to 
which it was made, and shall notify the communicator of the provisions 
of this code prohibiting ex parte communications. If the communications 
are from persons other than participants to the proceedings or their 
agents, and the Secretary determines that it would be too burdensome to 
send copies of the communications to all participants because: (1) The 
communications are so voluminous, or (2) the communications are of such 
borderline relevance to the issues of the proceedings, or (3) the 
participants to the proceeding are so numerous, the Secretary may, 
instead, notify the participants that the communications have been 
received, placed in the file, and are available for examination.
    (c) Post decisional communications. Any Commission member or 
decisional employee who receives a communication which would be 
prohibited by this Code, but for the fact that it was received 
subsequent to the date when the prohibitions imposed hereby have ceased 
to apply, shall comply with the provisions of Sec. 200.112(a) with 
respect to such communication in the event that he or she is to act in a 
decisional capacity in the same proceeding pursuant to remand where he 
or she concludes, in fairness, that such communication should be brought 
to the attention of all participants to the proceeding.

[42 FR 14691 Mar. 16, 1977]



Sec. 200.113  Opportunity to respond; interception.

    (a) Opportunity to respond. All participants to a proceeding may 
respond to any allegations or contentions contained in a prohibited ex 
parte communication placed in the public record in accordance with 
Sec. 200.112. Such responses shall be included in the public record.
    (b) Interception of communications. All written communications 
addressed to the Commission respecting a proceeding will be deemed to be 
communications to the staff of the interested division and will be 
directed to that division by the Commission's mail room. A Commission 
member or decisional employee may instruct any of his assistants who are 
nondecisional employees to intercept any communication directed to him 
which might appear to violate this Code and authorize them either to 
transmit any such written communication to the staff of the interested 
division of the Commission, if it appears from the contents of the 
communication that the intent of the sender is consistent with such 
action, or to return the communication to the sender.

[28 FR 4447, May 3, 1963, as amended at 42 FR 14691, Mar. 16, 1977]



Sec. 200.114  Sanctions.

    (a) Discipline of persons practicing before the Commission. The 
Commission may, to the extent not prohibited by law, censure, suspend, 
or revoke the privilege to practice before it of any person who makes, 
or solicits the making of, an unauthorized ex parte communication.
    (b) Adverse action on claim. Upon receipt of a communication 
knowingly made or knowingly caused to be made by a party in violation of 
this subpart, the Commission, administrative law judge, or other 
employee presiding at the hearing may, to the extent consistent with the 
interests of justice and the policy of the underlying statutes, require 
the party to show cause why his claim or interest in the proceeding 
should not be dismissed, denied, disregarded, or otherwise adversely 
affected on account of such violation.

[[Page 83]]

    (c) Discipline of Commission employees. The Commission may censure, 
suspend, or dismiss any Commission employee who violates the 
prohibitions or requirements of this Code.

[28 FR 4447, May 3, 1963, as amended at 42 FR 14691, Mar. 16, 1977]



Subpart G--Plan of Organization and Operation Effective During Emergency 
                               Conditions

    Authority: 15 U.S.C. 77s, 78w, 79t, 77sss, 80a-37, 80b-11, unless 
otherwise noted.
    Section 200.203 is also issued under 15 U.S.C. 78d, 78d-1.

    Source: 28 FR 6970, July 9, 1963, unless otherwise noted.



Sec. 200.200  Purpose.

    This subpart describes the plan of organization and operation which 
will be observed by the Securities and Exchange Commission in 
discharging its duties and responsibilities in the event of a national 
emergency as defined in the following section.

(Sec. 4, 48 Stat. 885, as amended; 15 U.S.C. 78d, sec. 1, 76 Stat. 394; 
15 U.S.C. 78d-1. Reorganization Plan No. 10 of 1950; 3 CFR, 1949-1953 
Comp., p. 1006)



Sec. 200.201  Emergency conditions, effective date, and duration.

    For the purposes of this subpart, emergency conditions shall be 
deemed to commence at the time of an armed attack upon the United 
States, its territories and possessions, at the time of official 
notification of the likelihood or imminence of such attack, or at a time 
specified by the authority of the President, whichever may first occur, 
and shall continue until official notification of cessation of such 
conditions. The provisions of this subpart shall become operative as at 
the commencement of emergency conditions and continue until cessation of 
those conditions, or until the Commission shall by notice or order 
resume its normal organization and operations.

(Sec. 4, 48 Stat. 885, as amended; 15 U.S.C. 78d, sec. 1, 76 Stat. 394; 
15 U.S.C. 78d-1. Reorganization Plan No. 10 of 1950; 3 CFR, 1949-1953 
Comp., p. 1006)



Sec. 200.202  Offices, and information and submittals.

    (a) During emergency conditions, the location or headquarters of the 
Commission shall be as designated by the Chairman or his successor. The 
location of each Regional and District Office of the Commission, if 
different from the normal location, shall be as designated by the 
Chairman of the Commission or his successor, or in the absence of 
communications with him, by the Regional Director or District 
Administrator for the area or his acting successor.
    (b) During emergency conditions, all formal or informal requests, 
filings, reports or other submittals shall be delivered to the 
Commission at designated offices or addressed to the Securities and 
Exchange Commission, Official Mail and Messenger Service, United States 
Post Office Department, Washington 25, DC.

(Sec. 4, 48, Stat. 885, as amended; 15 U.S.C. 78d, sec. 1, 76 Stat. 394; 
15 U.S.C. 78d-1. Reorganization Plan No. 10 of 1950; 3 CFR, 1949-1953 
Comp., p. 1006)

[28 FR 6970, July 9, 1963, as amended at 59 FR 5944, Feb. 9, 1994]



Sec. 200.203  Organization, and delegations of authority.

    (a) During emergency conditions, the respective functions and 
responsibilities of the Commissioners, the Chairman of the Commission, 
and the staff members shall be, to the extent possible, as set forth in 
Subpart A of this part (Sec. 200.1 et seq.).
    (b) Action for and in the name of the Commission taken pursuant to 
this subpart by one or more Commissioners or by a successor as 
designated in this section shall mean and include the delegated 
authority to act for the unavailable or incapacitated Commissioners.
    (c) Pursuant to the statutes governing the Commission, to 
Reorganization Plan No. 10 of 1950, and to Pub. L. 100-181, section 
308(b), 101 Stat. 1249 (1987), the following automatic delegation of 
authority is made to provide continuity in the event of an emergency:
    (1) In the absence or incapacity of the Chairman of the Commission 
during an emergency of the nature contemplated by this subpart, the 
authority of the

[[Page 84]]

Chairman to govern the affairs of the Commission and to act for the 
Commission, as provided for by laws and by delegations from the 
Commission, will pass to the surviving successor highest on the 
following list until such time as a duly appointed Chairman of the 
Commission is available:
    (i) The Commissioners in order of seniority.
    (ii) The General Counsel.
    (iii) The Executive Director.
    (iv) The Executive Assistant to the Chairman.
    (v) The Division Directors in order of seniority.
    (vi) The Regional Directors in order of seniority.
    (vii) The District Administrators in order of seniority.
    (2) If and when a commissioner previously incapacitated or otherwise 
unavailable, again becomes available, he shall thereupon have all the 
powers and functions he would have had if he had not been incapacitated 
or otherwise unavailable.
    (d) Actions taken for and in the name of the Commission as described 
above shall be effective immediately or as specified by the successor 
acting, but shall be subject to reconsideration by the Commissioners 
when the Commission has been reconstituted and is functioning.
    (e) Except as may be determined otherwise by the Chairman or his 
successor, the duties of each head of a division or office of the 
Commission shall be discharged, in the absence or incapacity of such 
person during the emergency conditions, by the available staff member 
next in line of succession. The head of each division or office shall 
designate the line of succession within his division or office. If no 
such designation has been made or the designatee is unavailable, such 
duties shall be assumed by the available subordinate officer or employee 
in the particular division or office who is highest in grade and in the 
event that there is more than one such person, in length of service with 
the Commission.

(Sec. 4, 48 Stat. 885, as amended; 15 U.S.C. 78d, sec. 1, 76 Stat. 394; 
15 U.S.C. 78d-1. Reorganization Plan No. 10 of 1950; 3 CFR, 1949-1953 
Comp., p. 1006)

[28 FR 6970, July 9, 1963, as amended at 28 FR 7672, July 27, 1963; 28 
FR 14493, Dec. 31, 1963; 54 FR 40862, Oct. 4, 1989; 59 FR 5945, Feb. 9, 
1994]



Sec. 200.204  Personnel, fiscal, and service functions.

    In the absence of unavailability of the appropriate staff officer or 
his successor, authority to effect temporary appointments of such 
additional officers and employees, to classify and allocate positions to 
their proper grades, to issue travel orders, and to effect emergency 
purchases of supplies, equipment and services shall be exercised by the 
respective Regional Directors and District Administrators, their 
deputies, or staff in line of succession, as may be required for the 
discharge of the lawful duties of the respective offices.

(Sec. 4, 48 Stat. 885, as amended; 15 U.S.C. 78d, sec. 1, 76 Stat. 394; 
15 U.S.C. 78d-1, Reorganization Plan No. 10 of 1950; 3 CFR, 1949-1953 
Comp., p. 1006)

[28 FR 6970, July 9, 1963, as amended at 59 FR 5945, Feb. 9, 1994]



Sec. 200.205  Effect upon existing Commission organization, delegations, and rules.

    Except as otherwise provided herein, all outstanding Commission 
organizational statements, delegations of authority, orders, rules and 
regulations shall remain in force and effect during emergency 
conditions, subject to all lawful requirements and such changes as may 
be authorized by or in the name of the Chairman or the Commission.

(Sec. 4, 48 Stat. 885, as amended; 15 U.S.C. 78d, sec. 1, 76 Stat. 394, 
15 U.S.C. 78d-1. Reorganization Plan No. 10 of 1950; 3 CFR, 1949-1953 
Comp., p. 1006)

[[Page 85]]



  Subpart H--Regulations Pertaining to the Privacy of Individuals and 
             Systems of Records Maintained by the Commission

    Authority: 5 U.S.C. 552a(f), unless otherwise noted.
    Section 200.312 is also issued under Pub. L. 93-579, sec. k, 5 
U.S.C. 552a(k).
    Section 200.313 is also issued under Pub. L. 93-579, sec. j, 5 
U.S.C. 552a(j) and sec. k, 5 U.S.C. 552a(k).

    Source: 40 FR 44068, Sept. 24, 1975, unless otherwise noted.



Sec. 200.301  Purpose and scope.

    (a) The Privacy Act of 1974, Pub. L. 93-579, 88 Stat. 1896, is 
based, in part, on the finding by Congress that ``in order to protect 
the privacy of individuals identified in information systems maintained 
by Federal agencies, it is necessary and proper for the Congress to 
regulate the collection, maintenance, use, and dissemination of 
information by such agencies.'' To achieve this objective the Act, among 
other things, provides, with some exceptions, that Federal agencies 
shall advise an individual upon request whether records maintained by 
the agency in a system of records pertain to the individual and shall 
grant the individual access to such records. The Act further provides 
that individuals may request amendments or corrections to records 
pertaining to them that are maintained by the agency, and that the 
agency shall either grant the requested amendments or set forth fully 
its reasons for refusing to do so.
    (b) The Securities and Exchange Commission, pursuant to subsection 
(f) of the Privacy Act, adopts the following rules and procedures to 
implement the provisions of the Act summarized above, and other 
provisions of the Act. These rules and procedures are applicable to all 
requests for information, access or amendment to records pertaining to 
an individual that are contained in any system of records that is 
maintained by the Commission.



Sec. 200.302  Definitions.

    The following definitions shall apply for purposes of this subpart:
    (a) The terms individual, maintain, record, system of records, and 
routine use are defined for purposes of these rules as they are defined 
in 5 U.S.C. 552a(a)(2), (a)(3), (a)(4), (a)(5), and (a)(6).
    (b) Commission means the Securities and Exchange Commission.



Sec. 200.303  Times, places and requirements for requests pertaining to individual records in a record system and for the identification of individuals making 
          requests for access to the records pertaining to them.

    (a) Place to make request. Any request by an individual to be 
advised whether any system of records maintained by the Commission and 
named by the individual contains a record pertaining to him or her, or 
any request by an individual for access to a record pertaining to him or 
her that is contained in a system of records maintained by the 
Commission, shall be submitted by mail to the Privacy Act Officer, SEC, 
Operations Center, 6432 General Green Way, Alexandria, VA 22312-2413, or 
by facsimile (703-914-1149). All requests will be required to be put in 
writing and signed by the individual making the request. In the case of 
requests for access that are made by mail, the envelope should be 
clearly marked ``Privacy Act Request.''
    (1) Information to be included in requests. Each request by an 
individual concerning whether the Commission maintains in a system of 
records a record that pertains to him, or for access to any record 
pertaining to the individual that is maintained by the Commission in a 
system of records, shall include such information as will assist the 
Commission in identifying those records as to which the individual is 
seeking information or access. Where practicable, the individual should 
identify the system of records that is the subject of his request by 
reference to the Commission's notices of systems of records, which are 
published in the Federal Register, as required by section (e)(4) of the 
Privacy Act, 5 U.S.C. 552a(e)(4). Where a system of records is compiled 
on the basis of a specific identification scheme, the individual should 
include in his request the identification number or other identifier 
assigned to him. In the event the individual does not know the specific 
identifier assigned to him, he shall provide other information, 
including his

[[Page 86]]

full name, address, date of birth and subject matter of the record, to 
aid in processing his request. If additional information is required 
before a request can be processed, the individual shall be so advised.
    (2) Verification of identity. When the fact of the existence of a 
record is not required to be disclosed under the Freedom of Information 
Act, 5 U.S.C. 552, as amended, or when a record as to which access has 
been requested is not required to be disclosed under that Act, the 
individual seeking the information or requesting access to the record 
shall be required to verify his or her identity before access will be 
granted or information given. For this purpose, individuals shall appear 
at the Office of Freedom of Information and Privacy Act Operations, SEC, 
Operations Center, 6432 General Green Way, Alexandria, VA 22312-2413, 
during normal business hours of 9 a.m. to 4:30 p.m. e.s.t., Monday 
through Friday, or at one of the Commission's Regional or District 
Offices. The addresses and business hours of those offices are listed 
below:
Northeast Regional Office. 7 World Trade Center, Suite 1300, New York, 
          NY 10048. Office hours--9 a.m. to 5:30 p.m. E.S.T.
  Boston District Office--73 Tremont Street, Sixth Floor, Suite 600, 
          Boston, MA 02108. Office hours--9 a.m. to 5:30 p.m. E.S.T.
  Philadelphia District Office--The Curtis Center, Suite 1005 E., 601 
          Walnut Street, Philadelphia, PA 19106. Office hours--9 a.m. to 
          5:30 p.m. E.S.T.
Southeast Regional Office. 1401 Brickell Avenue, Suite 200, Miami, FL 
          33131. Office hours--9:00 a.m. to 5:30 p.m. E.S.T.
  Atlanta District Office--3475 Lenox Road, NE., Suite 1000, Atlanta, GA 
          30326. Office hours--9 a.m. to 5:30 p.m. E.S.T.
Midwest Regional Office. 500 West Madison Street, Suite 1400, Chicago, 
          IL 60661. Office hours--8:45 a.m. to 5:15 p.m. C.S.T.
Central Regional Office. 1801 California Street, Suite 4800, Denver, CO 
          80202. Office hours--8 a.m. to 4:30 p.m. M.S.T.
  Fort Worth District Office--801 Cherry Street, 19th Floor, Fort Worth, 
          TX 76102. Office hours--8:30 a.m. to 5 p.m. C.S.T.
  Salt Lake District Office--500 Key Bank Tower, 50 S. Main Street, 
          Suite 500, Box 79, Salt Lake City, UT 84144. Office hours--8 
          a.m. to 4:30 p.m. M.S.T.
Pacific Regional Office. 5670 Wilshire Boulevard, 11th Floor, Los 
          Angeles, CA 90036. Office hours 8:30 a.m. to 5 p.m. P.S.T.
  San Francisco District Office--44 Montgomery Street, Suite 1100, San 
          Francisco, CA 94104. Office hours--8:30 a.m. to 5 p.m. P.S.T.

None of the Commission's Offices are open on Saturday, Sunday or the 
following legal holidays: New Year's Day, Martin Luther King, Jr.'s 
Birthday, President's Day, Memorial Day, Independence Day, Labor Day, 
Veterans' Day, Columbus Day, Thanksgiving Day or Christmas Day.
    (3) Methods for verifying identity--appearance in person. An 
individual seeking information as to records pertaining to him or access 
to those records shall furnish documentation that may reasonably be 
relied on to establish the individual's identity. Such documentation 
might include a valid birth certificate, driver's license, employee or 
military identification card, or medicare card.
    (4) Method for verifying identity by mail. Where an individual 
cannot appear at one of the Commission's Offices to verify his or her 
identity, he or she must submit, along with the request for information 
or access, a statement attesting to his or her identity. Where access is 
being sought, the statement shall include a representation that the 
requested records pertain to the individual and a statement that the 
individual is aware that knowingly and willfully requesting or obtaining 
records pertaining to an individual from the Commission under false 
pretenses is a criminal offense. This statement shall be a sworn 
statement, or in lieu of a sworn statement, an individual may submit an 
unsworn statement to the same effect if it is signed by him or her as 
true under penalty of perjury, dated, and in substantially the following 
form:
    (i) If executed outside the United States: ``I declare (or certify, 
verify, or state) under penalty of perjury under the laws of the United 
States of America that the foregoing is true and correct.''
    Executed on (date)--------

(Signature)
    (ii) If executed within the United States, its territories, 
possessions, or commonwealths: ``I declare (or certify, verify, or 
state) under penalty of perjury that the foregoing is true and 
correct.''
    Executed on (date)--------

[[Page 87]]


(Signature)
    (5) Additional procedures for verifying identity. When it appears 
appropriate, there may be made such other arrangements for the 
verification of identity as are reasonable under the circumstances and 
appear to be effective to prevent unauthorized disclosure of, or access 
to, individual records.
    (b) Acknowledgement of requests for information pertaining to 
individual records in a record system or for access to individual 
records. (1) Except where an immediate acknowledgement is given for 
requests made in person, the receipt of a request for information 
pertaining to individual records in a record system will be acknowledged 
within 10 days after the receipt of such request. Requests will be 
processed as promptly as possible and a response to such requests will 
be given within 30 days (excluding Saturdays, Sundays, and legal 
holidays) unless, within the 30 day period and for cause shown, the 
individual making the request is notified in writing that a longer 
period is necessary.
    (2) When an individual appears in person at the Office of 
Information and Privacy Act Operations, SEC, Operations Center, 6432 
General Green Way, Alexandria, VA 22312-2413, or at one of its Regional 
or District Offices to request access to records pertaining to him, and 
such individual provides the required information and verification of 
identity, the Commission's staff, if practicable, will indicate at that 
time whether it is likely that the individual will be given access to 
the records and, if so, when and under what circumstances such access 
will be given. In the case of requests received by mail, whenever 
practicable, acknowledgement of the receipt of the request will be given 
within 10 days after receipt (excluding Saturdays, Sundays, and legal 
holidays). The acknowledgement will indicate, if practicable, whether or 
not access likely will be granted and, if so, when and under what 
circumstances.

[40 FR 44068, Sept. 24, 1975, as amended at 41 FR 44698, Oct. 12, 1976; 
47 FR 26819, June 22, 1982; 52 FR 2677, Jan. 26, 1987; 54 FR 40862, Oct. 
4, 1989; 54 FR 50307, Dec. 5, 1989; 59 FR 5945, Feb. 9, 1994; 59 FR 
12543, Mar. 17, 1994; 65 FR 55185, 55186, Sept. 13, 2000]



Sec. 200.304  Disclosure of requested records.

    (a) Initial review. Requests by individuals for access to records 
pertaining to them will be referred to the Commission's Privacy Act 
Officer who initially will determine whether access will be granted, 
Provided, however, That a Director of a staff Division of the Commission 
or Office head, other than the General Counsel, whose zone of 
responsibility relates to the record requested (see 17 CFR 200.13 et 
seq.), may make a determination that access is not lawfully required to 
be granted and should not be granted, in which case he, and not the 
Privacy Act Officer, shall make the required notification to the 
individual making the request.
    (b) Grant of request for access. (1) If it is determined that a 
request for access to records pertaining to an individual will be 
granted, the individual will be advised by mail that access will be 
given at the designated Office of the Commission or a copy of the 
requested record will be provided by mail if the individual shall so 
indicate. Where the individual requests that copies of the record be 
mailed to him or requests copies of a record upon reviewing it at a 
Commission Office, the individual shall pay the cost of making the 
requested copies, as set forth in Sec. 200.310 of this subpart.
    (2) In granting access to an individual to a record pertaining to 
him, such steps shall be taken by the Commission's staff as are 
necessary to prevent the unauthorized disclosure at the same time of 
information pertaining to individuals other than the person making the 
request or of other information that does not pertain to the individual.
    (c) Denial of request for access. If it is determined that access 
will not be granted, the individual making the request will be notified 
of that fact and given the reasons why access is being denied. The 
individual also will be advised (1) of his right to seek review by the 
General Counsel of the intital decision to deny access, in accordance 
with the procedures set forth in Sec. 200.308 of this subpart; and (2) 
of his right ultimately to obtain judicial review pursuant to 5 U.S.C. 
552a(g)(1)(A) of a final denial of access by the General Counsel.

[[Page 88]]

    (d) Time for acting on requests for access. Access to a record 
pertaining to an individual normally will be granted or denied within 30 
days (excluding Saturdays, Sundays and legal holidays) after the receipt 
of the request for access unless the individual making the request is 
notified in writing within the 30 day period that, for good cause shown, 
a longer time is required. In such cases, the individual making the 
request shall be informed in writing of the difficulties encountered and 
an indication shall be given as to when it is anticipated that access 
may be granted or denied.
    (e) Authorization to allow designated person to review and discuss 
records pertaining to another individual. An individual who is granted 
access to records pertaining to him, and who appears at a Commission 
Office to review the records, may be accompanied by another person of 
his choosing. Where the records as to which access has been granted are 
not required to be disclosed under provisions of the Freedom of 
Information Act 5 U.S.C. 552, as amended, the individual requesting the 
records, before being granted access, shall execute a written statement, 
signed by him and the person accompanying him, which specifically 
authorizes the latter individual to review and discuss the records. If 
such authorization has not been given as described, the person who has 
accompanied the individual making the request will be excluded from any 
review or discussion of the records.
    (f) Exclusion for certain records. Nothing contained in these rules 
shall allow an individual access to any information compiled in 
reasonable anticipation of a civil action or proceeding.

(5 U.S.C. 552a(f); sec. 19, Securities Act of 1933, 48 Stat. 85, as 
amended; sec. 23, Securities Exchange Act of 1934, 48 Stat. 901, as 
amended; sec. 20, Public Utility Holding Company Act of 1935, 49 Stat. 
833; sec. 319, Trust Indenture Act of 1939, 53 Stat. 1173; sec. 38, 
Investment Company Act of 1940, 54 Stat. 841; sec. 211, Investment 
Advisers Act of 1940, 54 Stat. 855 (15 U.S.C. 77s, 78w, 79t, 77sss, 80a-
37, 80b-11))

[40 FR 44068, Sept. 24, 1975, as amended at 49 FR 13866, Apr. 9, 1984]



Sec. 200.305  Special procedure: Medical records.

    (a) Statement of physician or mental health professional. When an 
individual requests access to records pertaining to him that include 
medical and/or psychological information, the Commission, if it deems it 
necessary under the particular circumstances, may require the individual 
to submit with the request a signed statement by his physician or a 
mental health professional indicating that, in their opinion, disclosure 
of the requested records or information directly to the individual will 
not have an adverse effect on the individual.
    (b) Designation of physician or mental health professional to 
receive records. If the Commission believes, in good faith, that 
disclosure of medical and/or psychological information directly to an 
individual could have an adverse effect on that individual, the 
individual may be asked to designate in writing a physician or mental 
health professional to whom he would like the records to be disclosed, 
and disclosure that otherwise would be made to the individual will 
instead be made to the designated physician or mental health 
professional.



Sec. 200.306  Requests for amendment or correction of records.

    (a) Place to make requests. A written request by an individual to 
amend or correct records pertaining to him or her may be hand delivered 
during normal business hours to the SEC, Operations Center, Room 1418, 
6432 General Green Way, Alexandria, VA 22312-2414, or be sent by mail to 
the Office of Information and Privacy Act Operations, SEC, Operations 
Center, 6432 General Green Way, Alexandria, VA 22312-2413, or by 
facsimile (703-914-1149).
    (1) Information to be included in requests. Each request to amend or 
correct a Commission record shall reasonably describe the record sought 
to be amended or corrected. Such description should include, for 
example, relevant names, dates and subject matter to permit the record 
to be located among the records maintained by the Commission. An 
individual who has requested that a record pertaining to him be amended 
or corrected will be advised

[[Page 89]]

promptly if the record cannot be located on the basis of the description 
given and that further identifying information is necessary before his 
request can be processed. An initial evaluation of a request presented 
in person will be made immediately to ensure that the request is 
complete and to indicate what, if any, additional information will be 
required. Verification of the individual's identity as set forth in 
Sec. 200.303(a) (2), (3), (4) and (5) may also be required.
    (2) Basis for amendment or correction. An individual requesting an 
amendment or correction to a record pertaining to him shall specify the 
substance of the amendment or correction and set forth facts and provide 
such materials that would support his contention that the record 
pertaining to him as maintained by the Commission is not accurate, 
timely or complete, or that the record is not necessary and relevant to 
accomplish a statutory purpose of the Commission as authorized by law or 
by Executive Order of the President.
    (b) Acknowledgement of requests for amendment or correction. Receipt 
of a request to amend or correct a record pertaining to an individual 
normally will be acknowledged in writing within 10 days after such 
request has been received. When a request to amend or correct is made in 
person, the individual making the request will be given a written 
acknowledgement when the request is presented. The acknowledgement will 
describe the request received and indicate when it is anticipated that 
action will be taken on the request. No acknowledgement will be sent 
when the request for amendment or correction will be reviewed, and an 
initial decision made, within 10 days from the date the request is 
received.

[40 FR 44068, Sept. 24, 1975, as amended at 47 FR 26819, June 22, 1982; 
65 FR 55186, Sept. 13, 2000]



Sec. 200.307  Review of requests for amendment or correction.

    (a) Initial review. As in the case of requests for access, requests 
by individuals for amendment or correction to records pertaining to them 
will be referred to the Commission's Privacy Act Officer for an initial 
determination, except that such requests may be considered by a Division 
Director or Office Head (other than the General Counsel) as set forth in 
Sec. 200.304(a) of this subpart.
    (b) Standards to be applied in reviewing requests. In reviewing 
requests to amend or correct records, the Privacy Act Officer, or 
Division or Office head, will be guided by the criteria set forth in 5 
U.S.C. 552a(e)(1), i.e., that records maintained by the Commission shall 
contain only such information as is necessary and relevant to accomplish 
a statutory purpose of the Commission as required by statute or 
Executive Order of the President and that such information also be 
accurate, timely, and complete. These criteria will be applied whether 
the request is to add material to a record or to delete information from 
a record.
    (c) Time for acting on requests. Initial review of a request by an 
individual to amend or correct a record pertaining to him shall be 
completed as promptly as is reasonably possible and normally within 30 
days (excluding Saturdays, Sundays and legal holidays) from the date the 
request was received, unless unusual circumstances preclude completion 
of review within that time. If the anticipated completion date indicated 
in the acknowledgement cannot be met, the individual requesting the 
amendment will be advised in writing of the delay and the reasons 
therefor, and also advised when action is expected to be completed.
    (d) Grant of requests to amend or correct records. If a request to 
amend or correct a record is granted in whole or in part, the Privacy 
Act Officer will: (1) Advise the individual making the request in 
writing of the extent to which it has been granted; (2) amend or correct 
the record accordingly; and (3) where an accounting of disclosures of 
the record has been kept pursuant to 5 U.S.C. 552a(c), advise all 
previous recipients of the record of the fact that the record has been 
amended or corrected and the substance of the amendment or correction.
    (e) Denial of requests to amend or correct records. If an 
individual's request to amend or correct a record pertaining to him is 
denied in whole or in part, the Privacy Act Officer will:

[[Page 90]]

    (1) Promptly advise the individual making the request in writing of 
the extent to which the request has been denied;
    (2) State the reasons for the denial of the request;
    (3) Describe the procedures established by the Commission to obtain 
further review within the Commission of the request to amend or correct, 
including the name and address of the person to whom the appeal is to be 
addressed; and
    (4) Inform the individual that the Privacy Act Officer will provide 
information and assistance to the individual in perfecting an appeal of 
the initial decision.

(5 U.S.C. 552a(f); sec. 19, Securities Act of 1933, 48 Stat. 85, as 
amended; sec. 23, Securities Exchange Act of 1934, 48 Stat. 901, as 
amended; sec. 20, Public Utility Holding Company Act of 1935, 49 Stat. 
833; sec. 319, Trust Indenture Act of 1939, 53 Stat. 1173; sec. 38, 
Investment Company Act of 1940, 54 Stat. 841; sec. 211, Investment 
Advisers Act of 1940, 54 Stat. 855 (15 U.S.C. 77s, 78w, 79t, 77sss, 80a-
37, 80b-11))

[40 FR 44068, Sept. 24, 1975, as amended at 49 FR 13866, Apr. 9, 1984]



Sec. 200.308  Appeal of initial adverse agency determination as to access or as to amendment or correction.

    (a) Administrative review. Any person who has been notified pursuant 
to Sec. 200.304(c) that his request for access to records pertaining to 
him has been denied, or pursuant to Section 307(e) of this subpart that 
his request for amendment or correction has been denied in whole or in 
part, or who has received no response to a request for access or to 
amend within 30 days (excluding Saturdays, Sundays and legal holidays) 
after his request was received by the Office of Information and Privacy 
Act Operations (or within such extended period as may be permitted in 
accordance with Secs. 200.304(d) and 200.307(c) of this subpart), may 
appeal the adverse determination or failure to respond to the General 
Counsel.
    (1) The appeal shall be in writing and shall describe the record in 
issue and set forth the proposed amendment or correction and the reasons 
therefor.
    (2) The appeal shall be delivered or sent by mail to the Office of 
Information and Privacy Act Operations, SEC, Operations Center, 6432 
General Green Way, Alexandria, VA 22312-2413, or by facsimile (703-914-
1149).
    (3) The applicant, if he wishes, may state such facts and cite such 
legal or other authorities as he may consider appropriate in support of 
his application.
    (4) The General Counsel will make a determination with respect to 
any appeal within 30 days after the receipt of such appeal (excluding 
Saturdays, Sundays and legal holidays), unless for good cause shown, the 
General Counsel shall extend that period. If such an extension is made, 
the individual who is appealing shall be advised in writing of the 
extension, the reasons therefor, and the anticipated date when the 
appeal will be decided.
    (5) In considering an appeal from a denial of a request to amend or 
correct a record, the General Counsel shall apply the same standards as 
set forth in Sec. 200.307(b).
    (6) If the General Counsel shall conclude that access should be 
granted, he or she shall issue an order granting access and instructing 
the Privacy Act Officer to comply with Sec. 200.304(b).
    (7) If the General Counsel shall conclude that the request to amend 
or correct the record should be granted in whole or in part, he or she 
shall issue an order granting the requested amendment or correction in 
whole or in part and instructing the Privacy Act Officer to comply with 
the requirements of Sec. 200.307(d) of this subpart, to the extent 
applicable.
    (8) If the General Counsel affirms the initial decision denying 
access, he or she shall issue an order denying access and advising the 
individual seeking access of (i) The order; (ii) the reasons for denying 
access; and (iii) the individual's right to obtain judicial review of 
the decision pursuant to 5 U.S.C. 552a(g)(1)(B).
    (9) If the General Counsel determines that the decision of the 
Privacy Act Officer denying a request to amend or correct a record 
should be upheld, he or she shall issue an order denying the request and 
the individual shall be advised of
    (i) The order refusing to amend or correct the record and the 
reasons therefor;

[[Page 91]]

    (ii) His or her right to file a concise statement setting forth his 
or her disagreement with the General Counsel's decision not to amend or 
correct the record;
    (iii) The procedures for filing such a statement of disagreement 
with the General Counsel;
    (iv) The fact that any such statement of disagreement will be made 
available to anyone to whom the record is disclosed, together with, if 
the General Counsel deems it appropriate, a brief statement setting 
forth the General Counsel's reasons for refusing to amend or correct;
    (v) The fact that prior recipients of the record in issue will be 
provided with the statement of disagreement and the General Counsel's 
statement, if any, to the extent that an accounting of such disclosures 
has been maintained pursuant to 5 U.S.C. 552a(c); and
    (vi) The individual's right to seek judicial review of the General 
Counsel's refusal to amend or correct, pursuant to 5 U.S.C. 
552a(g)(1)(A).
    (10) In appropriate cases the General Counsel may, in his or her 
sole and unfettered discretion, refer matters requiring administrative 
review of initial decisions to the Commission for determination and the 
issuance, where indicated, of orders.
    (b) Statement of disagreement. As noted in paragraph (a)(9)(ii) of 
this section, an individual may file with the General Counsel a 
statement setting forth his disagreement with the General Counsel's 
denial of his request to amend or correct a record.
    (1) Such statement of disagreement shall be delivered or sent by 
mail to the Office of Freedom of Information and Privacy Act Operations, 
SEC, Operations Center, 6432 General Green Way, Alexandria, VA 22312-
2413, or by facsimile (703-914-1149), within 30 days after receipt by 
the individual of the General Counsel's order denying the amendment or 
correction. For good cause shown this period can be extended for a 
reasonable time.
    (2) Such statement of disagreement shall concisely state the basis 
for the individual's agreement. Generally a statement should be no more 
than two pages in length, except an individual may submit a slightly 
longer statement if it is necessary to set forth his disagreement 
effectively. Unduly lengthy or irrelevant materials will be returned to 
the individual by the General Counsel for appropriate revisions before 
they become a permanent part of the individual's record.
    (3) The record about which a statement of disagreement has been 
filed will clearly note which part of the record is disputed and the 
General Counsel will provide copies of the statement of disagreement 
and, if the General Counsel deems it appropriate, provide a concise 
statement of his or her reasons for refusing to amend or correct the 
record, to persons or other agencies to whom the record has been or will 
be disclosed.
    (4) In appropriate cases, the General Counsel may, in his or her 
sole and unfettered discretion, refer matters concerning statements of 
disagreement to the Commission for disposition.

(5 U.S.C. 552a(f); sec. 19, Securities Act of 1933, 48 Stat. 85, as 
amended; sec. 23, Securities Exchange Act of 1934, 48 Stat. 901, as 
amended; sec. 20, Public Utility Holding Company Act of 1935, 49 Stat. 
833; sec. 319, Trust Indenture Act of 1939, 53 Stat. 1173; sec. 38, 
Investment Company Act of 1940, 54 Stat. 841; sec. 211, Investment 
Advisers Act of 1940, 54 Stat. 855 (15 U.S.C. 77s, 78w, 79t, 77sss, 80a-
37, 80b-11))

[40 FR 44068, Sept. 24, 1975, as amended at 42 FR 40190, Aug. 9, 1977; 
47 FR 26819, June 22, 1982; 49 FR 13866, Apr. 9, 1984; 65 FR 55186, 
Sept. 13, 2000]



Sec. 200.309  General provisions.

    (a) Extensions of time. Pursuant to Secs. 200.303(b), 200.304(d), 
200.307(c) and 200.308(a)(4) of this subpart, the time within which a 
request for information, access or amendment by an individual with 
respect to records maintained by the Commission that pertain to him 
normally would be processed may be extended for good cause shown or 
because of unusual circumstances. As used in these rules, good cause and 
unusual circumstances shall include, but only to the extent reasonably 
necessary to the proper processing of a particular request:
    (1) The need to search for and collect the requested records from 
field facilities or other establishments that are separate from the 
Office processing the

[[Page 92]]

request. Many records of the Commission are stored in Federal Records 
Centers in accordance with law--including many of the documents which 
have been on file with the Commission for more than 2 years--and cannot 
be made available promptly. Other records may temporarily be located at 
a Regional or District Office of the Commission. Any person who has 
requested for personal examination a record stored at the Federal 
Records Center or temporarily located in a Regional or District Office 
of the Commission will be notified when the record will be made 
available to him.
    (2) The need to search for, collect, and appropriately examine a 
voluminous amount of separate and distinct records which may be demanded 
in a single request. While every reasonable effort will be made fully to 
comply with each request as promptly as possible on a first-come, first-
served basis, work done to search for, collect and appropriately examine 
records in response to a request for a large number of records will be 
contingent upon the availability of processing personnel in accordance 
with an equitable allocation of time to all members of the public who 
have requested or wish to request records.
    (3) The need for consultation, which shall be conducted with all 
practicable speed, with another agency having a substantial interest in 
the determination of the request, or among two or more components within 
the Commission having substantial subject-matter interest therein.
    (b) Effective date of action. Whenever it is provided in this 
Subpart that an acknowledgement or response to a request will be given 
by specific times, deposit in the mails of such acknowledgement or 
response by that time, addressed to the person making the request, will 
be deemed full compliance.
    (c) Records in use by a member of the Commission or its staff. 
Although every effort will be made to make a record in use by a member 
of the Commission or its staff available when requested, it may 
occasionally be necessary to delay making such a record available when 
doing so at the time the request is made would seriously interfere with 
the work of the Commission or its staff.
    (d) Missing or lost records. Any person who has requested a record 
or a copy of a record pertaining to him will be notified if the record 
sought cannot be found. If he so requests, he will be notified if the 
record subsequently is found.
    (e) Oral requests; misdirected written requests--(1) Telephone and 
other oral requests. Before responding to any request by an individual 
for information concerning whether records maintained by the Commission 
in a system of records pertain to him or to any request for access to 
records by an individual, such request must be in writing and signed by 
the individual making the request. The General Counsel will not 
entertain any appeal from an alleged denial or failure to comply with an 
oral request. Any person who has orally requested information or access 
to records pertaining to him that he believes to have been improperly 
denied to him should resubmit his request in appropriate written form in 
order to obtain proper consideration and, if need be, administrative 
review.
    (2) Misdirected written requests. The Commission cannot assure that 
a timely or satisfactory response will be given to written requests for 
information, access or amendment by an individual with respect to 
records pertaining to him that are directed to the Commission other than 
in a manner prescribed in Secs. 200.303(a), 200.306(a), 200.308(a)(2), 
and 200.310 of this subpart. Any staff member who receives a written 
request for information, access or amendment should promptly forward the 
request to the Privacy Act Officer. Misdirected requests for records 
will be considered to have been received by the Commission only when 
they have been actually received by the Privacy Act Officer in cases 
under Sec. 200.308(a)(2). The General Counsel will not entertain any 
appeal from an alleged denial or failure to comply with a misdirected 
request, unless it is clearly shown that

[[Page 93]]

the request was in fact received by the Privacy Act Officer.

(5 U.S.C. 552a(f); sec. 19, Securities Act of 1933, 48 Stat. 85, as 
amended; sec. 23, Securities Exchange Act of 1934, 48 Stat. 901, as 
amended; sec. 20, Public Utility Holding Company Act of 1935, 49 Stat. 
833; sec. 319, Trust Indenture Act of 1939, 53 Stat. 1173; sec. 38, 
Investment Company Act of 1940, 54 Stat. 841; sec. 211, Investment 
Advisers Act of 1940, 54 Stat. 855 (15 U.S.C. 77s, 78w, 79t, 77sss, 80a-
37, 80b-11))

[40 FR 44068, Sept. 24, 1975, as amended at 49 FR 13867, Apr. 9, 1984; 
59 FR 5945, Feb. 9, 1994]



Sec. 200.310  Fees.

    (a) A request by an individual for copies of a record pertaining to 
him or her that is maintained by the Commission may be sent by mail to 
the Office of Freedom of Information and Privacy Act Operations, SEC, 
Operations Center, 6432 General Green Way, Alexandria, VA 22312-2413, or 
by facsimile (703-914-1149). There will be no charge assessed to the 
individual for the Commission's expense involved in searching for or 
reviewing the record. Copies of the Commission's records will be 
provided by a commercial copier or by the Commission at rates 
established by a contract between the copier and the Commission.
    (b) Waiver or reduction of fees. Whenever the Privacy Act Officer 
determines that good cause exists to grant a request for reduction or 
waiver of fees for copying documents, he or she may reduce or waive any 
such fees.

(Pub. L. 87-592, 76 Stat. 394, 15 U.S.C. 78d-1, 78d-2; Pub. L. 93-502; 
11 U.S.C. 901, 1109(a))

[42 FR 56727, Oct. 28, 1977, as amended at 47 FR 26819, June 22, 1982; 
49 FR 12686, Mar. 30, 1984; 50 FR 50287, Dec. 10, 1985; 65 FR 55186, 
Sept. 13, 2000]



Sec. 200.311  Penalties.

    Title 18 U.S.C. 1001 makes it a criminal offense, subject to a 
maximum fine of $10,000, or imprisonment for not more than 5 years or 
both, to knowingly and willingly make or cause to be made any false or 
fradulent statements or representations in any matter within the 
jurisdiction of any agency of the United States. 5 U.S.C. 552a(i) makes 
it a misdemeanor punishable by a fine of not more than $5,000 for any 
person knowingly and willfully to request or obtain any record 
concerning an individual from the Commission under false pretenses. 5 
U.S.C. 552a(i) (1) and (2) provide criminal penalties for certain 
violations of the Privacy Act by officers and employees of the 
Commission.



Sec. 200.312  Specific exemptions.

    Pursuant to section (k) of the Privacy Act of 1974, the Chairman of 
the Securities and Exchange Commission, with the concurrence of the 
Commission, has deemed it necessary to promulgate the following 
exemptions to specified provisions of the Privacy Act:
    (a) Pursuant to, and limited by 5 U.S.C. 552a(k)(2), the following 
systems of records maintained by the Commission shall be exempted from 5 
U.S.C. 552a(c)(3), (d), (e)(1), (e)(4)(G), (H), and (I), and (f) and 17 
CFR 200.303, 200.304, and 200.306, insofar as they contain investigatory 
materials compiled for law enforcement purposes:
    (1) Enforcement Files;
    (2) Office of General Counsel Working Files;
    (3) Office of the Chief Accountant Working Files;
    (4) Name-Relationship Index System;
    (5) Rule 102(e) of the Commission's Rules of Practice--Appearing or 
Practicing Before the Commission; and
    (6) Agency Correspondence Tracking System.
    (b) Pursuant to 5 U.S.C. 552a(k)(5), the systems of records 
containing the Commission's (1) Office of Personnel Code of Conduct and 
Employee Performance Files and (2) Personnel Security Files shall be 
exempt from sections (c)(3), (d), (e)(1), (e)(4) (G), (H), and (I), and 
(f) of the Privacy Act, 5 U.S.C. 552a(c)(3), (d), (e)(1), (e)(4) (G), 
(H), and (I), and (f), and 17 CFR 200.303, 200.304, and 200.306 insofar 
as they contain investigatory material compiled to determine an 
individual's suitability, eligibility, and qualifications for Federal 
civilian employment or access to classified information, but only to the 
extent that the disclosure of such material would reveal the identity of 
a source who furnished information to the Government under an express 
promise that the identity of the source would be held in confidence, or, 
prior to September 27, 1975, under an

[[Page 94]]

implied promise that the identity of the source would be held in 
confidence.

(Pub. L. 93-579, Sec. k, 5 U.S.C. 552a(k))

[40 FR 44073, Sept. 24, 1975, as amended at 52 FR 2677, Jan. 26, 1987; 
54 FR 24332, June 7, 1989; 54 FR 46373, Nov. 3, 1989; 60 FR 32795, June 
23, 1995; 65 FR 55186, Sept. 13, 2000]



Sec. 200.313  Inspector General exemptions.

    (a) Pursuant to section (j) of the Privacy Act of 1974, the Chairman 
of the Securities and Exchange Commission, with the concurrence of the 
Commission, has deemed it necessary to promulgate the following 
exemptions to specified provisions of the Privacy Act:
    (1) Pursuant to, and limited by 5 U.S.C. 552a(j)(2), the system of 
records maintained by the Office of Inspector General of the Commission 
that contains the Investigative Files shall be exempted from the 
provisions of 5 U.S.C. 552a, except subsections (b), (c) (1) and (2), 
(e)(4) (A) through (F), (e) (6), (7), (9), (10), and (11), and (i), and 
17 CFR 200.303, 200.304, 200.306, 200.307, 200.308, 200.309 and 200.310, 
insofar as the system contains information pertaining to criminal law 
enforcement investigations.
    (2) [Reserved]
    (b) Pursuant to section (k) of the Privacy Act of 1974, the Chairman 
of the Securities and Exchange Commission, with the concurrence of the 
Commission, has deemed it necessary to promulgate the following 
exemptions to specified provisions of the Privacy Act:
    (1) Pursuant to, and limited by 5 U.S.C. 552a(k)(2), the system of 
records maintained by the Office of Inspector General of the Commission 
that contains the Investigative Files shall be exempted from 5 U.S.C. 
552a(c)(3), (d), (e)(1), (e)(4) (G), (H), and (I), and (f) and 17 CFR 
200.303, 200.304, and 200.306, insofar as it contains investigatory 
materials compiled for law enforcement purposes.
    (2) [Reserved]

[55 FR 19872, May 14, 1990]



 Subpart I--Regulations Pertaining to Public Observation of Commission 
                                Meetings

    Authority: 5 U.S.C. 552b, unless otherwise noted. Section 200.410 
also is issued under 29 U.S.C. 794.

    Source: 42 FR 14693, Mar. 16, 1977, unless otherwise noted.



Sec. 200.400  Open meetings.

    Except as otherwise provided in this subpart, meetings of the 
Commission shall be open to public observation.



Sec. 200.401  Definitions.

    As used in this subpart:
    (a) Meeting means the joint deliberations of at least the number of 
individual members of the Securities and Exchange Commission required to 
take action on behalf of the Commission where such deliberations 
determine or result in the joint conduct or disposition of official 
Commission business, but does not include deliberations required or 
permitted by Sec. 200.42 or Sec. 200.43 (respecting seriatim and duty 
officer disposition of Commission business, respectively), or by 
Secs. 200.403, 200.404, or 200.405 (respecting whether particular 
Commission deliberations shall be open or closed and related matters).
    (b) Portion of a meeting means the consideration during a meeting of 
a particular topic or item separately identified in the notice of 
Commission meetings described in Sec. 200.403.
    (c) Open, when used in the context of a Commission meeting or a 
portion thereof, means that the public may attend and observe the 
deliberations of the Commission during such meeting or portion of a 
meeting, consistent with the provisions of Sec. 200.410 (respecting 
decorum at meetings and other related matters).
    (d) Closed, when used in the context of a Commission meeting or a 
portion thereof, means that the public may not attend or observe the 
deliberations of the Commission during such meeting or portion of a 
meeting.
    (e) Announce, and make publicly available, when used in the context 
of the

[[Page 95]]

dissemination of information, mean, in addition to any specific method 
of publication described in this subpart, that a document containing the 
information in question will be posted for public inspection in, or 
adjacent to, the lobby of the Commission's headquarters offices, and 
will be available to the public through the Commission's Public 
Reference Section and the Commission's Office of Public Affairs, all in 
Washington, DC
    (f) The term likely to, as used in Sec. 200.402, illustrating the 
circumstances under which Commission meetings may be closed, and the 
circumstances in which information may be deleted from the notice of 
Commission meetings, means that it is more probable than not that the 
discussion of Commission business, or publication of information, 
reasonably could encompass matters which the Commission is authorized, 
by the Government in the Sunshine Act, Pub. L. 94-409, as implemented by 
this subpart, to consider or discuss at a closed meeting (or a closed 
portion of a meeting).
    (g) The term financial institution, as used in Sec. 200.402(a), 
authorizing the closure of certain Commission meetings, includes, but is 
not limited to, banks, savings and loan associations, credit unions, 
brokers and dealers in securities or commodities, exchanges dealing in 
securities or commodities, national securities associations, investment 
companies, investment advisers, securities industry self-regulatory 
organizations subject to 15 U.S.C. 78s, and institutional managers as 
defined in 15 U.S.C. 78m(f).
    (h) The term person includes, but is not limited to, any 
corporation, partnership, company, association, joint stock corporation, 
business trust, unincorporated organization, government, political 
subdivision, agency, or instrumentality of a government.

[42 FR 14693, Mar. 16, 1977, as amended at 60 FR 17202, Apr. 5, 1995]



Sec. 200.402  Closed meetings.

    (a) Nonpublic matters. Pursuant to the general or special procedures 
for closing Commission meetings, as set forth in Sec. 200.404 or 
Sec. 200.405, respectively, a meeting, or any portion thereof, shall be 
closed to public observation where the Commission determines that such 
meeting, or a portion thereof, is likely to:
    (1) Disclose matters specifically authorized under criteria 
established by an executive order to be kept secret in the interests of 
national defense or foreign policy, and in fact properly classified 
pursuant to such executive order.
    (2) Relate solely to the internal personnel rules and practices of 
the Commission or any other agency, including, but not limited to, 
discussion concerning:
    (i) Operation rules, guidelines, and manuals of procedure for 
investigators, attorneys, accountants, and other employees, other than 
those rules, guidelines, and manuals which establish legal requirements 
to which members of the public are expected to conform; or
    (ii) Hiring, termination, promotion, discipline, compensation, or 
reward of any Commission employee or member, the existence, 
investigation, or disposition of a complaint against any Commission 
employee or member, the physical or mental condition of any Commission 
employee or member, the handling of strictly internal matters, which 
would tend to infringe on the privacy of the staff or members of the 
Commission, or similar subjects.
    (3) Disclose matters specifically exempted from disclosure by 
statute (other than 5 U.S.C. 552): Provided, That such statute requires 
that the matters be withheld from the public in such a manner as to 
leave no discretion on the issue, or establishes particular criteria for 
withholding or refers to particular types of matters to be withheld.
    (4) Disclose trade secrets and commercial or financial information 
obtained from a person and privileged or confidential, including, but 
not limited to:
    (i) Information contained in letters of comment in connection with 
registration statements, applications for registration or other material 
filed with the Commission, replies thereto, and related material which 
is deemed to have been submitted to the Commission in confidence or to 
be confidential at the instance of the registrant or person who has 
filed such material unless the contrary clearly appears; and

[[Page 96]]

    (ii) Information contained in any document submitted to or required 
to be filed with the Commission where the Commission has undertaken 
formally or informally to receive such submission or filing for its use 
or the use of specified persons only, such as preliminary proxy material 
filed pursuant to Rule 14a-6 under the Securities Exchange Act (17 CFR 
240.14a-6), reports filed pursuant to Rule 316(a) under the Securities 
Act (17 CFR 230.316(a)), agreements filed pursuant to Rule 15c3-1 under 
the Securities Exchange Act, 17 CFR 240.15c3-1, schedules filed pursuant 
to Part I of Form X-17A-5 (17 CFR 249.617) in accordance with Rule 17a-
5(b)(3) under the Securities Exchange Act (17 CFR 240.17a-5(b)(3)), 
statements filed pursuant to Rule 17a-5(k)(1) under the Securities 
Exchange Act (17 CFR 240.17a-5(k)(1)), confidential reports filed 
pursuant to Rules 17a-9, 17a-10, 17a-12 and 17a-16 under the Securities 
Exchange Act (17 CFR 240.17a-9, 240.17a-10, 240.17a-12, and 240.17a-16), 
and any information filed with the Commission and confidential pursuant 
to section 45 of the Investment Company Act of 1940, 15 U.S.C. 80a-44, 
or Rule 45a-1 thereunder (17 CFR 270.45a-1); and
    (iii) Information contained in reports, summaries, analyses, 
letters, of memoranda arising out of, in anticipation of, or in 
connection with, an examination or inspection of the books and records 
of any person or any other investigation.
    (5) Involve accusing any person of a crime, or formally censuring 
any person, including, but not limited to, consideration of whether to:
    (i) Institute, continue, or conclude administrative proceedings or 
any formal or informal investigation or inquiry, whether public or 
nonpublic, against or involving any person, alleging a violation of any 
provision of the federal securities laws, or the rules and regulations 
thereunder, or any other statute or rule a violation of which is 
punishable as a crime; or
    (ii) Commence, participate in, or terminate judicial proceedings 
alleging a violation of any provision of the federal securities laws, or 
the rules and regulations thereunder, or any other statute or rule a 
violation of which is punishable as a crime; or
    (iii) Issue a report or statement discussing the conduct of any 
person and the relationship of that conduct to possible violations of 
any provision of the federal securities laws, or the rules and 
regulations thereunder, or any other statute or rule a violation of 
which is punishable as a crime; or
    (iv) Transmit, or disclose, with or without recommendation, any 
Commission memorandum, file, document, or record to the Department of 
Justice, a United States Attorney, any federal, state, local, or foreign 
governmental authority or foreign securities authority, any professional 
association, or any securities industry self-regulatory organization, in 
order that the recipient may consider the institution of proceedings 
against any person or the taking of any action that might involve 
accusing any person of a crime or formally censuring any person; or
    (v) Seek from, act upon, or act jointly with respect to, any 
information, file, document, or record where such action could lead to 
accusing any person of a crime or formally censuring any person by any 
entity described in paragraph (a)(5)(iv) of this section.
    (6) Disclose information of a personal nature, where disclosure 
would constitute a clearly unwarranted invasion of personal privacy.
    (7)(i) Disclose investigatory records compiled for law enforcement 
purposes, or information which, if written, would be contained in such 
records, to the extent that the production of such records would:
    (A) Interfere with enforcement activities undertaken, or likely to 
be undertaken, by the Commission or the Department of Justice, or any 
United States Attorney, or any Federal, State, local, or foreign 
governmental authority or foreign securities authority, any professional 
association, or any securities industry self-regulatory organization;
    (B) Deprive a person of a right to a fair trial or an impartial 
adjudication;
    (C) Constitute an unwarranted invasion of personal privacy;
    (D) Disclose the identity of a confidential source and, in the case 
of a

[[Page 97]]

record compiled by a criminal law enforcement authority in the course of 
a criminal investigation, or by an agency conducting a lawful national 
security intelligence investigation, confidential information furnished 
only by the confidential source;
    (E) Disclose investigative techniques and procedures; or
    (F) Endanger the life or physical safety of law enforcement 
personnel.
    (ii) The term investigatory records includes, but is not limited to, 
all documents, records, transcripts, evidentiary materials of any 
nature, correspondence, related memoranda, or work product concerning 
any examination, any investigation (whether formal or informal), or any 
related litigation, which pertains to, or may disclose, the possible 
violation by any person of any provision of any statute, rule, or 
regulation administered by the Commission, by any other Federal, State, 
local, or foreign governmental authority or foreign securities 
authority, by any professional association, or by any securities 
industry self-regulatory organization. The term investigatory records 
also includes all written communications from, or to, any person 
complaining or otherwise furnishing information respecting such possible 
violations, as well as all correspondence or memoranda in connection 
with such complaints or information.
    (8) Disclose information contained in, or related to, any 
examination, operating, or condition report prepared by, on behalf of, 
or for the use of, the Commission, any other federal, state, local, or 
foreign governmental authority or foreign securities authority, or any 
securities industry self-regulatory organization, responsible for the 
regulation or supervision of financial institutions.
    (9) Disclose information the premature disclosure of which would be 
likely to
    (i)(A) Lead to significant financial speculation in currencies, 
securities, or commodities, including, but not limited to, discussions 
concerning the proposed or continued suspension of trading in any 
security, or the possible investigation of, or institution of activity 
concerning, any person with respect to conduct involving or affecting 
publicly-traded securities, or
    (B) Significantly endanger the stability of any financial 
institution; or
    (ii) Significantly frustrate the implementation, or the proposed 
implementation, of any action by the Commission, any other federal, 
state, local or foreign governmental authority, any foreign securities 
authority, or any securities industry self-regulatory organization: 
Provided, however, That this paragraph (a)(9)(ii) shall not apply in any 
instance where the Commission has already disclosed to the public the 
precise content or nature of its proposed action, or where the 
Commission is expressly required by law to make such disclosure on its 
own initiative prior to taking final agency action on such proposal.
    (10) Specifically concern the Commission's consideration of, or its 
actual: Issuance of a subpoena (whether by the Commission directly or by 
any Commission employee or member); participation in a civil action or 
proceeding, an action in a foreign court or international tribunal, or 
an arbitration; or initiation, conduct, or disposition of a particular 
case of formal adjudication pursuant to the procedures in 5 U.S.C. 554, 
or otherwise involving a determination on the record after opportunity 
for a hearing; including, but not limited to, matters involving
    (i) The institution, prosecution, adjudication, dismissal, 
settlement, or amendment of any administrative proceeding, whether 
public or nonpublic; or
    (ii) The commencement, settlement, defense, or prosecution of any 
judicial proceeding to which the Commission, or any one or more of its 
members or employees, is or may become a party; or
    (iii) The commencement, conduct, termination, status, or disposition 
of any inquiry, investigation, or proceedings to which the power to 
issue subpoenas is, or may become, attendant; or
    (iv) The discharge of the Commission's responsibilities involving 
litigation under any statute concerning the subject of bankruptcy; or
    (v) The participation by the Commission (or any employee or member

[[Page 98]]

thereof) in, or involvement with, any civil judicial proceeding or any 
administrative proceeding, whether as a party, as amicus curiae, or 
otherwise; or
    (vi) The disposition of any application for a Commission order of 
any nature where the issuance of such an order would involve a 
determination on the record after opportunity for a hearing.
    (b) Interpretation of exemptions. The examples set forth 
Sec. 200.402(a)(1) through (10) of particular matters which may be the 
subject of closed Commission deliberations are to be construed as 
illustrative, but not as exhaustive, of the scope of those exemptions.
    (c) Public interest determination. Notwithstanding the provisions of 
Sec. 200.402(a) (concerning the closing of Commission meetings), but 
subject to the provisions of Sec. 200.409(a) (respecting the right of 
certain persons to petition for the closing of a Commission meeting), 
the Commission may conduct any meeting or portion of a meeting in public 
where the Commission determines, in its discretion, that the public 
interest renders it appropriate to open such a meeting.
    (d) Nonpublic matter in announcements. The Commission may delete 
from the notice of Commission meetings described in Sec. 200.403, from 
the announcements concerning closed meetings described in 
Secs. 200.404(b) and 200.405(c), and from the General Counsel's 
certification described in Sec. 200.406, any information or description 
the publication of which would be likely to disclose matters of the 
nature described in Sec. 200.402(a) (concerning the closing of 
Commission meetings).

(Pub. L. 94-409, 90 Stat. 1241)

[42 FR 14693, Mar. 16, 1977; 47 FR 37077, Aug. 25, 1982, as amended at 
54 FR 24332, June 7, 1989]



Sec. 200.403  Notice of Commission meetings.

    (a) Content of notice. (1) In the case of open meetings, or meetings 
closed pursuant to the procedures specified in Sec. 200.404, the 
Commission shall announce the items to be considered. For each such 
item, the announcement shall include:
    (i) A brief description of the generic or precise subject matter to 
be discussed;
    (ii) The date, place, and approximate time at which the Commission 
will consider the matter;
    (iii) Whether the meeting, or the various portions thereof, shall be 
open or closed; and
    (iv) The name and telephone number of the Commission official 
designated to respond to requests for information concerning the meeting 
at which the matter is to be considered.
    (2) Every announcement of a Commission meeting described in this 
subsection, or any amended announcement described in paragraph (c), 
shall be transmitted to the Federal Register for publication.
    (b) Time of notice. The announcement of Commission meetings referred 
to in paragraph (a) shall be made publicly available (and submitted 
immediately thereafter to the Federal Register for publication) at least 
one week prior to the consideration of any item listed therein, except 
where a majority of the members of the Commission determine, by a 
recorded vote, that Commission business requires earlier consideration 
of the matter. In the event of such a determination, the announcement 
shall be made publicly available (and submitted to the Federal Register) 
at the earliest practicable time.
    (c) Amendments to notice. (1)(i) The time or place of a meeting may 
be changed following any public announcement that may be required by 
paragraph (a). In the event of such action, the Commission shall 
announce the change at the earliest practicable time.
    (ii) The subject matter of a meeting, or the determination of the 
Commission to open or close a meeting (or a portion of a meeting), may 
be changed following any public announcement that may be required by 
paragraph (a), if (A) a majority of the entire membership of the 
Commission determines, by a recorded vote, that Commission business so 
requires and that no earlier announcement of the change was possible; 
and (B) the Commission publicly announces such change and the vote of 
each member upon such change at the earliest practicable time.

[[Page 99]]

    (2) Notwithstanding the provisions of this paragraph (c), matters 
which have been announced for Commission consideration may be deleted, 
or continued in whole or in part to the next scheduled Commission 
meeting, without notice.
    (d) Notice of meetings closed pursuant to special procedure. In the 
case of meetings closed pursuant to the special procedures set forth in 
Sec. 200.405, the Commission shall make publicly available, in whole or 
in summary form,
    (1) A brief description of the general subject matter considered or 
to be considered, and
    (2) The date, place, and approximate time at which the Commission 
will, or did, consider the matter. The announcement described in this 
subsection shall be made publicly available at the earliest practicable 
time, and may be combined, in whole or in part, with the announcement 
described in paragraph (a).

    Note: The Commission intends, to the extent convenient, to adhere to 
the following schedule in organizing its weekly agenda: Closed meetings 
to consider matters concerning the enforcement of the federal securities 
laws and the conduct of related investigations will generally be held on 
Tuesdays and on Thursday afternoons. An open meeting will generally be 
held each Thursday morning to consider matters of any appropriate 
nature. On Wednesdays, either open or closed meetings, or both, will 
generally be held according to the requirements of the Commission's 
agenda for the week in question. Normally, no meetings will be scheduled 
on Mondays, Fridays, Saturdays, Sundays, or legal holidays.
    The foregoing tentative general schedule is set forth for the 
guidance of the public, but is not, in any event, binding upon the 
Commission. In every case, the scheduling of Commission meetings shall 
be determined by the demands of Commission business, consistent with the 
requirements of this subpart I. When feasible, the Commission will 
endeavor to announce the subject matter of all then-contemplated open 
meetings during a particular month at least one week prior to the 
commencement of that month.
    When and if convenient after the conclusion of a closed Commission 
meeting, the Commission will endeavor to make publicly available a 
notice describing (subject to the provision in Sec. 200.402(d) regarding 
nonpublic matter in announcements) the items considered at that meeting 
and any action taken thereon.



Sec. 200.404  General procedure for determination to close meeting.

    (a) Action to close meeting. Action to close a meeting pursuant to 
Sec. 200.402(a) or (c) shall be taken only upon a vote of a majority of 
the entire membership of the Commission. A separate vote of the 
Commission members shall be taken with respect to each Commission 
meeting a portion or portions of which are proposed to be closed to the 
public pursuant to Sec. 200.402(a), or with respect to any information 
which is proposed to be withheld under Sec. 200.402(d); Provided, 
however, That a single vote may be taken with respect to a series of 
meetings, a portion or portions of which are proposed to be closed, or 
with respect to any information concerning such series of meetings, so 
long as each meeting in such series relates to the same matters and is 
scheduled to be held no more than thirty days after the initial meeting 
in such series. The vote of each Commission member participating in such 
vote shall be recorded and no proxies shall be allowed.
    (b) Announcement of action to close meeting. Within one day of any 
vote pursuant to paragraph (a) of this section or Sec. 200.409(a) 
(relating to review of Commission determinations to open a meeting), the 
Commission shall make publicly available:
    (1) A written record reflecting the vote of each participating 
member of the Commission on the question; and
    (2) In the case of a meeting or portion thereof to be closed to the 
public, a written explanation of the Commission's action closing the 
meeting or a portion thereof, together with a list describing 
generically or specifically the persons expected to attend the meeting 
and their affiliation; and
    (3) For every closed meeting, the certification executed by the 
Commission's General Counsel as described in Sec. 200.406.



Sec. 200.405  Special procedure for determination to close meeting.

    (a) Finding. Based, in part, on a review of several months of its 
meetings, as well as the legislative history of the Sunshine Act, the 
Commission finds that a majority of its meetings may

[[Page 100]]

properly be closed to the public pursuant to Sec. 200.402(a) (4), (8), 
(9)(i), or (10), or any combination thereof.
    (b) Action to close meeting. The Commission may, by recorded vote of 
a majority of its members at the commencement of any meeting or portion 
thereof, determine to close any meeting or a portion thereof properly 
subject to being closed pursuant to Sec. 200.402(a) (4), (8), (9)(i), or 
(10), or any combination thereof. The procedure described in this rule 
may be utilized notwithstanding the fact that a meeting or portion 
thereof properly subject to being closed pursuant to Sec. 200.402(a) 
(4), (8), (9)(i), or (10), or any combination thereof, could also be 
closed pursuant to Sec. 200.402(a) (1), (2), (3), (5), (6), (7), or 
(9)(ii), or any combination thereof.
    (c) Announcement of action to close meeting. In the case of a 
meeting or a portion of a meeting closed pursuant to this rule, as soon 
as practicable the Commission shall make publicly available:
    (1) A written record reflecting the vote of each participating 
member of the Commission to close the meeting; and
    (2) The certification described in Sec. 200.406, executed by the 
Commission's General Counsel.



Sec. 200.406  Certification by the General Counsel.

    For every Commission meeting closed pursuant to Sec. 200.402(a) (1) 
through (10), the General Counsel of the Commission (or, in his or her 
absence, the attorney designated by General Counsel pursuant to 
Sec. 200.21) shall publicly certify that, in his or her opinion, the 
meeting may be closed to the public and shall state each relevant 
exemptive provision.



Sec. 200.407  Transcripts, minutes, and other documents concerning closed Commission meetings.

    (a) Record of closed meetings. Except as provided in 
Sec. 200.407(b), the Commission's Secretary shall prepare a complete 
transcript or electronic recording adequate to record fully the 
proceedings of each closed meeting, or closed portion of a meeting.
    (b) Minutes of closed meetings. In the case of a meeting, or portion 
of a meeting, closed to the public pursuant to Sec. 200.402(a) (8), 
(9)(i), or (10), the Secretary may, in his or her discretion or at the 
direction of the Commission, prepare either the transcript or recording 
described in Sec. 200.407(a), or a set of minutes. Such minutes shall 
fully and clearly describe all matters discussed and shall provide a 
full and accurate summary of any actions taken, and the reasons 
therefor, including a description of each of the views expressed on any 
item and the record of any rollcall vote (reflecting the vote of each 
participating Commission member on the question). All documents 
specifically considered by the Commission in connection with any action 
shall be identified in such minutes are maintained.
    (c) Retention of certificate and statement. The Secretary shall 
retain a copy of every certification executed by the General Counsel 
pursuant to Sec. 200.406, together with a statement from the presiding 
officer of the meeting, or portion of a meeting to which the 
certification applies, setting forth the time and place of the meeting, 
and the persons present.
    (d) Minute Record. Nothing herein shall affect the provisions of 
Secs. 200.13a and 200.40 requiring the Secretary to prepare and maintain 
a Minute Record reflecting the official actions of the Commission.



Sec. 200.408  Public access to transcripts and minutes of closed Commission meetings; record retention.

    (a) Public access to record. Within twenty days (excluding 
Saturdays, Sundays, and legal holidays) of the receipt by the 
Commission's Freedom of Information Act Officer of a written request, or 
within such extended period as may be agreeable to the person making the 
request, the Secretary shall make available for inspection by any person 
in the Commission's Public Reference Room, the transcript, electronic 
recording, or minutes (as required by Sec. 200.407 (a) or (b)) of the 
discussion of any item on the agenda, except for such item or items as 
the Freedom of Information Act Officer determines to involve matters 
which may be withheld under Sec. 200.402 or otherwise. Copies of such 
transcript, or minutes, or a transcription of such recording disclosing

[[Page 101]]

the identity of each speaker, shall be furnished to any person at the 
actual cost of duplication, as set forth in Sec. 200.80e, and, if a 
transcript is prepared, the actual cost of such transcription.
    (b) Review of deletion from record. Any person who has been notified 
that the Freedom of Information Act Officer has determined to withhold 
any transcript, recording, or minute, or portion thereof, which was the 
subject of a request for access pursuant to Sec. 200.402(a), or any 
person who has not received a response to his or her own request within 
the 20 days specified in Sec. 200.408(a), may appeal the adverse 
determination or failure to respond by applying for an order of the 
Commission determining and directing that the transcript, recording or 
minute, or deleted portion thereof, be made available. Such application 
shall be in writing and should be directed to the Secretary, Securities 
and Exchange Commission, Washington, DC 20549. The applicant shall state 
such facts and cite such legal or other authorities as the applicant may 
consider appropriate. The Commission shall make a determination with 
respect to any appeal pursuant to this subsection within 20 days 
(excepting Saturdays, Sundays and legal public holidays) after the 
receipt of such appeal, or within such extended period as may be 
agreeable to the person making the request. The Commission may determine 
to withhold any record that is exempt from disclosure pursuant to 
Sec. 200.402(a), although it may disclose a record, even if exempt, if, 
in its discretion, it determines it to be appropriate to do so.
    (c) Retention of record. The Commission, by its Secretary, shall 
retain a complete verbatim copy of the transcript, or a complete copy of 
the minutes, or a complete electronic recording of each meeting, or 
portion of a meeting, closed to the public, for a period of at least two 
years after such meeting, or until one year after the conclusion of any 
Commission proceeding with respect to which the meeting or portion was 
held, whichever occurs later.



Sec. 200.409  Administrative appeals.

    (a) Review of determination to open meeting. Following any 
announcement stating that the Commission intends to open a meeting or a 
portion thereof, any person whose interests may be directly and 
substantially affected by the disposition of the matter to be discussed 
at such meeting may make a request, directed to the Commission's 
Secretary, that the meeting, or relevant portion thereof, be closed 
pursuant to Sec. 200.402(a) (5), (6), or (7). The Secretary shall 
circulate such a request to the members of the Commission, along with a 
supporting statement provided by the requestor setting forth the 
requestor's interest in the matter and the reasons why the requestor 
believes that the meeting (or portion thereof) should be closed, and the 
Commission, upon the request of any one of its members, shall vote by 
recorded vote on whether to close such meeting or portion.
    (b) Review of determination to close meeting. Following any 
announcement that the Commission intends to close a meeting or a portion 
thereof, any person may make written or telegraphic request, directed to 
the Commission's Secretary, that the meeting or a portion thereof be 
open. Such a request shall set forth the requestor's interest in the 
matter and the reasons why the requestor believes that the meeting (or a 
portion thereof) should be open to the public. The Secretary shall 
circulate such a request and supporting statement to the members of the 
Commission, and the Commission, upon the request of any one of its 
members, shall vote whether to open such a meeting or a portion thereof.



Sec. 200.410  Miscellaneous.

    (a) Unauthorized activities; maintenance of decorum. Nothing in this 
subpart shall authorize any member of the public to be heard at, or 
otherwise participate in, any Commission meeting, or to photograph or 
record by videotape or similar device any Commission meeting or portion 
thereof. The Commission may exclude any person from attendance at any 
meeting whenever necessary to preserve decorum, or where appropriate or 
necessary for

[[Page 102]]

health or safety reasons, or where necessary to terminate behavior 
unauthorized by this paragraph (a). Any person desiring to sound-record 
an open Commission meeting shall notify the Commission's Secretary of 
his intention to do so at least 48 hours in advance of the meeting in 
question. Any person desiring to photograph or videotape the 
Commission's proceedings may apply to the Secretary for permission to do 
so at least 48 hours in advance of the meeting in question. The 
Commission's determination to permit photography or videotaping at any 
meeting is confined to its exclusive discretion, and will be granted 
only if such activities will not result in undue disruption of 
Commission proceedings.
    (b) Suspension of open meeting. Subject to the satisfaction of any 
procedural requirements which may be required by this subpart, nothing 
in this subpart shall preclude the Commission from directing that the 
room be cleared of spectators, temporarily or permanently, whenever it 
appears that the discussion during an open Commission meeting is likely 
to involve any matter described in Sec. 200.402(a) (respecting closed 
meetings).
    (c) Access to Commission documents. Except as expressly provided, 
nothing in this subpart shall authorize any person to obtain access to 
any document not otherwise available to the public or not required to be 
disclosed pursuant to subpart D. Access to documents considered or 
mentioned at Commission meetings may only be obtained subject to the 
procedures set forth in, and the provisions of, subpart D.
    (d) Access to public meetings. Any member of the public who plans to 
attend a public meeting of the Commission, and who requires an auxiliary 
aid such as a sign language interpreter, should contact the Commission's 
Selective Placement Coordinator, Office of Personnel at (202) 272-7065 
or TDD number (202) 272-2552, prior to the meeting to make the necessary 
arrangements. The Selective Placement Coordinator will take all 
reasonable steps to accommodate requests made in advance of the 
scheduled meeting date.

[42 FR 14693, Mar. 16, 1977, as amended at 44 FR 32366, June 6, 1979; 55 
FR 10235, Mar. 20, 1990]



  Subpart J--Classification and Declassification of National Security 
                        Information and Material

    Authority: Sec. 19, Securities Act of 1933, as amended, 48 Stat. 84, 
15 U.S.C. 77s. E.O. 12356, 47 FR 14874, Apr. 6, 1982. Information 
Security Oversight Office Directive No. 1 (47 FR 27836, June 25, 1982).

    Source: 44 FR 65737, Nov. 15, 1979, unless otherwise noted.



Sec. 200.500  Purpose.

    This part establishes general policies and procedures for the 
classification, declassification and safeguarding of national security 
information which is generated, processed and/or stored by the 
Commission, and supplements Executive Order 12356, April 6, 1982 (47 FR 
14874), and Information Security Oversight Office Directive No. 1, June 
25, 1982 (47 FR 27836).

[47 FR 47236, Oct. 25, 1982]



Sec. 200.501  Applicability.

    This part applies to the handling of, and public access to, national 
security information and classified documents in the Commission's 
possession. Such documents no longer in the Commission's possession will 
be handled by the agency having possession, or in accordance with 
guidelines developed in consultation with the Archivist.



Sec. 200.502  Definition.

    As used in this part: Foreign government information means either 
(a) information provided to the United States by a foreign government or 
governments, an international organization of governments, or any 
element thereof with the expectation, express or implied, that the 
information, the source of the information, or both, are to be held in 
confidence, or (b) information produced by the United States pursuant to 
or as a result of a joint arrangement with a foreign government or 
governments or an international organization of governments or any 
element thereof, requiring that the information, the arrangement, or 
both, are to be held in confidence.

[47 FR 47236, Oct. 25, 1982]

[[Page 103]]



Sec. 200.503  Senior agency official.

    The Executive Director of the Commission is designated the senior 
agency official responsible for conducting an oversight program to 
ensure effective implementation of Executive Order 12356. Any complaints 
or suggestions regarding the Commission's information security program 
should be directed to the Office of the Executive Director, Securities 
and Exchange Commission, Attn: Information Security Program, 450 5th 
Street, NW., Washington, DC 20549.
    (a) The Deputy Executive Director is the Senior Agency Official for 
purposes of the Paperwork Reduction Act of 1980. In this capacity, the 
Deputy Executive Director will carry out all responsibilities required 
by the Act (Pub. L. 96-511, 3506(b)), as well as serving as Agency 
Clearance Officer for purposes of the publication of notices in the 
Federal Register.
    (b) [Reserved]

(11 U.S.C. 901, 1109(a))

[47 FR 47236, Oct. 25, 1982, as amended at 49 FR 12686, Mar. 30, 1984; 
51 FR 5315, Feb. 13, 1986]



Sec. 200.504  Oversight Committee.

    An Oversight Committee is established, under the chairmanship of the 
Executive Director, with the following responsibilities:
    (a) Establish a security education program to familiarize Commission 
and other personnel who have access to classified information with the 
provisions of Executive Order 12065, and encourage Commission personnel 
to challenge those classification decisions they believe to be improper.
    (b) Establish controls to insure that classified information is 
used, processed, stored, reproduced, and transitted only under 
conditions that will provide adequate protection and prevent access by 
unauthorized persons.
    (c) Establish procedures which require that a demonstrable need, 
under section 4-1 of Executive Order 12065, for access to classified 
information be established before administrative clearance procedures 
are initiated, as well as other appropriate procedures to prevent 
unnecessary access to classified information.
    (d) Act on all suggestions and complaints concerning Commission 
administration of its information security program.
    (e) Establish procedures within the Commission to insure the orderly 
and effective referral of requests for declassification of documents in 
the Commission's possession.
    (f) Review on an annual basis all practices for safeguarding 
information and to eliminate those practices which are duplicative or 
unnecessary.
    (g) Recommend to the Chairman of the Commission appropriate 
administrative action to correct abuse or violation of any provision of 
Executive Order 12356.
    (h) Consider and decide other questions concerning classification 
and declassification that may be brought before it.
    (i) Develop special contingency plans for the protection of 
classified information used in or near hostile or potentially hostile 
areas.
    (j) Promptly notify the Director of the Information Security 
Oversight Office whenever an officer or employee of the United States 
Government or its contractors, licensees or grantees knowingly, 
willfully or negligently (1) discloses to unauthorized persons 
information properly classified under Executive Order 12356 or 
predecessor orders or (2) classifies or continues the classification of 
information in violation of Executive Order 12356 or predecessor orders.

[44 FR 65737, Nov. 15, 1979, as amended at 47 FR 47236, Oct. 25, 1982; 
51 FR 5315, Feb. 13, 1986]



Sec. 200.505  Original classification.

    (a) No Commission Member or employee has the authority to classify 
any information on an original basis.
    (b) If a Commission employee originates information that appears to 
require classification, the employee shall immediately notify the 
Secretary and protect the information accordingly.
    (c) If the Executive Director believes the information warrants 
classification, it shall be sent to an agency with original 
classification authority over

[[Page 104]]

the subject matter, or to the information Security Oversight Office, for 
determination.

[44 FR 65737, Nov. 15, 1979, as amended at 51 FR 5315, Feb. 13, 1986]



Sec. 200.506  Derivative classification.

    Any document that includes paraphrases, restatements, or summaries 
of, or incorporates in new form, information that is already classified 
shall be assigned the same level of classification as the source; if, 
however, the basic information appears to have been so changed that no 
classification, or a lower classification than originally assigned, 
should be used, the appropriate official of the originating agency or 
office of origin who has the authority to upgrade, downgrade or 
declassify the information must be consulted prior to assigning a 
different classification to the information.

[47 FR 47236, Oct. 25, 1982]



Sec. 200.507  Declassification dates on derivative documents.

    (a) A document that derives its classification from information 
classified under Executive Order 12356 of predecessor orders shall be 
marked with the date or event assigned to that source information for 
its automatic declassification or for review of its continued need for 
classification.
    (b) A derivative document that derives its classification from the 
approved use of the classification guide of another agency shall bear 
the declassification date required by the provisions of that 
classification guide.

[47 FR 47236, Oct. 25, 1982]



Sec. 200.508  Requests for mandatory review for declassification.

    (a) Requests for mandatory review of a Commission document for 
declassification may be made by any United States citizen or permanent 
resident alien, including Commission employees, or a Federal agency, or 
a State or local government. The request shall be in writing and shall 
be sent to the Office of the Executive Director, Attn: Mandatory Review 
Request, Securities and Exchange Commission, 450 5th Street NW., 
Washington, DC 20549.
    (b) The request shall describe the material sufficiently to enable 
the Commission to locate it. Requests with insufficient description of 
the material will be returned to the requester for further information.
    (c) Within 5 days of receiving a request for declassification, the 
Commission shall acknowledge its receipt. If the document was 
derivatively classified by the Commission or originally classified by 
another agency, the request and the document shall be forwarded promptly 
to the agency with original classification authority together with the 
Commission's recommendation to withhold any of the information where 
appropriate. The requester shall be notified of the referral.
    (d) If the request requires the provision of services by the 
Commission, fair and equitable fees may be charged under title 5 of the 
Independent Offices Appropriation Act, 65 Stat. 290, 31 U.S.C. 483a.

[44 FR 65737, Nov. 15, 1979, as amended at 47 FR 47237, Oct. 25, 1982; 
51 FR 5315, Feb. 13, 1986]



Sec. 200.509  Challenge to classification by Commission employees.

    Commission employees who have reasonable cause to believe that 
information is classified unnecessarily, improperly, or for an 
inappropriate period of time, may challenge those classification 
decisions through mandatory review or other appropriate procedures as 
established by the Oversight Committee. Commission employees who 
challenge classification decisions may request that their identity not 
be disclosed.



Sec. 200.510  Access by historical researchers.

    (a) Persons outside the executive branch performing historical 
research may have access to information over which the Commission has 
classification jurisdiction for the period requested (but not longer 
than 2 years unless renewed for an additional period of less than 2 
years) if the Executive Director determines in writing that access to 
the information will be consistent with the interests of national 
security.

[[Page 105]]

    (b) The person seeking access to classified information must agree 
in writing:
    (1) To be subject to a national agency check;
    (2) To protect the classified information in accordance with the 
provisions of Executive Order 12356; and
    (3) Not to publish or otherwise reveal to unauthorized persons any 
classified information.

[44 FR 65737, Nov. 15, 1979, as amended at 47 FR 47237, Oct. 25, 1982; 
51 FR 5315, Feb. 13, 1986]



Sec. 200.511  Access by former Presidential appointees.

    (a) Former Commission Members appointed by the President may have 
access to classified information or documents over which the Commission 
has jurisdiction that they originated, reviewed, signed, or received 
while in public office, if the Executive Director determines in writing 
that access to the information will be consistent with the interest of 
nation security.
    (b) The person seeking access to classified information must agree 
in writing:
    (1) To be subject to a national agency check;
    (2) To protect the classified information in accordance with the 
provisions of Executive Order 12356; and
    (3) Not to publish or otherwise reveal to unauthorized persons any 
classified information.

[44 FR 65737, Nov. 15, 1979, as amended at 47 FR 47237, Oct. 25, 1982; 
51 FR 5315, Feb. 13, 1986]



 Subpart K--Regulations Pertaining to the Protection of the Environment

    Authority: 15 U.S.C. 78w(a)(2).

    Source: 44 FR 41177, July 16, 1979, unless otherwise noted.



Sec. 200.550  Purpose.

    This subpart sets forth the procedures the Commission will follow to 
ensure compliance with the goals of the National Environmental Policy 
Act (NEPA) and with the procedures required by NEPA in the event that 
the Commission should take action subject to such procedural 
requirements.



Sec. 200.551  Applicability.

    (a) Compliance with the procedures set forth in Secs. 200.552 
through 200.554 shall be appropriate where Commission action taken with 
respect to security transactions subject to sections 6(b) and 7 of the 
Public Utility Holding Company Act of 1935 and acquisitions subject to 
sections 9 and 10 of that Act involves major Federal action 
significantly affecting the quality of the human environment.
    (b) In addition to the foregoing, in the event of extraordinary 
circumstances in which a Commission action not specified in paragraph 
(a) of this section may involve major Federal action significantly 
affecting the quality of the human environment, the Commission shall 
follow the procedures set forth in Secs. 200.552 through 200.554, unless 
doing so would be inconsistent with its statutory authority under the 
Federal securities laws.



Sec. 200.552  NEPA planning.

    Where it is reasonably foreseeable by the Commission that it may be 
required to act on a matter specified in Sec. 200.551 and that matter is 
likely to involve major Federal action significantly affecting the 
quality of the human environment, the Commission shall:
    (a) Advise the relevant persons as to information respecting the 
environment, if any, which may later be required to be submitted for 
Commission consideration should Commission action become necessary;
    (b) Consult on any environmental factors involved with individuals, 
organizations, and state and local authorities interested in the planned 
action; and
    (c) Begin implementing the procedures set forth in Secs. 200.553 and 
200.554 as soon as possible, Provided, That such procedures are not 
inconsistent with the Commission's authority under the Federal 
securities laws.



Sec. 200.553  Draft, final and supplemental impact statements.

    If the Commission determines that the requirements of section 
102(2)(C) of

[[Page 106]]

NEPA for preparation of an environmental impact statement are applicable 
in connection with a proposed Commission action, it shall prepare such 
statement generally in accordance with the procedures specified in 40 
CFR parts 1500-1508, particularly part 1502 concerning impact statement 
preparation and content, Sec. 1505.1 concerning decision-making 
procedures, and Sec. 1501.6 concerning the function of cooperating 
agencies, to the extent that such procedures do not conflict with the 
Commission's statutory responsibilities and authority under the Federal 
securities laws.



Sec. 200.554  Public availability of information.

    (a) Any environmental assessment or impact statement, and Commission 
responses pertaining to formal rulemaking proceedings or adjudicatory 
proceedings, shall be made part of the record in any such proceedings. 
In the case of formal adjudicatory proceedings, this shall be done in 
accordance with Rule 460 of the Commission's Rules of Practice, 
Sec. 201.460 of this chapter. In the case of formal rulemaking 
proceedings, this shall be done in accordance with the Commission's 
rules respecting such proceedings.
    (b) The location of publicly available environmental impact 
statements will be 450 Fifth Street, NW., Room 1024, Washington, DC
    (c) Interested persons may obtain information regarding and status 
reports on specific environmental impact statements and environmental 
assessments by contacting the division or office within the Commission 
which has responsibility for the particular proposed action.

[44 FR 41177, July 16, 1979, as amended at 47 FR 26819, June 22, 1982; 
60 FR 32795, June 23, 1995]



Subpart L--Enforcement of Nondiscrimination on the Basis of Handicap in 
    Programs or Activities Conducted by the Securities and Exchange 
                               Commission

    Authority: 29 U.S.C. 794.

    Source: 53 FR 25885, July 8, 1988, unless otherwise noted.



Sec. 200.601  Purpose.

    The purpose of this regulation is to effectuate section 119 of the 
Rehabilitation, Comprehensive Services, and Developmental Disabilities 
Amendments of 1978, which amended section 504 of the Rehabilitation Act 
of 1973 to prohibit discrimination on the basis of handicap in programs 
or activities conducted by Executive agencies or the United States 
Postal Service.



Sec. 200.602  Application.

    This regulation (Secs. 200.601-200.670) applies to all programs or 
activities conducted by the agency, except for programs or activities 
conducted outside the United States that do not involve individuals with 
handicaps in the United States.



Sec. 200.603  Definitions.

    For purposes of this regulation, the term--
    Assistant Attorney General means the Assistant Attorney General, 
Civil Rights Division, United States Department of Justice.
    Auxiliary aids means services or devices that enable persons with 
impaired sensory, manual, or speaking skills to have an equal 
opportunity to participate in, and enjoy the benefits of, programs or 
activities conducted by the agency. For example, auxiliary aids useful 
for persons with impaired vision include readers, Brailled materials, 
audio recordings, and other similar services and devices. Auxiliary aids 
useful for persons with impaired hearing include telephone handset 
amplifiers, telephones compatible with hearing aids, telecommunication 
devices for deaf persons (TDD's), interpreters, notetakers, written 
materials, and other similar services and devices.
    Complete complaint means a written statement that contains the 
complainant's name and address and describes the agency's alleged 
discriminatory action in sufficient detail to inform the agency of the 
nature and date of the alleged violation of section 504. It shall be 
signed by the complainant or by someone authorized to do so on his or 
her behalf. Complaints filed on behalf

[[Page 107]]

of classes or third parties shall describe or identify (by name, if 
possible) the alleged victims of discrimination.
    Facility means all or any portion of buildings, structures, 
equipment, roads, walks, parking lots, rolling stock or other 
conveyances, or other real or personal property.
    Historic preservation programs means programs conducted by the 
agency that have preservation of historic properties as a primary 
purpose.
    Historic properties means those properties that are listed or 
eligible for listing in the National Register of Historic Places or 
properties designated as historic under a statute of the appropriate 
State or local government body.
    Individual with handicaps means any person who has a physical or 
mental impairment that substantially limits one or more major life 
activities, has a record of such an impairment, or is regarded as having 
such an impairment.
    As used in this definition, the phrase:
    (1) Physical or mental impairment includes--
    (i) Any physiological disorder or condition, cosmetic disfigurement, 
or anatomical loss affecting one or more of the following body systems: 
Neurological; musculoskeletal; special sense organs; respiratory, 
including speech organs; cardiovascular; reproductive; digestive; 
genitourinary; hemic and lymphatic; skin; and endocrine; or
    (ii) Any mental or psychological disorder, such as mental 
retardation, organic brain syndrome, emotional or mental illness, and 
specific learning disabilities. The term physical or mental impairment 
includes, but is not limited to, such diseases and conditions as 
orthopedic, visual, speech, and hearing impairments, cerebral palsy, 
epilepsy, muscular dystrophy, multiple sclerosis, cancer, heart disease, 
diabetes, mental retardation, emotional illness, and drug addiction and 
alcoholism.
    (2) Major life activities includes functions such as caring for 
one's self, performing manual tasks, walking, seeing, hearing, speaking, 
breathing, learning, and working.
    (3) Has a record of such an impairment means has a history of, or 
has been misclassified as having, a mental or physical impairment that 
substantially limits one or more major life activities.
    (4) Is regarded as having an impairment means--
    (i) Has a physical or mental impairment that does not substantially 
limit major life activities but is treated by the agency as constituting 
such a limitation;
    (ii) Has a physical or mental impairment that substantially limits 
major life activities only as a result of the attitudes of others toward 
such impairment; or
    (iii) Has none of the impairments defined in paragraph (1) of this 
definition but is treated by the agency as having such an impairment.
    Qualified individual with handicaps means--
    (1) With respect to preschool, elementary, or secondary education 
services provided by the agency, an individual with handicaps who is a 
member of a class of persons otherwise entitled by statute, regulation, 
or agency policy to receive education services from the agency;
    (2) With respect to any other agency program or activity under which 
a person is required to perform services or to achieve a level of 
accomplishment, an individual with handicaps who meets the essential 
eligibility requirements and who can achieve the purpose of the program 
or activity without modifications in the program or activity that the 
agency can demonstrate would result in a fundamental alteration in its 
nature;
    (3) With respect to any other program or activity, an individual 
with handicaps who meets the essential eligibility requirements for 
participation in, or receipt of benefits from, that program or activity; 
and
    (4) Qualified handicapped person as that term is defined for 
purposes of employment in 29 CFR 1613.702(f), which is made applicable 
to this regulation by Sec. 200.640.
    Section 504 means section 504 of the Rehabilitation Act of 1973 
(Pub. L. 93-112, 87 Stat. 394 (29 U.S.C. 794)), as amended by the 
Rehabilitation Act Amendments of 1974 (Pub. L. 93-516, 88 Stat. 1617); 
the Rehabilitation, Comprehensive Services, and Developmental 
Disabilities Amendments of

[[Page 108]]

1978 (Pub. L. 95-602, 92 Stat. 2955); and the Rehabilitation Act 
Amendments of 1986 (Pub. L. 99-506, 100 Stat. 1810). As used in this 
regulation, section 504 applies only to programs or activities conducted 
by Executive agencies and not to federally assisted programs.
    Substantial impairment means a significant loss of the integrity of 
finished materials, design quality, or special character resulting from 
a permanent alteration.



Secs. 200.604-200.609  [Reserved]



Sec. 200.610  Self-evaluation.

    (a) The agency shall, by September 6, 1989, evaluate its current 
policies and practices, and the effects thereof, that do not or may not 
meet the requirements of this regulation and, to the extent modification 
of any such policies and practices is required, the agency shall proceed 
to make the necessary modifications.
    (b) The agency shall provide an opportunity to interested persons, 
including individuals with handicaps or organizations representing 
individuals with handicaps, to participate in the self-evaluation 
process by submitting comments (both oral and written).
    (c) The agency shall, for at least three years following completion 
of the self-evaluation, maintain on file and make available for public 
inspection:
    (1) A description of areas examined and any problems identified; and
    (2) A description of any modifications made.



Sec. 200.611  Notice.

    The agency shall make available to employees, applicants, 
participants, beneficiaries, and other interested persons such 
information regarding the provisions of this regulation and its 
applicability to the programs or activities conducted by the agency, and 
make such information available to them in such manner as the head of 
the agency finds necessary to apprise such persons of the protections 
against discrimination assured them by section 504 and this regulation.



Secs. 200.612-200.629  [Reserved]



Sec. 200.630  General prohibitions against discrimination.

    (a) No qualified individual with handicaps shall, on the basis of 
handicap, be excluded from participation in, be denied the benefits of, 
or otherwise be subjected to discrimination under any program or 
activity conducted by the agency.
    (b)(1) The agency, in providing any aid, benefit, or service, may 
not, directly or through contractual, licensing, or other arrangements, 
on the basis of handicap--
    (i) Deny a qualified individual with handicaps the opportunity to 
participate in or benefit from the aid, benefit, or service;
    (ii) Afford a qualified individual with handicaps an opportunity to 
participate in or benefit from the aid, benefit, or service that is not 
equal to that afforded others;
    (iii) Provide a qualified individual with handicaps with an aid, 
benefit, or service that is not as effective in affording equal 
opportunity to obtain the same result, to gain the same benefit, or to 
reach the same level of achievement as that provided to others;
    (iv) Provide different or separate aid, benefits, or services to 
individuals with handicaps or to any class of individuals with handicaps 
than is provided to others unless such action is necessary to provide 
qualified individuals with handicaps with aid, benefits, or services 
that are as effective as those provided to others;
    (v) Deny a qualified individual with handicaps the opportunity to 
participate as a member of planning or advisory boards;
    (vi) Otherwise limit a qualified individual with handicaps in the 
enjoyment of any right, privilege, advantage, or opportunity enjoyed by 
others receiving the aid, benefit, or service.
    (2) The agency may not deny a qualified individual with handicaps 
the opportunity to participate in programs or activities that are not 
separate or different, despite the existence of permissibly separate or 
different programs or activities.

[[Page 109]]

    (3) The agency may not, directly or through contractual or other 
arrangements, utilize criteria or methods of administration the purpose 
or effect of which would--
    (i) Subject qualified individuals with handicaps to discrimination 
on the basis of handicap; or
    (ii) Defeat or substantially impair accomplishment of the objectives 
of a program or activity with respect to individuals with handicaps.
    (4) The agency may not, in determining the site or location of a 
facility, make selections the purpose or effect of which would--
    (i) Exclude individuals with handicaps from, deny them the benefits 
of, or otherwise subject them to discrimination under any program or 
activity conducted by the agency; or
    (ii) Defeat or substantially impair the accomplishment of the 
objectives of a program or activity with respect to individuals with 
handicaps.
    (5) The agency, in the selection of procurement contractors, may not 
use criteria that subject qualified individuals with handicaps to 
discrimination on the basis of handicap.
    (6) The agency may not administer a licensing or certification 
program in a manner that subjects qualified individuals with handicaps 
to discrimination on the basis of handicap, nor may the agency establish 
requirements for the programs or activities of licensees or certified 
entities that subject qualified individuals with handicaps to 
discrimination on the basis of handicap. However, the programs or 
activities of entities that are licensed or certified by the agency are 
not, themselves, covered by this regulation.
    (c) The exclusion of nonhandicapped persons from the benefits of a 
program limited by Federal statute or Executive order to individuals 
with handicaps or the exclusion of a specific class of individuals with 
handicaps from a program limited by Federal statute or Executive order 
to a different class of individuals with handicaps is not prohibited by 
this regulation.
    (d) The agency shall administer programs and activities in the most 
integrated setting appropriate to the needs of qualified individuals 
with handicaps.



Secs. 200.631-200.639  [Reserved]



Sec. 200.640  Employment.

    No qualified individual with handicaps shall, on the basis of 
handicap, be subject to discrimination in employment under any program 
or activity conducted by the agency. The definitions, requirements, and 
procedures of section 501 of the Rehabilitation Act of 1973 (29 U.S.C. 
791), as established by the Equal Employment Opportunity Commission in 
29 CFR part 1613, shall apply to employment in federally conducted 
programs or activities.



Sec. 200.641-200.648  [Reserved]



Sec. 200.649  Program accessibility: Discrimination prohibited.

    Except as otherwise provided in Sec. 200.650, no qualified 
individual with handicaps shall, because the agency's facilities are 
inaccessible to or unusable by individuals with handicaps, be denied the 
benefits of, be excluded from participation in, or otherwise be 
subjected to discrimination under any program or activity conducted by 
the agency.



Sec. 200.650  Program accessibility: Existing facilities.

    (a) General. The agency shall operate each program or activity so 
that the program or activity, when viewed in its entirety, is readily 
accessible to and usable by individuals with handicaps. This paragraph 
does not--
    (1) Necessarily require the agency to make each of its existing 
facilities accessible to and usable by individuals with handicaps;
    (2) In the case of historic preservation programs, require the 
agency to take any action that would result in a substantial impairment 
of significant historic features of an historic property; or
    (3) Require the agency to take any action that it can demonstrate 
would result in a fundamental alteration in the nature of a program or 
activity or in undue financial and administrative burdens. In those 
circumstances where agency personnel believe that the proposed action 
would fundamentally alter the program or activity or would

[[Page 110]]

result in undue financial and administrative burdens, the agency has the 
burden of proving that compliance with Sec. 200.650(a) would result in 
such alteration or burdens. The decision that compliance would result in 
such alteration or burdens must be made by the agency head or his or her 
designee after considering all agency resources available for use in the 
funding and operation of the conducted program or activity, and must be 
accompanied by a written statement of the reasons for reaching that 
conclusion. If an action would result in such an alteration or such 
burdens, the agency shall take any other action that would not result in 
such an alteration or such burdens but would nevertheless ensure that 
individuals with handicaps receive the benefits and services of the 
program or activity.
    (b) Methods--(1) General. The agency may comply with the 
requirements of this section through such means as redesign of 
equipment, reassignment of services to accessible buildings, assignment 
of aides to beneficiaries, home visits, delivery of services at 
alternate accessible sites, alteration of existing facilities and 
construction of new facilities, use of accessible rolling stock, or any 
other methods that result in making its programs or activities readily 
accessible to and usable by individuals with handicaps. The agency is 
not required to make structural changes in existing facilities where 
other methods are effective in achieving compliance with this section. 
The agency, in making alterations to existing buildings, shall meet 
accessibility requirements to the extent compelled by the Architectural 
Barriers Act of 1968, as amended (42 U.S.C. 4151-4157), and any 
regulations implementing it. In choosing among available methods for 
meeting the requirements of this section, the agency shall give priority 
to those methods that offer programs and activities to qualified 
individuals with handicaps in the most integrated setting appropriate.
    (2) Historic preservation programs. In meeting the requirements of 
Sec. 200.650(a) in historic preservation programs, the agency shall give 
priority to methods that provide physical access to individuals with 
handicaps. In cases where a physical alteration to an historic property 
is not required because of Sec. 200.650(a) (2) or (3), alternative 
methods of achieving program accessibility include--
    (i) Using audio-visual materials and devices to depict those 
portions of an historic property that cannot otherwise be made 
accessible;
    (ii) Assigning persons to guide individuals with handicaps into or 
through portions of historic properties that cannot otherwise be made 
accessible; or
    (iii) Adopting other innovative methods.
    (c) Time period for compliance. The agency shall comply with the 
obligations established under this section by November 7, 1988, except 
that where structural changes in facilities are undertaken, such changes 
shall be made by September 6, 1991, but in any event as expeditiously as 
possible.
    (d) Transition plan. In the event that structural changes to 
facilities will be undertaken to achieve program accessibility, the 
agency shall develop, by March 6, 1989, a transition plan setting forth 
the steps necessary to complete such changes. The agency shall provide 
an opportunity to interested persons, including individuals with 
handicaps or organizations representing individuals with handicaps, to 
participate in the development of the transition plan by submitting 
comments (both oral and written). A copy of the transition plan shall be 
made available for public inspection. The plan shall, at a minimum--
    (1) Identify physical obstacles in the agency's facilities that 
limit the accessibility of its programs or activities to individuals 
with handicaps;
    (2) Describe in detail the methods that will be used to make the 
facilities accessible;
    (3) Specify the schedule for taking the steps necessary to achieve 
compliance with this section and, if the time period of the transition 
plan is longer than one year, identify steps that will be taken during 
each year of the transition period; and
    (4) Indicate the official responsible for implementation of the 
plan.

[[Page 111]]



Sec. 200.651  Program accessibility: New construction and alterations.

    Each building or part of a building that is constructed or altered 
by, on behalf of, or for the use of the agency shall be designed, 
constructed, or altered so as to be readily accessible to and usable by 
individuals with handicaps. The definitions, requirements, and standards 
of the Architectural Barriers Act (42 U.S.C. 4151-4157), as established 
in 41 CFR 101-19.600 to 101-19.607, apply to buildings covered by this 
section.



Secs. 200.652-200.659  [Reserved]



Sec. 200.660  Communications.

    (a) The agency shall take appropriate steps to ensure effective 
communication with applicants, participants, personnel of other Federal 
entities, and members of the public.
    (1) The agency shall furnish appropriate auxiliary aids where 
necessary to afford an individual with handicaps an equal opportunity to 
participate in, and enjoy the benefits of, a program or activity 
conducted by the agency.
    (i) In determining what type of auxiliary aid is necessary, the 
agency shall give primary consideration to the requests of the 
individual with handicaps.
    (ii) The agency need not provide individually prescribed devices, 
readers for personal use or study, or other devices of a personal 
nature.
    (2) Where the agency communicates with applicants and beneficiaries 
by telephone, telecommunication devices for deaf persons (TDD's) or 
equally effective telecommunication systems shall be used to communicate 
with persons with impaired hearing.
    (b) The agency shall ensure that interested persons, including 
persons with impaired vision or hearing, can obtain information as to 
the existence and location of accessible services, activities, and 
facilities.
    (c) The agency shall provide signage at a primary entrance to each 
of its inaccessible facilities, directing users to a location at which 
they can obtain information about accessible facilities. The 
international symbol for accessibility shall be used at each primary 
entrance of an accessible facility.
    (d) This section does not require the agency to take any action that 
it can demonstrate would result in a fundamental alteration in the 
nature of a program or activity or in undue financial and administrative 
burdens. In those circumstances where agency personnel believe that the 
proposed action would fundamentally alter the program or activity or 
would result in undue financial and administrative burdens, the agency 
has the burden of proving that compliance with Sec. 200.660 would result 
in such alteration or burdens. The decision that compliance would result 
in such alteration or burdens must be made by the agency head or his or 
her designee after considering all agency resources available for use in 
the funding and operation of the conducted program or activity and must 
be accompanied by a written statement of the reasons for reaching that 
conclusion. If an action required to comply with this section would 
result in such an alteration or such burdens, the agency shall take any 
other action that would not result in such an alteration or such burdens 
but would nevertheless ensure that, to the maximum extent possible, 
individuals with handicaps receive the benefits and services of the 
program or activity.



Secs. 200.661-200.669  [Reserved]



Sec. 200.670  Compliance procedures.

    (a) Except as provided in paragraph (b) of this section, this 
section applies to all allegations of discrimination on the basis of 
handicap in programs and activities conducted by the agency.
    (b) The agency shall process complaints alleging violations of 
section 504 with respect to employment according to the procedures 
established by the Equal Employment Opportunity Commission in 29 CFR 
part 1613 pursuant to section 501 of the Rehabilitation Act of 1973 (29 
U.S.C. 791).
    (c) The Equal Employment Opportunity Manager shall be responsible 
for coordinating implementation of this section. Complaints may be sent 
to the EEO Manager, 450 Fifth Street NW., Washington, DC 20549.
    (d) The agency shall accept and investigate all complete complaints 
for which it has jurisdiction. All complete

[[Page 112]]

complaints must be filed within 180 days of the alleged act of 
discrimination. The agency may extend this time period for good cause.
    (e) If the agency receives a complaint over which it does not have 
jurisdiction, it shall promptly notify the complainant and shall make 
reasonable efforts to refer the complaint to the appropriate Government 
entity.
    (f) The agency shall notify the Architectural and Transportation 
Barriers Compliance Board upon receipt of any complaint alleging that a 
building or facility that is subject to the Architectural Barriers Act 
of 1968, as amended (42 U.S.C. 4151-4157), is not readily accessible to 
and usable by individuals with handicaps.
    (g) Within 180 days of the receipt of a complete complaint for which 
it has jurisdiction, the agency shall notify the complainant of the 
results of the investigation in a letter containing--
    (1) Findings of fact and conclusions of law;
    (2) A description of a remedy for each violation found; and
    (3) A notice of the right to appeal.
    (h) Appeals of the findings of fact and conclusions of law or 
remedies must be filed by the complainant within 90 days of receipt from 
the agency of the letter required by Sec. 200.670(g). The agency may 
extend this time for good cause.
    (i) Timely appeals shall be accepted and processed by the head of 
the agency.
    (j) The head of the agency shall notify the complainant of the 
results of the appeal within 60 days of the receipt of the request. If 
the head of the agency determines that additional information is needed 
from the complainant, he or she shall have 60 days from the date of 
receipt of the additional information to make his or her determination 
on the appeal.
    (k) The time limits cited in paragraphs (g) and (j) of this section 
may be extended with the permission of the Assistant Attorney General.
    (l) The agency may delegate its authority for conducting complaint 
investigations to other Federal agencies, except that the authority for 
making the final determination may not be delegated to another agency.

[53 FR 25882 and 25885, July 8, 1988, as amended at 53 FR 25882, July 8, 
1988]



Secs. 200.671-200.699  [Reserved]



 Subpart M--Regulation Concerning Conduct of Members and Employees and 
             Former Members and Employees of the Commission

    Authority: 15 U.S.C. 77s, 78w, 79t, 77sss, 80a-37, 80b-11; E.O. 
11222, 3 CFR, 1964-1965 Comp.; 5 CFR 735.104 unless otherwise noted.

    Source: 45 FR 36064, May 29, 1980, unless otherwise noted.



Sec. 200.735-1  Purpose.

    This subpart sets forth the standards of ethical conduct required of 
members, employees and special Government employees, and former members 
and employees of the Securities and Exchange Commission. It is a further 
revision of a comprehensive conduct regulation first adopted by the 
Commission in 1953 ``to restate the ethical principles which it believes 
should govern and have governed the conduct of members and employees and 
former members and employees of the Commission.'' \1\ This revision is 
necessary to provide members, employees, special Government employees 
and former Commission members and employees with a comprehensive 
statement of standards of conduct which are dictated by applicable 
Federal law, Executive orders, and the Commission's own requirements.
---------------------------------------------------------------------------

    \1\ The last major revision of the Conduct Regulation was done in 
1966 to implement Executive Order 11222, May 8, 1965, and part 735 of 
the Civil Service Commission regulations (5 CFR part 735) adopted 
pursuant thereto. It also contains references to the several applicable 
statutes governing employee conduct, particularly Pub. L. 87-849 (76 
Stat. 1119, 18 U.S.C. 201 et seq.), and the ``Code of Ethics for 
Government Service,'' House Concurrent Resolution 175, 85th Congress, 2d 
session (72 Stat. B 12).
---------------------------------------------------------------------------



Sec. 200.735-2  Policy.

    (a) The Securities and Exchange Commission has been entrusted by

[[Page 113]]

Congress with the protection of the public interest in a highly 
significant area of our national economy. In view of the effect which 
Commission action frequently has on the general public, it is important 
that members, employees and special Government employees maintain 
unusually high standards of honesty, integrity, impartiality and 
conduct. They must be constantly aware of the need to avoid situations 
which might result either in actual or apparent misconduct or conflicts 
of interest and to conduct themselves in their official relationships in 
a manner which commands the respect and confidence of their fellow 
citizens.
    (b) For these reasons, members, employees and special Government 
employees should at all times abide by the standards of conduct set 
forth in this subpart, the canons of ethics for members of the 
Securities and Exchange Commission (subpart C of this part 200) and, in 
the case of a professional person, the ethical standards applicable to 
the profession of such person.



Sec. 200.735-3  General provisions.

    (a)(1) In considering the prohibitions of this section, members and 
employees must constantly be aware that the provisions here enumerated 
set forth standards of conduct which are broader than the specific 
applications stated in the rules which follow. Therefore, members and 
employees should look to these general prohibitions when assessing the 
advisability of a particular course of conduct. The broadly stated 
provisions of this rule are aimed at eliminating the appearance of 
impropriety as well as any actual wrongdoing.
    (2) Accordingly, a member or employee should avoid any action, 
whether or not specifically prohibited by law or regulation (including 
the provisions of this subpart), which would result in or might create 
appearance of, among other things:
    (i) Using public office for private gain;
    (ii) Giving preferential treatment to any organization or person;
    (iii) Losing complete independence or impartiality;
    (iv) Making a Government decision outside official channels; or
    (v) Affecting adversely the confidence of the public in the 
integrity of the Government.
    (3) While provisions applicable to all employees of the Commission 
are outlined in this regulation, certain Offices or Divisions for 
management reasons may require more stringent regulations in certain 
areas. These may be imposed by Division Directors, Office Heads or 
Regional Administrators with the consent of the Chairman and the 
approval of the Office of Government Ethics. Should such additional 
regulations be imposed, all employees affected must be notified ten days 
before the effective date of the restriction or at the time of their 
employment.
    (b) A member or employee of the Commission shall not:
    (1) Engage, directly or indirectly, in any personal business 
transaction or private arrangement for personal profit the opportunity 
for which arises because of his or her official position or authority, 
or that is based upon confidential or nonpublic information which he or 
she gains by reason of such position or authority. \2\
---------------------------------------------------------------------------

    \2\ Detailed provisions regarding outside or private employment and 
transactions in securities and commodities are set forth in 
Secs. 200.735-4 and 200.735-5, respectively. Further provisions 
regarding use and disclosure of confidential information are set forth 
in paragraph (b) of this section and in the note appended thereto.
    Members of the Commission are subject also to the following 
prohibition in section 4(a) of the Securities Exchange Act of 1934 (15 
U.S.C. 78d(a)): ``* * * No Commissioner shall engage in any other 
business, vocation, or employment than that of serving as Commissioner, 
nor shall any Commissioner participate, directly or indirectly, in any 
stock market operations or transactions of a character subject to 
regulation by the Commission pursuant to this title * * *.'' This does 
not preclude Commissioners from engaging in securities transactions. See 
Opinion letter dated February 11, 1975, sent by the Office of the 
General Counsel to David Reich, Ethics Counselor at the Civil Service 
Commission. In addition, members of the Commission are subject to the 
requirements of Executive Order 11222 of May 8, 1965.
---------------------------------------------------------------------------

    (2) Solicit or accept, directly or indirectly, any gift, gratuity, 
favor, entertainment, loan, service, or any other

[[Page 114]]

thing of monetary value from any person with whom he or she transacts 
business on behalf of the United States:
    (i) Who has, or is seeking to obtain, contractual or other business 
or financial relations with the Commission;
    (ii) Who conducts operations or activities regulated by the 
Commission; or
    (iii) Who has interests that may be substantially affected by the 
performance or non-performance of his or her official duty.
    (3) The restrictions of paragraph (b)(2) of this section do not 
prohibit members and employees from the following:
    (i) The acceptance of food and refreshments, not lavish in kind, 
offered free in the course of a meeting or other group function, not 
connected with an inspection or investigation, at which attendance is 
desirable because it will assist the member or employee in performing 
his or her official duties. Members shall determine for themselves and 
their staffs the propriety of accepting such invitations. Division 
Directors, Office Heads, and Regional Administrators are authorized to 
make such determinations for themselves and their subordinates. Staff 
members are required to advise their Division Director, Office Head, or 
Regional Administrator of invitations received from entities described 
in paragraph (b)(2) of this section.
    (ii) The acceptance of items of value when the circumstances make it 
clear that it is family or personal relationships rather than the 
business of the persons concerned which govern and are the motivating 
factors.
    (iii) The acceptance of unsolicited advertising or promotional 
material, such as pens, pencils, notepads, calendars and other items of 
modest value.
    (iv) The acceptance of meals and refreshments as provided to all 
panelists, when participating as a panelist in an educational program.
    (v) The acceptance of gifts given for participation in an 
educational program when they are (A) of modest value; or (B) provided 
to all participants in the program; or (C) in the nature of a 
remembrance traditional to the particular sponsor institution.
    (vi) For purposes of this subpart, person means an individual, a 
corporation, a company, an association, a firm, a partnership, a 
society, a joint stock company; or any other organization or institution 
or anyone who acts for such a person in a representative capacity.\3\
---------------------------------------------------------------------------

    \3\ Members and employees of the Commission are subject also to 
provisions of the Federal criminal code which prohibit, (1) any officer 
or employee of the United States from asking, accepting or receiving any 
money or other thing of value in connection with any matter before him 
or her in his or her official capacity, (18 U.S.C. 203); and (2) the 
compensation of government employees for services to the government by 
entities other than the United States (18 U.S.C. 209). In addition, 
members are prohibited by 5 CFR 735.203(c) from receiving compensation 
or anything of monetary value for any consultation, lecture, discussion, 
writing, or appearance, the subject matter of which is devoted 
substantially to the responsibilities, programs, or operations of the 
Commission or which draws substantially on official data or ideas which 
have not become part of the body of public information. See also 17 CFR 
200.735-4.
---------------------------------------------------------------------------

    (4) Solicit contributions from another employee for a gift to an 
employee in a superior official position. An employee in a superior 
official position shall not accept a gift presented as a contribution 
from employees receiving less salary than himself or herself. An 
employee shall not make a donation as a gift to an employee in a 
superior official position (5 U.S.C. 7351). However, this paragraph does 
not prohibit the occasional giving of gifts of modest value to an 
employee in a superior position or the receipt of such gifts by a 
superior or the use of completely voluntary contributions of nominal 
amounts by employees within the Commission to establish funds for the 
limited purpose of providing token remembrances or gifts of modest value 
to an employee in a superior position on special occasions.
    (5) Accept from a foreign government a gift, decoration or other 
thing of more than minimal value except in accordance with the 
provisions of 5 U.S.C. 7342.
    (6) Discuss or entertain a proposal for future employment by any 
person outside the Government with whom he or

[[Page 115]]

she is personally and substantially involved in transacting business on 
behalf of the United States.%thnsp;\4\
---------------------------------------------------------------------------

    \4\ Detailed provisions regarding negotiations for future employment 
are set forth in Sec. 200.735-7.
---------------------------------------------------------------------------

    (i) If an employee wishes to discuss future employment with another 
Government agency, this fact should be disclosed to the employee's 
Division Director, Office Head or Regional Administrator prior to any 
discussion regarding employment, if at that time the employee is 
representing the Commission in a particular matter in which the other 
agency is taking a position adverse to the Commission.
    (7)(i) Divulge to any unauthorized person or release in advance of 
authorization for its release \5\ any nonpublic Commission document, or 
any information contained in any such document or any confidential 
information: (A) In contravention of the rules and regulations of the 
Commission promulgated under 5 U.S.C. 552, 552a and 552b; or (B) in 
circumstances where the Commission has determined to accord such 
information confidential treatment.
---------------------------------------------------------------------------

    \5\ In Section 171 of the Commission's Manual of Administrative 
Regulations the Commission's policy on making available nonpublic 
information to Federal, State and foreign government authorities, 
national securities exchanges and national securities associations is 
outlined.
---------------------------------------------------------------------------

    (ii) Except where the Commission or the General Counsel, pursuant to 
delegated authority, has previously granted approval or in relation to a 
Commission administrative proceeding or a judicial proceeding in which 
the Commission, or a present or former Commissioner, or present or 
former member of the staff, represented by Commission counsel, is a 
party, any officer, employee or former officer or employee who is served 
with a subpoena requiring the disclosure of confidential or non-public 
information or documents shall, unless the Commission or the General 
Counsel, pursuant to delegated authority, authorizes the disclosure of 
such information or documents, respectfully decline to disclose the 
information or produce the documents called for, basing his or her 
refusal on this paragraph.
    (iii) Any member, employee or former member or employee who is 
served with such a subpoena not covered by the exceptions in paragraph 
(b)(7)(ii) of this section 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 in 
the public interest of making available such information or 
documents.\6\ The Commission or the General Counsel, pursuant to 
delegated authority, shall authorize the disclosure of non-expert, non-
privileged, factual staff testimony and the production of non-privileged 
documents when validly subpoenaed.
---------------------------------------------------------------------------

    \6\ Detailed prohibitions regarding disclosure or use of 
confidential or nonpublic information are set forth in Rule 122 (17 CFR 
230.122) under the Securities Act of 1933; section 24(b) of the 
Securities Exchange Act of 1934 (15 U.S.C. 78x) and Rule 0-4 (17 CFR 
240.0-4); and Rule 24(b)(2) (17 CFR 240.24b-2), thereunder; section 
22(c) of the Public Utility Holding Company Act of 1935 (15 U.S.C. 79y) 
and Rule 104 thereunder (17 CFR 250.104); section 45(a)(1) of the 
Investment Company Act, and section 210(b) of the Investment Advisers 
Act of 1940 (15 U.S.C. 80b-10). But see, section 171 of the 
Administrative Manual which authorizes the staff to divulge certain 
nonpublic information without Commission approval (n. 5, supra).
---------------------------------------------------------------------------

    (8) Act in any official matter with respect to which there exists a 
personal interest incompatible with an unbiased exercise of official 
judgment. \7\
---------------------------------------------------------------------------

    \7\ Section 200.735-6 of this subpart provides a procedure for 
relieving employees from assignments in certain cases, including those 
covered by paragraph (b)(5) of this section.
---------------------------------------------------------------------------

    (9) Have direct or indirect personal, business or financial affairs 
which conflict or appear to conflict with his or her official duties and 
responsibilities.
    (10)(i) Use, or allow the use of, directly or indirectly, Government 
property of any kind, including property leased to the Government, for 
other than officially approved activities. Officially approved 
activities for the purpose of this section are those activities which 
are part of an employee's official duties or are approved by the 
employee's Division Director, Office Head or

[[Page 116]]

Regional Administrator as being sufficiently related to the employee's 
official duties, or important to the interests of the Commission to 
warrant the use of Commission facilities for their accomplishment. 
Division Directors, Office Heads and Regional Administrators may, for 
their own activities meeting the same criteria, obtain the concurrence 
of the Executive Director.
    (ii) An employee has a positive duty to protect and conserve 
Government property, including equipment, supplies, and other property 
entrusted or issued to him or her.
    (11) Participate, while on Government-owned or leased property or 
while on duty for the Government, in any gambling activity, including 
the operation of a gambling device, in conducting a lottery or pool, in 
a game for money or property, or in selling or purchasing a numbers slip 
or ticket.
    (12) Engage in unlawful or unethical conduct, or other conduct 
prejudicial to the Government.

[45 FR 36064, May 29, 1980; 45 FR 40975, June 17, 1980, as amended at 50 
FR 23287, June 3, 1985; 53 FR 17458, May 17, 1988; 54 FR 33500, Aug. 15, 
1989]



Sec. 200.735-4  Outside employment and activities.

    (a) No member or employee shall permit his or her name to be 
associated in any way with any legal, accounting or other professional 
firm or office. \8\
---------------------------------------------------------------------------

    \8\ With respect to members, this paragraph supplements the 
statutory prohibition against outside employment contained in section 
4(a) of the Securities Exchange Act of 1934, quoted in footnote 2. 
Except as otherwise indicated, the remaining provisions of this section 
are not made applicable to members in view of the provisions of section 
4(a) of the Securities Exchange Act of 1934.
---------------------------------------------------------------------------

    (b)(1) No employee shall have any outside or private employment, 
activity, or affiliation incompatible with concurrent employment by the 
Commission. Incompatible activities include but are not limited to
    (i) Employment or association with any securities exchange, 
association of securities dealers, or other self-regulatory organization 
either registered under the Securities Exchange Act of 1934 or otherwise 
involved with the securities industry, any registered broker, dealer, 
registered municipal securities dealer, public utility holding company, 
investment company, investment adviser, securities information 
processor, transfer agent, clearing agency or other persons who are 
subject to regulation by the Commission, or where the facts relating to 
a particular employment would create an appearance of impropriety, 
because the employment is directly or indirectly related to the 
issuance, sale, purchase or investment of securities;
    (ii) Legal, accounting, or engineering work for compensation 
involving matters in which the Federal government may be significantly 
interested;
    (iii) Acceptance of a fee, compensation, gift, payment of expense, 
or any other thing of monetary value in circumstances in which 
acceptance may result in or create the appearance of conflicts of 
interest;
    (iv) Outside employment or activity which impairs the employee's 
mental or physical capacity to perform his or her Commission duties and 
responsibilities in an acceptable manner;
    (2) For the purposes of this paragraph (b), the private employment 
of an employee's spouse, or other member of his or her immediate 
household with any securities exchange, association of securities 
dealers, or other self-regulatory organization either registered under 
the Securities Exchange Act of 1934 or otherwise involved in the 
securities industry, any registered broker, dealer, registered municipal 
securities dealer, public utility holding company, investment company, 
investment adviser, securities information processor, transfer agent, 
clearing agency or other persons who are subject to regulation by the 
Commission, or where the particular employment is directly related to 
the issuance, sale, purchase or investment of securities is deemed to be 
incompatible with the employee's concurrent employment by the Commission 
if the duties and activities incident to such employment relate directly 
to the official activities of the Commission employee, except as 
determined otherwise by the Commission in a specific case.
    (i) Member of his or her immediate household is defined for the 
purposes of

[[Page 117]]

this paragraph as a resident of the employee's household who is related 
to the employee by blood or marriage.
    (3) No employee shall accept or perform outside employment 
prohibited by law, regulations of the Office of Personnel Management or 
the rules in this subpart.
    (4) No employee shall receive any salary or anything of monetary 
value from a private source as compensation for his or her services to 
the Government (18 U.S.C. 209), except as otherwise provided by law.
    (5) The Commission encourages employees to engage in teaching, 
lecturing, and writing activities with or without compensation. \9\ In 
participating in such activities, employees should be guided by the 
following:
---------------------------------------------------------------------------

    \9\ As to employees, while the receipt of honoraria is discouraged 
(See 17 CFR 200.735-4(b)(7)), that rule is not applicable to the receipt 
of compensation for teaching.
---------------------------------------------------------------------------

    (i) No teaching, lecturing, or writing should be engaged in if 
prohibited by law, Executive order, Office of Personnel Management 
regulations, or the rules in this subpart.
    (ii) No teaching, lecturing, or writing should be engaged in 
(including for the purpose of the special preparation of a person or 
class of persons for an examination of the Office of Personnel 
Management or Board of Examiners for the Foreign Service) that depends 
on information filed with the Commission, or obtained by the Commission 
in an investigation or otherwise, or generated within the Commission 
which is nonpublic, unless the Commission gives formal approval for the 
use of such nonpublic information on the basis that the use thereof is 
in the public interest.\10\
---------------------------------------------------------------------------

    \10\ Since members of the Commission are covered by section 401(a) 
of Executive Order 11222, they are prohibited by Civil Service 
Regulations (5 CFR 735.203(c)) from receiving compensation or anything 
of monetary value for any consultation, lecture, discussion, writing, or 
appearance the subject matter of which is devoted substantially to the 
responsibilities, programs, or operations of their agencies, or which 
draws substantially on official data or ideas which have not become part 
of the body of public information.
    \11\ [lsqb]Reserved[rsqb]
---------------------------------------------------------------------------

    (6)(i) Subject to the specific prohibition and requirements set 
forth below, the Commission may accept payment or reimbursement in cash 
or in kind, for travel and subsistence expenses actually incurred by 
Commission members and employees, while on official duty status, in 
connection with the participation of such members and employees in 
conferences, proceedings, meetings, seminars, and educational programs 
concerning the functions and responsibilities of the Commission and 
related topics.
    (ii)(A) The Commission shall accept no payment or reimbursement for 
expenses described in paragraph (b)(6)(i) of this section from or in 
connection with a conference sponsored by:
    (1) A person directly required to file reports or registration 
statements with the Commission, or
    (2) A person directly or indirectly regulated by the Commission, or
    (3) Any association or other group composed predominantly of persons 
regulated by the Commission, Provided, however, That the Chairman may 
authorize the Commission to accept payment or reimbursement from such a 
group. In determining whether to authorize such payment or 
reimbursement, the Chairman shall consider the benefits to the 
Commission and the public of participation in the particular program and 
the possibility of any appearance of impropriety.
    (B) For purposes of this section, the phrase person regulated by the 
Commission means all persons whose activities are directly regulated by, 
or who are required to register with, the Commission, including but not 
limited to, such persons as brokers or dealers in securities, national 
securities exchanges, national securities associations, investment 
companies, investment advisers, public utility holding companies, and 
any self-regulatory organization, as that term is defined in section 3 
of the Securities Exchange Act of 1934, 15 U.S.C. 78(c).
    (iii)(A) Subordinate members of the staff who are invited to 
participate in programs which offer payment or reimbursement meeting the 
criteria of paragraph (b)(6)(i) of this section must, prior to 
participation, obtain the written approval of their Division Director, 
Office Head, or Regional Administrator to participate in the program and 
the

[[Page 118]]

written approval of the Chairman, if paragraph (b)(6)(ii)(A)(3) of this 
section applies. If paragraph (b)(6)(ii)(A)(3) of this section does not 
apply, the Executive Director shall determine in writing whether the 
Commission will accept the payment or reimbursement.
    (1) In acting on requests to participate, Division Directors, Office 
Heads, and Regional Administrators shall consider: (i) The benefit to 
the Commission and the public of participation; (ii) the expertise of 
the proposed participant; and (iii) the appropriate allocation of 
resources.
    (2) In determining whether the Commission shall accept payment or 
reimbursement, the Executive Director shall consider the possibility of 
any appearance of impropriety.
    (B) Division Directors, Office Heads, and Regional Administrators 
must, prior to participation, obtain the written approval of the 
Chairman, if paragraph (b)(6)(ii)(A)(3) of this section applies. If 
paragraph (b)(6)(ii)(A)(3) of this section does not apply, the Executive 
Director shall determine, in writing, considering the possibility of any 
appearance of impropriety, whether the Commission will accept the 
payment or reimbursement. Division Directors, Office Heads, and Regional 
Administrators shall make the determinations specified in paragraph 
(b)(6)(iii)(A)(1) of this section as to their own participation.
    (C) Except if paragraph (b)(6)(ii)(A)(3) of this section applies, 
each Commissioner shall determine for himself or herself whether payment 
or reimbursement for his or her expenses incident to participation in 
programs meeting the criteria of paragraph (b)(6)(i) of this section 
should be accepted by the Commission. Notice of each decision shall be 
sent to the Executive Director.
    (D) Whenever it is determined, pursuant to paragraphs (b)(6)(iii) 
(A), (B), or (C) of this section that the Commission will accept a 
particular payment or reimbursement, the Executive Director shall 
forward notice of that decision to the Public Reference Room, 
Washington, DC, for insertion in a public file.
    (iv) Payment or reimbursement shall not be accepted for expenses 
which are unreasonable or lavish.
    (v) On a quarterly basis, the Commission shall publish in the SEC 
Docket a compilation of payments and reimbursements accepted.
    (vi) The Commission's acceptance from any person of payment or 
reimbursement for the expenses of a spouse or traveling companion 
accompanying a member or employee is prohibited. If a staff member 
wishes to participate in a program which offers payment or reimbursement 
meeting the criteria of paragraph (b)(6)(i) of this section and 
acceptance would not be prohibited by paragraph (b)(6)(ii) of this 
section, but is denied approval in accordance with paragraphs 
(b)(6)(iii)(A) or (B) of this section, or wishes to accept reimbursement 
for the travel expenses of his or her spouse or traveling companion, the 
staff member may participate in the program and accept such 
reimbursement personally, Provided, That:
    (A) No reimbursement for travel expenses may be accepted from a 
person who does, or is seeking to do, business with the Commission, is 
regulated directly or indirectly by the Commission, is registered with 
the Commission, or has interests which may be substantially affected by 
the official's performance or non-performance of his or her official 
duties.
    (B) No reimbursement may be accepted for the travel expenses of an 
employee's spouse or traveling companion unless the prior written 
approval of the General Counsel is obtained. Under appropriate 
circumstances, such as programs where participants are expected to 
engage in social activities, the General Counsel may approve acceptance 
upon written application.
    (C) A copy of the General Counsel's approval and notice of the 
amount of payment or reimbursement accepted from the sponsor must be 
sent to the Executive Director for inclusion in the public file in 
accordance with paragraph (b)(6)(iii)(D) of this section.
    (D) Such staff member's participation and travel occur only while on 
annual leave, approved in accord with regular leave procedures. Note 7 
CFR 200.735-4(e)(2)(ii).
    (vii) Members or employees who are participating in a program 
meeting the criteria of paragraph (b)(6)(i) of this section, which is 
sponsored by a person

[[Page 119]]

determined by the Secretary of the Treasury to be a tax-exempt 
organization pursuant to 26 U.S.C. 501(c)(3), and for which 
reimbursement for the member's or employee's participation will be 
accepted by the Commission, may, while on official duty, accept from the 
sponsoring entity bona fide reimbursement for actual expenses for travel 
and necessary subsistence for a spouse or traveling companion Provided 
that the procedures detailed in paragraphs (d)(6)(vi) (A)-(C) of this 
section are followed.
    (7) The provisions of this paragraph (b) and Sec. 200.735-3(b)(2) do 
not preclude a member or employee from:
    (i) Participation in the activities of national or State political 
parties not proscribed by law;
    (ii) Participation in the affairs of, or acceptance of an award for 
a meritorious public contribution or achievement given by, a charitable, 
religious, professional, social, fraternal, nonprofit educational, 
recreational, public service, or civic organization.
    (8)(i) As a matter of general policy, the Commission discourages the 
acceptance of honoraria or similar fees and payments which are given for 
publications, speeches or lectures based on the official duties of the 
employee. In accord with this policy, no member or employee may accept 
such an honorarium unless written approval is obtained in advance from 
the Commission's General Counsel, subject to the general review of the 
Commission. Requests for such approval should be submitted to the 
General Counsel in writing and should include a statement in support of 
the request.
    (ii) Honoraria which are most likely to be deemed acceptable are 
those which appear to be remuneration for teaching. An employee may not, 
under any circumstances, accept an honorarium from any person from whom 
reimbursement for travel expenses is prohibited by paragraph (b)(6)(ii) 
of this section. In any event an employee may not accept an excessive 
honorarium as described in 2 U.S.C. 441(i). This section does not 
preclude the acceptance of a modest gift for participation as a speaker, 
as provided in Rule 3.
    (c) No employee shall appear in court or on a brief in a 
representative capacity (with or without compensation) or otherwise 
accept or perform legal, accounting, engineering, or similar 
professional work, unless specifically authorized to do so by the 
Commission. Acceptance of a forwarding fee shall be deemed to be within 
the foregoing prohibition. As a matter of general policy, outside or 
private professional work or practice by the staff is discouraged and 
only in unusual cases or circumstances will it be authorized. However, 
the Commission encourages its employees, in off-duty hours and 
consistent with official responsibilities, to participate, without 
compensation, in programs to provide legal or other appropriate 
assistance and representation to indigents. \12\ Such participation may 
include limited appearances in court and on briefs when required in 
connection with such programs. However, such participation may not 
involve any activities which are prohibited by law, Executive orders, 
Office of Personnel Management regulations, or this subpart M. \13\ For 
example, 18 U.S.C. 205 prohibits a Federal employee from appearing in 
court in a matter in which the United States has an interest

[[Page 120]]

(other than on behalf of the United States), without regard to 
compensation.
---------------------------------------------------------------------------

    \12\ As a matter of policy, the Commission encourages members of its 
staff to participate in matters involving improvement to their 
communities and service to indigent persons, provided that the necessary 
approval is obtained in advance. However, in no case will approval be 
given to participate in matters involving securities.
    \13\ Attention is called to Title 18, United States Code, sections 
201 through 209 which provide, among other things, that Federal 
employees are prohibited from acting as agent or attorney in prosecuting 
any claim against the United States or from aiding and assisting in any 
way, except as otherwise permitted in the discharge of official duties, 
in the prosecution or support of any such claim, or from receiving any 
gratuity, or any share of an interest in any claim from any claimant 
against the United States; and from directly or indirectly receiving or 
agreeing to receive any compensation whatever for services rendered or 
to be rendered to any persons in relation to any matter in which the 
United States is a party or directly or indirectly interested. 18 U.S.C. 
205 contains an exception from the foregoing restrictions for acting as 
agent or attorney, without compensation, for government employees who 
are the subject of disciplinary, loyalty or other personnel-type 
proceedings, in connection with these proceedings.
---------------------------------------------------------------------------

    (1) The provisions of this paragraph (c) and Sec. 200.735-3(b)(2) do 
not preclude an employee from:
    (i) Acting without compensation as agent or attorney (A) for a 
Commission employee who is sued or is under investigation in connection 
with his or her official duties; (B) for any Commission employee who is 
the subject of disciplinary, loyalty or other personnel administrative 
proceedings in connection with those proceedings; or (C) for any 
Commission employee who raises claims or against whom allegations of 
wrongdoing are made pursuant to the Commission's Equal Opportunity 
regulations, if such representation is not inconsistent with the 
faithful performance of the employee's duties. \14\
---------------------------------------------------------------------------

    \14\ This is adapted from the provision in 18 U.S.C. 205 and 
expresses the Commission's general policy which favors the 
representation of fellow employees without compensation. However, it may 
be necessary to look to other regulations for specific provisions 
regarding such representation.
---------------------------------------------------------------------------

    (2) [Reserved]
    (d) No member or employee shall hold office in or be a director of 
any company which has public security holders, except not for profit 
corporations, savings and loan associations, and similar institutions, 
whose securities are exempted under section 3(a)(4) or 3(a)(5) of the 
Securities Act of 1933 (15 U.S.C. 77c(a)(4), 77c(a)(5)).
    (e)(1) As paragraph (b)(5) of this section indicates, the Commission 
encourages employees to engage in teaching, lecturing and writing 
activities. \15\ It is understood, however, that Commission employees in 
their teaching, writing and lecturing shall not
---------------------------------------------------------------------------

    \15\ This paragraph (e), requiring review of prepared speeches or 
writings relating to the Commission, does not apply to teaching 
activities.
---------------------------------------------------------------------------

    (i) Use confidential or nonpublic information;
    (ii) Make comments on pending litigation in which the Commission is 
participating as a party or amicus curiae; or
    (iii) Make comments on rulemaking proceedings pending before the 
Commission which would adversely affect the operations of the 
Commission.
    (2) To assist employees in conforming to these requirements the 
following procedure for reviewing writings prior to publication, or 
prepared speeches prior to delivery, has been established:
    (i) Employees must submit proposed publications or prepared speeches 
relating to the Commission, or the statutes or rules it administers, to 
the General Counsel for review. Employees will be notified as promptly 
as possible, with due regard to publication deadlines, but in any event 
within 30 days of receipt of the written document, whether such document 
conforms to the requirements of this Rule.
    (ii) A determination by the General Counsel that a proposed 
publication conforms to the requirements of the rule will not involve 
adoption of, or concurrence in, the views expressed. Therefore, such 
publication or speech shall include at an appropriate place or by way of 
footnote, or otherwise, the following disclaimer of responsibility:

    The Securities and Exchange Commission, as a matter of policy, 
disclaims responsibility for any private publication or statement by any 
of its employees. The views expressed herein are those of the author and 
do not necessarily reflect the views of the Commission or of the 
author's colleagues upon the staff of the Commission.


In appropriate cases, the above disclaimer may be modified by the 
General Counsel or the Commission to reflect the circumstances of an 
individual case. In addition, any publication or speech which reflects 
positions taken by the Commission shall set forth those positions 
accurately and, if it contains differences with Commission positions, it 
shall clearly state that such positions are those of the employee.
    (f) An employee who intends to accept or perform any outside or 
private employment or professional work shall obtain necessary 
authorization in advance of such acceptance or performance. A request 
for such authorization shall be submitted to the Division Director, 
Office Head or Regional Administrator concerned, together with all 
pertinent facts regarding the proposed employment, such as the name of 
the employer, the nature of the work to be

[[Page 121]]

performed, its estimated duration, and the fee or compensation to be 
received. Division Directors, Office Heads and Regional Administrators 
have been delegated the authority to approve routine requests for 
outside employment. The approving official shall forward to the Director 
of Personnel a copy of each request showing the date of approval. 
Requests of a non-routine nature should be forwarded to the Director of 
Personnel.
    (g) The Director of Personnel, or his designee, is authorized to 
approve or disapprove requests for outside or private employment under 
this rule, except as to those cases which, in his judgment, should be 
considered and decided by the Commission. An employee may appeal a 
disapproved request to the Commission. The written appeal, submitted 
through the Director of Personnel, shall give reasons why the proposed 
outside or private employment is consistent with this rule. The Director 
of Personnel may not approve proposed outside or private employment 
which is absolutely prohibited by these rules. The Commission may, in a 
particular case, approve such employment.\16\
---------------------------------------------------------------------------

    \16\ The Commission does not favor the granting of waivers from the 
provision of this subsection.

---------------------------------------------------------------------------
(Pub. L. 98-38)

[45 FR 36064, May 29, 1980; 45 FR 40975, June 17, 1980; 48 FR 39216, 
Aug. 30, 1983; 50 FR 45603, Nov. 1, 1985]



Sec. 200.735-5  Securities transactions.

    (a)(1) This section applies to all transactions effected by or on 
behalf of a member or employee. This includes transactions for the 
accounts of other persons effected by the member or employee, directly 
or indirectly, under a power of attorney or otherwise. In addition, a 
member or employee is considered to have sufficient interest in the 
securities transactions of his or her spouse or unemancipated minor 
child or other member of his or her immediate household so that 
transactions effected by or on behalf of such persons must be reported 
and are subject to all the terms of this section.
    (i) Except, this section shall not apply to securities transactions 
of a legally separated spouse living apart from the member or employee, 
including transactions for the benefit of a minor child, if the member 
or employee has no power to control and does not, in fact, advise or 
control with regard to such transactions. If the member or employee has 
knowledge of securities held by a separated spouse or for the benefit of 
a minor child, the disqualification provisions of Rule 6, 17 CFR 
200.735-6, and 18 U.S.C. 208 are applicable.
    (ii) For purposes of this section member of his or her immediate 
household means a resident of the member's or employee's household who 
is related to the employee by blood or marriage or who is in the legal 
care and/or custody of the employee by reason of adoption, prospective 
adoption or guardianship.
    (2) Members and employees are prohibited from recommending or 
suggesting the purchase or sale of securities:
    (i) Based on non-public information gained in the course of 
employment; or
    (ii) Which a member or employee could not purchase because of the 
restrictions of this rule, in any circumstance in which the member or 
employee could reasonably expect to benefit from the recommendation, or 
to anyone over whom the member or employee has or may have control or 
substantial influence.
    (b)(1) No member or employee shall effect or cause to be effected 
any transaction in a security except for bona fide investment purposes. 
Therefore, all securities purchased by a member or employee must be held 
for a minimum of six months. Except, this holding period is not 
applicable to
    (i) Securities sold for less than the purchase price pursuant to a 
stop-loss order entered at the time of purchase and submitted to the 
Office of Personnel with the report of purchase;
    (ii) Money market fund shares; \17\
---------------------------------------------------------------------------

    \17\ For purposes of this rule a money market fund is defined as an 
open end investment company whose investment policy calls for investment 
of at least 80% of its assets in debt securities maturing in 13 months 
or less.
---------------------------------------------------------------------------

    (iii) Securities purchased by a member or employee prior to entrance 
on duty with the Commission;

[[Page 122]]

    (iv) Debt securities with an initial term of less than six months 
which are held to term;
    (v) Shares of a unit investment trust having a term of less than six 
months; or
    (vi) The transferring of funds within a family of registered 
investment companies.
    (2) For purposes of this provision a family means any two or more 
registered investment companies which share the same investment adviser 
or principal underwriter and hold themselves out to investors as related 
companies for purposes of investment and investor services.
    (c) No member or employee shall effect any purchase or sale of an 
option, future contract, or option on a future contract involving a 
security or group of securities.
    (d) No member or employee shall
    (1) Carry securities on margin;
    (2) Borrow funds or securities, with or without collateral, for the 
purpose of purchasing or carrying securities with the proceeds, unless 
the prior approval of the Commission has been secured; or
    (3) Sell a security which he or she does not own, or consummate a 
sale by the delivery of a security borrowed by or for such member's or 
employee's account.
    (e)(1) Except as provided in this paragraph (e) or paragraph (f) 
below, members and employees are prohibited from purchasing or selling 
any security which is the subject of a registration statement filed 
under the Security Exchange Act of 1934 (15 U.S.C. 78a et seq.), the 
Securities Act of 1933 (15 U.S.C. 77a et seq.), or a letter of 
notification filed under Regulation A, or any security of the same 
issuer while such a registration statement or letter of notification is 
pending or during the first 60 days after its effective date. This 
prohibition shall not apply to:
    (i) A security which is the subject of a pending registration 
statement filed on Forms S-2, S-3, S-8, F-2, F-3, 8-A, or 8-B; or
    (ii) Offerings, except initial public offerings, of shares by an 
investment company, other than a closed-end investment company, or to 
offerings by a registered separate account (as defined in section 
1(a)(37) of the Investment Company Act of 1940 (15 U.S.C. 80a-2(a)(37)) 
which become effective pursuant to 17 CFR 230.485(b).
    (2) Securities of a unit investment trust whose registration 
statements become effective pursuant to 17 CFR 230.487 may be purchased 
immediately upon effectiveness of the registration statement.
    (3) Securities which are registered for delayed distribution 
pursuant to 17 CFR 230.415 may be purchased 60 days after the 
registration becomes effective. The subsequent filing of a pricing 
amendment or sticker does not revive the prohibition on purchase.
    (f) A member or employee may sell a security which is referred to in 
paragraph (e) of this section only if:
    (1) The member or employee certifies that he or she has no 
information which is not publicly available concerning or relating to 
the issuer; and
    (2) The employee's Division Director, Office Head or Regional 
Administrator certifies that the employee has not participated in the 
registration processing. Members, Division Directors, Office Heads, and 
Regional Administrators are required to submit such certification on 
their own behalf to the Director of the Office of Personnel.
    (g) No member or employee shall purchase any security which to his 
or her knowledge is involved in any pending investigation by the 
Commission, or in any proceeding before the Commission, or to which the 
Commission is a party.
    (h) No member or employee shall purchase any security of any company 
which is in a receivership or bankruptcy proceeding in which the 
Commission has filed a notice of appearance.
    (i) No member or employee shall purchase securities of:
    (1) Any holding company registered under section 5 of the Public 
Utility Holding Company Act of 1935 (15 U.S.C. 79e), or any subsidiary 
thereof, or
    (2) Any company, if its status under such Act, or the applicability 
of any provision of the Act to it, is known by the employee to be under 
consideration.
    (j) The restrictions imposed in paragraphs (e), (g), (h), and (i) of 
this section do not apply;

[[Page 123]]

    (1) To the exercise of a privilege to convert or exchange 
securities;
    (2) To the exercise of rights accruing unconditionally by virtue of 
ownership of other securities (as distinguished from a contingent right 
to acquire securities not subscribed for by others);
    (3) To the acquisition and exercise of rights in order to round out 
fractional shares;
    (4) To the acceptance of stock dividends on securities already 
owned; to the reinvestment, under a reinvestment program, of cash 
dividends on a security already owned; or the participation in a 
periodic investment plan for the purchase of a security when the 
original purchase was consistent with the provisions of this rule; or
    (5) Investments in funds established pursuant to the Federal 
Employees Retirement System.
    (k) Members and employees holding a Senior Executive Service 
position in the Division of Investment Management or the Office of 
Compliance Inspections and Examinations may make discretionary 
investments in any investment company registered under the Investment 
Company Act of 1940, 15 U.S.C. 80a et seq., provided that the registered 
investment company is diversified pursuant to section 5(b)(1) of the 
Investment Company Act of 1940, 15 U.S.C. 80a-5(b)(1). The Directors of 
the Division of Investment Management and the Office of Compliance 
Inspections and Examinations, in consultation with the Office of the 
General Counsel, shall determine in writing whether Senior Executive 
Service positions in their respective Division or Office whose duties do 
not include fund matters also may invest in nondiversified registered 
investment companies.
    (l) No member or employee shall have a beneficial interest in any 
broker, dealer or investment adviser through ownership of securities or 
otherwise. However, if a corporation acquires or establishes a 
subsidiary or affiliate subject to regulation by the Commission 
(regulated entity),
    (1) A member or employee may retain his or her existing holdings in 
the corporation, provided the security was originally acquired in 
compliance with the provisions of this rule or prior to entry on duty 
with the Commission.
    (2) Purchases of the corporation's shares will be permitted so long 
as the regulated entity subsidiary or affiliate provides less than 10% 
of the corporation's gross revenue. Except for reinvestment of cash 
dividends, additional purchases are prohibited when the regulated entity 
provides 10% or more of the corporation's gross revenues.
    (3) A member or employee who owns shares in a corporation with a 
regulated entity subsidiary or affiliate is disqualified from 
participating in any matter including rulemaking which affects the 
regulated entity unless the disqualification is waived in accordance 
with the provisions of Rule 6, of this section, 17 CFR 200.735-6, and 18 
U.S.C. 208(b).
    (m)(1) Annually, in accordance with the procedures adopted by the 
Director of Personnel, every member and employee shall furnish the 
Director of Personnel with a complete list of all securities in which he 
or she has an interest. Employees having no interests in securities and 
required to so state.
    (2) Except as provided in paragraphs (m)(3) and (m)(4) of this 
section, members and employees shall report every acquisition or sale of 
any security within five business days of the transaction date or date 
confirmation is received. (Reports submitted by employees in field 
offices must be placed in the mails within five business days of the 
transaction date or date the confirmation is received for each 
transaction.)
    (3) After the initial purchase of shares in a mutual fund, employees 
shall report holdings in that mutual fund only on the annual statement.
    (4) Changes in holdings, other than by purchase, which do not affect 
disqualification, such as those resulting from the automatic 
reinvestment of dividends, stock splits, stock dividends or 
reclassifications, may be reported on the annual statement rather than 
when notification of the transaction is received. But, the acquisition 
of holdings by, for example, gifts, inheritance or spin-offs, which may 
result in additional disqualifications pursuant to Rule 6 of this 
section, 17 CFR 200.735-6, and 18 U.S.C. 208 shall be reported

[[Page 124]]

within five days of the receipt of the notice of the change in holdings.
    (n) At the time of taking the oath of office, or prior thereto if 
requested by the Director of Personnel, a new member or employee shall 
provide to the Office of Personnel, as requested, information relating 
to--
    (1) Securities owned by or held for the benefit of him or her, or 
his or her spouse or unemancipated minor child, or a member of his or 
her immediate household, or by any trust or estate of which he or she is 
a trustee or other fiduciary or beneficiary, or by any person for whom 
he or she effects transactions under a power of attorney or otherwise;
    (2) Accounts with securities firms;
    (3) Close relatives (i.e. children, parents, grandparents, siblings, 
aunts, uncles, or like relations of a spouse), who are partners or 
officers of securities firms, investment advisers, or registered public 
utility holding companies or their affiliates;
    (4) The holding of office in or being a director of any company 
which has public security holders; and
    (5) Such other information as may be required by the Director of 
Personnel.

Employees are required to advise the Office of Personnel of changes in 
the foregoing information within ten business days of the time the new 
information is learned.
    (o) Paragraphs (b), (m), and (n) of this section do not apply to 
personal notes, individual real estate mortgages, securities issued by 
the U.S. Government or its agencies, and securities issued by building 
and loan associations or cooperatives.
    (p) Any member or employee who is a trustee or other fiduciary or a 
beneficiary of a trust or estate holding securities not exempted by 
paragraph (o) of this section, shall report the existence and nature of 
such trust or estate to the Director of Personnel. The transactions of 
such trust or estate, which is not a qualified blind trust, shall be 
subject to all the provisions of this section except if the member or 
employee did not create the trust, is solely a beneficiary, has no power 
to control, and does not in fact control or advise with respect to the 
investments of the trust or estate, unless the Commission shall 
otherwise direct in view of the circumstances of the particular case.
    (q) The Director of Personnel, or his designee, is authorized to 
require the disposition of securities acquired as a result of a 
violation of the provisions of this section, whether unintentional or 
not. Repeated violations shall be reported to the Commission for 
appropriate action.
    (r) Any member or employee who believes that the application of any 
of the provisions of this rule will result in undue hardship in a 
particular case may make a written application to the Commission 
(through the Director of Personnel) setting out, in detail, the reasons 
for that belief and requesting a waiver. However, as a matter of policy 
the Commission favors a strict interpretation of the provisions of this 
rule.

[53 FR 18553, May 24, 1988, as amended at 59 FR 43464, Aug. 24, 1994; 60 
FR 52626, Oct. 10, 1995]



Sec. 200.735-6  Action in case of personal interest.

    Any employee assigned to work on any application, filing or matter 
of a company (a) in which he or she or his or her spouse or his or her 
minor unemancipated child then owns any securities or has a personal 
interest, including a continuing financial interest in a pension or 
retirement plan, shared income, or other arrangement, as a result of any 
current or prior employment or business or professional association; or 
(b) with which he or she has been employed or associated in the past 5 
years; or (c) which was a client of a firm with which he or she had been 
associated, shall immediately advise his or her Division Director or 
other Office Head or Regional Administrator of the fact. Division 
Directors, Office Heads and Regional Administrators are authorized to 
direct the reporting employee to continue with the assignment in 
question where this appears in the interest of the Government, taking 
into account (1) the prohibitions stated in Sec. 200.735-3(b) (7) and 
(8); (2) the general desirability of avoiding situations that require a 
question of conflict of interest to be resolved; (3) the extent to which 
the employee's activities will be supervised; and (4) the difficulty of

[[Page 125]]

assigning the matter to some other employee. Where the employee in 
question is not relieved of the assignment, his or her written report 
concerning the nature of his or her interest shall be forwarded to the 
Director of Personnel with a notation that he or she has been directed 
to continue the assignment, together with such explanation, if any, as 
may seem appropriate. In the event that a Division Director, Office Head 
or Regional Administrator deems that he or she has, himself or herself, 
such a personal interest in an application, filing or matter of a 
company as may raise a question as to his or her disinterestedness, he 
or she may delegate his or her responsibility with regard thereto to a 
subordinate, but in that event shall submit a brief memorandum of the 
circumstances to the Director of Personnel. \18\
---------------------------------------------------------------------------

    \18\ 18 U.S.C. 208, provides among other things, that a member or 
employee is prohibited from participating personally and substantially 
in any matter in which to his knowledge, he, his spouse, minor child, 
partner, organization in which he is serving as an officer, director, 
trustee, partner or employee, or any person or organization with whom he 
is negotiating or has any arrangement concerning prospective employment, 
has a financial interest. This section (of the Criminal Code) does not 
apply if the employee has received a written determination made by an 
authorized official that the interest is not so substantial as to be 
deemed likely to affect the integrity of the employee's service. Note: 
Members of the Commission may follow the procedural provision contained 
in Part V, Section 503 of the Executive Order 11222.

[45 FR 36064, May 29, 1980; 45 FR 40975, June 17, 1980]



Sec. 200.735-7  Negotiation for employment.

    (a) An employee may not negotiate employment with anyone outside the 
Commission with whom he or she is personally transacting business in any 
matter on behalf of the Commission or the United States, or while he or 
she is immediately or personally engaged in representing the Commission 
in any matter in which the prospective employer is a participant or 
witness or counsel for such a person, whether or not such a person takes 
a substantive position in an adversary proceeding in opposition to the 
Commission's position.
    (b) An employee who wishes to negotiate employment with another 
Government agency at a time when he or she is representing the 
Commission in a particular matter in which the other Government agency 
is taking a position adverse to the Commission should disclose this 
intention to his or her Division Director, Office Head or Regional 
Administrator prior to taking any action.
    (c) No employee shall undertake to act personally on behalf of the 
Commission in any capacity in a matter \19\ that, to his or her 
knowledge, affects even indirectly any person or organization outside 
the Commission with whom he or she is discussing or entertaining any 
proposal for future employment, except pursuant to the direction of the 
Commission, his or her Division Director, Office Head, or Regional 
Administrator, as provided in Sec. 200.735-6. See footnote 18.
---------------------------------------------------------------------------

    \19\ Employees should bear in mind that in this connection the word 
matter is construed very broadly. See 200.735-8 and footnote 20, 
thereto, infra.
---------------------------------------------------------------------------



Sec. 200.735-8  Practice by former members and employees of the Commission.

    (a)(1) No person shall appear in a representative capacity before 
the Commission in a particular matter if such person, or one 
participating with him or her in the particular matter, participated 
personally and substantially in that matter while he or she was a member 
or employee of the Commission. \20\ As used in this rule, a matter

[[Page 126]]

means a discrete and isolatable transaction or set of transactions 
between identifiable parties. \21\
---------------------------------------------------------------------------

    \20\ As used in this paragraph, a single investigation or formal 
proceeding, or both if they are related, shall be presumed to constitute 
a particular matter for at least 2 years irrespective of changes in the 
issues. However, in cases of proceedings in which the issues change from 
time to time, such as proceedings involving compliance with section 11 
of the Public Utility Holding Company Act (15 U.S.C. 79k), this 
paragraph shall not be construed as prohibiting appearance in such a 
proceeding, more than two years after ceasing to be a member or employee 
of the Commission, unless it appears to the Commission that there is 
such an identity of particular issues or pertinent facts as to make it 
likely that confidential information, derived while a member or employee 
of the Commission, would have continuing relevance to the proceeding, so 
as to make participation therein by the former member or employee of the 
Commission unethical or prejudicial to the interests of the Commission.
    \21\ This definition is taken from Formal Opinion 342 of the ABA 
Ethics Committee. The opinion states that ``work as a government 
employee in drafting, enforcing or interpreting government or agency 
procedures, regulations or laws, or in briefing abstract principles of 
law, does not disqualify the lawyer under DR9-101B (which states `a 
lawyer shall not accept private employment in a matter in which he had 
substantial responsibility while he was a public employee') from 
subsequent private employment involving the same regulation procedures, 
or points of law * * *.''
---------------------------------------------------------------------------

    (2) No person who has been a member or employee shall, within 2 
years after his or her employment has ceased, assist, by personal 
presence, a person appearing in a representative capacity before the 
Commission in any matter in which he or she participated personally and 
substantially while a member or employee of the Commission at any time 
within a period of 1 year prior to the termination of such 
responsibility.
    (3) No person who has been a member or an employee shall, within 2 
years after his or her employment has ceased, appear in a representative 
capacity before the Commission in any matter which was under his or her 
official responsibility as a member or employee of the Commission at any 
time within a period of 1 year prior to the termination of such 
responsibility. The term official responsibility as defined in 18 U.S.C. 
202 means the ``direct administrative or operating authority, whether 
intermediate or final, and either exercisable alone or with others, and 
either personally or through subordinates, to approve, disapprove, or 
otherwise direct Government action.''
    (4) No employee in a position which is designated by the Director of 
the Office of Government Ethics shall, within one year after his or her 
employment has ceased, appear in a representative capacity before the 
Commission or communicate with the Commission or its employees with the 
intent to influence. \22\ This restriction does not apply to members who 
ceased employment before July 1, 1979, or to employees who ceased 
employment prior to February 28, 1980.
---------------------------------------------------------------------------

    \22\ This prohibition appears in the Ethics in Government Act of 
1978. Pub. L. 95-521.
---------------------------------------------------------------------------

    (b)(1) Any former member or employee of the Commission who, within 2 
years after ceasing to be such, is employed or retained as the 
representative of any person outside the Government in any matter in 
which it is contemplated that he or she will appear before the 
Commission, or communicate with the Commission or its employees, shall, 
within ten days of such retainer or employment, or of the time when 
appearance before, or communication with the Commission or its employees 
is first contemplated, file with the Secretary of the Commission a 
statement which includes:
    (i) A description of the contemplated representation;
    (ii) An affirmative representation that the former employee while on 
the Commission's staff had neither personal and substantial 
responsibility nor official responsibility for the matter which is the 
subject of the representation; and
    (iii) The name of the Commission Division or Office in which the 
person had been employed.
    (2) Employment of a recurrent character may be covered by a single 
comprehensive statement. Each such statement should include an 
appropriate caption indicating that it is filed pursuant to this 
section. The reporting requirements of this paragraph do not apply to
    (i) Communications incidental to court appearances in litigation 
involving the Commission; and
    (ii) Oral communications concerning ministerial or informational 
matters or requests for oral advice not otherwise prohibited by 
paragraph (a) of this section.
    (c) As used in this section, the term appear before the commission 
means physical presence before the Commission or its employees in either 
a formal or informal setting or the conveyance

[[Page 127]]

of material in connection with a formal appearance or application to the 
Commission. As used in this section the term communication with intent 
to influence does not encompass communications which are not for the 
purpose of influencing the Commission or any of its employees or which, 
at the time of the filings, are reasonably believed not to involve any 
potential controversy. As used in this section, the term representative 
or representative capacity shall include not only the usual type of 
representation by an attorney, etc., but also representation of a 
corporation in the capacity of an officer, director or controlling 
stockholder thereof.
    (d)(1) Partners or associates of any person disqualified from 
appearing or practicing before the Commission in a particular matter by 
paragraph (a)(1) of this section are also disqualified. Such partners or 
associates (the firm) may request a waiver of this prohibition from the 
Commission by writing a letter to the General Counsel of the commission 
setting forth the facts of the proposed representation and the 
individual's disqualification. In appropriate situations, a firm may 
request a generic waiver with respect to a number of different matters. 
Upon the advice of the Office of the General Counsel, the Commission, or 
the General Counsel exercising delegated authority, will advise the 
requestor of the Commission's response.
    (2) Waivers ordinarily will be granted where the firm makes a 
satisfactory representation that it has adopted screening measures which 
will effectively isolate the individual lawyer disqualified under 
paragraph (a)(1) of this section from participating in the particular 
matter or matters and from sharing in any fees attributable to it. It 
will be considered significant for purposes of this determination that:
    (i) The firm had a pre-existing securities law practice prior to the 
arrival of the disqualified attorney;
    (ii) The matter was previously the subject of consideration by the 
firm or the client was already advised by the firm;
    (iii) In cases where the matter or client became the subject of 
consideration by the firm subsequent to the firm's employment of the 
lawyer individually disqualified, that the matter was not brought to the 
firm because of the disqualified attorney.
    (3) Notwithstanding the existence or non-existence of any of these 
factors, no waiver will be issued if the proposed representation would 
create a significant appearance of impropriety or would otherwise 
adversely affect the interests of the government. \23\ All proceedings 
with respect to waivers shall be a matter of public record except to the 
extent that such public disclosure might violate attorney-client 
privilege or breach the attorney's obligation to preserve the 
confidences and secrets of this or her clients, reveal the existence of 
ongoing private investigations, interfere with law enforcement 
proceedings, or otherwise be inconsistent with the public interest.
---------------------------------------------------------------------------

    \23\ For example, no waiver will be granted if, during the course of 
representing a client who has an interest with respect to a matter 
before the Commission, a firm employs, or accepts as a partner, a member 
of the staff or of the Commission who at any time during the course of 
that representation had direct and substantial responsibility for the 
same matter, and whose departure would result in a significant adverse 
impact upon that matter at the Commission.
---------------------------------------------------------------------------

    (e) Persons in doubt as to the applicability of any portion of this 
section may apply for an advisory ruling of the Commission. \24\
---------------------------------------------------------------------------

    \24\ Attention of former members and employees is directed to Formal 
Opinion 342 of the Committee on Ethics of the American Bar Association, 
62 A.B.A.J. 517 (1975) and to 18 U.S.C. 207.

[45 FR 36064, May 29, 1980, as amended at 50 FR 23669, June 5, 1985]



Sec. 200.735-9  Indebtedness.

    (a) The Securities and Exchange Commission considers the 
indebtedness of its members and employees to be essentially a matter of 
their own concern and will not be placed in the position of acting as a 
collection agency or of determining the validity or amount of contested 
debts. Nevertheless, failure on the part of an employee without good 
reason and in a proper and timely manner to honor debts acknowledged by 
him or her to be valid, or reduced to judgment by a court, or to make or 
to

[[Page 128]]

adhere to satisfactory arrangements for the settlement thereof, may be a 
cause for disciplinary action. In this connection each member and 
employee is expected to meet his or her responsibilities for payment of 
Federal, State and local taxes. For purposes of this section, in a 
proper and timely manner means in a manner which the agency determines 
does not, under the circumstances, reflect adversely on the Government 
as his or her employer.
    (b) Compensation due members and employees is subject to garnishment 
for child support and alimony obligations. (42 U.S.C. 659).



Sec. 200.735-10  Miscellaneous statutory provisions.

    Each member and employee is responsible for acquainting himself or 
herself with each statute that relates to his or her ethical and other 
conduct as a member or employee of the Commission and of the Government, 
including the statutory provisions listed below. Violations of any of 
these statutes are deemed to be violations of the rules in this subpart 
M as well.
    (a) House Concurrent Resolution 175, 85th Congress, 2d Session, 72 
Stat. B12, the ``Code of Ethics for Government Service.''
    (b) Chapter 11 of title 18 U.S.C., relating to bribery, graft, and 
conflicts of interest, as appropriate to the employees concerned.
    (c) The prohibition against lobbying with appropriated funds (18 
U.S.C. 1913).
    (d) The prohibition against disloyalty and striking (5 U.S.C. 7311, 
18 U.S.C. 1918).
    (e) The prohibition against (1) the disclosure of classified 
information (18 U.S.C. 798, 50 U.S.C. 783); and (2) disclosure of 
confidential information (18 U.S.C. 1905).
    (f) The provision relating to the habitual use of intoxicants to 
excess (5 U.S.C. 7352).
    (g) The prohibition against the misuse of a Government vehicle (31 
U.S.C. 638a(c)).
    (h) The prohibition against the misuse of the franking privilege (18 
U.S.C. 1719).
    (i) The prohibition against the use of deceit in an examination or 
personnel action in connection with Government employment (18 U.S.C. 
1917).
    (j) The prohibition against fraud or false statements in a 
Government matter (18 U.S.C. 1001).
    (k) The prohibition against mutilating or destroying a public record 
(18 U.S.C. 2071).
    (l) The prohibition against counterfeiting and forging 
transportation requests (18 U.S.C. 508).
    (m) The prohibition against (1) embezzlement of Government money or 
property (18 U.S.C. 641); (2) failing to account for public money (18 
U.S.C. 643); and (3) embezzlement of the money or property of another 
person in the possession of an employee by reason of his employment (18 
U.S.C. 654).
    (n) The prohibition against unauthorized use of documents relating 
to claims from or by the Government (18 U.S.C. 285).
    (o) The prohibition against political activities in subchapter III 
of chapter 73 of title 5 U.S.C. and 18 U.S.C. 602, 603, 607, and 608.
    (p) The prohibition against an employee acting as the agent of a 
foreign principal registered under the Foreign Agents Registration Act 
(18 U.S.C. 219).



Sec. 200.735-11  Statement of employment and financial interests.

    (a) Members and employees in the Senior Executive Service or Grades 
GS-16 through GS-18 are required to file a financial disclosure report 
as provided by title II of the Ethics in Government Act of 1978, Pub. L. 
95-521. Members and such employees need not also file the statement of 
employment and financial interests required by the following provisions.
    (b) Prior to the time of entry on duty, or upon designation to a 
position set forth in paragraph (c) of this section, such employee shall 
submit to the Director of Personnel a statement, on the official form 
made available for this purpose through the Office of Personnel, setting 
forth the following information: \25\
---------------------------------------------------------------------------

    \25\ In addition to the information required by this Rule, all 
employees are required by Rule 5 to file annually with the Director of 
Personnel a listing of their securities holdings.

---------------------------------------------------------------------------

[[Page 129]]

    (1) A list of the names of all corporations, companies, firms, or 
other business enterprises, partnerships, nonprofit organizations, and 
educational or other institutions with or in which the employee, his or 
her spouse, unemancipated minor child or other member of his or her 
immediate household has--
    (i) Any connection as an employee, officer, owner, director, member, 
trustee, partner, adviser or consultant; or
    (ii) Any continuing financial interest, through a pension or 
retirement plan, shared income, or other arrangement as a result of any 
current or prior employment or business or professional association.
    (iii) Any financial interest through the ownership of stock, stock 
options, bonds, securities, or other arrangements including trusts.
    (2) A list of the names of the employee's creditors and the 
creditors of his or her spouse, unemancipated minor child or other 
member of his or her immediate household, other than those creditors to 
whom any such person may be indebted by reason of a mortgage on property 
which he or she occupies as a personal residence, or to whom such person 
may be indebted for current and ordinary household and living expenses 
such as those incurred for household furnishings, vacations, an 
automobile, education, or the like.
    (3) A list of the employee's interests and those of his or her 
spouse, unemancipated minor child, or other member of his or her 
immediate household in real property or rights in lands, other than 
property which he or she occupies as a personal residence.
    (4) For the purpose of this section, member of his or her immediate 
household means a resident of the employee's household who is related to 
the employee by blood or marriage.
    (5) In the instance where a spouse is not a member of the employee's 
immediate household, and the employee certifies he or she neither 
derives nor expects to derive any economic benefit from the holdings of 
the spouse, the Director of Personnel may waive the requirement of 
reporting the interests of such spouse.
    (c) Except as to employees noted in paragraph (a) of this section, 
statements of employment and financial interests are required of the 
following:
    (1) All employees in grade GS-15.
    (2) Incumbents of the following positions, regardless of grade:
    (i) Executive Staff. (A) Legal Assistants to the Chairman and to 
each Commissioner; (B) Special Counsels to the Chairman.
    (ii) Employees serving under SEC Fellowship Programs.
    (iii) All employees engaged in any aspect of Government contracting 
or procurement activities.
    (iv) Division, Office, Directorate
    (A) Directors
    (B) Deputies
    (C) Associates
    (D) Assistants
    (E) Chief Counsels
    (v) Regional Offices
    (A) Administrators
    (B) Associate Administrators
    (C) Assistant Administrators
    (D) Attorneys-in-Charge of Branch Offices
    (E) Chief Enforcement Attorneys
    (d) Changes in, or additions to, the information contained in an 
employee's statement of employment and financial interests shall be 
reported in a supplementary statement as of May 15 of each year. If no 
changes or additions occur, a negative report is required. 
Notwithstanding the filing of the annual report required by this 
paragraph, each employee shall at all times avoid acquiring a financial 
interest that could result, or taking an action that would result, in a 
violation of the conflict-of-interest provisions of section 208 of title 
18 U.S.C., or of this Conduct Regulation.
    (e) If any information required to be included on a statement of 
employment and financial interest or supplementary statement, including 
holdings placed in trust, is not known to the employee but is known to 
another person, the employee shall request that other person to submit 
information in his or her behalf.
    (f) Paragraph (c) of this section does not require an employee to 
submit any information relating to his or her connection with, or 
interest in, a non-profit educational, charitable, religious,

[[Page 130]]

professional, social, fraternal, recreational, public service, civic, or 
political organization, or a similar organization not conducted as a 
business enterprise. For the purpose of this section, educational and 
other institutions doing research and development or related work 
involving grants of money from or contracts with the Government are 
deemed business enterprises and are required to be included in an 
employee's statement of employment and financial interests.
    (g) Statements of employment and financial interests filed pursuant 
to paragraph (c) of this section shall be sent to the Director of 
Personnel in a sealed envelope marked ``Confidential Employment and 
Financial Interests.'' They shall be maintained in a confidential file. 
Only those officials of the Commission whose participation is necessary 
for the carrying out of the purpose of this Conduct Regulation may have 
access to such statements and no information may be disclosed from them 
except as the Commission or the Office of Personnel Management may 
determine for good cause shown.
    (h) In accordance with the requirements of the Ethics in Government 
Act of 1978, Pub. L. 95-521, the Director of Personnel or the Assistant 
Director of Personnel shall review the financial disclosure reports 
filed pursuant to that Act.
    (i) The Director of Personnel or the Assistant Director of Personnel 
shall examine the statements of employment and financial interests filed 
pursuant to paragraph (c) of this section to determine whether conflicts 
of interest or apparent conflicts of interest on the part of employees 
exist. An employee shall be afforded the opportunity to explain any 
conflict or appearance of conflict. When the Director or Assistant 
Director of Personnel, in consultation with appropriate superiors of the 
employee involved, is unable to resolve a conflict or appearance of 
conflict, he or she shall report the matter to the Commission through 
the Counselor for the Commission designated under Sec. 200.735-15(a).
    (j) The Counselor for the Commission shall examine statements filed 
by the Director of Personnel and the Assistant Director of Personnel.
    (k) Except as otherwise provided in paragraph (a) of this section 
the statement of employment and financial interests and supplementary 
statements required of employees are in addition to, and not in 
substitution for, or in derogation of, any similar requirement imposed 
by law, order or regulation. The submission of a statement by an 
employee does not permit him or her or any other person to participate 
in a matter in which his or her or the other person's participation is 
prohibited by law, order or regulation.
    (l) An employee has the right to ask for a review through the 
Commission's grievance procedure outlined in section 771, Part II, 
Manual of Administrative Regulations, of a complaint that his or her 
position has been improperly included under the provisions of this 
section as one requiring the submission of a statement of employment and 
financial interests.

[45 FR 36064, May 29, 1980; 45 FR 40975, June 17, 1980]



Sec. 200.735-12  Special Government employees.

    (a) Special Government employee means a person defined in section 18 
U.S.C. 202 as a special Government employee. All of the provisions of 
this Conduct Regulation are applicable to special Government employees, 
except that in specific appropriate cases the Commission may exempt such 
employees from, or modify the applicability of, any portion of any 
provision of the Conduct Regulation.
    (b) In no event will the Commission waive a provision of the Conduct 
Regulation which would permit a special Government employee to:
    (1) Use his or her Government employment for a purpose that is, or 
gives the appearance of being, motivated by the desire for private gain 
for himself or another person, particularly one with whom he or she has 
family, business, or financial ties.
    (2) Use inside information obtained as a result of his or her 
Government employment for private gain for himself or herself or another 
person either by direct action on his or her part or by counsel, 
recommendation, or suggestion to another person, particularly one with 
whom he or she has family,

[[Page 131]]

business, or financial ties. For purposes of this paragraph, inside 
information means information obtained under Government authority which 
has not become part of the body of public information.
    (3) Use his or her Government employment to coerce, or give the 
appearance of coercing, a person to provide financial benefit to himself 
or herself or another person, particularly one with whom he or she has 
family, business, or financial ties.
    (4) Receive or solicit from a person having business with the 
Commission anything of value as a gift, gratuity, loan, entertainment, 
or favor for himself or herself or another person, particularly one with 
whom he or she has family, business or financial ties.
    (c) Prior to entrance on duty, each special Government employee 
shall submit to the Director of Personnel a statement of employment and 
financial interests which contains such information as the Director of 
Personnel determines is relevant in the light of the duties the special 
Government employee is to perform and, if appropriate, the financial 
disclosure report as provided by title II of the Ethics in Government 
Act of 1978, Pub. L. 95-521. It shall be kept current throughout the 
period of employment by the filing of supplementary statements in 
accordance with the requirements of Sec. 200.735-11(d). Statements shall 
be on the official form made available for this purpose through the 
Office of Personnel.
    (d) The Commission may waive the requirement of paragraph (c) of 
this section in the case of a special Government employee who is not a 
consultant or an expert, as those terms are defined in chapter 304 of 
the Federal Personnel Manual (5 CFR 735.304), if the duties of the 
position are determined to be at a level of responsibility which does 
not require the submission of such statement to protect the integrity of 
the Commission.



Sec. 200.735-13  Disciplinary and other remedial action.

    (a) Knowing participation in a violation of this subpart by persons 
not within the scope of the foregoing rules in this subpart shall 
likewise be deemed improper conduct and in contravention of Commission 
rules. Departure from any of the rules in this subpart by employees or 
special Government employees without specific approval may be cause for 
appropriate remedial and/or disciplinary action or, in the case of 
former members, employees, and special Government employees, for 
disqualification from appearing and practicing before the Commission, 
which may be in addition to any penalty prescribed by law.
    (b) When there has been a departure from any of the rules of this 
subpart without specific approval or when a conflict of interest or an 
apparent conflict of interest on the part of an employee or special 
Government employee arises, the Director of Personnel may order 
immediate action to end such conflict or appearance of conflict of 
interest. Remedial action may include, but is not limited to (1) changes 
in assigned duties; (2) divestment by the employee or special Government 
employee of his conflicting interest; (3) disciplinary action; or (4) 
disqualification for a particular assignment. Remedial action, whether 
disciplinary or otherwise, shall be effected in accordance with any 
applicable laws, Executive Orders, and regulations. The Director of 
Personnel may refer any recommended action to the Commission. The 
employee may obtain review by the Commission of any action ordered to be 
taken by the Director of Personnel. During the period of review, unless 
otherwise directed by the Commission, the action ordered by the Director 
of Personnel is stayed.
    (c) Former members or employees who violate the post-employment 
restriction provisions of 18 U.S.C. 207(a), (b) or (c), which parallel 
the provisions of Rule 8(a), supra, will be subject to an administrative 
enforcement proceeding as set forth in Rule 102(e) of the Commission's 
Rules of Practice, Sec. 201.102(e) of this chapter, except that, when 
proceedings are brought to determine if violations of post-employment 
restrictions have occurred, denial of the privilege of appearing and 
practicing before the Commission will be based on a finding of violation 
of the provisions of Rule 8(a) and 18 U.S.C. 207 (a), (b) and (c). 
Procedures applicable to such administrative proceedings are to be

[[Page 132]]

found in the Commission's Rules of Practice, 17 CFR 201.100 et seq.

[45 FR 36064, May 29, 1980, as amended at 60 FR 32795, June 23, 1995]



Sec. 200.735-14  Employees on leave of absence.

    The provisions of the rules in this subpart relative to employees of 
the Commission are applicable to employees on a leave with pay or a 
leave without pay status other than extended military service.



Sec. 200.735-15  Interpretive and advisory service.

    (a) The General Counsel shall be designated Counselor for the 
Commission and shall serve as the Commission's delegate to the Office of 
Personnel Management on matters covered by the rules in this subpart. 
The General Counsel shall be responsible for coordinating the 
Commission's counseling services provided under this section and for 
assuring that counseling and interpretations on questions of conflicts 
of interest and other matters covered by the rules in this subpart are 
available to all members and employees.
    (b) There shall be designated as Deputy Counselors the Director of 
Personnel, the Administrator of each regional office, and the person in 
charge of each branch office. The General Counsel or his or her designee 
shall provide guidance to the Deputy Counselors for the purpose of 
achieving uniform interpretations of this subpart.
    (c) A member, employee, or former member or employee may obtain 
advice or guidance on the application of the rules in this subpart from 
any Deputy Counselor or the General Counsel. In addition, any former 
member or employee seeking advice or an interpretation relating to the 
Ethics in Government Act shall submit his or her request to the General 
Counsel.
    (d) The General Counsel and Deputy Counselors will treat information 
they receive pursuant to requests for advice or guidance under this Rule 
on a confidential basis, except that information they receive indicating 
a possible past violation of any provision of this Conduct Regulation or 
of the law will be brought to the attention of appropriate persons.
    (e) The Director of Personnel shall furnish a copy of this Conduct 
Regulation (subpart M) to each member, employee and special Government 
employee immediately upon his or her entrance on duty and shall 
thereafter, annually, and at such other times as circumstances warrant, 
bring to the attention of each member, employee and special Government 
employee this Conduct Regulation (subpart M) and all revisions thereof.
    (f) The Director of Personnel shall notify each member, employee and 
special Government employee at the time of entrance on duty, and from 
time to time thereafter, of the availability of counseling services and 
of how and where these services are available.



Sec. 200.735-16  Delegation.

    Any official responsibility assigned to a person in a particular 
position pursuant to this subpart may be delegated by such person to any 
other person.



Sec. 200.735-17  Administration of the conduct regulation.

    Under the general direction of the Executive Director, the Director 
of Personnel is responsible for the day-to-day administration of this 
conduct regulation except where otherwise provided.



Sec. 200.735-18  Requests for waivers.

    Unless a different procedure is specifically prescribed in a rule of 
this part, an employee may submit a request for a waiver, modification 
or postponement of a requirement included in this part to the Chairman. 
Such waiver, modification or postponement may be granted if it is 
determined by the Chairman that such waiver, modification of 
postponement would not adversely affect the interest of the Commission 
or the United States. Any such waiver, modification or postponement 
granted by the Chairman shall be made available to the public. The 
Chairman may submit any request made pursuant to this rule to the 
Commission for its consideration. Any Commission action on such request 
shall be made public only in the

[[Page 133]]

discretion of the Commission. Requirements included in this part which 
implement any provision of Federal law, regulation or Executive Order 
generally applicable to the Executive Branch shall not be waived under 
this provision.



  Subpart N--Commission Information Collection Requirements Under the 
              Paperwork Reduction Act: OMB Control Numbers

    Authority: 44 U.S.C. 3506; 44 U.S.C. 3507.

    Source: 67 FR 14634, Mar. 27, 2002, unless otherwise noted.



Sec. 200.800  OMB control numbers assigned pursuant to the Paperwork Reduction Act.

    (a) Purpose: This subpart collects and displays the control numbers 
assigned to information collection requirements of the Commission by the 
Office of Management and Budget pursuant to the Paperwork Reduction Act 
of 1980, 44 U.S.C. 3500 et seq. This subpart displays current OMB 
control numbers for those information collection requirements of the 
Commission that are rules and regulations and codified in 17 CFR either 
in full text or incorporated by reference with the approval of the 
Director of the Office of the Federal Register.
    (b) Display.

------------------------------------------------------------------------
                                    17 CFR part or section
      Information collection         where identified and    Current OMB
           requirement                     described         Control No.
------------------------------------------------------------------------
Regulation S-X...................  PART 210................    3235-0009
Regulation S-B...................  PART 228................    3235-0417
Regulation S-K...................  PART 229................    3235-0071
Rule 154.........................  230.154.................    3235-0495
Rule 155.........................  230.155.................    3235-0549
Rule 236.........................  230.236.................    3235-0095
Rule 237.........................  230.237.................    3235-0528
Regulation A.....................  230.251 thru 230.263....    3235-0286
Regulation C.....................  230.400 thru 230.494....    3235-0074
Rule 425.........................  230.425.................    3235-0521
Rule 477.........................  230.477.................    3235-0550
Rule 489.........................  230.489.................    3235-0411
Rule 498.........................  230.498.................    3235-0488
Regulation D.....................  230.501 thru 230.506....    3235-0076
Regulation E.....................  230.601 thru 230.610a...    3235-0232
Rule 604.........................  230.604.................    3235-0232
Rule 605.........................  230.605.................    3235-0232
Rule 609.........................  230.609.................    3235-0233
Rule 701.........................  230.701.................    3235-0522
Regulation S.....................  230.901 thru 230.905....    3235-0357
Regulation S-T...................  Part 232................    3235-0424
Form SB-1........................  239.9...................    3235-0423
Form SB-2........................  239.10..................    3235-0418
Form S-1.........................  239.11..................    3235-0065
Form S-2.........................  239.12..................    3235-0072
Form S-3.........................  239.13..................    3235-0073
Form N-2.........................  239.14..................    3235-0026
Form N-1A........................  239.15A.................    3235-0307
Form S-6.........................  239.16..................    3235-0184
Form S-8.........................  239.16b.................    3235-0066
Form N-3.........................  239.17a.................    3235-0316
Form N-4.........................  239.17b.................    3235-0318
Form S-11........................  239.18..................    3235-0067
Form N-14........................  239.23..................    3235-0336
Form N-5.........................  239.24..................    3235-0169
Form S-4.........................  239.25..................    3235-0324
Form F-1.........................  239.31..................    3235-0258
Form F-2.........................  239.32..................    3235-0257
Form F-3.........................  239.33..................    3235-0256
Form F-4.........................  239.34..................    3235-0325
Form F-6.........................  239.36..................    3235-0292
Form F-7.........................  239.37..................    3235-0383
Form F-8.........................  239.38..................    3235-0378
Form F-9.........................  239.39..................    3235-0377
Form F-10........................  239.40..................    3235-0380
Form F-80........................  239.41..................    3235-0404
Form F-X.........................  239.42..................    3235-0379

[[Page 134]]

 
Form F-N.........................  239.43..................    3235-0411
Form ET..........................  239.62..................    3235-0329
Form ID..........................  239.63..................    3235-0328
Form SE..........................  239.64..................    3235-0327
Form TH..........................  239.65..................    3235-0425
Form 1-A.........................  239.90..................    3235-0286
Form 2-A.........................  239.91..................    3235-0286
Form 144.........................  239.144.................    3235-0101
Form 1-E.........................  239.200.................    3235-0232
Form CB..........................  239.800.................    3235-0518
Rule 6a-1........................  240.6a-1................    3235-0017
Rule 6a-3........................  240.6a-3................    3235-0021
Rule 6a-4........................  240.6a-4................    3235-0554
Rule 6h-1........................  240.6h-1................    3235-0555
Rule 8c-1........................  240.8c-1................    3235-0514
Rule 9b-1........................  240.9b-1................    3235-0480
Rule 10a-1.......................  240.10a-1...............    3235-0475
Rule 10b-10......................  240.10b-10..............    3235-0444
Rule 10b-17......................  240.10b-17..............    3235-0476
Rule 10b-18......................  240.10b-18..............    3235-0474
Rule 10A-1.......................  240.10A-1...............    3235-0468
Rule 11a1-1(T)...................  240.11a1-1(T)...........    3235-0478
Rule 11Aa3-2.....................  240.11Aa3-2.............    3235-0500
Rule 11Ab2-1.....................  240.11Ab2-1.............    3235-0043
Rule 11Ac1-3.....................  240.11Ac1-3.............    3235-0435
Rule 11Ac1-4.....................  240.11Ac1-4.............    3235-0462
Rule 11Ac1-5.....................  240.11Ac1-5.............    3235-0542
Rule 11Ac1-6.....................  240.11Ac1-6.............    3235-0541
Rule 11Ac1-6.....................  240.11Ac1-6.............    3235-0541
Rule 11Ac1-7.....................  240.11Ac1-7.............    3235-0543
Rule 12a-5.......................  240.12a-5...............    3235-0079
Regulation 12B...................  240.12b-1 thru 240.12b-     3235-0062
                                    36.
Rule 12d1-3......................  240.12d1-3..............    3235-0109
Rule 12d2-1......................  240.12d2-1..............    3235-0081
Rule 12d2-2......................  240.12d2-2..............    3235-0080
Rule 12f-1.......................  240.12f-1...............    3235-0128
Rule 13a-16......................  240.13a-16..............    3235-0116
Regulation 13D/G.................  240.13d-1 thru 240.13d-7    3235-0145
Schedule 13D.....................  240.13d-101.............    3235-0145
Schedule 13G.....................  240.13d-102.............    3235-0145
Rule 13e-1.......................  240.13e-1...............    3235-0305
Rule 13e-3.......................  240.13e-3...............    3235-0007
Schedule 13E-3...................  240.13e-100.............    3235-0007
Schedule 13e-4F..................  240.13e-101.............    3235-0375
Regulation 14A...................  240.14a-1 thru 240.14a-     3235-0059
                                    12.
Schedule 14A.....................  240.14a-101.............    3235-0059
Regulation 14C...................  240.14c-1...............    3235-0057
Schedule 14C.....................  240.14c-101.............    3235-0057
Regulation 14D...................  240.14d-1 thru 240.14d-9    3235-0102
Schedule TO......................  240.14d-100.............    3235-0515
Schedule 14D-1...................  240.14d-101.............    3235-0102
Schedule 14D-9...................  240.14d-101.............    3235-0102
Schedule 14D-1F..................  240.14d-102.............    3235-0376
Schedule 14D-9F..................  240.14d-103.............    3235-0382
Regulation 14E...................  240.14e-1 thru 240.14e-2    3235-0102
Rule 14f-1.......................  240.14f-1...............    3235-0108
Rule 15a-4.......................  240.15a-4...............    3235-0010
Rule 15a-6.......................  240.15a-6...............    3235-0371
Rule 15b1-1......................  240.15b1-1..............    3235-0012
Rule 15b6-1(a)...................  240.15b6-1(a)...........    3235-0018
Rule 15c1-5......................  240.15c1-5..............    3235-0471
Rule 15c1-6......................  240.15c1-6..............    3235-0472
Rule 15c1-7......................  240.15c1-7..............    3235-0134
Rule 15c2-1......................  240.15c2-1..............    3235-0485
Rule 15c2-5......................  240.15c2-5..............    3235-0198
Rule 15c2-7......................  240.15c2-7..............    3235-0479
Rule 15c2-8......................  240.15c2-8..............    3235-0481
Rule 15c2-11.....................  240.15c2-11.............    3235-0202
Rule 15c2-12.....................  240.15c2-12.............    3235-0372
Rule 15c3-1......................  240.15c3-1..............    3235-0200
Rule 15c3-1(c)(13)...............  240.15c3-1(c)(13).......    3235-0499
Appendix F to Rule 15c3-1........  240.15c3-1f.............    3235-0496

[[Page 135]]

 
Rule 15c3-3......................  240.15c3-3..............    3235-0078
Rule 15c3-4......................  240.15c3-4..............    3235-0497
Rule 15d-16......................  240.15d-16..............    3235-0116
Rule 15g-2.......................  240.15g-2...............    3235-0434
Rule 15g-3.......................  240.15g-3...............    3235-0392
Rule 15g-4.......................  240.15g-4...............    3235-0393
Rule 15g-5.......................  240.15g-5...............    3235-0394
Rule 15g-6.......................  240.15g-6...............    3235-0395
Rule 15g-9.......................  240.15g-9...............    3235-0385
Rule 15Aj-1......................  240.15Aj-1..............    3235-0044
Rule 15Ba2-1.....................  240.15Ba2-1.............    3235-0083
Rule 15Ba2-5.....................  240.15Ba2-5.............    3235-0088
Rule 15Bc3-1.....................  240.15Bc3-1.............    3235-0087
Rule 17a-1.......................  240.17a-1...............    3235-0208
Rule 17a-2.......................  240.17a-2...............    3235-0201
Rule 17a-3.......................  240.17a-3...............    3235-0033
Rule 17a-3(a)(16)................  240.17a-3(a)(16)........    3235-0508
Rule 17a-4.......................  240.17a-4...............    3235-0279
Rule 17a-4(b)(10)................  240.17a-4(b)(10)........    3235-0506
Rule 17a-5.......................  240.17a-5...............    3235-0123
Rule 17a-5(c)....................  240.17a-5(c)............    3235-0199
Rule 17a-6.......................  240.17a-6...............    3235-0489
Rule 17a-7.......................  240.17a-7...............    3235-0131
Rule 17a-8.......................  240.17a-8...............    3235-0092
Rule 17a-9T......................  240.17a-9T..............    3235-0524
Rule 17a-10......................  240.17a-10..............    3235-0122
Rule 17a-11......................  240.17a-11..............    3235-0085
Rule 17a-12......................  240.17a-12..............    3235-0498
Rule 17a-13......................  240.17a-13..............    3235-0035
Rule 17a-19......................  240.17a-19..............    3235-0133
Rule 17a-22......................  240.17a-22..............    3235-0196
Rule 17a-25......................  240.17a-25..............    3235-0540
Rule 17f-1(b)....................  240.17f-1(b)............    3235-0032
Rule 17f-1(c)....................  240.17f-1(c)............    3235-0037
Rule 17f-1(g)....................  240.17f-1(g)............    3235-0290
Rule 17f-2(a)....................  240.17f-2(a)............    3235-0034
Rule 17f-2(c)....................  240.17f-2(c)............    3235-0029
Rule 17f-2(d)....................  240.17f-2(d)............    3235-0028
Rule 17f-2(e)....................  240.17f-2(e)............    3235-0031
Rule 17f-5.......................  240.17f-5...............    3235-0269
Rule 17h-1T......................  240.17h-1T..............    3235-0410
Rule 17h-2T......................  240.17h-2T..............    3235-0410
Rule 17Ab2-1.....................  240.17Ab2-1(a)..........    3235-0195
Rule 17Ac2-1.....................  240.17Ac2-1.............    3235-0084
Rule 17Ad-2(c), (d), and (h).....  240.17Ad-2(c), (d) and      3235-0130
                                    (h).
Rule 17Ad-3(b)...................  240.17Ad-3(b)...........    3235-0473
Rule 17Ad-4 (b) and (c)..........  240.17Ad-4(b) and (c)...    3235-0341
Rule 17Ad-6......................  240.17Ad-6..............    3235-0291
Rule 17Ad-7......................  240.17Ad-7..............    3235-0291
Rule 17Ad-10.....................  240.17Ad-10.............    3235-0273
Rule 17Ad-11.....................  240.17Ad-11.............    3235-0274
Rule 17Ad-13.....................  240.17Ad-13.............    3235-0275
Rule 17Ad-15.....................  240.17Ad-15.............    3235-0409
Rule 17Ad-16.....................  240.17Ad-16.............    3235-0413
Rule 17Ad-17.....................  240.17Ad-17.............    3235-0469
Rule 19b-1.......................  240.19b-1...............    3235-0354
Rule 19b-4.......................  240.19b-4...............    3235-0045
Rule 19b-4(e)....................  240.19b-4(e)............    3235-0504
Rule 19b-5.......................  240.19b-5...............    3235-0507
Rule 19b-7.......................  240.19b-7...............    3235-0553
Rule 19d-1.......................  240.19d-1(b) thru           3235-0206
                                    240.19d-1(i).
Rule 19d-2.......................  240.19d-2...............    3235-0205
Rule 19d-3.......................  240.19d-3...............    3235-0204
Rule 19h-1.......................  240.19h-1(a), (c) thru      3235-0259
                                    (e), and (g).
Rule 24b-1.......................  240.24b-1...............    3235-0194
Rule 101.........................  242.101.................    3235-0464
Rule 102.........................  242.102.................    3235-0467
Rule 103.........................  242.103.................    3235-0466
Rule 104.........................  242.104.................    3235-0465
Rule 301.........................  242.301.................    3235-0509
Rule 302.........................  242.302.................    3235-0510
Rule 303.........................  242.303.................    3235-0505

[[Page 136]]

 
Regulation FD....................  243.100 thru 243.103....    3235-0536
Regulation S-P...................  Part 248................    3235-0537
Form 1...........................  249.1...................    3235-0017
Form 1-N.........................  249.10..................    3235-0554
Form 25..........................  249.25..................    3235-0080
Form 26..........................  249.26..................    3235-0079
Form 3...........................  249.103.................    3235-0104
Form 4...........................  249.104.................    3235-0287
Form 5...........................  249.105.................    3235-0362
Form 8-A.........................  249.208a................    3235-0056
Form 10..........................  249.210.................    3235-0064
Form 10-SB.......................  249.210b................    3235-0419
Form 18..........................  249.218.................    3235-0121
Form 20-F........................  249.220f................    3235-0288
Form 40-F........................  249.240f................    3235-0381
Form 6-K.........................  249.306.................    3235-0116
Form 8-K.........................  249.308.................    3235-0060
Form 10-Q........................  249.308a................    3235-0070
Form 10-QSB......................  249.308b................    3235-0416
Form 10-K........................  249.310.................    3235-0063
Form 10-KSB......................  249.310b................    3235-0420
Form 11-K........................  249.311.................    3235-0082
Form 18-K........................  249.318.................    3235-0120
Form 12B-25......................  249.322.................    3235-0058
Form 15..........................  249.323.................    3235-0167
Form 13F.........................  249.325.................    3235-0006
Form SE..........................  249.444.................    3235-0327
Form ET..........................  249.445.................    3235-0329
Form ID..........................  249.446.................    3235-0328
Form DF..........................  249.448.................    3235-0482
Form BD..........................  249.501.................    3235-0012
Form BDW.........................  249.501a................    3235-0018
Form BD-N........................  249.501b................    3235-0556
Form X-17A-5.....................  249.617.................    3235-0123
Form X-17A-19....................  249.635.................    3235-0133
Form ATS.........................  249.637.................    3235-0509
Form ATS-R.......................  249.638.................    3235-0509
Form X-15AJ-1....................  249.802.................    3235-0044
Form X-15AJ-2....................  249.803.................    3235-0044
Form 19b-4.......................  249.819.................    3235-0045
Form 19b-4(e)....................  249.820.................    3235-0504
Form Pilot.......................  249.821.................    3235-0507
Form SIP.........................  249.1001................    3235-0043
Form MSD.........................  249.1100................    3235-0083
Form MSDW........................  249.1110................    3235-0087
Form X-17F-1A....................  249.1200................    3235-0037
Form TA-1........................  249b.100................    3235-0084
Form TA-W........................  249b.101................    3235-0151
Form TA-2........................  249b.102................    3235-0337
Form CA-1........................  249b.200................    3235-0195
Rule 1(a)........................  250.1(a)................    3235-0170
Rule 1(b)........................  250.1(b)................    3235-0170
Rule 1(c)........................  250.1(c)................    3235-0164
Rule 2...........................  250.2...................    3235-0161
Rule 3...........................  250.3...................    3235-0160
Rule 7...........................  250.7...................    3235-0165
Rule 7(d)........................  250.7(d)................    3235-0165
Rule 20(b).......................  250.20(b)...............    3235-0125
Rule 20(c).......................  250.20(c)...............    3235-0125
Rule 20(d).......................  250.20(d)...............    3235-0163
Rule 23..........................  250.23..................    3235-0125
Rule 24..........................  250.24..................    3235-0126
Rule 26..........................  250.26..................    3235-0183
Rule 29..........................  250.29..................    3235-0149
Rule 44..........................  250.44..................    3235-0147
Rule 45..........................  250.45..................    3235-0154
Rule 47(b).......................  250.47(b)...............    3235-0163
Rule 52..........................  250.52..................    3235-0369
Form 53..........................  250.53..................    3235-0426
Rule 54..........................  250.54..................    3235-0427
Rule 57(a).......................  250.57(a)...............    3235-0428
Rule 57(b).......................  250.57(b)...............    3235-0429

[[Page 137]]

 
Rule 58..........................  250.58..................    3235-0457
Rule 62..........................  250.62..................    3235-0152
Rule 71(a).......................  250.71(a)...............    3235-0173
Rule 72..........................  250.72..................    3235-0149
Rule 83..........................  250.83..................    3235-0181
Rule 87..........................  250.87..................    3235-0552
Rule 88..........................  250.88..................    3235-0182
Rule 93..........................  250.93..................    3235-0153
Rule 94..........................  250.94..................    3235-0153
Rule 95..........................  250.95..................    3235-0162
Rule 100(a)......................  250.100(a)..............    3235-0125
Uniform System of Accounts for     Part 256................    3235-0153
 Mutual Service Companies and
 Subsidiary Service Companies,
 Public Utility Holding Company
 Act of 1935.
Preservation and Destruction of    Part 257................    3235-0306
 Records of Registered Public
 Utility Holding Companies and of
 Mutual and Subsidiary Service
 Companies.
Form U5A.........................  259.5a..................    3235-0170
Form U5B.........................  259.5b..................    3235-0170
Form U5S.........................  259.5s..................    3235-0164
Form U-1.........................  259.101.................    3235-0125
Form U-13-1......................  259.113.................    3235-0182
Form U-6B-2......................  259.206.................    3235-0163
Form U-57........................  259.207.................    3235-0428
Form U-9C-3......................  259.208.................    3235-0457
Form U-12(I)-A...................  259.212a................    3235-0173
Form U-12(I)-B...................  259.212b................    3235-0173
Form U-13E-1.....................  259.213.................    3235-0162
Form U-R-1.......................  259.221.................    3235-0152
Form U-13-60.....................  259.313.................    3235-0153
Form U-3A-2......................  259.402.................    3235-0161
Form U-3A3-1.....................  259.403.................    3235-0160
Form U-7D........................  259.404.................    3235-0165
Form U-33-S......................  259.405.................    3235-0429
Form ET..........................  259.601.................    3235-0329
Form ID..........................  259.602.................    3235-0328
Form SE..........................  259.603.................    3235-0327
Rule 7a-15 thru 7a-37............  260.7a-15 thru 260.7a-37    3235-0132
Form T-1.........................  269.1...................    3235-0110
Form T-2.........................  269.2...................    3235-0111
Form T-3.........................  269.3...................    3235-0105
Form T-4.........................  269.4...................    3235-0107
Form ET..........................  269.6...................    3235-0329
Form ID..........................  269.7...................    3235-0328
Form SE..........................  269.8...................    3235-0327
Form T-6.........................  269.9...................    3235-0391
Rule 0-1.........................  270.0-1.................    3235-0531
Rule 2a-7........................  270.2a-7................    3235-0268
Rule 2a19-1......................  270.2a19-1..............    3235-0332
Rule 3a-4........................  270.3a-4................    3235-0459
Rule 6c-7........................  270.6c-7................    3235-0276
Rule 6e-2........................  270.6e-2................    3235-0177
Rule 7d-1........................  270.7d-1................    3235-0311
Rule 7d-2........................  270.7d-2................    3235-0527
Section 8(b) of the Investment     270.8b-1 thru 270.8b-32.    3235-0176
 Company Act of 1940.
Rule 10f-3.......................  270.10f-3...............    3235-0226
Rule 11a-2.......................  270.11a-2...............    3235-0272
Rule 11a-3.......................  270.11a-3...............    3235-0358
Rule 12b-1.......................  270-12b-1...............    3235-0212
Rule 17a-7.......................  270.17a-7...............    3235-0214
Rule 17a-8.......................  270.17a-8...............    3235-0235
Rule 17e-1.......................  270.17e-1...............    3235-0217
Rule 17f-1.......................  270.17f-1...............    3235-0222
Rule 17f-2.......................  270.17f-2...............    3235-0223
Rule 17f-4.......................  270.17f-4...............    3235-0225
Rule 17f-6.......................  270.17f-6...............    3235-0447
Rule 17f-7.......................  270-17f-7...............    3235-0529
Rule 17g-1(g)....................  270.17g-1(g)............    3235-0213
Rule 17j-1.......................  270.17j-1...............    3235-0224
Rule 18f-1.......................  270.18f-1...............    3235-0211
Rule 18f-3.......................  270.18f-3...............    3235-0441
Rule 19a-1.......................  270.19a-1...............    3235-0216

[[Page 138]]

 
Rule 20a-1.......................  270-20a-1...............    3235-0158
Rule 22d-1.......................  270-22d-1...............    3235-0310
Rule 23c-1.......................  270.23c-1...............    3235-0260
Rule 23c-3.......................  270.23c-3...............    3235-0422
Rule 27e-1.......................  270.27e-1...............    3235-0545
Rule 30b2-1......................  270.30b2-1..............    3235-0220
Rule 30d-2.......................  270.30d-2...............    3235-0494
Rule 30e-1.......................  270.30e-1...............    3235-0025
Rule 31a-1.......................  270.31a-1...............    3235-0178
Rule 31a-2.......................  270.31a-2...............    3235-0179
Rule 32a-4.......................  270.32a-4...............    3235-0530
Rule 34b-1.......................  270.34b-1...............    3235-0346
Rule 35d-1.......................  270-35d-1...............    3235-0548
Form N-5.........................  274.5...................    3235-0169
Form N-8A........................  274.10..................    3235-0175
Form N-2.........................  274.11a-1...............    3235-0026
Form N-3.........................  274.11b.................    3235-0316
Form N-4.........................  274.11c.................    3235-0318
Form N-8B-2......................  274.12..................    3235-0186
Form N-6F........................  274.15..................    3235-0238
Form 24F-2.......................  274.24..................    3235-0456
Form N-18F-1.....................  274.51..................    3235-0211
Form N-54A.......................  274.53..................    3235-0237
Form N-54C.......................  274.54..................    3235-0236
Form N-SAR.......................  274.101.................    3235-0330
Form N-27E-1.....................  274.127e-1..............    3235-0545
Form N-27F-1.....................  274.127f-1..............    3235-0546
Form N-17D-1.....................  274.200.................    3235-0229
Form N-23C-1.....................  274.201.................    3235-0230
Form N-8F........................  274.218.................    3235-0157
Form N-17F-1.....................  274.219.................    3235-0359
Form N-17F-2.....................  274.220.................    3235-0360
Form N-23c-3.....................  274.221.................    3235-0422
Form ET..........................  274.401.................    3235-0329
Form ID..........................  274.402.................    3235-0328
Form SE..........................  274.403.................    3235-0327
Rule 0-2.........................  275.0-2.................    3235-0240
Rule 203-3.......................  275.203-3...............    3235-0538
Rule 204-2.......................  275.204-2...............    3235-0278
Rule 204-3.......................  275.204-3...............    3235-0047
Rule 206(3)-2....................  275.206(3)-2............    3235-0243
Rule 206(4)-2....................  275.206(4)-2............    3235-0241
Rule 206(4)-3....................  275.206(4)-3............    3235-0242
Rule 206(4)-4....................  275.206(4)-4............    3235-0345
Form ADV.........................  279.1...................    3235-0049
Schedule I to Form ADV...........  279.1...................    3235-0490
Form ADV-W.......................  279.2...................    3235-0313
Form ADV-H.......................  379.3...................    3235-0538
Form 4-R.........................  279.4...................    3235-0240
Form 5-R.........................  279.5...................    3235-0240
Form 6-R.........................  279.6...................    3235-0240
Form 7-R.........................  279.7...................    3235-0240
Form ADV-E.......................  279.8...................    3235-0361
------------------------------------------------------------------------



PART 201--RULES OF PRACTICE--Table of Contents




Subpart A [Reserved]

  Subpart B--Regulations Pertaining to the Equal Access to Justice Act

Sec.
201.31  Purpose of these rules.
201.32  When the Act applies.
201.33  Proceedings covered.
201.34  Eligibility of applicants.
201.35  Standards for awards.
201.36  Allowable fees and expenses.
201.37  Delegations of authority.
201.41  Contents of application.
201.42  Net worth exhibit.
201.43  Documentation of fees and expenses.
201.44  When an application may be filed.
201.51  Filing and service of documents.
201.52  Answer to application.
201.53  Reply.
201.54  Settlement.
201.55  Further proceedings.
201.56  Decision.
201.57  Commission review.
201.58  Judicial review.

[[Page 139]]

201.59  Payment of award.
201.60  [Reserved]

Subpart C--Procedures Pertaining to the Payment of Bounties Pursuant to 
        Subsection 21A(e) of the Securities Exchange Act of 1934

201.61  Scope of subpart.
201.62  Application required.
201.63  Time and place of filing.
201.64  Form of application and information required.
201.65  Identity and signature.
201.66  Notice to applicants.
201.67  Applications by legal guardians.
201.68  No promises of payment.

                      Subpart D--Rules of Practice

                              General Rules

201.100  Scope of the rules of practice.
201.101  Definitions.
201.102  Appearance and practice before the Commission.
201.103  Construction of rules.
201.104  Business hours.
201.110  Presiding officer.
201.111  Hearing officer: Authority.
201.112  Hearing officer: Disqualification and withdrawal.
201.120  Ex parte communications.
201.121  Separation of functions.
201.140  Commission orders and decisions: Signature and availability.
201.141  Orders and decisions: Service of orders instituting proceeding 
          and other orders and decisions.
201.150  Service of papers by parties.
201.151  Filing of papers with the Commission: Procedure.
201.152  Filing of papers: Form.
201.153  Filing of papers: Signature requirement and effect.
201.154  Motions.
201.155  Default; motion to set aside default.
201.160  Time computation.
201.161  Extensions of time, postponements and adjournments.
201.180  Sanctions.
201.190  Confidential treatment of information in certain filings.
201.191  Adjudications not required to be determined on the record after 
          notice and opportunity for hearing.
201.192  Rulemaking: Issuance, amendment and repeal of rules of general 
          application.
201.193  Applications by barred individuals for consent to associate.

             Initiation of Proceedings and Prehearing Rules

201.200  Initiation of proceedings.
201.201  Consolidation of proceedings.
201.202  Specification of procedures by parties in certain proceedings.
201.210  Parties, limited participants and amici curiae.
201.220  Answer to allegations.
201.221  Prehearing conference.
201.222  Prehearing submissions.
201.230  Enforcement and disciplinary proceedings: Availability of 
          documents for inspection and copying.
201.231  Enforcement and disciplinary proceedings: Production of witness 
          statements.
201.232  Subpoenas.
201.233  Depositions upon oral examination.
201.234  Depositions upon written questions.
201.235  Introducing prior sworn statements of witnesses into the 
          record.
201.240  Settlement.
201.250  Motion for summary disposition.

                        Rules Regarding Hearings

201.300  Hearings.
201.301  Hearings to be public.
201.302  Record of hearings.
201.310  Failure to appear at hearings: Default.
201.320  Evidence: Admissibility.
201.321  Evidence: Objections and offers of proof.
201.322  Evidence: Confidential information, protective orders.
201.323  Evidence: Official notice.
201.324  Evidence: Stipulations.
201.325  Evidence: Presentation under oath or affirmation.
201.326  Evidence: Presentation, rebuttal and cross-examination.
201.340  Proposed findings, conclusions and supporting briefs.
201.350  Record in proceedings before hearing officer; retention of 
          documents; copies.
201.351  Transmittal of documents to Secretary; record index; 
          certification.
201.360  Initial decision of hearing officer.

             Appeal to the Commission and Commission Review

201.400  Interlocutory review.
201.401  Issuance of stays.
201.410  Appeal of initial decisions by hearing officers.
201.411  Commission consideration of initial decisions by hearing 
          officers.
201.420  Appeal of determinations by self-regulatory organizations.
201.421  Commission consideration of determinations by self-regulatory 
          organizations.
201.430  Appeal of actions made pursuant to delegated authority.
201.431  Commission consideration of actions made pursuant to delegated 
          authority.
201.450  Briefs filed with the Commission.
201.451  Oral argument before the Commission.

[[Page 140]]

201.452  Additional evidence.
201.460  Record before the Commission.
201.470  Reconsideration.
201.490  Receipt of petitions for judicial review pursuant to 28 U.S.C. 
          2112(a)(1).

           Rules Relating to Temporary Orders and Suspensions

201.500  Expedited consideration of proceedings.
201.510  Temporary cease-and-desist orders: Application process.
201.511  Temporary cease-and-desist orders: Notice; procedures for 
          hearing.
201.512  Temporary cease-and-desist orders: Issuance after notice and 
          opportunity for hearing.
201.513  Temporary cease-and-desist orders: Issuance without prior 
          notice and opportunity for hearing.
201.514  Temporary cease-and-desist orders: Judicial review; duration.
201.520  Suspension of registration of brokers, dealers, or other 
          Exchange Act-registered entities: Application.
201.521  Suspension of registration of brokers, dealers, or other 
          Exchange Act-registered entities: Notice and opportunity for 
          hearing on application.
201.522  Suspension of registration of brokers, dealers, or other 
          Exchange Act-registered entities: Issuance and review of 
          order.
201.523  [Reserved]
201.524  Suspension of registrations: Duration.
201.530  Initial decision on permanent order: Timing for submitting 
          proposed findings and preparation of decision.
201.531  Initial decision on permanent order: Effect on temporary order.
201.540  Appeal and Commission review of initial decision making a 
          temporary order permanent.
201.550  Summary suspensions pursuant to Exchange Act Section 
          12(k)(1)(A).

            Rules Regarding Disgorgement and Penalty Payments

201.600  Interest on sums disgorged.
201.601  Prompt payment of disgorgement, interest and penalties.
201.610  Submission of proposed plan of disgorgement.
201.611  Contents of plan of disgorgement; provisions for payment.
201.612  Notice of proposed plan of disgorgement and opportunity for 
          comment by non-parties.
201.613  Order approving, modifying or disapproving proposed plan of 
          disgorgement.
201.614  Administration of plan of disgorgement.
201.620  Right to challenge order of disgorgement.
201.630  Inability to pay disgorgement, interest or penalties.

      Informal Procedures and Supplementary Information Concerning 
                        Adjudicatory Proceedings

201.900  Informal Procedures and Supplementary Information Concerning 
          Adjudicatory Proceedings.

Table I to Subpart D--Adversary Adjudications Conducted by the 
          Commission under 5 U.S.C. 554
Table II to Subpart D--Cross-reference table showing location of Rules 
          of Practice adopted in 1995 with former Rules of Practice, 
          related rules and statutory provisions
Table III to Subpart D--Cross-reference table showing location of former 
          Rules of Practice and related rules with Rules of Practice 
          adopted in 1995

            Subpart E--Adjustment of Civil Monetary Penalties

201.1001  Adjustment of civil monetary penalties--1996.

Table 1 to Subpart E--Civil Monetary Penalty Inflation Adjustments
201.1002  Adjustment of civil monetary penalties--2001.
Table II to Subpart E--Civil Monetary Penalty Inflation Adjustments

    Authority: 15 U.S.C. 77s, 78w, 78x, 79t, 77sss, 80a-37 and 80b-11; 5 
U.S.C. 504(c)(1).

    Source: 47 FR 610, Jan. 6, 1982, unless otherwise noted.

Subpart A [Reserved]



  Subpart B--Regulations Pertaining to the Equal Access to Justice Act



Sec. 201.31  Purpose of these rules.

    The Equal Access to Justice Act, 5 U.S.C. 504 (called the Act in 
this subpart B), provides for the award of attorney fees and other 
expenses to eligible individuals and entities who are parties to certain 
administrative proceedings (called adversary adjudications) before the 
Commission. An eligible party may receive an award when it prevails over 
the Commission, unless the Commission's position was substantially 
justified or special circumstances make an award unjust. The rules in 
this subpart describe the parties eligible for awards and the 
proceedings that are covered. They also explain how to apply for awards, 
and the procedures and standards that the

[[Page 141]]

Commission will use in ruling on those applications.

[54 FR 53051, Dec. 27, 1989]



Sec. 201.32  When the Act applies.

    The Act applies to adversary adjudications described in Sec. 201.33 
pending or commenced before the Commission on or after August 5, 1985. 
It also applies to any adversary adjudication commenced on or after 
October 1, 1984, and finally disposed of before August 5, 1985, provided 
that an application for fees and expenses, as described in these rules, 
has been filed with the Commission within 30 days after August 5, 1985. 
Proceedings which have been substantially concluded are not deemed 
pending under these rules although officially pending for purposes such 
as concluding remedial actions found in Commission orders or private 
undertakings.

[54 FR 53051, Dec. 27, 1989]



Sec. 201.33  Proceedings covered.

    (a) The Act applies to adversary adjudications conducted by the 
Commission. These are on the record adjudications under 5 U.S.C. 554 in 
which the position of an Office or Division of the Commission as a 
party, not including amicus participation, is presented by an attorney 
or other representative who enters an appearance and participates in the 
proceeding. See appendix, 17 CFR 201.60.
    (b) The fact that the Commission has not identified a type of 
proceeding as an adversary adjudication shall not preclude the filing of 
an application by a party who believes the proceeding is covered by the 
Act; whether the proceeding is covered will then be an issue for 
resolution in proceedings on the application.
    (c) If a proceeding includes both matters covered by the Act and 
matters specifically excluded from coverage, any award made will include 
only fees and expenses related to covered issues.

[47 FR 610, Jan. 6, 1982, as amended at 54 FR 53051, Dec. 27, 1989]



Sec. 201.34  Eligibility of applicants.

    (a) To be eligible for an award of attorney fees and other expenses 
under the Act, the applicant must be a party to the adversary 
adjudication for which it seeks it seeks an award. The term party is 
defined in 5 U.S.C. 551(3). The applicant must show that it meets all 
conditions of eligibility set out in this subpart.
    (b) The types of eligible applicants are as follows:
    (1) An individual with a net worth of not more than $2 million;
    (2) The sole owner of an unincorporated business who has a net worth 
of not more than $7 million, including both personal and business 
interests, and not more than 500 employees;
    (3) A charitable or other tax-exempt organization described in 
section 501(c)(3) of the Internal Revenue Code (26 U.S.C. 501(c)(3)) 
with not more than 500 employees;
    (4) A cooperative association as defined in section 15(a) of the 
Agricultural Marketing Act (12 U.S.C. 1141j(a)) with more than 500 
employees; and
    (5) Any other partnership, corporation, association, unit of local 
government, or public or private organization with a new worth of not 
more than $7 million and not more than 500 employees.
    (c) For the purpose of eligibility, the net worth and number of 
employees of an applicant shall be determined as of the date the 
proceeding was initiated.
    (d) An applicant who owns an unincorporated business will be 
considered as an individual rather than a sole owner of an 
unincorporated business if the issues on which the applicant prevails 
are related primarily to personal interests rather than to business 
interests.
    (e) The employees of an applicant include all persons who regularly 
perform services for remuneration for the applicant, under the 
applicant's direction and control. Part-time employees shall be included 
on a proportional basis.
    (f) The net worth and number of employees of the applicant and all 
of its affiliates shall be aggregated to determine eligibility. Any 
individual, corporation or other entity that directly or indirectly 
controls or owns a majority of the voting shares or other interest of 
the applicant, or any corporation or entity of which the applicant 
directly or indirectly owns or controls a majority of the voting shares 
or other

[[Page 142]]

interest, will be considered an affiliate for purposes of this subpart, 
unless the administrative law judge determines that such treatment would 
be unjust and contrary to the purposes of the Act in light of the actual 
relationship between the affiliated entities. In addition, the 
administrative law judge may determine that financial relationships of 
the applicant other than those described in this paragraph constitute 
special circumstances that would make an award unjust.
    (g) An applicant that participates in a proceeding primarily on 
behalf of one or more other persons or entities that would be ineligible 
is not itself eligible for an award.

[47 FR 610, Jan. 6, 1982, as amended at 54 FR 53051, Dec. 27, 1989]



Sec. 201.35  Standards for awards.

    (a) A prevailing applicant may receive an award for fees and 
expenses incurred in connection with a proceeding or in a significant 
and discrete substantive portion of the proceeding, unless the position 
of the Office or Division over which the applicant has prevailed was 
substantially justified. The position of the Office or Division 
includes, in addition to the position taken by the Office or Division in 
the adversary adjudication, the action or failure to act by the Office 
or Division upon which the adversary adjudication is based. The burden 
of proof that an award should not be made to an eligible prevailing 
applicant is on counsel for an Office or Division of the Commission, 
which must show that its position was reasonable in law and fact.
    (b) An award will be reduced or denied if the applicant has unduly 
or unreasonably protracted the proceeding or if special circumstances 
make the award sought unjust.

[47 FR 610, Jan. 6, 1982, as amended at 54 FR 53051, Dec. 27, 1989]



Sec. 201.36  Allowable fees and expenses.

    (a) Subject to the limitation of paragraph (b), awards will be based 
on rates customarily charged, in the locale of the hearing, by persons 
engaged in the business of acting as attorneys, agents and expert 
witnesses, even if the services were made available without charge or at 
a reduced rate to the applicant.
    (b) No award of the fee of an attorney or agent under these rules 
may exceed $75.00 per hour. No award to compensate an expert witness may 
exceed the reasonable rate at which the Commission pays witnesses with 
similar expertise. However, an award may also include the reasonable 
expenses of the attorney, agent or witness as a separate item, if the 
attorney, agent or witness ordinarily charges clients separately for 
such expenses.
    (c) In determining the reasonableness of the fee sought for an 
attorney, agent or expert witness, the administrative law judge shall 
consider the following:
    (1) If the attorney, agent or witness is in private practice, his or 
her customary fee for similar services, or, if an employee of the 
applicant the fully allocated cost of the services;
    (2) The prevailing rate for similar services in the community in 
which the attorney, agent or witness ordinarily performs services;
    (3) The time actually spent in the representation of the applicant;
    (4) The time reasonably spent in light of the difficulty or 
complexity of the issues in the proceeding; and
    (5) Such other factors as may bear on the value of the services 
provided.
    (d) The reasonable cost of any study, analysis, engineering report, 
test, project or similar matter prepared on behalf of a party may be 
awarded, to the extent that the charge for the service does not exceed 
the prevailing rate for similar services, and the study or other matter 
was necessary for preparation of the applicant's case.

[47 FR 610, Jan. 6, 1982, as amended at 54 FR 53051, Dec. 27, 1989]



Sec. 201.37  Delegations of authority.

    (a) The Commission may by order delegate authority to take final 
action on matters pertaining to the Equal Access to Justice Act in 
particular cases.
    (b) Unless the Commission shall order otherwise, applications for 
awards of fees and expenses made pursuant to this subject shall be 
assigned by the Chief Administrative Law Judge

[[Page 143]]

to an administrative law judge for determination.

[54 FR 53051, Dec. 27, 1989]



Sec. 201.41  Contents of application.

    (a) An application for an award of fees and expenses under the Act 
shall identify the applicant, the proceeding for which an award is 
sought and contain the information required in this subpart. The 
application shall show that the applicant has prevailed and specify the 
position(s) of the opposing Office or Division in the proceeding that 
the applicant alleges was not substantially justified. Unless the 
applicant is an individual, the application shall also state the number 
of employees of the applicant and describe briefly the type and purpose 
of its organization or business.
    (b) The application shall also include a statement that the 
applicant's net worth does not exceed $2 million (if an individual) or 
$7 million (for all other applicants, including their affiliates). 
However, an applicant may omit this statement if:
    (1) It attaches a copy of a ruling by the Internal Revenue Service 
that it qualifies as an organization described in section 501(c)(3) of 
the Internal Revenue Code (26 U.S.C. 501(c)(3)) or, in the case of a 
tax-exempt organization not required to obtain a ruling from the 
Internal Revenue Service on its exempt status, a statement that 
describes the basis for the applicant's belief that it qualifies under 
such section; or
    (2) It states that it is a cooperative association as defined in 
section 15(a) of the Agricultural Marketing Act (12 U.S.C. 1141j(a)).
    (c) The application shall state the amount of fees and expenses for 
which an award is sought.
    (d) The application may also include any other matters that the 
applicant wishes the Commission to consider in determining whether and 
in what amount an award should be made.
    (e) The application shall be signed by the applicant or an 
authorized officer or attorney of the applicant. It shall also contain 
or be accompanied by a written verification under oath or under penalty 
of perjury that the information provided in the application is true and 
correct.

[47 FR 610, Jan. 6, 1982, as amended at 54 FR 53051, Dec. 27, 1989]



Sec. 201.42  Net worth exhibit.

    (a) Each applicant, except a qualified tax-exempt organization or 
cooperative association, must provide with its application a detailed 
exhibit showing the net worth of the applicant and any affiliates (as 
defined in Sec. 201.34(f) of this part) when the proceeding was 
initiated. The exhibit may be in any form convenient to the applicant 
that provides full disclosure of the applicant's and its affiliates' 
assets and liabilities and is sufficient to determine whether the 
applicant qualifies under the standards in this subpart. The 
administrative law judge or the Commission may require an applicant to 
file additional information to determine its eligibility for an award.
    (b) Ordinarily, the net worth exhibit will be included in the public 
record of the proceeding. However, an applicant that objects to public 
disclosure of information in any portion of the exhibit and believes 
there are legal grounds for withholding it from disclosure may submit 
that exhibit in accordance with 17 CFR 201.190.

[47 FR 610, Jan. 6, 1982, as amended at 60 FR 32795, June 23, 1995]



Sec. 201.43  Documentation of fees and expenses.

    The application shall be accompanied by full documentation of the 
fees and expenses, including the cost of any study, analysis, 
engineering report, test, project or similar matter, for which an award 
is sought. A separate itemized statement shall be submitted for each 
professional firm or individual whose services are covered by the 
application, showing the hours spent in connection with the proceeding 
by each individual, a description of the specific services performed, 
the rate at which each fee has been computed, any expenses for which 
reimbursement is sought, the total amount claimed, and the total amount 
paid or payable by the applicant or by any other person or entity for 
the services provided. The applicant may be required to provide

[[Page 144]]

vouchers, receipts, or other substantiation for any fees or expenses 
claimed.



Sec. 201.44  When an application may be filed.

    (a) An application may be filed whenever the applicant has prevailed 
in the proceeding or in a significant and discrete substantive portion 
of the proceeding, but in no case later than 30 days after the 
Commission's final disposition of the proceeding.
    (b) For purposes of this rule, final disposition means the date on 
which a decision or order disposing of the merits of the proceeding or 
any other complete resolution of the proceeding, such as a settlement or 
voluntary dismissal, becomes final and unappealable, both within the 
Commission and to the courts.
    (c) If review or reconsideration is sought or taken of a decision as 
to which an applicant believes it has prevailed, proceedings for the 
award of fees shall be stayed pending final disposition of the 
underlying controversy.

[47 FR 610, Jan. 6, 1982, as amended at 54 FR 53052, Dec. 27, 1989]



Sec. 201.51  Filing and service of documents.

    Any application for an award or other document related to an 
application shall be filed and served in the same manner as other papers 
in proceedings under the Commission's Rules of Practice. In addition, a 
copy of each application for fees and expenses shall be served on the 
General Counsel of the Commission.



Sec. 201.52  Answer to application.

    (a) Within 30 days after service of an application, counsel 
representing the Office or Division of the Commission may file an answer 
to the application. Unless the Office or Division of the Commission 
counsel requests an extension of time for filing or files a statement of 
intent to negotiate under paragraph (b) of this section, failure to file 
an answer within the 30-day period may be treated as a consent to the 
award requested.
    (b) If counsel for the Office or Division of the Commission and the 
applicant believe that the issues in the fee application can be settled, 
they may jointly file a statement of their intent to negotiate a 
settlement. The filing of this statement shall extend the time for 
filing an answer for an additional 30 days, and further extensions may 
be granted upon request by agency counsel and the applicant.
    (c) The answer shall explain any objections to the award requested 
and identify the facts relied on in support of that position. If the 
answer is based on any alleged facts not already in the record of the 
proceeding, it shall include supporting affidavits or a request for 
further proceedings under Sec. 201.55.



Sec. 201.53  Reply.

    Within 15 days after service of an answer, the applicant may file a 
reply. If the reply is based on any alleged facts not already in the 
record of the proceeding, the applicant shall include with the reply 
either supporting affidavits or a request for further proceedings under 
Sec. 201.55.



Sec. 201.54  Settlement.

    The applicant and counsel for the Office or Division of the 
Commission may agree on a proposed settlement of the award before final 
action on the application, either in connection with a settlement of the 
underlying proceeding or after the underlying proceeding has been 
concluded, in accordance with the Commission's standard settlement 
procedure. See 17 CFR 201.240. If a prevailing party and counsel for the 
Office or Division of the Commission agree on a proposed settlement of 
an award before an application has been filed, the application shall be 
filed with the proposed settlement. If a proposed settlement provides 
that each side shall bear its own expenses, and the settlement is 
accepted, no application may be filed.

[54 FR 53052, Dec. 27, 1989, as amended at 60 FR 32795, June 23, 1995]



Sec. 201.55  Further proceedings.

    (a) Ordinarily, the determination of an award will be made on the 
basis of the written record. However, on request of either the applicant 
or counsel for the Office or Division of the Commission, or on his or 
her own initiative, the administrative law judge may order further 
proceedings, such as an

[[Page 145]]

informal conference, oral argument, additional written submissions or, 
as to issues other than substantial justification (such as the 
applicant's eligibility or substantiation of fees and expenses) an 
evidentiary hearing. The administrative law judge may order all 
proceedings that are otherwise available under Rule 8(d) of the 
Commission's Rules of Practice. Such further proceedings shall be held 
only when necessary for full and fair resolution of the issues arising 
from the application, and shall be conducted as promptly as possible. 
Whether or not the Commission's position was substantially justified 
shall be determined on the basis of the administrative record, as a 
whole, which is made in the adversary adjudication for which fees and 
other expenses are sought.
    (b) A request for further proceedings under this section shall 
specifically identify the information sought or the disputed issues and 
shall explain why the additional proceedings are necessary to resolve 
the issues.

[47 FR 610, Jan. 6, 1982, as amended at 54 FR 53052, Dec. 27, 1989]



Sec. 201.56  Decision.

    The administrative law judge shall issue an initial decision on the 
application promptly after completion of proceedings on the application. 
The decision shall include written findings and conclusions on the 
applicant's eligibility and status as a prevailing party, and an 
explanation of the reasons for any difference between the amount 
requested and the amount awarded. The decision shall also include, if at 
issue, findings on whether the Commission's position was substantially 
justified, whether the applicant unduly protracted the proceedings, or 
whether special circumstances make an award unjust.



Sec. 201.57  Commission review.

    In accordance with the procedures set forth in 17 CFR 201.410 and 
201.411, either the applicant or counsel for the Office or Division of 
the Commission may seek review of the initial decision on the fee 
application, or the Commission may decide to review the decision on its 
own initiative. If neither the applicant nor counsel for the Division or 
Office of the Commission seeks review and the Commission does not take 
review on its own initiative, the initial decision on the application 
shall become a final decision of the Commission 30 days after it is 
issued. Whether to review a decision is a matter within the discretion 
of the Commission. If review is taken, the Commission will issue a final 
decision on the application or remand the application to the 
administrative law judge for further proceedings.

[47 FR 610, Jan. 6, 1982, as amended at 60 FR 32795, June 23, 1995]



Sec. 201.58  Judicial review.

    Judicial review of final Commission decisions on awards may be 
sought as provided in 5 U.S.C. 504(c)(2).



Sec. 201.59  Payment of award.

    An applicant seeking payment of an award shall submit to the 
Comptroller of the Commission a copy of the Commission's final decision 
granting the award, accompanied by a sworn statement that the applicant 
will not seek review of the decision in the United States courts. The 
Commission will pay the amount awarded to the applicant as authorized by 
law, unless judicial review of the award has been sought by the 
applicant.

[54 FR 53052, Dec. 27, 1989]



Sec. 201.60  [Reserved]



Subpart C--Procedures Pertaining to the Payment of Bounties Pursuant to 
        Subsection 21A(e) of the Securities Exchange Act of 1934

    Authority: 15 U.S.C. 78u-1 and 78w.

    Source: 54 FR 28799, July 10, 1989, unless otherwise noted.



Sec. 201.61  Scope of subpart.

    Section 21A of the Securities Exchange Act of 1934 authorizes the 
courts to impose civil penalties for certain violations of that Act. 
Subsection 21A(e) permits the Commission to award bounties to persons 
who provide

[[Page 146]]

information that leads to the imposition of such penalties. Any such 
determination, including whether, to whom, or in what amount to make 
payments, is in the sole discretion of the Commission. This subpart sets 
forth procedures regarding applications for the award of bounties 
pursuant to subsection 21A(e). Nothing in this subpart shall be deemed 
to limit the discretion of the Commission with respect to determinations 
under subsection 21A(e) or to subject any such determination to judicial 
review.



Sec. 201.62  Application required.

    No person shall be eligible for the payment of a bounty under 
subsection 21A(e) of the Securities Exchange Act of 1934 unless such 
person has filed a written application that meets the requirements of 
this subpart and, upon request, provides such other information as the 
Commission or its staff deems relevant to the application.



Sec. 201.63  Time and place of filing.

    Each application pursuant to this subpart and each amendment thereto 
must be filed within one hundred and eighty days after the entry of the 
court order requiring the payment of the penalty that is subject to the 
application. Such applications and amendments shall be addressed to: 
Office of the Secretary, Securities and Exchange Commission, 450 Fifth 
Street NW., Washington, DC 20549.



Sec. 201.64  Form of application and information required.

    Each application pursuant to this subpart shall be identified as an 
Application for Award of a Bounty and shall contain a detailed statement 
of the information provided by the applicant that the applicant believes 
led or may lead to the imposition of a penalty. Except as provided by 
Rule 65 of this subpart, each application shall state the identity and 
mailing address of, and be signed by, the applicant. When the 
application is not the means by which the applicant initially provides 
such information, the application shall contain: The dates and times 
upon which, and the means by which, the information was provided; the 
identity of the Commission staff members to whom the information was 
provided; and, if the information was provided anonymously, sufficient 
further information to confirm that the person filing the application is 
the same person who provided the information to the Commission.



Sec. 201.65  Identity and signature.

    Applications pursuant to this subpart may omit the identity, mailing 
address, and signature of the applicant; provided, that such identity, 
mailing address and signature are submitted by an amendment to the 
application. Any such amendment must be filed within one hundred and 
eighty days after the entry of the court order requiring the payment of 
the penalty that is subject to the application.



Sec. 201.66  Notice to applicants.

    The Commission will notify each person who files an application that 
meets the requirements of this subpart, at the address specified in such 
application, of the Commission's determination with respect to such 
person's application. Nothing in this subpart shall be deemed to entitle 
any person to any other notice from the Commission or its staff.



Sec. 201.67  Applications by legal guardians.

    An application pursuant to this subpart may be filed by an executor, 
administrator, or other legal representative of a person who provides 
information that may be subject to a bounty payment, or by the parent or 
guardian of such a person if that person is a minor. Certified copies of 
the letters testamentary, letters of administration, or other similar 
evidence showing the authority of the legal representative to file the 
application must be annexed to the application.



Sec. 201.68  No promises of payment.

    No person is authorized under this subpart to make any offer or 
promise, or otherwise to bind the Commission with respect to the payment 
of any bounty or the amount thereof.



                      Subpart D--Rules of Practice

    Authority: 15 U.S.C. 77f, 77g, 77h, 77h-1, 77j, 77s, 77u, 78c(b), 
78d-1, 78d-2, 78l, 78m, 78n,

[[Page 147]]

78o(d), 78o-3, 78s, 78u-2, 78u-3, 78v, 78w, 79c, 79s, 79t, 79z-5a, 
77sss, 77ttt, 80a-8, 80a-9, 80a-37, 80a-38, 80a-39, 80a-40, 80a-41, 80a-
44, 80b-3, 80b-9, 80b-11, and 80b-12 unless otherwise noted.

    Source: 60 FR 32796, June 23, 1995, unless otherwise noted.

                              General Rules



Sec. 201.100  Scope of the rules of practice.

    (a) Unless provided otherwise, these Rules of Practice govern 
proceedings before the Commission under the statutes that it 
administers.
    (b) These rules do not apply to:
    (1) Investigations, except where made specifically applicable by the 
Rules Relating to Investigations, part 203 of this chapter; or
    (2) Actions taken by the duty officer pursuant to delegated 
authority under 17 CFR 200.43.

[60 FR 32796, June 23, 1995; 60 FR 46499, Sept. 7, 1995]



Sec. 201.101  Definitions.

    (a) For purposes of these Rules of Practice, unless explicitly 
stated to the contrary:
    (1) Commission means the United States Securities and Exchange 
Commission, or a panel of Commissioners constituting a quorum of the 
Commission, or a single Commissioner acting as duty officer pursuant to 
17 CFR 200.43;
    (2) Counsel means any attorney representing a party or any other 
person representing a party pursuant to Sec. 201.102(b);
    (3) Disciplinary proceeding means an action pursuant to 
Sec. 201.102(e);
    (4) Enforcement proceeding means an action, initiated by an order 
instituting proceedings, held for the purpose of determining whether or 
not a person is about to violate, has violated, has caused a violation 
of, or has aided or abetted a violation of any statute or rule 
administered by the Commission, or whether to impose a sanction as 
defined in Section 551(10) of the Administrative Procedure Act, 5 U.S.C. 
551(10);
    (5) Hearing officer means an administrative law judge, a panel of 
Commissioners constituting less than a quorum of the Commission, an 
individual Commissioner, or any other person duly authorized to preside 
at a hearing;
    (6) Interested division means a division or an office assigned 
primary responsibility by the Commission to participate in a particular 
proceeding;
    (7) Order instituting proceedings means an order issued by the 
Commission commencing a proceeding or an order issued by the Commission 
to hold a hearing;
    (8) Party means the interested division, any person named as a 
respondent in an order instituting proceedings, any applicant named in 
the caption of any order, persons entitled to notice in a stop order 
proceeding as set forth in Sec. 201.200(a)(2) or any person seeking 
Commission review of a decision;
    (9) Proceeding means any agency process initiated by an order 
instituting proceedings; or by the filing, pursuant to Sec. 201.410, of 
a petition for review of an initial decision by a hearing officer; or by 
the filing, pursuant to Sec. 201.420, of an application for review of a 
self-regulatory organization determination; or by the filing, pursuant 
to Sec. 201.430, of a notice of intention to file a petition for review 
of a determination made pursuant to delegated authority;
    (10) Secretary means the Secretary of the Commission; and
    (11) Temporary sanction means a temporary cease-and-desist order or 
a temporary suspension of the registration of a broker, dealer, 
municipal securities dealer, government securities broker, government 
securities dealer, or transfer agent pending final determination whether 
the registration shall be revoked.
    (b) [Reserved]



Sec. 201.102  Appearance and practice before the Commission.

    A person shall not be represented before the Commission or a hearing 
officer except as stated in paragraphs (a) and (b) of this section or as 
otherwise permitted by the Commission or a hearing officer.
    (a) Representing oneself. In any proceeding, an individual may 
appear on his or her own behalf.
    (b) Representing others. In any proceeding, a person may be 
represented by an attorney at law admitted to

[[Page 148]]

practice before the Supreme Court of the United States or the highest 
court of any State (as defined in Section 3(a)(16) of the Exchange Act, 
15 U.S.C. 78c(a)(16)); a member of a partnership may represent the 
partnership; a bona fide officer of a corporation, trust or association 
may represent the corporation, trust or association; and an officer or 
employee of a state commission or of a department or political 
subdivision of a state may represent the state commission or the 
department or political subdivision of the state.
    (c) Former Commission employees. Former employees of the Commission 
must comply with the restrictions on practice contained in the 
Commission's Conduct Regulation, Subpart M, 17 CFR 200.735.
    (d) Designation of address for service; notice of appearance; power 
of attorney; withdrawal. (1) Representing oneself. When an individual 
first makes any filing or otherwise appears on his or her own behalf 
before the Commission or a hearing officer in a proceeding as defined in 
Sec. 201.101(a), he or she shall file with the Commission, or otherwise 
state on the record, and keep current, an address at which any notice or 
other written communication required to be served upon him or her or 
furnished to him or her may be sent and a telephone number where he or 
she may be reached during business hours.
    (2) Representing others. When a person first makes any filing or 
otherwise appears in a representative capacity before the Commission or 
a hearing officer in a proceeding as defined in Sec. 201.101(a), that 
person shall file with the Commission, and keep current, a written 
notice stating the name of the proceeding; the representative's name, 
business address and telephone number; and the name and address of the 
person or persons represented.
    (3) Power of attorney. Any individual appearing or practicing before 
the Commission in a representative capacity may be required to file a 
power of attorney with the Commission showing his or her authority to 
act in such capacity.
    (4) Withdrawal. Withdrawal by any individual appearing in a 
representative capacity shall be permitted only by order of the 
Commission or the hearing officer. A motion seeking leave to withdraw 
shall state with specificity the reasons for such withdrawal.
    (e) Suspension and disbarment. (1) Generally. The Commission may 
censure a person or deny, temporarily or permanently, the privilege of 
appearing or practicing before it in any way to any person who is found 
by the Commission after notice and opportunity for hearing in the 
matter:
    (i) Not to possess the requisite qualifications to represent others; 
or
    (ii) To be lacking in character or integrity or to have engaged in 
unethical or improper professional conduct; or
    (iii) To have willfully violated, or willfully aided and abetted the 
violation of any provision of the Federal securities laws or the rules 
and regulations thereunder.
    (iv) With respect to persons licensed to practice as accountants, 
``improper professional conduct'' under Sec. 201.102(e)(1)(ii) means:
    (A) Intentional or knowing conduct, including reckless conduct, that 
results in a violation of applicable professional standards; or (B) 
Either of the following two types of negligent conduct:
    (1) A single instance of highly unreasonable conduct that results in 
a violation of applicable professional standards in circumstances in 
which an accountant knows, or should know, that heightened scrutiny is 
warranted.
    (2) Repeated instances of unreasonable conduct, each resulting in a 
violation of applicable professional standards, that indicate a lack of 
competence to practice before the Commission.
    (2) Certain professionals and convicted persons. Any attorney who 
has been suspended or disbarred by a court of the United States or of 
any State; or any person whose license to practice as an accountant, 
engineer, or other professional or expert has been revoked or suspended 
in any State; or any person who has been convicted of a felony or a 
misdemeanor involving moral turpitude shall be forthwith suspended from 
appearing or practicing before the Commission. A disbarment, suspension, 
revocation or conviction within the meaning of this section shall be

[[Page 149]]

deemed to have occurred when the disbarring, suspending, revoking or 
convicting agency or tribunal enters its judgment or order, including a 
judgment or order on a plea of nolo contendere, regardless of whether an 
appeal of such judgment or order is pending or could be taken.
    (3) Temporary suspensions. An order of temporary suspension shall 
become effective upon service on the respondent. No order of temporary 
suspension shall be entered by the Commission pursuant to paragraph 
(e)(3)(i) of this section more than 90 days after the date on which the 
final judgment or order entered in a judicial or administrative 
proceeding described in paragraph (e)(3)(i)(A) or (e)(3)(i)(B) of this 
section has become effective, whether upon completion of review or 
appeal procedures or because further review or appeal procedures are no 
longer available.
    (i) The Commission, with due regard to the public interest and 
without preliminary hearing, may, by order, temporarily suspend from 
appearing or practicing before it any attorney, accountant, engineer, or 
other professional or expert who has been by name:
    (A) Permanently enjoined by any court of competent jurisdiction, by 
reason of his or her misconduct in an action brought by the Commission, 
from violating or aiding and abetting the violation of any provision of 
the Federal securities laws or of the rules and regulations thereunder; 
or
    (B) Found by any court of competent jurisdiction in an action 
brought by the Commission to which he or she is a party or found by the 
Commission in any administrative proceeding to which he or she is a 
party to have violated (unless the violation was found not to have been 
willful) or aided and abetted the violation of any provision of the 
Federal securities laws or of the rules and regulations thereunder.
    (ii) Any person temporarily suspended from appearing and practicing 
before the Commission in accordance with paragraph (e)(3)(i) of this 
section may, within 30 days after service upon him or her of the order 
of temporary suspension, petition the Commission to lift the temporary 
suspension. If no petition has been received by the Commission within 30 
days after service of the order, the suspension shall become permanent.
    (iii) Within 30 days after the filing of a petition in accordance 
with paragraph (e)(3)(ii) of this section, the Commission shall either 
lift the temporary suspension, or set the matter down for hearing at a 
time and place designated by the Commission, or both, and, after 
opportunity for hearing, may censure the petitioner or disqualify the 
petitioner from appearing or practicing before the Commission for a 
period of time or permanently. In every case in which the temporary 
suspension has not been lifted, every hearing held and other action 
taken pursuant to this paragraph (e)(3) shall be expedited in accordance 
with Sec. 201.500. If the hearing is held before a hearing officer, the 
time limits set forth in Sec. 201.531 will govern review of the hearing 
officer's initial decision.
    (iv) In any hearing held on a petition filed in accordance with 
paragraph (e)(3)(ii) of this section, the staff of the Commission shall 
show either that the petitioner has been enjoined as described in 
paragraph (e)(3)(i)(A) of this section or that the petitioner has been 
found to have committed or aided and abetted violations as described in 
paragraph (e)(3)(i)(B) of this section and that showing, without more, 
may be the basis for censure or disqualification. Once that showing has 
been made, the burden shall be upon the petitioner to show cause why he 
or she should not be censured or temporarily or permanently disqualified 
from appearing and practicing before the Commission. In any such 
hearing, the petitioner may not contest any finding made against him or 
her or fact admitted by him or her in the judicial or administrative 
proceeding upon which the proceeding under this paragraph (e)(3) is 
predicated. A person who has consented to the entry of a permanent 
injunction as described in paragraph (e)(3)(i)(A) of this section 
without admitting the facts set forth in the complaint shall be presumed 
for all purposes under this paragraph (e)(3) to have been enjoined by 
reason of the misconduct alleged in the complaint.
    (4) Filing of prior orders. Any person appearing or practicing 
before the

[[Page 150]]

Commission who has been the subject of an order, judgment, decree, or 
finding as set forth in paragraph (e)(3) of this section shall promptly 
file with the Secretary a copy thereof (together with any related 
opinion or statement of the agency or tribunal involved). Failure to 
file any such paper, order, judgment, decree or finding shall not impair 
the operation of any other provision of this section.
    (5) Reinstatement. (i) An application for reinstatement of a person 
permanently suspended or disqualified under paragraph (e)(1) or (e)(3) 
of this section may be made at any time, and the applicant may, in the 
Commission's discretion, be afforded a hearing; however, the suspension 
or disqualification shall continue unless and until the applicant has 
been reinstated by the Commission for good cause shown.
    (ii) Any person suspended under paragraph (e)(2) of this section 
shall be reinstated by the Commission, upon appropriate application, if 
all the grounds for application of the provisions of that paragraph are 
subsequently removed by a reversal of the conviction or termination of 
the suspension, disbarment, or revocation. An application for 
reinstatement on any other grounds by any person suspended under 
paragraph (e)(2) of this section may be filed at any time and the 
applicant shall be accorded an opportunity for a hearing in the matter; 
however, such suspension shall continue unless and until the applicant 
has been reinstated by order of the Commission for good cause shown.
    (6) Other proceedings not precluded. A proceeding brought under 
paragraph (e)(1), (e)(2) or (e)(3) of this section shall not preclude 
another proceeding brought under these same paragraphs.
    (7) Public hearings. All hearings held under this paragraph (e) 
shall be public unless otherwise ordered by the Commission on its own 
motion or after considering the motion of a party.
    (f) Practice defined. For the purposes of these Rules of Practice, 
practicing before the Commission shall include, but shall not be limited 
to:
    (1) Transacting any business with the Commission; and
    (2) The preparation of any statement, opinion or other paper by any 
attorney, accountant, engineer or other professional or expert, filed 
with the Commission in any registration statement, notification, 
application, report or other document with the consent of such attorney, 
accountant, engineer or other professional or expert.

[60 FR 32796, June 23, 1995, as amended at 63 FR 57122, Oct. 26, 1998]



Sec. 201.103  Construction of rules.

    (a) The Rules of Practice shall be construed and administered to 
secure the just, speedy, and inexpensive determination of every 
proceeding.
    (b) In any particular proceeding, to the extent that there is a 
conflict between these rules and a procedural requirement contained in 
any statute, or any rule or form adopted thereunder, the latter shall 
control.
    (c) For purposes of these rules:
    (1) Any term in the singular includes the plural, and any term in 
the plural includes the singular, if such use would be appropriate;
    (2) Any use of a masculine, feminine, or neuter gender encompasses 
such other genders as would be appropriate; and
    (3) Unless the context requires otherwise, counsel for a party may 
take any action required or permitted to be taken by such party.



Sec. 201.104  Business hours.

    The Headquarters office of the Commission, at 450 Fifth Street, 
N.W., Washington, D.C. 20549, is open each day, except Saturdays, 
Sundays, and Federal legal holidays, from 9 a.m. to 5:30 p.m., Eastern 
Standard Time or Eastern Daylight Saving Time, whichever is currently in 
effect in Washington, D.C. Federal legal holidays consist of New Year's 
Day; Birthday of Martin Luther King, Jr.; Presidents Day; Memorial Day; 
Independence Day; Labor Day; Columbus Day; Veterans Day; Thanksgiving 
Day; Christmas Day; and any other day appointed as a holiday in 
Washington, D.C. by the President or the Congress of the United States.



Sec. 201.110  Presiding officer.

    All proceedings shall be presided over by the Commission or, if the 
Commission so orders, by a hearing officer. When the Commission 
designates that

[[Page 151]]

the hearing officer shall be an administrative law judge, the Chief 
Administrative Law Judge shall select, pursuant to 17 CFR 200.30-10, the 
administrative law judge to preside.



Sec. 201.111  Hearing officer: Authority.

    The hearing officer shall have the authority to do all things 
necessary and appropriate to discharge his or her duties. No provision 
of these Rules of Practice shall be construed to limit the powers of the 
hearing officer provided by the Administrative Procedure Act, 5 U.S.C. 
556, 557. The powers of the hearing officer include, but are not limited 
to, the following:
    (a) Administering oaths and affirmations;
    (b) Issuing subpoenas authorized by law and revoking, quashing, or 
modifying any such subpoena;
    (c) Receiving relevant evidence and ruling upon the admission of 
evidence and offers of proof;
    (d) Regulating the course of a proceeding and the conduct of the 
parties and their counsel;
    (e) Holding prehearing and other conferences as set forth in 
Sec. 201.221 and requiring the attendance at any such conference of at 
least one representative of each party who has authority to negotiate 
concerning the resolution of issues in controversy;
    (f) Recusing himself or herself upon motion made by a party or upon 
his or her own motion;
    (g) Ordering, in his or her discretion, in a proceeding involving 
more than one respondent, that the interested division indicate, on the 
record, at least one day prior to the presentation of any evidence, each 
respondent against whom that evidence will be offered;
    (h) Subject to any limitations set forth elsewhere in these rules, 
considering and ruling upon all procedural and other motions;
    (i) Preparing an initial decision as provided in Sec. 201.360;
    (j) Upon notice to all parties, reopening any hearing prior to the 
filing of an initial decision therein, or, if no initial decision is to 
be filed, prior to the time fixed for the filing of final briefs with 
the Commission; and
    (k) Informing the parties as to the availability of one or more 
alternative means of dispute resolution, and encouraging the use of such 
methods.



Sec. 201.112  Hearing officer: Disqualification and withdrawal.

    (a) Notice of disqualification. At any time a hearing officer 
believes himself or herself to be disqualified from considering a 
matter, the hearing officer shall issue a notice stating that he or she 
is withdrawing from the matter and setting forth the reasons therefor.
    (b) Motion for withdrawal. Any party who has a reasonable, good 
faith basis to believe that a hearing officer has a personal bias, or is 
otherwise disqualified from hearing a case, may make a motion to the 
hearing officer that the hearing officer withdraw. The motion shall be 
accompanied by an affidavit setting forth in detail the facts alleged to 
constitute grounds for disqualification. If the hearing officer finds 
himself or herself not disqualified, he or she shall so rule and shall 
continue to preside over the proceeding.



Sec. 201.120  Ex parte communications.

    (a) Except to the extent required for the disposition of ex parte 
matters as authorized by law, the person presiding over an evidentiary 
hearing may not:
    (1) Consult a person or party on a fact in issue, unless on notice 
and opportunity for all parties to participate; or
    (2) Be responsible to or subject to the supervision or direction of 
an employee or agent engaged in the performance of investigative or 
prosecuting functions for the Commission.
    (b) The Commission's code of behavior regarding ex parte 
communications between persons outside the Commission and decisional 
employees, 17 CFR 200.110 through 200.114, governs other prohibited 
communications during a proceeding conducted under the Rules of 
Practice.



Sec. 201.121  Separation of functions.

    Any Commission officer, employee or agent engaged in the performance 
of investigative or prosecutorial functions for the Commission in a 
proceeding as defined in Sec. 201.101(a) may not, in that proceeding or 
one that is factually related, participate or advise

[[Page 152]]

in the decision, or in Commission review of the decision pursuant to 
Section 557 of the Administrative Procedure Act, 5 U.S.C. 557, except as 
a witness or counsel in the proceeding.



Sec. 201.140  Commission orders and decisions: Signature and availability.

    (a) Signature required. All orders and decisions of the Commission 
shall be signed by the Secretary or any other person duly authorized by 
the Commission.
    (b) Availability for inspection. Each order and decision shall be 
available for inspection by the public from the date of entry, unless 
the order or decision is nonpublic. A nonpublic order or decision shall 
be available for inspection by any person entitled to inspect it from 
the date of entry.
    (c) Date of entry of orders. The date of entry of a Commission order 
shall be the date the order is signed. Such date shall be reflected in 
the caption of the order, or if there is no caption, in the order 
itself.



Sec. 201.141  Orders and decisions: Service of orders instituting proceeding and other orders and decisions.

    (a) Service of an order instituting proceedings. (1) By whom made. 
The Secretary, or another duly authorized officer of the Commission, 
shall serve a copy of an order instituting proceedings on each person 
named in the order as a party. The Secretary may direct an interested 
division to assist in making service.
    (2) How made. (i) To individuals. Notice of a proceeding shall be 
made to an individual by delivering a copy of the order instituting 
proceedings to the individual or to an agent authorized by appointment 
or by law to receive such notice. Delivery means--handing a copy of the 
order to the individual; or leaving a copy at the individual's office 
with a clerk or other person in charge thereof; or leaving a copy at the 
individual's dwelling house or usual place of abode with some person of 
suitable age and discretion then residing therein; or sending a copy of 
the order addressed to the individual by U.S. Postal Service certified, 
registered or Express Mail and obtaining a confirmation of receipt; or 
giving confirmed telegraphic notice.
    (ii) To corporations or entities. Notice of a proceeding shall be 
made to a person other than a natural person by delivering a copy of the 
order instituting proceedings to an officer, managing or general agent, 
or any other agent authorized by appointment or by law to receive such 
notice, by any method specified in paragraph (a)(2)(i) of this section.
    (iii) Upon persons registered with the Commission. In addition to 
any other method of service specified in paragraph (a)(2) of this 
section, notice may be made to a person currently registered with the 
Commission as a broker, dealer, municipal securities dealer, government 
securities broker, government securities dealer, investment adviser, 
investment company or transfer agent by sending a copy of the order 
addressed to the most recent business address shown on the person's 
registration form by U.S. Postal Service certified, registered or 
Express Mail and obtaining a confirmation of attempted delivery.
    (iv) Upon persons in a foreign country. Notice of a proceeding to a 
person in a foreign country may be made by any method specified in 
paragraph (a)(2) of this section, or by any other method reasonably 
calculated to give notice, provided that the method of service used is 
not prohibited by the law of the foreign country.
    (v) In stop order proceedings. Notwithstanding any other provision 
of paragraph (a)(2) of this section, in proceedings pursuant to Sections 
8 or 10 of the Securities Act of 1933, 15 U.S.C. 77h or 77j, or Sections 
305 or 307 of the Trust Indenture Act of 1939, 15 U.S.C. 77eee or 77ggg, 
notice of the institution of proceedings shall be made by personal 
service or confirmed telegraphic notice, or a waiver obtain pursuant to 
paragraph (a)(4) of this section.
    (3) Certificate of service. The Secretary shall place in the record 
of the proceeding a certificate of service identifying the party given 
notice, the method of service, the date of service, the address to which 
service was made and the person who made service. If service is made in 
person, the certificate shall

[[Page 153]]

state, if available, the name of the individual to whom the order was 
given. If service is made by U.S. Postal Service certified, registered 
or Express Mail, the certificate shall be accompanied by a confirmation 
of receipt or of attempted delivery, as required. If service is made to 
an agent authorized by appointment to receive service, the certificate 
shall be accompanied by evidence of the appointment.
    (4) Waiver of service. In lieu of service as set forth in paragraph 
(a)(2) of this section, the party may be provided a copy of the order 
instituting proceedings by first class mail or other reliable means if a 
waiver of service is obtained from the party and placed in the record.
    (b) Service of orders or decisions other than an order instituting 
proceedings. Written orders or decisions issued by the Commission or by 
a hearing officer shall be served promptly on each party pursuant to any 
method of service authorized under paragraph (a) of this section or 
Sec. 201.150(c). Service of orders or decisions by the Commission, 
including those entered pursuant to delegated authority, shall be made 
by the Secretary or, as authorized by the Secretary, by a member of an 
interested division. Service of orders or decisions issued by a hearing 
officer shall be made by the Secretary or the hearing officer.



Sec. 201.150  Service of papers by parties.

    (a) When required. In every proceeding as defined in 
Sec. 201.101(a), each paper, including each notice of appearance, 
written motion, brief, or other written communication, shall be served 
upon each party in the proceeding in accordance with the provisions of 
this section; provided, however, that absent an order to the contrary, 
no service shall be required for motions which may be heard ex parte.
    (b) Upon a person represented by counsel. Whenever service is 
required to be made upon a person represented by counsel who has filed a 
notice of appearance pursuant to Sec. 201.102, service shall be made 
pursuant to paragraph (c) of this section upon counsel, unless service 
upon the person represented is ordered by the Commission or the hearing 
officer.
    (c) How made. Service shall be made by delivering a copy of the 
filing. Delivery means:
    (1) Personal service--handing a copy to the person required to be 
served; or leaving a copy at the person's office with a clerk or other 
person in charge thereof, or, if there is no one in charge, leaving it 
in a conspicuous place therein; or, if the office is closed or the 
person to be served has no office, leaving it at the person's dwelling 
house or usual place of abode with some person of suitable age and 
discretion then residing therein;
    (2) Mailing the papers through the U.S. Postal Service by first 
class, registered, or certified mail or Express Mail delivery addressed 
to the person;
    (3) Sending the papers through a commercial courier service or 
express delivery service; or
    (4) Transmitting the papers by facsimile machine where the following 
conditions are met:
    (i) The persons serving each other by facsimile transmission have 
agreed to do so in a writing, signed by each party, which specifies such 
terms as they deem necessary with respect to facsimile machine telephone 
numbers to be used, hours of facsimile machine operation, the provision 
of non-facsimile original or copy, and any other such matters; and
    (ii) Receipt of each document served by facsimile is confirmed by a 
manually signed receipt delivered by facsimile machine or other means 
agreed to by the parties.
    (d) When service is complete. Personal service, service by U.S. 
Postal Service Express Mail or service by a commercial courier or 
express delivery service is complete upon delivery. Service by mail is 
complete upon mailing. Service by facsimile is complete upon 
confirmation of transmission by delivery of a manually signed receipt.



Sec. 201.151  Filing of papers with the Commission: Procedure.

    (a) When to file. All papers required to be served by a party upon 
any person shall be filed with the Commission at the time of service or 
promptly thereafter. Papers required to be filed with

[[Page 154]]

the Commission must be received within the time limit, if any, for such 
filing.
    (b) Where to file. Filing of papers with the Commission shall be 
made by filing them with the Secretary. When a proceeding is assigned to 
a hearing officer, a person making a filing with the Secretary shall 
promptly provide to the hearing officer a copy of any such filing, 
provided, however, that the hearing officer may direct or permit filings 
to be made with him or her, in which event the hearing officer shall 
note thereon the filing date and promptly provide the Secretary with 
either the original or a copy of any such filings.
    (c) To whom to direct the filing. Unless otherwise provided, where 
the Commission has assigned a case to a hearing officer, all motions, 
objections, applications or other filings made during a proceeding prior 
to the filing of an initial decision therein, or, if no initial decision 
is to be filed, prior to the time fixed for the filing of briefs with 
the Commission, shall be directed to and decided by the hearing officer.
    (d) Certificate of service. Papers filed with the Commission or a 
hearing officer shall be accompanied by a certificate stating the name 
of the person or persons served, the date of service, the method of 
service and the mailing address or facsimile telephone number to which 
service was made, if not made in person. If the method of service to any 
party is different from the method of service to any other party or the 
method for filing with the Commission, the certificate shall state why a 
different means of service was used.



Sec. 201.152  Filing of papers: Form.

    (a) Specifications. Papers filed in connection with any proceeding 
as defined in Sec. 201.101(a) shall:
    (1) Be on one grade of unglazed white paper measuring 8\1/2\x11 
inches, except that, to the extent that the reduction of larger 
documents would render them illegible, such documents may be filed on 
larger paper;
    (2) Be typewritten or printed in either 10- or 12-point typeface or 
otherwise reproduced by a process that produces permanent and plainly 
legible copies;
    (3) Include at the head of the paper, or on a title page, the name 
of the Commission, the title of the proceeding, the names of the 
parties, the subject of the particular paper or pleading, and the file 
number assigned to the proceeding;
    (4) Be paginated with left hand margins at least 1 inch wide, and 
other margins of at least 1 inch;
    (5) Be double-spaced, with single-spaced footnotes and single-spaced 
indented quotations; and
    (6) Be stapled, clipped or otherwise fastened in the upper left 
corner.
    (b) Signature required. All papers must be dated and signed as 
provided in Sec. 201.153.
    (c) Suitability for recordkeeping. Documents which, in the opinion 
of the Commission, are not suitable for computer scanning or 
microfilming may be rejected.
    (d) Number of copies. An original and three copies of all papers 
shall be filed.
    (e) Form of briefs. All briefs containing more than 10 pages shall 
include a table of contents, an alphabetized table of cases, a table of 
statutes, and a table of other authorities cited, with references to the 
pages of the brief wherein they are cited.
    (f) Scandalous or impertinent matter. Any scandalous or impertinent 
matter contained in any brief or pleading or in connection with any oral 
presentation in a proceeding may be stricken on order of the Commission 
or the hearing officer.



Sec. 201.153  Filing of papers: Signature requirement and effect.

    (a) General requirements. Following the issuance of an order 
instituting proceedings, every filing of a party represented by counsel 
shall be signed by at least one counsel of record in his or her name and 
shall state that counsel's business address and telephone number. A 
party who acts as his or her own counsel shall sign his or her 
individual name and state his or her address and telephone number on 
every filing.
    (b) Effect of signature. (1) The signature of a counsel or party 
shall constitute a certification that:
    (i) the person signing the filing has read the filing;

[[Page 155]]

    (ii) to the best of his or her knowledge, information, and belief, 
formed after reasonable inquiry, the filing is well grounded in fact and 
is warranted by existing law or a good faith argument for the extension, 
modification, or reversal of existing law; and
    (iii) the filing is not made for any improper purpose, such as to 
harass or to cause unnecessary delay or needless increase in the cost of 
adjudication.
    (2) If a filing is not signed, the hearing officer or the Commission 
shall strike the filing, unless it is signed promptly after the omission 
is called to the attention of the person making the filing.



Sec. 201.154  Motions.

    (a) Generally. Unless made during a hearing or conference, a motion 
shall be in writing, shall state with particularity the grounds 
therefor, shall set forth the relief or order sought, and shall be 
accompanied by a written brief of the points and authorities relied 
upon. All written motions shall be served in accordance with 
Sec. 201.150, be filed in accordance with Sec. 201.151, meet the 
requirements of Sec. 201.152, and be signed in accordance with 
Sec. 201.153. The Commission or the hearing officer may order that an 
oral motion be submitted in writing. Unless otherwise ordered by the 
Commission or the hearing officer, if a motion is properly made to the 
Commission concerning a proceeding to which a hearing officer is 
assigned, the proceeding before the hearing officer shall continue 
pending the determination of the motion by the Commission. No oral 
argument shall be heard on any motion unless the Commission or the 
hearing officer otherwise directs.
    (b) Opposing and reply briefs. Except as provided in Sec. 201.401, 
briefs in opposition to a motion shall be filed within five days after 
service of the motion. Reply briefs shall be filed within three days 
after service of the opposition.
    (c) Length limitation. A brief in support of or opposition to a 
motion shall not exceed 10 pages, exclusive of pages containing any 
table of contents, table of authorities, and/or addendum. Requests for 
leave to file briefs in excess of 10 pages are disfavored.



Sec. 201.155  Default; motion to set aside default.

    (a) A party to a proceeding may be deemed to be in default and the 
Commission or the hearing officer may determine the proceeding against 
that party upon consideration of the record, including the order 
instituting proceedings, the allegations of which may be deemed to be 
true, if that party fails:
    (1) To appear, in person or through a representative, at a hearing 
or conference of which that party has been notified;
    (2) To answer, to respond to a dispositive motion within the time 
provided, or otherwise to defend the proceeding; or
    (3) To cure a deficient filing within the time specified by the 
commission or the hearing officer pursuant to Sec. 201.180(b).
    (b) A motion to set aside a default shall be made within a 
reasonable time, state the reasons for the failure to appear or defend, 
and specify the nature of the proposed defense in the proceeding. In 
order to prevent injustice and on such conditions as may be appropriate, 
the hearing officer, at any time prior to the filing of the initial 
decision, or the Commission, at any time, may for good cause shown set 
aside a default.



Sec. 201.160  Time computation.

    (a) Computation. In computing any period of time prescribed in or 
allowed by these Rules of Practice or by order of the Commission, the 
day of the act, event, or default from which the designated period of 
time begins to run shall not be included. The last day of the period so 
computed shall be included unless it is a Saturday, Sunday, or Federal 
legal holiday (as defined in Sec. 201.104), in which event the period 
runs until the end of the next day that is not a Saturday, Sunday, or 
Federal legal holiday. Intermediate Saturdays, Sundays, and Federal 
legal holidays shall be excluded from the computation when the period of 
time prescribed or allowed is seven days or less, not including any 
additional time allowed for service by mail in paragraph (b) of this 
section. If on the day a filing is to be made, weather or other 
conditions have

[[Page 156]]

caused the Secretary's office or other designated filing location to 
close, the filing deadline shall be extended to the end of the next day 
that is neither a Saturday, a Sunday, nor a Federal legal holiday.
    (b) Additional time for service by mail. If service is made by mail, 
three days shall be added to the prescribed period for response.



Sec. 201.161  Extensions of time, postponements and adjournments.

    (a) Availability. Except as otherwise provided by law, the 
Commission, at any time, or the hearing officer, at any time prior to 
the filing of his or her initial decision or, if no initial decision is 
to be filed, at any time prior to the closing of the record, may, for 
good cause shown, extend or shorten any time limits prescribed by these 
Rules of Practice for the filing of any papers and may, consistent with 
paragraph (b) of this section, postpone or adjourn any hearing.
    (b) Limitations on postponements, adjournments and extensions. A 
hearing shall begin at the time and place ordered, provided that, within 
the limits provided by statute, the Commission or the hearing officer 
may for good cause shown postpone the commencement of the hearing or 
adjourn a convened hearing for a reasonable period of time or change the 
place of hearing.
    (1) Additional considerations. In considering a motion for 
postponement of the start of a hearing, adjournment once a hearing has 
begun, or extensions of time for filing papers, the hearing officer or 
the Commission shall consider, in addition to any other factors:
    (i) The length of the proceeding to date;
    (ii) The number of postponements, adjournments or extensions already 
granted;
    (iii) The stage of the proceedings at the time of the request; and
    (iv) Any other such matters as justice may require.
    (2) Time limit. Postponements, adjournments or extensions of time 
for filing papers shall not exceed 21 days unless the Commission or the 
hearing officer states on the record or sets forth in a written order 
the reasons why a longer period of time is necessary.



Sec. 201.180  Sanctions.

    (a) Contemptuous conduct--(1) Subject to exclusion or suspension. 
Contemptuous conduct by any person before the Commission or a hearing 
officer during any proceeding, including any conference, shall be 
grounds for the Commission or the hearing officer to:
    (i) Exclude that person from such hearing or conference, or any 
portion thereof; and/or
    (ii) Summarily suspend that person from representing others in the 
proceeding in which such conduct occurred for the duration, or any 
portion, of the proceeding.
    (2) Review procedure. A person excluded from a hearing or 
conference, or a counsel summarily suspended from practice for the 
duration or any portion of a proceeding, may seek review of the 
exclusion or suspension by filing with the Commission, within three days 
of the exclusion or suspension order, a motion to vacate the order. The 
Commission shall consider such motion on an expedited basis as provided 
in Sec. 201.500.
    (3) Adjournment. Upon motion by a party represented by counsel 
subject to an order of exclusion or suspension, an adjournment shall be 
granted to allow the retention of new counsel. In determining the length 
of an adjournment, the Commission or hearing officer shall consider, in 
addition to the factors set forth in Sec. 201.161, the availability of 
co-counsel for the party or of other members of a suspended counsel's 
firm.
    (b) Deficient filings; leave to cure deficiencies. The Commission or 
the hearing officer may reject, in whole or in part, any filing that 
fails to comply with any requirements of these Rules of Practice or of 
any order issued in the proceeding in which the filing was made. Any 
such filings shall not be part of the record. The Commission or the 
hearing officer may direct a party to cure any deficiencies and to 
resubmit the filing within a fixed time period.
    (c) Failure to make required filing or to cure deficient filing. The 
Commission or the hearing officer may enter a default pursuant to 
Sec. 201.155, dismiss the case,

[[Page 157]]

decide the particular matter at issue against that person, or prohibit 
the introduction of evidence or exclude testimony concerning that matter 
if a person fails:
    (1) To make a filing required under these Rules of Practice; or
    (2) To cure a deficient filing within the time specified by the 
Commission or the hearing officer pursuant to paragraph (b) of this 
section.



Sec. 201.190  Confidential treatment of information in certain filings.

    (a) Application. An application for confidential treatment pursuant 
to the provisions of Clause 30 of Schedule A of the Securities Act of 
1933, 15 U.S.C. 77aa(30), and Rule 406 thereunder, 17 CFR 230.406; 
Section 24(b)(2) of the Securities Exchange Act of 1934, 15 U.S.C. 
78x(b)(2), and Rule 24b-2 thereunder, 17 CFR 240.24b-2; Section 22(b) of 
the Public Utility Holding Company Act of 1935, 15 U.S.C. 79v(b), and 
Rule 104 thereunder, 17 CFR 250.104; Section 45(a) of the Investment 
Company Act of 1940, 15 U.S.C. 80a-44(a), and Rule 45a-1 thereunder, 17 
CFR 270.45a-1; or Section 210(a) of the Investment Advisers Act of 1940, 
15 U.S.C. 80b-10(a), shall be filed with the Secretary. The application 
shall be accompanied by a sealed copy of the materials as to which 
confidential treatment is sought.
    (b) Procedure for supplying additional information. The applicant 
may be required to furnish in writing additional information with 
respect to the grounds for objection to public disclosure. Failure to 
supply the information so requested within 14 days from the date of 
receipt by the applicant of a notice of the information required shall 
be deemed a waiver of the objection to public disclosure of that portion 
of the information to which the additional information relates, unless 
the Commission or the hearing officer shall otherwise order for good 
cause shown at or before the expiration of such 14-day period.
    (c) Confidentiality of materials pending final decision. Pending the 
determination of the application for confidential treatment, 
transcripts, non-final orders including an initial decision, if any, and 
other materials in connection with the application shall be placed under 
seal; shall be for the confidential use only of the hearing officer, the 
Commission, the applicant, and any other parties and counsel; and shall 
be made available to the public only in accordance with orders of the 
Commission.
    (d) Public availability of orders. Any final order of the Commission 
denying or sustaining an application for confidential treatment shall be 
made public. Any prior findings or opinions relating to an application 
for confidential treatment under this section shall be made public at 
such time as the material as to which confidentiality was requested is 
made public.



Sec. 201.191  Adjudications not required to be determined on the record after notice and opportunity for hearing.

    (a) Scope of the rule. This rule applies to every case of 
adjudication, as defined in 5 U.S.C. 551, pursuant to any statute which 
the Commission administers, where adjudication is not required to be 
determined on the record after notice and opportunity for hearing and 
which the Commission has not chosen to determine on the record after 
notice and opportunity for hearing.
    (b) Procedure. In every case of adjudication under paragraph (a) of 
this section, the Commission shall give prompt notice of any adverse 
action or final disposition to any person who has requested the 
Commission to make (or not to make) any such adjudication, and furnish 
to any such person a written statement of reasons therefor. Additional 
procedures may be specified in rules relating to specific types of such 
adjudications. Where any such rule provides for the publication of a 
Commission order, notice of the action or disposition shall be deemed to 
be given by such publication.
    (c) Contents of the record. If the Commission provides notice and 
opportunity for the submission of written comments by parties to the 
adjudication or, as the case may be, by other interested persons, 
written comments received on or before the closing date for comments, 
unless accorded confidential treatment pursuant to statute or rule of 
the Commission, become a part of the record of the adjudication. The 
Commission, in its discretion, may

[[Page 158]]

accept and include in the record written comments filed with the 
Commission after the closing date.



Sec. 201.192  Rulemaking: Issuance, amendment and repeal of rules of general application.

    (a) By petition. Any person desiring the issuance, amendment or 
repeal of a rule of general application may file a petition therefor 
with the Secretary. Such petition shall include a statement setting 
forth the text or the substance of any proposed rule or amendment 
desired or specifying the rule the repeal of which is desired, and 
stating the nature of his or her interest and his or her reasons for 
seeking the issuance, amendment or repeal of the rule. The Secretary 
shall acknowledge, in writing, receipt of the petition and refer it to 
the appropriate division or office for consideration and recommendation. 
Such recommendations shall be transmitted with the petition to the 
Commission for such action as the Commission deems appropriate. The 
Secretary shall notify the petitioner of the action taken by the 
Commission.
    (b) Notice of proposed issuance, amendment or repeal of rules. 
Except where the Commission finds that notice and public procedure are 
impracticable, unnecessary, or contrary to the public interest, whenever 
the Commission proposes to issue, amend, or repeal any rule or 
regulation of general application other than an interpretive rule; 
general statement of policy; or rule of agency organization, procedure, 
or practice; or any matter relating to agency management or personnel or 
to public property, loans, grants, benefits, or contracts, there shall 
first be published in the Federal Register a notice of the proposed 
action. Such notice shall include:
    (1) A statement of the time, place, and nature of the rulemaking 
proceeding, with particular reference to the manner in which interested 
persons shall be afforded the opportunity to participate in such 
proceeding;
    (2) Reference to the authority under which the rule is proposed; and
    (3) The terms or substance of the proposed rule or a description of 
the subjects and issues involved.



Sec. 201.193  Applications by barred individuals for consent to associate.

                            Preliminary note

    This rule governs applications to the Commission by certain persons, 
barred by Commission order from association with brokers, dealers, 
municipal securities dealers, government securities brokers, government 
securities dealers, investment advisers, investment companies or 
transfer agents, for consent to become so associated. Applications made 
pursuant to this section must show that the proposed association would 
be consistent with the public interest. In addition to the information 
specifically required by the rule, applications should be supplemented, 
where appropriate, by written statements of individuals (other than the 
applicant) who are competent to attest to the applicant's character, 
employment performance, and other relevant information. Intentional 
misstatements or omissions of fact may constitute criminal violations of 
18 U.S.C. 1001 et seq. and other provisions of law.
    The nature of the supervision that an applicant will receive or 
exercise as an associated person with a registered entity is an 
important matter bearing upon the public interest. In meeting the burden 
of showing that the proposed association is consistent with the public 
interest, the application and supporting documentation must demonstrate 
that the proposed supervision, procedures, or terms and conditions of 
employment are reasonably designed to prevent a recurrence of the 
conduct that led to imposition of the bar. As an associated person, the 
applicant will be limited to association in a specified capacity with a 
particular registered entity and may also be subject to specific terms 
and conditions.
    Normally, the applicant's burden of demonstrating that the proposed 
association is consistent with the public interest will be difficult to 
meet where the applicant is to be supervised by, or is to supervise, 
another barred individual. In addition, where an applicant wishes to 
become the sole proprietor of a registered entity and thus is seeking 
Commission consent notwithstanding an absence of supervision, the 
applicant's burden will be difficult to meet.
    In addition to the factors set forth in paragraph (d) of this 
section, the Commission will consider the nature of the findings that 
resulted in the bar when making its determination as to whether the 
proposed association is consistent with the public interest. In this 
regard, attention is directed to Rule 5(e) of the Commission's Rules on 
Informal and Other Procedures, 17 CFR 202.5(e). Among other things, Rule 
5(e) sets forth the Commission's policy ``not to permit a * * * 
respondent [in an administrative proceeding] to consent to * * * [an] 
order that imposes a

[[Page 159]]

sanction while denying the allegations in the * * * order for 
proceedings.'' Consistent with the rationale underlying that policy, and 
in order to avoid the appearance that an application made pursuant to 
this section was granted on the basis of such denial, the Commission 
will not consider any application that attempts to reargue or 
collaterally attack the findings that resulted in the Commission's bar 
order.

    (a) Scope of rule. Applications for Commission consent to associate, 
or to change the terms and conditions of association, with a registered 
broker, dealer, municipal securities dealer, government securities 
broker, government securities dealer, investment adviser, investment 
company or transfer agent may be made pursuant to this section where a 
Commission order bars the individual from association with a registered 
entity and:
    (1) Such barred individual seeks to become associated with an entity 
that is not a member of a self-regulatory organization; or
    (2) The order contains a proviso that application may be made to the 
Commission after a specified period of time.
    (b) Form of application. Each application shall be supported by an 
affidavit, manually signed by the applicant, that addresses the factors 
set forth in paragraph (d) of this section. One original and three 
copies of the application shall be filed pursuant to Secs. 201.151, 
201.152 and 201.153. Each application shall include as exhibits:
    (1) A copy of the Commission order imposing the bar;
    (2) An undertaking by the applicant to notify immediately the 
Commission in writing if any information submitted in support of the 
application becomes materially false or misleading while the application 
is pending;
    (3) The following forms, as appropriate:
    (i) A copy of a completed Form U-4, where the applicant's proposed 
association is with a broker-dealer or municipal securities dealer;
    (ii) A copy of a completed Form MSD-4, where the applicant's 
proposed association is with a bank municipal securities dealer;
    (iii) The information required by Form ADV, 17 CFR 279.1, with 
respect to the applicant, where the applicant's proposed association is 
with an investment adviser;
    (iv) The information required by Form TA-1, 17 CFR 249b.100, with 
respect to the applicant, where the applicant's proposed association is 
with a transfer agent; and
    (4) A written statement by the proposed employer that describes:
    (i) The terms and conditions of employment and supervision to be 
exercised over such applicant and, where applicable, by such applicant;
    (ii) The qualifications, experience, and disciplinary records of the 
proposed supervisor(s) of the applicant;
    (iii) The compliance and disciplinary history, during the two years 
preceding the filing of the application, of the office in which the 
applicant will be employed; and
    (iv) The names of any other associated persons in the same office 
who have previously been barred by the Commission, and whether they are 
to be supervised by the applicant.
    (c) Required showing. The applicant shall make a showing 
satisfactory to the Commission that the proposed association would be 
consistent with the public interest.
    (d) Factors to be addressed. The affidavit required by paragraph (b) 
of this section shall address each of the following:
    (1) The time period since the imposition of the bar;
    (2) Any restitution or similar action taken by the applicant to 
recompense any person injured by the misconduct that resulted in the 
bar;
    (3) The applicant's compliance with the order imposing the bar;
    (4) The applicant's employment during the period subsequent to 
imposition of the bar;
    (5) The capacity or position in which the applicant proposes to be 
associated;
    (6) The manner and extent of supervision to be exercised over such 
applicant and, where applicable, by such applicant;
    (7) Any relevant courses, seminars, examinations or other actions 
completed by the applicant subsequent to imposition of the bar to 
prepare for his or her return to the securities business; and

[[Page 160]]

    (8) Any other information material to the application.
    (e) Notification to applicant and written statement. In the event an 
adverse recommendation is proposed by the staff with respect to an 
application made pursuant to this section, the applicant shall be so 
advised and provided with a written statement of the reasons for such 
recommendation. The applicant shall then have 30 days to submit a 
written statement in response.
    (f) Concurrent applications. The Commission will not consider any 
application submitted pursuant to this section if any other application 
for consent to associate concerning the same applicant is pending before 
any self-regulatory organization.

             Initiation of Proceedings and Prehearing Rules



Sec. 201.200  Initiation of proceedings.

    (a) Order instituting proceedings: Notice and opportunity for 
hearing. (1) Generally. Whenever an order instituting proceedings is 
issued by the Commission, appropriate notice thereof shall be given to 
each party to the proceeding by the Secretary or another duly designated 
officer of the Commission. Each party shall be given notice of any 
hearing within a time reasonable in light of the circumstances, in 
advance of the hearing; provided, however, no prior notice need be given 
to a respondent if the Commission has authorized the Division of 
Enforcement to seek a temporary sanction ex parte.
    (2) Stop order proceedings: Additional persons entitled to notice. 
Any notice of a proceeding relating to the issuance of a stop order 
suspending the effectiveness of a registration statement pursuant to 
Section 8(d) of the Securities Act of 1933, 15 U.S.C. 77h(d), shall be 
sent to or served on the issuer; or, in the case of a foreign government 
or political subdivision thereof, sent to or served on the underwriter; 
or, in the case of a foreign or territorial person, sent to or served on 
its duly authorized representative in the United States named in the 
registration statement, properly directed in the case of telegraphic 
notice to the address given in such statement. In addition, if such 
proceeding is commenced within 90 days after the registration statement 
has become effective, notice of the proceeding shall be given to the 
agent for service named on the facing sheet of the registration 
statement and to each other person designated on the facing sheet of the 
registration statement as a person to whom copies of communications to 
such agent are to be sent.
    (b) Content of order. The order instituting proceedings shall:
    (1) State the nature of any hearing;
    (2) State the legal authority and jurisdiction under which the 
hearing is to be held;
    (3) Contain a short and plain statement of the matters of fact and 
law to be considered and determined, unless the order directs an answer 
pursuant to Sec. 201.220 in which case the order shall set forth the 
factual and legal basis alleged therefor in such detail as will permit a 
specific response thereto; and
    (4) State the nature of any relief or action sought or taken.
    (c) Time and place of hearing. The time and place for any hearing 
shall be fixed with due regard for the public interest and the 
convenience and necessity of the parties, other participants, or their 
representatives.
    (d) Amendment to order instituting proceedings. (1) By the 
Commission. Upon motion by a party, the Commission may, at any time, 
amend an order instituting proceedings to include new matters of fact or 
law.
    (2) By the hearing officer. Upon motion by a party, the hearing 
officer may, at any time prior to the filing of an initial decision or, 
if no initial decision is to be filed, prior to the time fixed for the 
filing of final briefs with the Commission, amend an order instituting 
proceedings to include new matters of fact or law that are within the 
scope of the original order instituting proceedings.
    (e) Publication of notice of public hearings. Unless otherwise 
ordered by the Commission, notice of any public hearing shall be given 
general circulation by release to the public, by publication in the SEC 
News Digest and, where directed, by publication in the Federal Register.

[[Page 161]]



Sec. 201.201  Consolidation of proceedings.

    By order of the Commission or a hearing officer, proceedings 
involving a common question of law or fact may be consolidated for 
hearing of any or all the matters at issue in such proceedings. The 
Commission or the hearing officer may make such orders concerning the 
conduct of such proceedings as it deems appropriate to avoid unnecessary 
cost or delay. Consolidation shall not prejudice any rights under these 
Rules of Practice and shall not affect the right of any party to raise 
issues that could have been raised if consolidation had not occurred. 
For purposes of this section, no distinction is made between joinder and 
consolidation of proceedings.



Sec. 201.202  Specification of procedures by parties in certain proceedings.

    (a) Motion to specify procedures. In any proceeding other than an 
enforcement or disciplinary proceeding or a proceeding to review a 
determination by a self-regulatory organization pursuant to 
Secs. 201.420 and 201.421, a party may, at any time up to 20 days prior 
to the start of a hearing, make a motion to specify the procedures 
necessary or appropriate for the proceeding, with particular reference 
to:
    (1) Whether there should be an initial decision by a hearing 
officer;
    (2) Whether any interested division of the Commission may assist in 
the preparation of the Commission's decision; and
    (3) Whether there should be a 30-day waiting period between the 
issuance of the Commission's order and the date it is to become 
effective.
    (b) Objections; effect of failure to object. Any other party may 
object to the procedures so specified, and such party may specify such 
additional procedures as it considers necessary or appropriate. In the 
absence of such objection or such specification of additional 
procedures, such other party may be deemed to have waived objection to 
the specified procedures.
    (c) Approval required. Any proposal pursuant to paragraph (a) of 
this section, even if not objected to by any party, shall be subject to 
the written approval of the hearing officer.
    (d) Procedure upon agreement to waive an initial decision. If an 
initial decision is waived pursuant to paragraph (a) of this section, 
the hearing officer shall notify the Secretary and, unless the 
Commission directs otherwise within 14 days, no initial decision shall 
be issued.



Sec. 201.210  Parties, limited participants and amici curiae.

    (a) Parties in an enforcement or disciplinary proceeding or a 
proceeding to review a self-regulatory organization determination-- (1) 
Generally. No person shall be granted leave to become a party or non-
party participant on a limited basis in an enforcement or disciplinary 
proceeding or a proceeding to review a determination by a self-
regulatory organization pursuant to Secs. 201.420 and 201.421, except as 
authorized by paragraph (c) of this section.
    (2) Disgorgement proceedings. In an enforcement proceeding, a person 
may state his or her views with respect to a proposed plan of 
disgorgement or file a proof of claim pursuant to Sec. 201.612.
    (b) Intervention as a party. (1) Generally. In any proceeding, other 
than an enforcement proceeding, a disciplinary proceeding or a 
proceeding to review a self-regulatory organization determination, any 
person may seek leave to intervene as a party by filing a motion setting 
forth the person's interest in the proceeding. No person, however, shall 
be admitted as a party to a proceeding by intervention unless it is 
determined that leave to participate pursuant to paragraph (c) of this 
section would be inadequate for the protection of his or her interests.
    (i) In a proceeding under the Public Utility Holding Company Act of 
1935, any representative of interested consumers or security holders, or 
any other person whose participation in the proceeding may be in the 
public interest or for the protection of investors or consumers, may be 
admitted as a party upon the filing of a written motion setting forth 
the person's interest in the proceeding.
    (ii) In a proceeding under the Investment Company Act of 1940, any 
representative of interested security holders, or any other person whose 
participation in the proceeding may be in the public interest or for the 
protection of

[[Page 162]]

investors, may be admitted as a party upon the filing of a written 
motion setting forth the person's interest in the proceeding.
    (2) Intervention as of right. (i) In proceedings under the Public 
Utility Holding Company Act of 1935, any interested representative, 
agency, authority or instrumentality of the United States or any 
interested State, State commission, municipality or other political 
subdivision of a state shall be admitted as a party to any proceeding 
upon the filing of a written motion requesting leave to be admitted.
    (ii) In proceedings under the Investment Company Act of 1940, any 
interested State or State agency shall be admitted as a party to any 
proceeding upon the filing of a written motion requesting leave to be 
admitted.
    (c) Leave to participate on a limited basis. In any proceeding, 
other than an enforcement proceeding, a disciplinary proceeding or a 
proceeding to review a self-regulatory organization determination, any 
person may seek leave to participate on a limited basis as a non-party 
participant as to any matter affecting the person's interests. In any 
enforcement proceeding or disciplinary proceeding, an authorized 
representative of the United States Department of Justice, an authorized 
representative of a United States Attorney, or an authorized 
representative of any criminal prosecutorial authority of any State or 
any other political subdivision of a State may seek leave to participate 
on a limited basis as a non-party participant as provided in paragraph 
(c)(3) of this section.
    (1) Procedure. Motions for leave to participate shall be in writing, 
shall set forth the nature and extent of the movant's interest in the 
proceeding, and, except where good cause for late filing is shown, shall 
be filed not later than 20 days prior to the date fixed for the 
commencement of the hearing. Leave to participate pursuant to this 
paragraph (c) may include such rights of a party as the hearing officer 
may deem appropriate. Persons granted leave to participate shall be 
served in accordance with Sec. 201.150; provided, however, that a party 
to the proceeding may move that the extent of notice of filings or other 
papers to be provided to persons granted leave to participate be 
limited, or may move that the persons granted leave to participate bear 
the cost of being provided copies of any or all filings or other papers. 
Persons granted leave to participate shall be bound, except as may be 
otherwise determined by the hearing officer, by any stipulation between 
the parties to the proceeding with respect to procedure, including 
submission of evidence, substitution of exhibits, corrections of the 
record, the time within which briefs or exceptions may be filed or 
proposed findings and conclusions may be submitted, the filing of 
initial decisions, the procedure to be followed in the preparation of 
decisions and the effective date of the Commission's order in the case. 
Where the filing of briefs or exceptions or the submission of proposed 
findings and conclusions are waived by the parties to the proceedings, a 
person granted leave to participate pursuant to this paragraph (c) shall 
not be permitted to file a brief or exceptions or submit proposed 
findings and conclusions except by leave of the Commission or of the 
hearing officer.
    (2) Certain persons entitled to leave to participate. The hearing 
officer is directed to grant leave to participate under this paragraph 
(c) to any person to whom it is proposed to issue any security in 
exchange for one or more bona fide outstanding securities, claims or 
property interests, or partly in such exchange and partly for cash, 
where the Commission is authorized to approve the terms and conditions 
of such issuance and exchange after a hearing upon the fairness of such 
terms and conditions.
    (3) Leave to participate in certain Commission proceedings by a 
representative of the United States Department of Justice, a United 
States Attorney's Office, or a criminal prosecutorial authority of any 
State or any other political subdivision of a State. The Commission or 
the hearing officer may grant leave to participate on a limited basis to 
an authorized representative of the United States Department of Justice, 
an authorized representative of a United States Attorney, or an 
authorized representative of any criminal prosecutorial authority of any 
State or any other political subdivision of a State for the purpose of

[[Page 163]]

requesting a stay during the pendency of a criminal investigation or 
prosecution arising out of the same or similar facts that are at issue 
in the pending Commission enforcement or disciplinary proceeding. Upon a 
showing that such a stay is in the public interest or for the protection 
of investors, the motion for stay shall be favored. A stay granted under 
this paragraph (c)(3) may be granted for such a period and upon such 
conditions as the Commission or the hearing officer deems appropriate.
    (d) Amicus participation--(1) Availability. An amicus brief may be 
filed only if:
    (i) A motion for leave to file the brief has been granted;
    (ii) The brief is accompanied by written consent of all parties;
    (iii) The brief is filed at the request of the Commission or the 
hearing officer; or
    (iv) The brief is presented by the United States or an officer or 
agency thereof, or by a State, Territory or Commonwealth.
    (2) Procedure. An amicus brief may be filed conditionally with the 
motion for leave. The motion for leave shall identify the interest of 
the movant and shall state the reasons why a brief of an amicus curiae 
is desirable. Except as all parties otherwise consent, any amicus curiae 
shall file its brief within the time allowed the party whose position 
the amicus will support, unless the Commission or hearing officer, for 
cause shown, grants leave for a later filing. In the event that a later 
filing is allowed, the order granting leave to file shall specify when 
an opposing party may reply to the brief. A motion of an amicus curiae 
to participate in oral argument will be granted only for extraordinary 
reasons.
    (e) Permission to state views. Any person may make a motion seeking 
leave to file a memorandum or make an oral statement of his or her 
views. Any such communication may be included in the record; provided, 
however, that unless offered and admitted as evidence of the truth of 
the statements therein made, any assertions of fact submitted pursuant 
to the provisions of this paragraph (e) will be considered only to the 
extent that the statements therein made are otherwise supported by the 
record.
    (f) Modification of participation provisions. The Commission or the 
hearing officer may, by order, modify the provisions of this section 
which would otherwise be applicable, and may impose such terms and 
conditions on the participation of any person in any proceeding as it 
may deem necessary or appropriate in the public interest.

[60 FR 32796, June 23, 1995, as amended at 63 FR 63405, Nov. 13, 1998]



Sec. 201.220  Answer to allegations.

    (a) When required. In its order instituting proceedings, the 
Commission may require any party to file an answer to each of the 
allegations contained therein. Even if not so ordered, any party in any 
proceeding may elect to file an answer. Any other person granted leave 
by the Commission or the hearing officer to participate on a limited 
basis in such proceedings pursuant to Sec. 201.210(c) may be required to 
file an answer.
    (b) When to file. Except where a different period is provided by 
rule or by order, a party required to file an answer as provided in 
paragraph (a) of this section shall do so within 20 days after service 
upon the party of the order instituting proceedings. Persons granted 
leave to participate on a limited basis in the proceeding pursuant to 
Sec. 201.210(c) may file an answer within a reasonable time, as 
determined by the Commission or the hearing officer. If the order 
instituting proceedings is amended, the Commission or the hearing 
officer may require that an amended answer be filed and, if such an 
answer is required, shall specify a date for the filing thereof.
    (c) Contents; effect of failure to deny. Unless otherwise directed 
by the hearing officer or the Commission, an answer shall specifically 
admit, deny, or state that the party does not have, and is unable to 
obtain, sufficient information to admit or deny each allegation in the 
order instituting proceedings. When a party intends in good faith to 
deny only a part of an allegation, the party shall specify so much of it 
as is true and shall deny only the remainder. A statement of a lack of 
information shall have the effect of a denial. A

[[Page 164]]

defense of res judicata, statute of limitations or any other matter 
constituting an affirmative defense shall be asserted in the answer. Any 
allegation not denied shall be deemed admitted.
    (d) Motion for more definite statement. A party may file with an 
answer a motion for a more definite statement of specified matters of 
fact or law to be considered or determined. Such motion shall state the 
respects in which, and the reasons why, each such matter of fact or law 
should be required to be made more definite. If the motion is granted, 
the order granting such motion shall set the periods for filing such a 
statement and any answer thereto.
    (e) Amendments. A party may amend its answer at any time by written 
consent of each adverse party or with leave of the Commission or the 
hearing officer. Leave shall be freely granted when justice so requires.
    (f) Failure to file answer: default. If a party respondent fails to 
file an answer required by this section within the time provided, such 
person may be deemed in default pursuant to Sec. 201.155(a). A party may 
make a motion to set aside a default pursuant to Sec. 201.155(b).



 201.221  Prehearing conference.

    (a) Purposes of conference. The purposes of a prehearing conference 
include, but are not limited to:
    (1) Expediting the disposition of the proceeding;
    (2) Establishing early and continuing control of the proceeding by 
the hearing officer; and
    (3) Improving the quality of the hearing through more thorough 
preparation.
    (b) Procedure. On his or her own motion or at the request of a 
party, the hearing officer may, in his or her discretion, direct counsel 
or any party to meet for an initial, final or other prehearing 
conference. Such conferences may be held with or without the hearing 
officer present as the hearing officer deems appropriate. Where such a 
conference is held outside the presence of the hearing officer, the 
hearing officer shall be advised promptly by the parties of any 
agreements reached. Such conferences also may be held with one or more 
persons participating by telephone or other remote means.
    (c) Subjects to be discussed. At a prehearing conference 
consideration may be given and action taken with respect to any and all 
of the following:
    (1) Simplification and clarification of the issues;
    (2) Exchange of witness and exhibit lists and copies of exhibits;
    (3) Stipulations, admissions of fact, and stipulations concerning 
the contents, authenticity, or admissibility into evidence of documents;
    (4) Matters of which official notice may be taken;
    (5) The schedule for exchanging prehearing motions or briefs, if 
any;
    (6) The method of service for papers other than Commission orders;
    (7) Summary disposition of any or all issues;
    (8) Settlement of any or all issues;
    (9) Determination of hearing dates;
    (10) Amendments to the order instituting proceedings or answers 
thereto;
    (11) Production of documents as set forth in Sec. 201.230, and 
prehearing production of documents in response to subpoenas duces tecum 
as set forth in Sec. 201.232;
    (12) Specification of procedures as set forth in Sec. 201.202; and
    (13) Such other matters as may aid in the orderly and expeditious 
disposition of the proceeding.
    (d) Required prehearing conference. Except where the emergency 
nature of a proceeding would make a prehearing conference clearly 
inappropriate, at least one prehearing conference should be held.
    (e) Prehearing orders. At or following the conclusion of any 
conference held pursuant to this section, the hearing officer shall 
enter a ruling or order which recites the agreements reached and any 
procedural determinations made by the hearing officer.
    (f) Failure to appear: default. Any person who is named in an order 
instituting proceedings as a person against whom findings may be made or 
sanctions imposed and who fails to appear, in person or through a 
representative, at a prehearing conference of which he or she has been 
duly notified may be deemed in default pursuant to

[[Page 165]]

Sec. 201.155(a). A party may make a motion to set aside a default 
pursuant to Sec. 201.155(b).

[60 FR 32796, June 23, 1995, as amended at 63 FR 63405, Nov. 13, 1998]



Sec. 201.222  Prehearing submissions.

    (a) Submissions generally. The hearing officer, on his or her own 
motion, or at the request of a party or other participant, may order any 
party, including the interested division, to furnish such information as 
deemed appropriate, including any or all of the following:
    (1) An outline or narrative summary of its case or defense;
    (2) The legal theories upon which it will rely;
    (3) Copies and a list of documents that it intends to introduce at 
the hearing; and
    (4) A list of witnesses who will testify on its behalf, including 
the witnesses' names, occupations, addresses and a brief summary of 
their expected testimony.
    (b) Expert witnesses. Each party who intends to call an expert 
witness shall submit, in addition to the information required by 
paragraph (a)(4) of this section, a statement of the expert's 
qualifications, a listing of other proceedings in which the expert has 
given expert testimony, and a list of publications authored or co-
authored by the expert.



Sec. 201.230  Enforcement and disciplinary proceedings: Availability of documents for inspection and copying.

    For purposes of this section, the term documents shall include 
writings, drawings, graphs, charts, photographs, recordings and other 
data compilations, including data stored by computer, from which 
information can be obtained.
    (a) Documents to be available for inspection and copying. (1) Unless 
otherwise provided by this section, or by order of the Commission or the 
hearing officer, the Division of Enforcement shall make available for 
inspection and copying by any party documents obtained by the Division 
prior to the institution of proceedings, in connection with the 
investigation leading to the Division's recommendation to institute 
proceedings. Such documents shall include:
    (i) Each subpoena issued;
    (ii) Every other written request to persons not employed by the 
Commission to provide documents or to be interviewed;
    (iii) The documents turned over in response to any such subpoenas or 
other written requests;
    (iv) All transcripts and transcript exhibits;
    (v) Any other documents obtained from persons not employed by the 
Commission; and
    (vi) Any final examination or inspection reports prepared by the 
Office of Compliance Inspections and Examinations, the Division of 
Market Regulation, or the Division of Investment Management.
    (2) Nothing in this paragraph (a) shall limit the right of the 
Division to make available any other document, or shall limit the right 
of a respondent to seek access to or production pursuant to subpoena of 
any other document, or shall limit the authority of the hearing officer 
to order the production of any document pursuant to subpoena.
    (b) Documents that may be withheld. (1) The Division of Enforcement 
may withhold a document if:
    (i) The document is privileged;
    (ii) The document is an internal memorandum, note or writing 
prepared by a Commission employee, other than an examination or 
inspection report as specified in paragraph (a)(1)(vi) of this section, 
or is otherwise attorney work product and will not be offered in 
evidence;
    (iii) The document would disclose the identity of a confidential 
source; or
    (iv) The hearing officer grants leave to withhold a document or 
category of documents as not relevant to the subject matter of the 
proceeding or otherwise, for good cause shown.
    (2) Nothing in this paragraph (b) authorizes the Division of 
Enforcement in connection with an enforcement or disciplinary proceeding 
to withhold, contrary to the doctrine of Brady v. Maryland, 373 U.S. 83, 
87 (1963), documents that contain material exculpatory evidence.
    (c) Withheld document list. The hearing officer may require the 
Division of

[[Page 166]]

Enforcement to submit for review a list of documents withheld pursuant 
to paragraphs (b)(1) through (b)(4) of this section or to submit any 
document withheld, and may determine whether any such document should be 
made available for inspection and copying.
    (d) Timing of inspection and copying. Unless otherwise ordered by 
the Commission or the hearing officer, the Division of Enforcement shall 
commence making documents available to a respondent for inspection and 
copying pursuant to this section no later than 14 days after the 
respondent files an answer. In a proceeding in which a temporary cease-
and-desist order is sought pursuant to Sec. 201.510 or a temporary 
suspension of registration is sought pursuant to Sec. 201.520, documents 
shall be made available no later than the day after service of the 
decision as to whether to issue a temporary cease-and-desist order or 
temporary suspension order.
    (e) Place of inspection and copying. Documents subject to inspection 
and copying pursuant to this section shall be made available to the 
respondent for inspection and copying at the Commission office where 
they are ordinarily maintained, or at such other place as the parties, 
in writing, may agree. A respondent shall not be given custody of the 
documents or leave to remove the documents from the Commission's offices 
pursuant to the requirements of this section other than by written 
agreement of the Division of Enforcement. Such agreement shall specify 
the documents subject to the agreement, the date they shall be returned 
and such other terms or conditions as are appropriate to provide for the 
safekeeping of the documents.
    (f) Copying costs and procedures. The respondent may obtain a 
photocopy of any documents made available for inspection. The respondent 
shall be responsible for the cost of photocopying. Unless otherwise 
ordered, charges for copies made by the Division of Enforcement at the 
request of the respondent will be at the rate charged pursuant to the 
fee schedule at 17 CFR 200.80e for copies. The respondent shall be given 
access to the documents at the Commission's offices or such other place 
as the parties may agree during normal business hours for copying of 
documents at the respondent's expense.
    (g) Issuance of investigatory subpoenas after institution of 
proceedings. The Division of Enforcement shall promptly inform the 
hearing officer and each party if investigatory subpoenas are issued 
under the same investigation file number or pursuant to the same order 
directing private investigation (``formal order'') under which the 
investigation leading to the institution of proceedings was conducted. 
The hearing officer shall order such steps as necessary and appropriate 
to assure that the issuance of investigatory subpoenas after the 
institution of proceedings is not for the purpose of obtaining evidence 
relevant to the proceedings and that any relevant documents that may be 
obtained through the use of investigatory subpoenas in a continuing 
investigation are made available to each respondent for inspection and 
copying on a timely basis.
    (h) Failure to make documents available--harmless error. In the 
event that a document required to be made available to a respondent 
pursuant to this section is not made available by the Division of 
Enforcement, no rehearing or redecision of a proceeding already heard or 
decided shall be required, unless the respondent shall establish that 
the failure to make the document available was not harmless error.

[60 FR 32796, June 23, 1995; 60 FR 46499, Sept. 7, 1995]



Sec. 201.231  Enforcement and disciplinary proceedings: Production of witness statements.

    (a) Availability. Any respondent in an enforcement or disciplinary 
proceeding may move that the Division of Enforcement produce for 
inspection and copying any statement of any person called or to be 
called as a witness by the division that pertains, or is expected to 
pertain, to his or her direct testimony and that would be required to be 
produced pursuant to the Jencks Act, 18 U.S.C. 3500. Such production 
shall be made at a time and place fixed by the hearing officer and shall 
be made available to any party, provided, however, that the production 
shall be made under conditions intended to preserve the items to be 
inspected or copied.

[[Page 167]]

    (b) Failure to produce--harmless error. In the event that a 
statement required to be made available for inspection and copying by a 
respondent is not turned over by the Division of Enforcement, no 
rehearing or redecision of a proceeding already heard or decided shall 
be required unless the respondent establishes that the failure to turn 
over the statement was not harmless error.



Sec. 201.232  Subpoenas.

    (a) Availability; procedure. In connection with any hearing ordered 
by the Commission, a party may request the issuance of subpoenas 
requiring the attendance and testimony of witnesses at the designated 
time and place of hearing, and subpoenas requiring the production of 
documentary or other tangible evidence returnable at any designated time 
or place. Unless made on the record at a hearing, requests for issuance 
of a subpoena shall be made in writing and served on each party pursuant 
to Sec. 201.150. A person whose request for a subpoena has been denied 
or modified may not request that any other person issue the subpoena.
    (1) Unavailability of hearing officer. In the event that the hearing 
officer assigned to a proceeding is unavailable, the party seeking 
issuance of the subpoena may seek its issuance from the first available 
of the following persons: The Chief Administrative Law Judge, the law 
judge most senior in service as a law judge, the duty officer, any other 
member of the Commission, or any other person designated by the 
Commission to issue subpoenas. Requests for issuance of a subpoena made 
to the Commission, or any member thereof, must be submitted to the 
Secretary, not to an individual Commissioner.
    (2) Signing may be delegated. A hearing officer may authorize 
issuance of a subpoena, and may delegate the manual signing of the 
subpoena to any other person authorized to issue subpoenas.
    (b) Standards for issuance. Where it appears to the person asked to 
issue the subpoena that the subpoena sought may be unreasonable, 
oppressive, excessive in scope, or unduly burdensome, he or she may, in 
his or her discretion, as a condition precedent to the issuance of the 
subpoena, require the person seeking the subpoena to show the general 
relevance and reasonable scope of the testimony or other evidence 
sought. If after consideration of all the circumstances, the person 
requested to issue the subpoena determines that the subpoena or any of 
its terms is unreasonable, oppressive, excessive in scope, or unduly 
burdensome, he or she may refuse to issue the subpoena, or issue it only 
upon such conditions as fairness requires. In making the foregoing 
determination, the person issuing the subpoena may inquire of the other 
participants whether they will stipulate to the facts sought to be 
proved.
    (c) Service. Service shall be made pursuant to the provisions of 
Sec. 201.150 (b) through (d). The provisions of this paragraph (c) shall 
apply to the issuance of subpoenas for purposes of investigations, as 
required by 17 CFR 203.8, as well as hearings.
    (d) Tender of fees required. When a subpoena compelling the 
attendance of a person at a hearing or deposition is issued at the 
instance of anyone other than an officer or agency of the United States, 
service is valid only if the subpoena is accompanied by a tender to the 
subpoenaed person of the fees for one day's attendance and mileage 
specified by paragraph (f) of this section.
    (e) Application to quash or modify. (1) Procedure. Any person to 
whom a subpoena is directed or who is an owner, creator or the subject 
of the documents that are to be produced pursuant to a subpoena may, 
prior to the time specified therein for compliance, but in no event more 
than 15 days after the date of service of such subpoena, request that 
the subpoena be quashed or modified. Such request shall be made by 
application filed with the Secretary and served on all parties pursuant 
to Sec. 201.150. The party on whose behalf the subpoena was issued may, 
within five days of service of the application, file an opposition to 
the application. If a hearing officer has been assigned to the 
proceeding, the application to quash shall be directed to that hearing 
officer for consideration, even if the subpoena was issued by another 
person.
    (2) Standards governing application to quash or modify. If 
compliance with the subpoena would be unreasonable, oppressive or unduly 
burdensome, the

[[Page 168]]

hearing officer or the Commission shall quash or modify the subpoena, or 
may order return of the subpoena only upon specified conditions. These 
conditions may include but are not limited to a requirement that the 
party on whose behalf the subpoena was issued shall make reasonable 
compensation to the person to whom the subpoena was addressed for the 
cost of copying or transporting evidence to the place for return of the 
subpoena.
    (f) Witness fees and mileage. Witnesses summoned before the 
Commission shall be paid the same fees and mileage that are paid to 
witnesses in the courts of the United States, and witnesses whose 
depositions are taken and the persons taking the same shall severally be 
entitled to the same fees as are paid for like services in the courts of 
the United States. Witness fees and mileage shall be paid by the party 
at whose instance the witnesses appear.



Sec. 201.233  Depositions upon oral examination.

    (a) Procedure. Any party desiring to take the testimony of a witness 
by deposition shall make a written motion setting forth the reasons why 
such deposition should be taken including the specific reasons why the 
party believes the witness will be unable to attend or testify at the 
hearing; the name and address of the prospective witness; the matters 
concerning which the prospective witness is expected to be questioned; 
and the proposed time and place for the taking of the deposition.
    (b) Required finding when ordering a deposition. In the discretion 
of the Commission or the hearing officer, an order for deposition may be 
issued upon a finding that the prospective witness will likely give 
testimony material to the proceeding, that it is likely the prospective 
witness will be unable to attend or testify at the hearing because of 
age, sickness, infirmity, imprisonment or other disability, and that the 
taking of a deposition will serve the interests of justice.
    (c) Contents of order. An order for deposition shall designate by 
name a deposition officer. The designated officer may be the hearing 
officer or any other person authorized to administer oaths by the laws 
of the United States or of the place where the deposition is to be held. 
An order for deposition also shall state:
    (1) The name of the witness whose deposition is to be taken;
    (2) The scope of the testimony to be taken;
    (3) The time and place of the deposition;
    (4) The manner of recording, preserving and filing the deposition; 
and
    (5) The number of copies, if any, of the deposition and exhibits to 
be filed upon completion of the deposition.
    (d) Procedure at depositions. A witness whose testimony is taken by 
deposition shall be sworn or shall affirm before any questions are put 
to him or her. Examination and cross-examination of deponents may 
proceed as permitted at a hearing. The witness being deposed may have 
counsel present during the deposition.
    (e) Objections to questions or evidence. Objections to questions or 
evidence shall be in short form, stating the grounds of objection relied 
upon. Objections to questions or evidence shall be noted by the 
deposition officer upon the deposition, but a deposition officer other 
than the hearing officer shall not have the power to decide on the 
competency, materiality or relevance of evidence. Failure to object to 
questions or evidence before the deposition officer shall not be deemed 
a waiver unless the ground of the objection is one that might have been 
obviated or removed if presented at that time.
    (f) Filing of depositions. The questions propounded and all answers 
or objections shall be recorded or transcribed verbatim, and a 
transcript prepared by the deposition officer, or under his or her 
direction. The transcript shall be subscribed by the witness and 
certified by the deposition officer. The original deposition and 
exhibits shall be filed with the Secretary. A copy of the deposition 
shall be available to the deponent and each party for purchase at 
prescribed rates.
    (g) Payment. The cost of the transcript shall be paid by the party 
requesting the deposition.

[[Page 169]]



Sec. 201.234  Depositions upon written questions.

    (a) Availability. Depositions may be taken and submitted on written 
questions upon motion of any party. The motion shall include the 
information specified in Sec. 201.233(a). A decision on the motion shall 
be governed by the provisions of Sec. 201.233(b).
    (b) Procedure. Written questions shall be filed with the motion. 
Within 10 days after service of the motion and written questions, any 
party may file objections to such written questions and any party may 
file cross-questions. When a deposition is taken pursuant to this 
section no persons other than the witness, counsel to the witness, the 
deposition officer, and, if the deposition officer does not act as 
reporter, a reporter, shall be present at the examination of the 
witness. No party shall be present or represented unless otherwise 
permitted by order. The deposition officer shall propound the questions 
and cross-questions to the witness in the order submitted.
    (c) Additional requirements. The order for deposition, filing of the 
deposition, form of the deposition and use of the deposition in the 
record shall be governed by paragraphs (c) through (g) of Sec. 201.233, 
except that no cross-examination shall be made.



Sec. 201.235  Introducing prior sworn statements of witnesses into the record.

    (a) At a hearing, any person wishing to introduce a prior, sworn 
statement of a witness, not a party, otherwise admissible in the 
proceeding, may make a motion setting forth the reasons therefor. If 
only part of a statement is offered in evidence, the hearing officer may 
require that all relevant portions of the statement be introduced. If 
all of a statement is offered in evidence, the hearing officer may 
require that portions not relevant to the proceeding be excluded. A 
motion to introduce a prior sworn statement may be granted if:
    (1) The witness is dead;
    (2) The witness is out of the United States, unless it appears that 
the absence of the witness was procured by the party offering the prior 
sworn statement;
    (3) The witness is unable to attend or testify because of age, 
sickness, infirmity, imprisonment or other disability;
    (4) The party offering the prior sworn statement has been unable to 
procure the attendance of the witness by subpoena; or,
    (5) In the discretion of the Commission or the hearing officer, it 
would be desirable, in the interests of justice, to allow the prior 
sworn statement to be used. In making this determination, due regard 
shall be given to the presumption that witnesses will testify orally in 
an open hearing. If the parties have stipulated to accept a prior sworn 
statement in lieu of live testimony, consideration shall also be given 
to the convenience of the parties in avoiding unnecessary expense.
    (b) [Reserved]



Sec. 201.240  Settlement.

    (a) Availability. Any person who is notified that a proceeding may 
or will be instituted against him or her, or any party to a proceeding 
already instituted, may, at any time, propose in writing an offer of 
settlement.
    (b) Procedure. An offer of settlement shall state that it is made 
pursuant to this section; shall recite or incorporate as a part of the 
offer the provisions of paragraphs (c) (4) and (5) of this section; 
shall be signed by the person making the offer, not by counsel; and 
shall be submitted to the interested division.
    (c) Consideration of offers of settlement. (1) Offers of settlement 
shall be considered by the interested division when time, the nature of 
the proceedings, and the public interest permit.
    (2) Where a hearing officer is assigned to a proceeding, the 
interested division and the party submitting the offer may request that 
the hearing officer express his or her views regarding the 
appropriateness of the offer of settlement. A request for the hearing 
officer to express his or her views on an offer of settlement or 
otherwise to participate in a settlement conference constitutes a waiver 
by the persons making the request of any right to claim bias or 
prejudgment by the hearing officer based on the views expressed.

[[Page 170]]

    (3) The interested division shall present the offer of settlement to 
the Commission with its recommendation, except that, if the division's 
recommendation is unfavorable, the offer shall not be presented to the 
Commission unless the person making the offer so requests.
    (4) By submitting an offer of settlement, the person making the 
offer waives, subject to acceptance of the offer:
    (i) All hearings pursuant to the statutory provisions under which 
the proceeding is to be or has been instituted;
    (ii) The filing of proposed findings of fact and conclusions of law;
    (iii) Proceedings before, and an initial decision by, a hearing 
officer;
    (iv) All post-hearing procedures; and
    (v) Judicial review by any court.
    (5) By submitting an offer of settlement the person further waives:
    (i) Such provisions of the Rules of Practice or other requirements 
of law as may be construed to prevent any member of the Commission's 
staff from participating in the preparation of, or advising the 
Commission as to, any order, opinion, finding of fact, or conclusion of 
law to be entered pursuant to the offer; and
    (ii) Any right to claim bias or prejudgment by the Commission based 
on the consideration of or discussions concerning settlement of all or 
any part of the proceeding.
    (6) If the Commission rejects the offer of settlement, the person 
making the offer shall be notified of the Commission's action and the 
offer of settlement shall be deemed withdrawn. The rejected offer shall 
not constitute a part of the record in any proceeding against the person 
making the offer, provided, however, that rejection of an offer of 
settlement does not affect the continued validity of waivers pursuant to 
paragraph (c)(5) of this section with respect to any discussions 
concerning the rejected offer of settlement.
    (7) Final acceptance of any offer of settlement will occur only upon 
the issuance of findings and an order by the Commission.



Sec. 201.250  Motion for summary disposition.

    (a) After a respondent's answer has been filed and, in an 
enforcement or a disciplinary proceeding, documents have been made 
available to that respondent for inspection and copying pursuant to 
Sec. 201.230, the respondent, or the interested division may make a 
motion for summary disposition of any or all allegations of the order 
instituting proceedings with respect to that respondent. If the 
interested division has not completed presentation of its case in chief, 
a motion for summary disposition shall be made only with leave of the 
hearing officer. The facts of the pleadings of the party against whom 
the motion is made shall be taken as true, except as modified by 
stipulations or admissions made by that party, by uncontested 
affidavits, or by facts officially noted pursuant to Sec. 201.323.
    (b) The hearing officer shall promptly grant or deny the motion for 
summary disposition or shall defer decision on the motion. The hearing 
officer may grant the motion for summary disposition if there is no 
genuine issue with regard to any material fact and the party making the 
motion is entitled to a summary disposition as a matter of law. If it 
appears that a party, for good cause shown, cannot present by affidavit 
prior to hearing facts essential to justify opposition to the motion, 
the hearing officer shall deny or defer the motion. A hearing officer's 
decision to deny leave to file a motion for summary disposition is not 
subject to interlocutory appeal.
    (c) The motion for summary disposition, supporting memorandum of 
points and authorities, and any declarations, affidavits or attachments 
shall not exceed 35 pages in length.

                        Rules Regarding Hearings



Sec. 201.300  Hearings.

    Hearings for the purpose of taking evidence shall be held only upon 
order of the Commission. All hearings shall be conducted in a fair, 
impartial, expeditious and orderly manner.

[[Page 171]]



Sec. 201.301  Hearings to be public.

    All hearings, except hearings on applications for confidential 
treatment filed pursuant to Sec. 201.190, hearings held to consider a 
motion for a protective order pursuant to Sec. 201.322, and hearings on 
ex parte application for a temporary cease-and-desist order, shall be 
public unless otherwise ordered by the Commission on its own motion or 
the motion of a party. No hearing shall be nonpublic where all 
respondents request that the hearing be made public.



Sec. 201.302  Record of hearings.

    (a) Recordation. Unless ordered otherwise by the hearing officer or 
the Commission, all hearings shall be recorded and a written transcript 
thereof shall be prepared.
    (b) Availability of a transcript. Transcripts of public hearings 
shall be available for purchase at prescribed rates. Transcripts of 
nonpublic proceedings, and transcripts subject to a protective order 
pursuant to Sec. 201.322, shall be available for purchase only by 
parties; provided, however, that any person compelled to submit data or 
evidence in a hearing may purchase a copy of his or her own testimony.
    (c) Transcript correction. Prior to the filing of post-hearing 
briefs or proposed findings and conclusions, or within such earlier time 
as directed by the Commission or the hearing officer, a party or witness 
may make a motion to correct the transcript. Proposed corrections of the 
transcript may be submitted to the hearing officer by stipulation 
pursuant to Sec. 201.324, or by motion. Upon notice to all parties to 
the proceeding, the hearing officer may, by order, specify corrections 
to the transcript.



Sec. 201.310  Failure to appear at hearings: Default.

    Any person named in an order instituting proceedings as a person 
against whom findings may be made or sanctions imposed who fails to 
appear at a hearing of which he or she has been duly notified may be 
deemed to be in default pursuant to Sec. 201.155(a). A party may make a 
motion to set aside a default pursuant to Sec. 201.155(b).



Sec. 201.320  Evidence: Admissibility.

    The Commission or the hearing officer may receive relevant evidence 
and shall exclude all evidence that is irrelevant, immaterial or unduly 
repetitious.



Sec. 201.321  Evidence: Objections and offers of proof.

    (a) Objections. Objections to the admission or exclusion of evidence 
must be made on the record and shall be in short form, stating the 
grounds relied upon. Exceptions to any ruling thereon by the hearing 
officer need not be noted at the time of the ruling. Such exceptions 
will be deemed waived on appeal to the Commission, however, unless 
raised:
    (1) Pursuant to interlocutory review in accordance with 
Sec. 201.400;
    (2) In a proposed finding or conclusion filed pursuant to 
Sec. 201.340; or
    (3) In a petition for Commission review of an initial decision filed 
in accordance with Sec. 201.410.
    (b) Offers of proof. Whenever evidence is excluded from the record, 
the party offering such evidence may make an offer of proof, which shall 
be included in the record. Excluded material shall be retained pursuant 
to Sec. 201.350(b).



Sec. 201.322  Evidence: Confidential information, protective orders.

    (a) Procedure. In any proceeding as defined in Sec. 201.101(a), a 
party, any person who is the owner, subject or creator of a document 
subject to subpoena or which may be introduced as evidence, or any 
witness who testifies at a hearing may file a motion requesting a 
protective order to limit from disclosure to other parties or to the 
public documents or testimony that contain confidential information. The 
motion should include a general summary or extract of the documents 
without revealing confidential details. If the movant seeks a protective 
order against disclosure to other parties as well as the public, copies 
of the documents shall not be served on other parties. Unless the 
documents are unavailable, the movant shall file for in camera 
inspection a sealed copy of the documents as to which the order is 
sought.

[[Page 172]]

    (b) Basis for issuance. Documents and testimony introduced in a 
public hearing are presumed to be public. A motion for a protective 
order shall be granted only upon a finding that the harm resulting from 
disclosure would outweigh the benefits of disclosure.
    (c) Requests for additional information supporting confidentiality. 
A movant under paragraph (a) of this section may be required to furnish 
in writing additional information with respect to the grounds for 
confidentiality. Failure to supply the information so requested within 
five days from the date of receipt by the movant of a notice of the 
information required shall be deemed a waiver of the objection to public 
disclosure of that portion of the documents to which the additional 
information relates, unless the Commission or the hearing officer shall 
otherwise order for good cause shown at or before the expiration of such 
five-day period.
    (d) Confidentiality of documents pending decision. Pending a 
determination of a motion under this section, the documents as to which 
confidential treatment is sought and any other documents that would 
reveal the confidential information in those documents shall be 
maintained under seal and shall be disclosed only in accordance with 
orders of the Commission or the hearing officer. Any order issued in 
connection with a motion under this section shall be public unless the 
order would disclose information as to which a protective order has been 
granted, in which case that portion of the order that would reveal the 
protected information shall be nonpublic.



Sec. 201.323  Evidence: Official notice.

    Official notice may be taken of any material fact which might be 
judicially noticed by a district court of the United States, any matter 
in the public official records of the Commission, or any matter which is 
peculiarly within the knowledge of the Commission as an expert body. If 
official notice is requested or taken of a material fact not appearing 
in the evidence in the record, the parties, upon timely request, shall 
be afforded an opportunity to establish the contrary.



Sec. 201.324  Evidence: Stipulations.

    The parties may, by stipulation, at any stage of the proceeding 
agree upon any pertinent facts in the proceeding. A stipulation may be 
received in evidence and, when received, shall be binding on the parties 
to the stipulation.



Sec. 201.325  Evidence: Presentation under oath or affirmation.

    A witness at a hearing for the purpose of taking evidence shall 
testify under oath or affirmation.



Sec. 201.326  Evidence: Presentation, rebuttal and cross-examination.

    In any proceeding in which a hearing is required to be conducted on 
the record after opportunity for hearing in accord with 5 U.S.C. 556(a), 
a party is entitled to present its case or defense by oral or 
documentary evidence, to submit rebuttal evidence, and to conduct such 
cross-examination as, in the discretion of the Commission or the hearing 
officer, may be required for a full and true disclosure of the facts. 
The scope and form of evidence, rebuttal evidence, if any, and cross-
examination, if any, in any other proceeding shall be determined by the 
Commission or the hearing officer in each proceeding.



Sec. 201.340  Proposed findings, conclusions and supporting briefs.

    (a) Opportunity to file. Before an initial decision is issued, each 
party shall have an opportunity, reasonable in light of all the 
circumstances, to file in writing proposed findings and conclusions 
together with, or as a part of, its brief.
    (b) Procedure. Proposed findings of fact must be supported by 
citations to specific portions of the record. If successive filings are 
directed, the proposed findings and conclusions of the party assigned to 
file first shall be set forth in serially numbered paragraphs, and any 
counter statement of proposed findings and conclusions must, in addition 
to any other matter, indicate those paragraphs of the proposals already 
filed as to which there is no dispute. A reply brief may be filed by the 
party assigned to file first, or, where simultaneous filings are 
directed, reply

[[Page 173]]

briefs may be filed by each party, within the period prescribed therefor 
by the hearing officer. No further briefs may be filed except with leave 
of the hearing officer.
    (c) Time for filing. In any proceeding in which an initial decision 
is to be issued:
    (1) At the end of each hearing, the hearing officer shall, by order, 
after consultation with the parties, prescribe the period within which 
proposed findings and conclusions and supporting briefs are to be filed. 
The party or parties directed to file first shall make its or their 
initial filing within 30 days of the end of the hearing unless the 
hearing officer, for good cause shown, permits a different period and 
sets forth in the order the reasons why the different period is 
necessary.
    (2) The total period within which all such proposed findings and 
conclusions and supporting briefs and any counter statements of proposed 
findings and conclusions and reply briefs are to be filed shall be no 
longer than 90 days after the close of the hearing unless the hearing 
officer, for good cause shown, permits a different period and sets forth 
in an order the reasons why the different period is necessary.



Sec. 201.350  Record in proceedings before hearing officer; retention of documents; copies.

    (a) Contents of the record. The record shall consist of:
    (1) The order instituting proceedings, each notice of hearing and 
any amendments;
    (2) Each application, motion, submission or other paper, and any 
amendments, motions, objections, and exceptions to or regarding them;
    (3) Each stipulation, transcript of testimony and document or other 
item admitted into evidence;
    (4) Each written communication accepted by the hearing officer 
pursuant to Sec. 201.210;
    (5) With respect to a request to disqualify a hearing officer or to 
allow the hearing officer's withdrawal under Sec. 201.112, each 
affidavit or transcript of testimony taken and the decision made in 
connection with the request;
    (6) All motions, briefs and other papers filed on interlocutory 
appeal;
    (7) All proposed findings and conclusions;
    (8) Each written order issued by the hearing officer or Commission; 
and
    (9) Any other document or item accepted into the record by the 
hearing officer.
    (b) Retention of documents not admitted. Any document offered in 
evidence but excluded, and any document marked for identification but 
not offered as an exhibit, shall not be considered a part of the record. 
The Secretary shall retain any such documents until the later of the 
date upon which a Commission order ending the proceeding becomes final, 
or the conclusion of any judicial review of the Commission's order.
    (c) Substitution of copies. A true copy of a document may be 
substituted for any document in the record or any document retained 
pursuant to paragraph (b) of this section.



Sec. 201.351  Transmittal of documents to Secretary; record index; certification.

    (a) Transmittal from hearing officer to Secretary of partial record 
index. The hearing officer may, at any time, transmit to the Secretary 
motions, exhibits or any other original documents filed with or accepted 
into evidence by the hearing officer, together with an index of such 
documents. The hearing officer, may, by order, require the interested 
division or other persons to assist in promptly transporting such 
documents from the hearing location to the Office of the Secretary.
    (b) Preparation, certification of record index. Promptly after the 
close of the hearing, the hearing officer shall transmit to the 
Secretary an index of the originals of any motions, exhibits or any 
other documents filed with or accepted into evidence by the hearing 
officer that have not been previously transmitted to the Secretary, and 
the Secretary shall prepare a record index. Prior to issuance of an 
initial decision, or if no initial decision is to be prepared, within 30 
days of the close of the hearing, the Secretary shall transmit the 
record index to the hearing officer and serve a copy of the record index 
on each party. Any person may file proposed corrections to the record 
index

[[Page 174]]

with the hearing officer within 15 days of service of the record index. 
The hearing officer shall, by order, direct whether any corrections to 
the record index shall be made. The Secretary shall make such 
corrections, if any, and issue a revised record index. If an initial 
decision is to be issued, the initial decision shall include a 
certification that the record consists of the items set forth in the 
record index or revised record index issued by the Secretary.
    (c) Final transmittal of record items to the Secretary. After the 
close of the hearing, the hearing officer shall transmit to the 
Secretary originals of any motions, exhibits or any other documents 
filed with, or accepted into evidence by, the hearing officer, or any 
other portions of the record that have not already been transmitted to 
the Secretary. Prior to service of the initial decision by the 
Secretary, or if no initial decision is to be issued, within 60 days of 
the close of the hearing, the Secretary shall inform the hearing officer 
if any portions of the record are not in the Secretary's custody.



Sec. 201.360  Initial decision of hearing officer.

    (a) When required. Unless the Commission directs otherwise, the 
hearing officer shall prepare an initial decision in any proceeding in 
which the Commission directs a hearing officer to preside at a hearing, 
provided, however, that an initial decision may be waived by the parties 
with the consent of the hearing officer pursuant to Sec. 201.202.
    (b) Content. An initial decision shall include: Findings and 
conclusions, and the reasons or basis therefor, as to all the material 
issues of fact, law or discretion presented on the record and the 
appropriate order, sanction, relief, or denial thereof. The initial 
decision shall also state the time period, not to exceed 21 days after 
service of the decision, except for good cause shown, within which a 
petition for review of the initial decision may be filed. The reasons 
for any extension of time shall be stated in the initial decision. The 
initial decision shall also include a statement that, as provided in 
paragraph (d) of this section:
    (1) The initial decision shall become the final decision of the 
Commission as to each party unless a party files a petition for review 
of the initial decision or the Commission determines on its own 
initiative to review the initial decision as to a party; and
    (2) If a party timely files a petition for review or the Commission 
takes action to review as to a party, the initial decision shall not 
become final with respect to that party.
    (c) Filing, service and publication. The hearing officer shall file 
the initial decision with the Secretary. The Secretary shall promptly 
serve the initial decision upon the parties and shall promptly publish 
notice of the filing thereof in the SEC News Digest. Thereafter, the 
Secretary shall publish the initial decision in the SEC Docket; 
provided, however, that in nonpublic proceedings no notice shall be 
published unless the Commission otherwise directs.
    (d) When final. (1) Unless a party or an aggrieved person entitled 
to review files a petition for review in accordance with the time limit 
specified in the initial decision, or unless the Commission on its own 
initiative orders review pursuant to Sec. 201.411, an initial decision 
shall become the final decision of the Commission.
    (2) If a petition for review is timely filed by a party or an 
aggrieved person entitled to review, or if the Commission upon its own 
initiative has ordered review of a decision with respect to a party or a 
person aggrieved who would be entitled to review, the initial decision 
shall not become final as to that party or person.
    (e) Order of finality. In the event that the initial decision 
becomes the final decision of the Commission with respect to a party, 
the Commission shall issue an order that the decision has become final 
as to that party. The order of finality shall state the date on which 
sanctions, if any, take effect. Notice of the order shall be published 
in the SEC News Digest and the SEC Docket.

[[Page 175]]

             Appeal to the Commission and Commission Review



Sec. 201.400  Interlocutory review.

    (a) Availability. The Commission will not review a hearing officer's 
ruling prior to its consideration of the entire proceeding in the 
absence of extraordinary circumstances. The Commission may decline to 
consider a ruling certified by a hearing officer pursuant to paragraph 
(c) of this section if it determines that interlocutory review is not 
warranted or appropriate under the circumstances. The Commission may, at 
any time, on its own motion, direct that any matter be submitted to it 
for review.
    (b) Expedited consideration. Interlocutory review of a hearing 
officer's ruling shall be expedited in every way, consistent with the 
Commission's other responsibilities.
    (c) Certification process. A ruling submitted to the Commission for 
interlocutory review must be certified in writing by the hearing officer 
and shall specify the material relevant to the ruling involved. The 
hearing officer shall not certify a ruling unless:
    (1) His or her ruling would compel testimony of Commission members, 
officers or employees or the production of documentary evidence in their 
custody; or
    (2) Upon application by a party, within five days of the hearing 
officer's ruling, the hearing officer is of the opinion that:
    (i) The ruling involves a controlling question of law as to which 
there is substantial ground for difference of opinion; and
    (ii) An immediate review of the order may materially advance the 
completion of the proceeding.
    (d) Proceedings not stayed. The filing of an application for review 
or the grant of review shall not stay proceedings before the hearing 
officer unless he or she, or the Commission, shall so order. The 
Commission will not consider the motion for a stay unless the motion 
shall have first been made to the hearing officer.



Sec. 201.401  Issuance of stays.

    (a) Procedure. A request for a stay shall be made by written motion, 
filed pursuant to Sec. 201.154, and served on all parties pursuant to 
Sec. 201.150. The motion shall state the reasons for the relief 
requested and the facts relied upon, and, if the facts are subject to 
dispute, the motion shall be supported by affidavits or other sworn 
statements or copies thereof. Portions of the record relevant to the 
relief sought, if available to the movant, shall be filed with the 
motion. The Commission may issue a stay based on such motion or on its 
own motion.
    (b) Scope of relief. The Commission may grant a stay in whole or in 
part, and may condition relief under this section upon such terms, or 
upon the implementation of such procedures, as it deems appropriate.
    (c) Stay of a Commission order. A motion for a stay of a Commission 
order may be made by any person aggrieved thereby who would be entitled 
to review in a federal court of appeals. A motion seeking to stay the 
effectiveness of a Commission order pending judicial review may be made 
to the Commission at any time during which the Commission retains 
jurisdiction over the proceeding.
    (d) Stay of an action by a self-regulatory organization--(1) 
Availability. A motion for a stay of an action by a self-regulatory 
organization for which the Commission is the appropriate regulatory 
agency, for which action review may be sought pursuant to Sec. 201.420, 
may be made by any person aggrieved thereby.
    (2) Summary entry. A stay may be entered summarily, without notice 
and opportunity for hearing.
    (3) Expedited consideration. Where the action complained of has 
already taken effect and the motion for stay is filed within 10 days of 
the effectiveness of the action, or where the action complained of, 
will, by its terms, take effect within five days of the filing of the 
motion for stay, the consideration of and decision on the motion for a 
stay shall be expedited in every way, consistent with the Commission's 
other responsibilities. Where consideration will be expedited, persons 
opposing the motion for a stay may file a statement in opposition within 
two days of service of the motion unless the Commission,

[[Page 176]]

by written order, shall specify a different period.



Sec. 201.410  Appeal of initial decisions by hearing officers.

    (a) Petition for review; when available. In any proceeding in which 
an initial decision is made by a hearing officer, any party, and any 
other person who would have been entitled to judicial review of the 
decision entered therein if the Commission itself had made the decision, 
may file a petition for review of the decision with the Commission.
    (b) Procedure. The petition for review of an initial decision shall 
be filed with the Commission within such time after service of the 
initial decision as prescribed by the hearing officer pursuant to 
Sec. 201.360(b). The petition shall set forth the specific findings and 
conclusions of the initial decision as to which exception is taken, 
together with supporting reasons for each exception. Supporting reasons 
may be stated in summary form. Any exception to an initial decision not 
stated in the petition for review, or in a previously filed proposed 
finding made pursuant to Sec. 201.340, may, at the discretion of the 
Commission, be deemed to have been waived by the petitioner.
    (c) Financial disclosure statement requirement. Any person who files 
a petition for review of an initial decision that asserts that person's 
inability to pay either disgorgement, interest or a penalty shall file 
with the opening brief a sworn financial disclosure statement containing 
the information specified in Sec. 201.630(b).
    (d) Opposition to review. A party may seek leave to file a brief in 
opposition to a petition for review within five days of the filing of 
the petition. The Commission will grant leave, or order the filing of an 
opposition on its own motion, only if it determines that briefing will 
significantly aid the decisional process. A brief in opposition shall 
identify those issues which do not warrant consideration by the 
Commission and shall state succinctly the reasons therefore.
    (e) Prerequisite to judicial review. Pursuant to Section 704 of the 
Administrative Procedure Act, 5 U.S.C. 704, a petition to the Commission 
for review of an initial decision is a prerequisite to the seeking of 
judicial review of a final order entered pursuant to such decision.



Sec. 201.411  Commission consideration of initial decisions by hearing officers.

    (a) Scope of review. The Commission may affirm, reverse, modify, set 
aside or remand for further proceedings, in whole or in part, an initial 
decision by a hearing officer and may make any findings or conclusions 
that in its judgment are proper and on the basis of the record.
    (b) Standards for granting review pursuant to a petition for review-
-(1) Mandatory review. After a petition for review has been filed, the 
Commission shall review any initial decision that:
    (i) Denies any request for action pursuant to Section 8(a) or 
Section 8(c) of the Securities Act of 1933, 15 U.S.C. 77h(a), (c), or 
the first sentence of Section 12(d) of the Exchange Act, 15 U.S.C. 
78l(d);
    (ii) Suspends trading in a security pursuant to Section 12(k) of the 
Exchange Act, 15 U.S.C. 78l(k); or
    (iii) Is in a case of adjudication (as defined in 5 U.S.C. 551) not 
required to be determined on the record after notice and opportunity for 
hearing (except to the extent there is involved a matter described in 5 
U.S.C. 554(a) (1) through (6)).
    (2) Discretionary review. The Commission may decline to review any 
other decision. In determining whether to grant review, the Commission 
shall consider whether the petition for review makes a reasonable 
showing that:
    (i) A prejudicial error was committed in the conduct of the 
proceeding; or
    (ii) The decision embodies:
    (A) A finding or conclusion of material fact that is clearly 
erroneous; or
    (B) A conclusion of law that is erroneous; or
    (C) An exercise of discretion or decision of law or policy that is 
important and that the Commission should review.
    (c) Commission review other than pursuant to a petition for review. 
The Commission may, on its own initiative, order review of any initial 
decision, or a portion of any initial decision, within

[[Page 177]]

21 days after the end of the period established for filing a petition 
for review pursuant to Sec. 201.410(b) or any brief in opposition to a 
petition for review permitted pursuant to Sec. 201.410(d). A party who 
does not intend to file a petition for review, and who desires the 
Commission's determination whether to order review on its own initiative 
to be made in a shorter time, may make a motion for an expedited 
decision, accompanied by a written statement that the party waives its 
right to file a petition for review. The vote of one member of the 
Commission, conveyed to the Secretary, shall be sufficient to bring a 
matter before the Commission for review.
    (d) Limitations on matters reviewed. Review by the Commission of an 
initial decision shall be limited to the issues specified in the 
petition for review or the issues, if any, specified in the briefing 
schedule order issued pursuant to Sec. 201.450(a). On notice to all 
parties, however, the Commission may, at any time prior to issuance of 
its decision, raise and determine any other matters that it deems 
material, with opportunity for oral or written argument thereon by the 
parties.
    (e) Summary affirmance. The Commission may summarily affirm an 
initial decision based upon the petition for review and any response 
thereto, without further briefing, if it finds that no issue raised in 
the petition for review warrants further consideration by the 
Commission.
    (f) Failure to obtain a majority. In the event a majority of 
participating Commissioners do not agree to a disposition on the merits, 
the initial decision shall be of no effect, and an order will be issued 
in accordance with this result.



Sec. 201.420  Appeal of determinations by self-regulatory organizations.

    (a) Application for review; when available. An application for 
review by the Commission may be filed by any person who is aggrieved by 
a self-regulatory organization determination as to which a notice is 
required to be filed with the Commission pursuant to Section 19(d)(1) of 
the Exchange Act, 15 U.S.C. 78s(d)(1). Such determinations include any:
    (1) Final disciplinary sanction;
    (2) Denial or conditioning of membership or participation;
    (3) Prohibition or limitation in respect to access to services 
offered by that self-regulatory organization or a member thereof; or
    (4) Bar from association.
    (b) Procedure. An application for review may be filed with the 
Commission pursuant to Sec. 201.151 within 30 days after notice of the 
determination was filed with the Commission pursuant to Section 19(d)(1) 
of the Exchange Act, 15 U.S.C. 78s(d)(1), and received by the aggrieved 
person applying for review. The application shall be served by the 
applicant on the self-regulatory organization. The application shall 
identify the determination complained of, set forth in summary form a 
brief statement of alleged errors in the determination and supporting 
reasons therefor and state an address where the applicant can be served 
with the record index. The application shall be accompanied by the 
notice of appearance required by Sec. 201.102(d).
    (c) Determination not stayed. Filing an application for review with 
the Commission pursuant to paragraph (b) of this section shall not 
operate as a stay of the complained of determination made by the self-
regulatory organization unless the Commission otherwise orders either 
pursuant to a motion filed in accordance with Sec. 201.401 or on its own 
motion.
    (d) Certification of the record; service of the index. Fourteen days 
after receipt of an application for review or a Commission order for 
review, the self-regulatory organization shall certify and file with the 
Commission one copy of the record upon which the action complained of 
was taken, and shall file with the Commission three copies of an index 
to such record, and shall serve upon each party one copy of the index.



Sec. 201.421  Commission consideration of determinations by self-regulatory organizations.

    (a) Commission review other than pursuant to a petition for review. 
The Commission may, on its own initiative, order review of any 
determination by a self-regulatory organization that could be subject to 
an application for review

[[Page 178]]

pursuant to Sec. 201.420(a) within 40 days after notice thereof was 
filed with the Commission pursuant to Section 19(d)(1) of the Exchange 
Act, 15 U.S.C. 78s(d)(1).
    (b) Supplemental briefing. The Commission may at any time prior to 
issuance of its decision raise or consider any matter that it deems 
material, whether or not raised by the parties. Notice to the parties 
and an opportunity for supplemental briefing with respect to issues not 
briefed by the parties shall be given where the Commission believes that 
such briefing would significantly aid the decisional process.



Sec. 201.430  Appeal of actions made pursuant to delegated authority.

    (a) Scope of rule. Any person aggrieved by an action made by 
authority delegated in Secs. 200.30-1 through 200.30-18 of this chapter 
may seek review of the action pursuant to paragraph (b) of this section.
    (b) Procedure--(1) Notice of intention to petition for review. A 
party or any person aggrieved by an action made pursuant to delegated 
authority may seek Commission review of the action by filing a written 
notice of intention to petition for review within five days after actual 
notice to the party of the action or service of notice of the action 
pursuant to Sec. 201.141(b), whichever is earlier. The notice shall 
identify the petitioner and the action complained of, and shall be 
accompanied by a notice of appearance pursuant to Sec. 201.102(d).
    (2) Petition for review. Within five days after the filing of a 
notice of intention to petition for review pursuant to paragraph (b)(1) 
of this section, the person seeking review shall file a petition for 
review containing a clear and concise statement of the issues to be 
reviewed and the reasons why review is appropriate. The petition shall 
include exceptions to any findings of fact or conclusions of law made, 
together with supporting reasons for such exceptions based on 
appropriate citations to such record as may exist. These reasons may be 
stated in summary form.
    (c) Prerequisite to judicial review. Pursuant to Section 704 of the 
Administrative Procedure Act, 5 U.S.C. 704, a petition to the Commission 
for review of an action made by authority delegated in Secs. 200.30-1 
through 200.30-18 of this chapter is a prerequisite to the seeking of 
judicial review of a final order entered pursuant to such an action.

[60 FR 32796, June 23, 1995; 60 FR 46500, Sept. 7, 1995]



Sec. 201.431  Commission consideration of actions made pursuant to delegated authority.

    (a) Scope of review. The Commission may affirm, reverse, modify, set 
aside or remand for further proceedings, in whole or in part, any action 
made pursuant to authority delegated in Secs. 200.30-1 through 200.30-18 
of this chapter.
    (b) Standards for granting review pursuant to a petition for review-
-(1) Mandatory review. After a petition for review has been filed, the 
Commission shall review any action that it would be required to review 
pursuant to Sec. 201.411(b)(1) if the action was made as the initial 
decision of a hearing officer.
    (2) Discretionary review. The Commission may decline to review any 
other action. In determining whether to grant review, the Commission 
shall consider the factors set forth in Sec. 201.411(b)(2).
    (c) Commission review other than pursuant to a petition for review. 
The Commission may, on its own initiative, order review of any action 
made pursuant to delegated authority at any time, provided, however, 
that where there are one or more parties to the matter, such review 
shall not be ordered more than ten days after the action. The vote of 
one member of the Commission, conveyed to the Secretary, shall be 
sufficient to bring a matter before the Commission for review.
    (d) Required items in an order for review. In an order granting a 
petition for review or directing review on the Commission's own 
initiative, the Commission shall set forth the time within which any 
party or other person may file a statement in support of or in 
opposition to the action made by delegated authority and shall state 
whether a stay shall be granted, if none is in effect, or shall be 
continued, if in effect pursuant to paragraph (e) of this section.

[[Page 179]]

    (e) Automatic stay of delegated action. An action made pursuant to 
delegated authority shall have immediate effect and be deemed the action 
of the Commission. Upon filing with the Commission of a notice of 
intention to petition for review, or upon notice to the Secretary of the 
vote of a Commissioner that a matter be reviewed, an action made 
pursuant to delegated authority shall be stayed until the Commission 
orders otherwise, provided, however, there shall be no automatic stay of 
an action:
    (1) To grant a stay of action by the Commission or a self-regulatory 
organization as authorized by 17 CFR 200.30-14(g) (5)-(6); or
    (2) To commence a subpoena enforcement proceeding as authorized by 
17 CFR 200.30-4(a)(10).
    (f) Effectiveness of stay or of Commission decision to modify or 
reverse a delegated action. As against any person who shall have acted 
in reliance upon any action at a delegated level, any stay or any 
modification or reversal by the Commission of such action shall be 
effective only from the time such person receives actual notice of such 
stay, modification or reversal.

[60 FR 32796, June 23, 1995; 60 FR 46500, Sept. 7, 1995]



Sec. 201.450  Briefs filed with the Commission.

    (a) Briefing schedule order. Other than review ordered pursuant to 
Sec. 201.431, if review of a determination is mandated by statute, rule, 
or judicial order or the Commission determines to grant review as a 
matter of discretion, the Commission shall issue a briefing schedule 
order directing the party or parties to file opening briefs and 
specifying particular issues, if any, as to which briefing should be 
limited or directed. Unless otherwise provided, opening briefs shall be 
filed within 40 days of the date of the briefing schedule order. 
Opposition briefs shall be filed within 30 days after the date opening 
briefs are due. Reply briefs shall be filed within 14 days after the 
date opposition briefs are due. No briefs in addition to those specified 
in the briefing schedule order may be filed except with leave of the 
Commission. The briefing schedule order shall be issued:
    (1) At the time the Commission orders review on its own initiative 
pursuant to Secs. 201.411 or 201.421, or orders interlocutory review on 
its own motion pursuant to Sec. 201.400(a); or
    (2) Within 21 days, or such longer time as provided by the 
Commission, after:
    (i) The last day permitted for filing a petition for review pursuant 
to Sec. 201.410(b) or a brief in opposition to a petition for review 
pursuant to Sec. 201.410(d);
    (ii) Receipt by the Commission of an index to the record of a 
determination of a self-regulatory organization filed pursuant to 
Sec. 201.420(d);
    (iii) Receipt by the Commission of the mandate of a court of appeals 
with respect to a judicial remand; or
    (iv) Certification of a ruling for interlocutory review pursuant to 
Sec. 201.400(c).
    (b) Contents of briefs. Briefs shall be confined to the particular 
matters at issue. Each exception to the findings or conclusions being 
reviewed shall be stated succinctly. Exceptions shall be supported by 
citation to the relevant portions of the record, including references to 
the specific pages relied upon, and by concise argument including 
citation of such statutes, decisions and other authorities as may be 
relevant. If the exception relates to the admission or exclusion of 
evidence, the substance of the evidence admitted or excluded shall be 
set forth in the brief, in an appendix thereto, or by citation to the 
record. Reply briefs shall be confined to matters in opposition briefs 
of other parties.
    (c) Length limitation. Opening and opposition briefs shall not 
exceed 50 pages and reply briefs shall not exceed 25 pages, exclusive of 
pages containing the table of contents, table of authorities, and any 
addendum, except with leave of the Commission.



Sec. 201.451  Oral argument before the Commission.

    (a) Availability. The Commission, on its own motion or the motion of 
a party or any other aggrieved person entitled to Commission review, may 
order oral argument with respect to any matter. Motions for oral 
argument with respect to whether to affirm all or

[[Page 180]]

part of an initial decision by a hearing officer shall be granted unless 
exceptional circumstances make oral argument impractical or inadvisable. 
The Commission will consider appeals, motions and other matters properly 
before it on the basis of the papers filed by the parties without oral 
argument unless the Commission determines that the presentation of facts 
and legal arguments in the briefs and record and the decisional process 
would be significantly aided by oral argument.
    (b) Procedure. Requests for oral argument shall be made by separate 
motion accompanying the initial brief on the merits. The Commission 
shall issue an order as to whether oral argument is to be heard, and if 
so, the time and place therefor. The grant or denial of a motion for 
oral argument shall be made promptly after the filing of the last brief 
called for by the briefing schedule. If oral argument is granted, the 
time fixed for oral argument shall be changed only by written order of 
the Commission, for good cause shown. The order shall state at whose 
request the change is made and the reasons for any such change.
    (c) Time allowed. Unless the Commission orders otherwise, not more 
than one half-hour per side will be allowed for oral argument. The 
Commission may, in its discretion, determine that several persons have a 
common interest, and that the interests represented will be considered a 
single side for purposes of allotting time for oral argument. Time will 
be divided equally among persons on a single side, provided, however, 
that by mutual agreement they may reallocate their time among 
themselves. A request for additional time must be made by motion filed 
reasonably in advance of the date fixed for argument.
    (d) Participation of Commissioners. A member of the Commission who 
was not present at the oral argument may participate in the decision of 
the proceeding, provided that the member has reviewed the transcript of 
such argument prior to such participation. The decision shall state 
whether the required review was made.



Sec. 201.452  Additional evidence.

    Upon its own motion or the motion of a party, the Commission may 
allow the submission of additional evidence. A party may file a motion 
for leave to adduce additional evidence at any time prior to issuance of 
a decision by the Commission. Such motion shall show with particularity 
that such additional evidence is material and that there were reasonable 
grounds for failure to adduce such evidence previously. The Commission 
may accept or hear additional evidence, may remand the proceeding to a 
self-regulatory organization, or may remand or refer the proceeding to a 
hearing officer for the taking of additional evidence, as appropriate.



Sec. 201.460  Record before the Commission.

    The Commission shall determine each matter on the basis of the 
record.
    (a) Contents of the record.
    (1) In proceedings for final decision before the Commission other 
than those reviewing a determination by a self-regulatory organization, 
the record shall consist of:
    (i) All items part of the record below in accordance with 
Sec. 201.350;
    (ii) Any petitions for review, cross-petitions or oppositions; and
    (iii) All briefs, motions, submissions and other papers filed on 
appeal or review.
    (2) In a proceeding for final decision before the Commission 
reviewing a determination by a self-regulatory organization, the record 
shall consist of:
    (i) The record certified pursuant to Sec. 201.420(d) by the self-
regulatory organization;
    (ii) Any application for review; and
    (iii) Any submissions, moving papers, and briefs filed on appeal or 
review.
    (b) Transmittal of record to Commission. Within 14 days after the 
last date set for filing briefs or such later date as the Commission 
directs, the Secretary shall transmit the record to the Commission.
    (c) Review of documents not admitted. Any document offered in 
evidence but excluded by the hearing officer or the Commission and any 
document marked for identification but not offered as an exhibit shall 
not be considered a part

[[Page 181]]

of the record before the Commission on appeal but shall be transmitted 
to the Commission by the Secretary if so requested by the Commission. In 
the event that the Commission does not request the document, the 
Secretary shall retain the document not admitted into the record until 
the later of:
    (1) The date upon which the Commission's order becomes final, or
    (2) The conclusion of any judicial review of that order.



Sec. 201.470  Reconsideration.

    (a) Scope of rule. A party or any person aggrieved by a 
determination in a proceeding may file a motion for reconsideration of a 
final order issued by the Commission.
    (b) Procedure. A motion for reconsideration shall be filed within 10 
days after service of the order complained of on each party, or within 
such time as the Commission may prescribe upon motion of the person 
seeking reconsideration, if made within the foregoing 10-day period. The 
motion for reconsideration shall briefly and specifically state the 
matters of record alleged to have been erroneously decided, the grounds 
relied upon, and the relief sought. Except with permission of the 
Commission, a motion for reconsideration shall not exceed 15 pages. No 
responses to a motion for reconsideration shall be filed unless 
requested by the Commission.



Sec. 201.490  Receipt of petitions for judicial review pursuant to 28 U.S.C. 2112(a)(1).

    The Commission officer and office designated pursuant to 28 U.S.C. 
2112(a)(1) to receive copies of petitions for review of Commission 
orders from the persons instituting review in a court of appeals, are 
the Secretary and the Office of the Secretary at the Commission's 
Headquarters. Ten copies of each petition shall be submitted. Each copy 
shall state on its face that it is being submitted to the Commission 
pursuant to 28 U.S.C. 2112 by the person or persons who filed the 
petition in the court of appeals.

           Rules Relating to Temporary Orders and Suspensions



Sec. 201.500  Expedited consideration of proceedings.

    Consistent with the Commission's or the hearing officer's other 
responsibilities, every hearing shall be held and every decision shall 
be rendered at the earliest possible time in connection with:
    (a) An application for a temporary sanction, as defined in 
Sec. 201.101(a), or a proceeding to determine whether a temporary 
sanction should be made permanent;
    (b) A motion or application to review an order suspending 
temporarily the effectiveness of an exemption from registration pursuant 
to Regulations A, B, E or F under the Securities Act, Secs. 230.258, 
230.336, 230.610 or 230.656 of this chapter; or,
    (c) A motion to or petition to review an order suspending 
temporarily the privilege of appearing before the Commission under 
Sec. 201.102(e)(3), or a sanction under Sec. 201.180(a)(1).



Sec. 201.510  Temporary cease-and-desist orders: Application process.

    (a) Procedure. A request for entry of a temporary cease-and-desist 
order shall be made by application filed by the Division of Enforcement. 
The application shall set forth the statutory provision or rule that 
each respondent is alleged to have violated; the temporary relief sought 
against each respondent, including whether the respondent would be 
required to take action to prevent the dissipation or conversion of 
assets; and whether the relief is sought ex parte.
    (b) Accompanying documents. The application shall be accompanied by 
a declaration of facts signed by a person with knowledge of the facts 
contained therein, a memorandum of points and authorities, a proposed 
order imposing the temporary relief sought, and, unless relief is sought 
ex parte, a proposed notice of hearing and order to show cause whether 
the temporary relief should be imposed. If a proceeding for a permanent 
cease-and-desist order has not already been commenced, a proposed order 
instituting proceedings to

[[Page 182]]

determine whether a permanent cease-and-desist order should be imposed 
shall also be filed with the application.
    (c) With whom filed. The application shall be filed with the 
Secretary or, if the Secretary is unavailable, with the duty officer. In 
no event shall an application be filed with an administrative law judge.
    (d) Record of proceedings. Hearings, including ex parte 
presentations made by the Division of Enforcement pursuant to 
Sec. 201.513, shall be recorded or transcribed pursuant to Sec. 201.302.



Sec. 201.511  Temporary cease-and-desist orders: Notice; procedures for hearing.

    (a) Notice: how given. Notice of an application for a temporary 
cease-and-desist order shall be made by serving a notice of hearing and 
order to show cause pursuant to Sec. 201.141(b) or, where timely service 
of a notice of hearing pursuant to Sec. 201.141(b) is not practicable, 
by any other means reasonably calculated to give actual notice that a 
hearing will be held, including telephonic notification of the general 
subject matter, time, and place of the hearing. If an application is 
made ex parte, pursuant to Sec. 201.513, no notice to a respondent need 
be given prior to the Commission's consideration of the application.
    (b) Hearing before the Commission. Except as provided in paragraph 
(d) of this section, hearings on an application for a temporary cease-
and-desist order shall be held before the Commission.
    (c) Presiding officer: designation. The Chairman shall preside or 
designate a Commissioner to preside at the hearing. If the Chairman is 
absent or unavailable at the time of hearing and no other Commissioner 
has been designated to preside, the duty officer on the day the hearing 
begins shall preside or designate another Commissioner to preside.
    (d) Procedure at hearing. (1) The presiding officer shall have all 
those powers of a hearing officer set forth in Sec. 201.111 and shall 
rule on the admissibility of evidence and other procedural matters, 
including, but not limited to whether oral testimony will be heard; the 
time allowed each party for the submission of evidence or argument; and 
whether post-hearing submission of briefs, proposed findings of fact and 
conclusions of law will be permitted and if so, the procedures for 
submission; provided, however, that the person presiding may consult 
with other Commissioners participating in the hearing on these or any 
other question of procedure.
    (2) Each Commissioner present at the hearing shall be afforded a 
reasonable opportunity to ask questions of witnesses, if any, or of 
counsel.
    (3) A party or witness may participate by telephone. Alternative 
means of remote access, including a video link, shall be permitted in 
the Commission's discretion. Factors the Commission may consider in 
determining whether to permit alternative means of remote access 
include, but are not limited to, whether allowing an alternative means 
of access will delay the hearing, whether the alternative means is 
reliable, and whether the party proposing its use has made arrangements 
to pay for its cost.
    (4) After a hearing has begun, the Commission may, on its own 
motion, or the motion of a party, assign a hearing officer to preside at 
the taking of oral testimony or other evidence and to certify the record 
of such testimony or other evidence to the Commission within a fixed 
period of time. No recommended or initial decision shall be made by such 
a hearing officer.



Sec. 201.512  Temporary cease-and-desist orders: Issuance after notice and opportunity for hearing.

    (a) Basis for issuance. A temporary cease-and-desist order shall be 
issued only if the Commission determines that the alleged violation or 
threatened violation specified in an order instituting proceedings 
whether to enter a permanent cease-and-desist order pursuant to 
Securities Act Section 8A(a), 15 U.S.C. 77h-1(a), Exchange Act Section 
21C(a), 15 U.S.C. 78u-3(a), Investment Company Act Section 9(f)(1), 15 
U.S.C. 80a-9(f)(1), or Investment Advisers Act Section 203(k)(1), 15 
U.S.C. 80b-3(k)(1), or the continuation thereof,

[[Page 183]]

is likely to result in significant dissipation or conversion of assets, 
significant harm to investors, or substantial harm to the public 
interest, including, but not limited to, losses to the Securities 
Investor Protection Corporation, prior to the completion of proceedings 
on the permanent cease-and-desist order.
    (b) Content, scope and form of order. Every temporary cease-and-
desist order granted shall:
    (1) Describe the basis for its issuance, including the alleged or 
threatened violations and the harm that is likely to result without the 
issuance of an order;
    (2) Describe in reasonable detail, and not by reference to the order 
instituting proceedings or any other document, the act or acts the 
respondent is to take or refrain from taking; and
    (3) Be indorsed with the date and hour of issuance.
    (c) Effective upon service. A temporary cease-and-desist order is 
effective upon service upon the respondent.
    (d) Service: how made. Service of a temporary cease-and-desist order 
shall be made pursuant to Sec. 201.141(a). The person who serves the 
order shall promptly file a declaration of service identifying the 
person served, the method of service, the date of service, the address 
to which service was made and the person who made service; provided, 
however, failure to file such a declaration shall have no effect on the 
validity of the service.
    (e) Commission review. At any time after the respondent has been 
served with a temporary cease-and-desist order, the respondent may apply 
to the Commission to have the order set aside, limited or suspended. The 
application shall set forth with specificity the facts that support the 
request.



Sec. 201.513  Temporary cease-and-desist orders: Issuance without prior notice and opportunity for hearing.

    In addition to the requirements for issuance of a temporary cease-
and-desist order set forth in Sec. 201.512, the following requirements 
shall apply if a temporary cease-and-desist order is to be entered 
without prior notice and opportunity for hearing:
    (a) Basis for issuance without prior notice and opportunity for 
hearing. A temporary cease-and-desist order may be issued without notice 
and opportunity for hearing only if the Commission determines, from 
specific facts in the record of the proceeding, that notice and hearing 
prior to entry of an order would be impracticable or contrary to the 
public interest.
    (b) Content of the order. An ex parte temporary cease-and-desist 
order shall state specifically why notice and hearing would have been 
impracticable or contrary to the public interest.
    (c) Hearing before the Commission. If a respondent has been served 
with a temporary cease-and-desist order entered without a prior 
Commission hearing, the respondent may apply to the Commission to have 
the order set aside, limited, or suspended, and if the application is 
made within 10 days after the date on which the order was served, may 
request a hearing on such application. The Commission shall hold a 
hearing and render a decision on the respondent's application at the 
earliest possible time. The hearing shall begin within two days of the 
filing of the application unless the applicant consents to a longer 
period or the Commission, by order, for good cause shown, sets a later 
date. The Commission shall render a decision on the application within 
five calendar days of its filing, provided, however, that the 
Commission, by order, for good cause shown, may extend the time within 
which a decision may be rendered for a single period of five calendar 
days, or such longer time as consented to by the applicant. If the 
Commission does not render its decision within 10 days of the 
respondent's application or such longer time as consented to by the 
applicant, the temporary order shall be suspended until a decision is 
rendered.
    (d) Presiding officer, procedure at hearing. Procedures with respect 
to the selection of a presiding officer and the conduct of the hearing 
shall be in accordance with Sec. 201.511.



Sec. 201.514  Temporary cease-and-desist orders: Judicial review; duration.

    (a) Availability of judicial review. Judicial review of a temporary 
cease-and-

[[Page 184]]

desist order shall be available as provided in Section 8A(d)(2) of the 
Securities Act, 15 U.S.C. 77h-1(d)(2), Section 21C(d)(2) of the Exchange 
Act, 15 U.S.C. 78u-3(d)(2), Section 9(f)(4)(B) of the Investment Company 
Act, 15 U.S.C. 80a-9(f)(4)(B), or Section 203(k)(4)(B) of the Investment 
Advisers Act, 15 U.S.C. 80b-3(k)(4)(B).
    (b) Duration. Unless set aside, limited, or suspended, either by 
order of the Commission, a court of competent jurisdiction, or a hearing 
officer acting pursuant to Sec. 201.531, or by operation of 
Sec. 201.513, a temporary cease-and-desist order shall remain effective 
and enforceable until the earlier of:
    (1) The completion of the proceedings whether a permanent order 
shall be entered; or
    (2) 180 days, or such longer time as consented to by the respondent, 
after issuance of a briefing schedule order pursuant to Sec. 201.540(b), 
if an initial decision whether a permanent order should be entered is 
appealed.



Sec. 201.520  Suspension of registration of brokers, dealers, or other Exchange Act-registered entities: Application.

    (a) Procedure. A request for suspension of a registered broker, 
dealer, municipal securities dealer, government securities broker, 
government securities dealer, or transfer agent pending a final 
determination whether the registration shall be revoked shall be made by 
application filed by the Division of Enforcement. The application shall 
set forth the statutory provision or rule that each respondent is 
alleged to have violated and the temporary suspension sought as to each 
respondent.
    (b) Accompanying documents. The application shall be accompanied by 
a declaration of facts signed by a person with knowledge of the facts 
contained therein, a memorandum of points and authorities, a proposed 
order imposing the temporary suspension of registration sought, and a 
proposed notice of hearing and order to show cause whether the temporary 
suspension of registration should be imposed. If a proceeding to 
determine whether to revoke the registration permanently has not already 
been commenced, a proposed order instituting proceedings to determine 
whether a permanent sanction should be imposed shall also be filed with 
the application.
    (c) With whom filed. The application shall be filed with the 
Secretary or, if the Secretary is unavailable, with the duty officer. In 
no event shall an application be filed with an administrative law judge.
    (d) Record of hearings. All hearings shall be recorded or 
transcribed pursuant to Sec. 201.302.



Sec. 201.521  Suspension of registration of brokers, dealers, or other Exchange Act-registered entities: Notice and opportunity for hearing on application.

    (a) How given. Notice of an application to suspend a registration 
pursuant to Sec. 201.520 shall be made by serving a notice of hearing 
and order to show cause pursuant to Sec. 201.141(b) or, where timely 
service of a notice of hearing pursuant to Sec. 201.141(b) is not 
practicable, by any other means reasonably calculated to give actual 
notice that a hearing will be held, including telephonic notification of 
the general subject matter, time, and place of the hearing.
    (b) Hearing: before whom held. Except as provided in paragraph (d) 
of this section, hearings on an application to suspend a registration 
pursuant to Sec. 201.520 shall be held before the Commission.
    (c) Presiding officer: designation. The Chairman shall preside or 
designate a Commissioner to preside at the hearing. If the Chairman is 
absent or unavailable at the time of hearing and no other Commissioner 
has been designated to preside, the duty officer on the day the hearing 
begins shall preside or designate another Commissioner to preside.
    (d) Procedure at hearing. (1) The presiding officer shall have all 
those powers of a hearing officer set forth in Sec. 201.111 and shall 
rule on the admissibility of evidence and other procedural matters, 
including, but not limited to whether oral testimony will be heard; the 
time allowed each party for the submission of evidence or argument; and 
whether post-hearing submission of briefs, proposed findings of fact and 
conclusions of law will be permitted

[[Page 185]]

and if so, the procedures for submission; provided, however, that the 
person presiding may consult with other Commissioners participating in 
the hearing on these or any other question of procedure.
    (2) Each Commissioner present at the hearing shall be afforded a 
reasonable opportunity to ask questions of witnesses, if any, or 
counsel.
    (3) A party or witness may participate by telephone. Alternative 
means of remote access, including a video link, shall be permitted in 
the Commission's discretion. Factors the Commission may consider in 
determining whether to permit alternative means of remote access 
include, but are not limited to, whether allowing an alternative means 
of access will delay the hearing, whether the alternative means is 
reliable, and whether the party proposing its use has made arrangements 
to pay for its cost.
    (4) After a hearing has begun, the Commission may, on its own motion 
or the motion of a party, assign a hearing officer to preside at the 
taking of oral testimony or other evidence and to certify the record of 
such testimony or other evidence to the Commission within a fixed period 
of time. No recommended or initial decision shall be made.



Sec. 201.522  Suspension of registration of brokers, dealers, or other Exchange Act-registered entities: Issuance and review of order.

    (a) Basis for issuance. An order suspending a registration, pending 
final determination as to whether the registration shall be revoked 
shall be issued only if the Commission finds that the suspension is 
necessary or appropriate in the public interest or for the protection of 
investors.
    (b) Content, scope and form of order. Each order suspending a 
registration shall:
    (1) Describe the basis for its issuance, including the alleged or 
threatened violations and the harm that is likely to result without the 
issuance of an order;
    (2) Describe in reasonable detail, and not by reference to the order 
instituting proceedings or any other document, the act or acts the 
respondent is to take or refrain from taking; and
    (3) Be indorsed with the date and hour of issuance.
    (c) Effective upon service. An order suspending a registration is 
effective upon service upon the respondent.
    (d) Service: how made. Service of an order suspending a registration 
shall be made pursuant to Sec. 201.141(a). The person who serves the 
order shall promptly file a declaration of service identifying the 
person served, the method of service, the date of service, the address 
to which service was made and the person who made service; provided, 
however, failure to file such a declaration shall have no effect on the 
validity of the service.
    (e) Commission review. At any time after the respondent has been 
served with an order suspending a registration, the respondent may apply 
to the Commission or the hearing officer to have the order set aside, 
limited, or suspended. The application shall set forth with specificity 
the facts that support the request.



Sec. 201.523  [Reserved]



Sec. 201.524  Suspension of registrations: Duration.

    Unless set aside, limited or suspended by order of the Commission, a 
court of competent jurisdiction, or a hearing officer acting pursuant to 
Sec. 201.531, an order suspending a registration shall remain effective 
and enforceable until the earlier of:
    (a) The completion of the proceedings whether the registration shall 
be permanently revoked; or
    (b) 180 days, or such longer time as consented to by the respondent, 
after issuance of a briefing schedule order pursuant to Sec. 201.540(b), 
if an initial decision whether the registration shall be permanently 
revoked is appealed.



Sec. 201.530  Initial decision on permanent order: Timing for submitting proposed findings and preparation of decision.

    Unless otherwise ordered by the Commission or hearing officer, if a 
temporary cease-and-desist order or suspension of registration order is 
in effect, the following time limits shall

[[Page 186]]

apply to preparation of an initial decision as to whether such order 
should be made permanent:
    (a) Proposed findings and conclusions and briefs in support thereof 
shall be filed 30 days after the close of the hearing;
    (b) The record in the proceedings shall be served by the Secretary 
upon the hearing officer three days after the date for the filing of the 
last brief called for by the hearing officer; and
    (c) The initial decision shall be filed with the Secretary at the 
earliest possible time, but in no event more than 30 days after service 
of the record, unless the hearing officer, by order, shall extend the 
time for good cause shown for a period not to exceed 30 days.



Sec. 201.531  Initial decision on permanent order: Effect on temporary order.

    (a) Specification of permanent sanction. If, at the time an initial 
decision is issued, a temporary sanction is in effect as to any 
respondent, the initial decision shall specify:
    (1) Which terms or conditions of a temporary cease-and-desist order, 
if any, shall become permanent; and
    (2) Whether a temporary suspension of a respondent's registration, 
if any, shall be made a permanent revocation of registration.
    (b) Modification of temporary order. If any temporary sanction shall 
not become permanent under the terms of the initial decision, the 
hearing officer shall issue a separate order setting aside, limiting or 
suspending the temporary sanction then in effect in accordance with the 
terms of the initial decision. The hearing officer shall decline to 
suspend a term or condition of a temporary cease-and-desist order if it 
is found that the continued effectiveness of such term or condition is 
necessary to effectuate any term of the relief ordered in the initial 
decision, including the payment of disgorgement, interest or penalties. 
An order modifying temporary sanctions shall be effective 14 days after 
service. Within one week of service of the order modifying temporary 
sanctions any party may seek a stay or modification of the order from 
the Commission pursuant to Sec. 201.401.



Sec. 201.540  Appeal and Commission review of initial decision making a temporary order permanent.

    (a) Petition for review. Any person who seeks Commission review of 
an initial decision as to whether a temporary sanction shall be made 
permanent shall file a petition for review pursuant to Sec. 201.410, 
provided, however, that the petition must be filed within 10 days after 
service of the initial decision.
    (b) Review procedure. If the Commission determines to grant or order 
review, it shall issue a briefing schedule order pursuant to 
Sec. 201.450. Unless otherwise ordered by the Commission, opening briefs 
shall be filed within 21 days of the order granting or ordering review, 
and opposition briefs shall be filed within 14 days after opening briefs 
are filed. Reply briefs shall be filed within seven days after 
opposition briefs are filed. Oral argument, if granted by the 
Commission, shall be held within 90 days of the issuance of the briefing 
schedule order.



Sec. 201.550  Summary suspensions pursuant to Exchange Act Section 12(k)(1)(A).

    (a) Petition for termination of suspension. Any person adversely 
affected by a suspension pursuant to Section 12(k)(1)(A) of the Exchange 
Act, 15 U.S.C. 78l(k)(1)(A), who desires to show that such suspension is 
not necessary in the public interest or for the protection of investors 
may file a sworn petition with the Secretary, requesting that the 
suspension be terminated. The petition shall set forth the reasons why 
the petitioner believes that the suspension of trading should not 
continue and state with particularity the facts upon which the 
petitioner relies.
    (b) Commission consideration of a petition. The Commission, in its 
discretion, may schedule a hearing on the matter, request additional 
written submissions, or decide the matter on the facts presented in the 
petition and any other relevant facts known to the Commission. If the 
petitioner fails to cooperate with, obstructs, or refuses to permit the 
making of an examination by the Commission, such conduct shall be 
grounds to deny the petition.

[[Page 187]]

            Rules Regarding Disgorgement and Penalty Payments



Sec. 201.600  Interest on sums disgorged.

    (a) Interest required. Prejudgment interest shall be due on any sum 
required to be paid pursuant to an order of disgorgement. The 
disgorgement order shall specify each violation that forms the basis for 
the disgorgement ordered; the date which, for purposes of calculating 
disgorgement, each such violation was deemed to have occurred; the 
amount to be disgorged for each such violation; and the total sum to be 
disgorged. Prejudgment interest shall be due from the first day of the 
month following each such violation through the last day of the month 
preceding the month in which payment of disgorgement is made. The order 
shall state the amount of prejudgment interest owed as of the date of 
the disgorgement order and that interest shall continue to accrue on all 
funds owed until they are paid.
    (b) Rate of interest. Interest on the sum to be disgorged shall be 
computed at the underpayment rate of interest established under Section 
6621(a)(2) of the Internal Revenue Code, 26 U.S.C. 6621(a)(2), and shall 
be compounded quarterly. The Commission or the hearing officer may, by 
order, specify a lower rate of prejudgment interest as to any funds 
which the respondent has placed in an escrow or otherwise guaranteed for 
payment of disgorgement upon a final determination of the respondent's 
liability. Escrow and other guarantee arrangements must be approved by 
the Commission or the hearing officer prior to entry of the disgorgement 
order.



Sec. 201.601  Prompt payment of disgorgement, interest and penalties.

    (a) Timing of payments. Unless otherwise provided, funds due 
pursuant to an order by the Commission requiring the payment of 
disgorgement, interest or penalties shall be paid no later than 21 days 
after service of the order, and funds due pursuant to an order by a 
hearing officer shall be paid on the first day after the order becomes 
final pursuant to Sec. 201.360.
    (b) Stays. A stay of any order requiring the payment of 
disgorgement, interest or penalties may be sought at any time pursuant 
to Sec. 201.401.



Sec. 201.610  Submission of proposed plan of disgorgement.

    The Commission or the hearing officer may, at any time, order any 
party to submit a plan for the administration and distribution of 
disgorgement funds. Unless ordered otherwise, the Division of 
Enforcement shall submit a proposed plan no later than 60 days after 
funds or other assets have been turned over by the respondent pursuant 
to a Commission disgorgement order and any appeals of the disgorgement 
order have been waived or completed, or appeal is no longer available.



Sec. 201.611  Contents of plan of disgorgement; provisions for payment.

    (a) Required plan elements. Unless otherwise ordered, a plan for the 
administration of a disgorgement fund shall include the following 
elements:
    (1) Procedures for the receipt of additional funds, including the 
specification of an account where funds will be held and the instruments 
in which the funds may be invested;
    (2) Specification of categories of persons potentially eligible to 
receive proceeds from the fund;
    (3) Procedure for providing notice to such persons of the existence 
of the fund and their potential eligibility to receive proceeds of the 
fund;
    (4) Procedures for making and approving claims, procedures for 
handling disputed claims and a cut-off date for the making of claims;
    (5) A proposed date for the termination of the fund, including 
provision for the disposition of any funds not otherwise distributed;
    (6) Procedures for the administration of the fund, including 
selection, compensation and, as necessary, indemnification of a fund 
administrator to oversee the fund, process claims, prepare accountings, 
file tax returns and, subject to the approval of the Commission, make 
distributions from the fund to investors; and
    (7) Such other provisions as the Commission or the hearing officer 
may require.
    (b) Payment to registry of the court or court-appointed receiver. 
Subject to such

[[Page 188]]

conditions as the Commission or the hearing officer shall deem 
appropriate, a plan of disgorgement may provide for payment of 
disgorgement funds into a court registry or to a court-appointed 
receiver in any case pending in federal or state court against a 
respondent or any other person based upon a complaint alleging 
violations arising from the same or substantially similar facts as those 
alleged in the Commission's order instituting proceedings.
    (c) Payment to the United States Treasury under certain 
circumstances. When, in the opinion of the Commission or the hearing 
officer, the cost of administering a plan of disgorgement relative to 
the value of the available disgorgement funds and the number of 
potential claimants would not justify distribution of the disgorgement 
funds to injured investors, the plan may provide that the funds shall be 
paid directly to the general fund of the United States Treasury.



Sec. 201.612  Notice of proposed plan of disgorgement and opportunity for comment by non-parties.

    Notice of a proposed plan of disgorgement shall be published in the 
SEC News Digest, in the SEC Docket, and in such other publications as 
the Commission or the hearing officer may require. The notice shall 
specify how copies of the proposed plan may be obtained and shall state 
that persons desiring to comment on the proposed plan may submit their 
views, in writing, to the Commission.



Sec. 201.613  Order approving, modifying or disapproving proposed plan of disgorgement.

    At any time more than 30 days after publication of notice of a 
proposed plan of disgorgement, the hearing officer or the Commission 
shall, by order, approve, approve with modifications, or disapprove the 
proposed plan. In the discretion of the Commission or the hearing 
officer, a proposed plan of disgorgement that is substantially modified 
prior to adoption may be republished for an additional comment period 
pursuant to Sec. 201.612. The order approving or disapproving the plan 
should be entered within 30 days after the end of the final period 
allowed for comments on the proposed plan unless the Commission or the 
hearing officer, by written order, allows a longer period for good cause 
shown.



Sec. 201.614  Administration of plan of disgorgement.

    (a) Appointment and removal of administrator. The Commission or the 
hearing officer shall have discretion to appoint any person, including a 
Commission employee, as administrator of a plan of disgorgement and to 
delegate to that person responsibility for administering the plan. A 
respondent may be required or permitted to administer or assist in 
administering a plan of disgorgement, subject to such terms and 
conditions as the Commission or the hearing officer deem appropriate to 
ensure the proper distribution of funds. An administrator may be removed 
at any time by order of the Commission or hearing officer.
    (b) Administrator to post bond. If the administrator is not a 
Commission employee, the administrator shall be required to obtain a 
bond in the manner prescribed by 11 U.S.C. 322, in an amount to be 
approved by the Commission. The cost of the bond may be paid for as a 
cost of administration. The Commission may waive posting of a bond for 
good cause shown.
    (c) Administrator's fees. If the administrator is a Commission 
employee, no fee shall be paid to the administrator for his or her 
services. If the administrator is not a Commission employee, he or she 
may file an application for fees for completed services, and upon 
approval by the Commission or a hearing officer, may be paid a 
reasonable fee for those services. Any objections thereto shall be filed 
within 21 days of service of the application on the parties.
    (d) Source of funds. Unless otherwise ordered, fees and other 
expenses of administering the plan of disgorgement shall be paid first 
from the interest earned on disgorged funds, and if the interest is not 
sufficient, then from the corpus.
    (e) Accountings. During the first 10 days of each calendar quarter, 
or as otherwise directed by the Commission or the hearing officer, the 
administrator shall file an accounting of all

[[Page 189]]

monies earned or received and all monies spent in connection with the 
administration of the plan of disgorgement. A final accounting shall be 
submitted for approval of the Commission or hearing officer prior to 
discharge of the administrator and cancellation of the administrator's 
bond, if any.
    (f) Amendment. A plan may be amended upon motion by any party or the 
plan administrator or upon the Commission's or hearing officer's own 
motion.



Sec. 201.620  Right to challenge order of disgorgement.

    Other than in connection with the opportunity to submit comments as 
provided in Sec. 201.612, no person shall be granted leave to intervene 
or to participate in a proceeding or otherwise to appear to challenge an 
order of disgorgement; or an order approving, approving with 
modifications, or disapproving a plan of disgorgement; or any 
determination relating to a plan of disgorgement based solely upon that 
person's eligibility or potential eligibility to participate in a 
disgorgement fund or based upon any private right of action such person 
may have against any person who is also a respondent in an enforcement 
proceeding.



Sec. 201.630  Inability to pay disgorgement, interest or penalties.

    (a) Generally. In any proceeding in which an order requiring payment 
of disgorgement, interest or penalties may be entered, a respondent may 
present evidence of an inability to pay disgorgement, interest or a 
penalty. The Commission may, in its discretion, or the hearing officer 
may, in his or her discretion, consider evidence concerning ability to 
pay in determining whether disgorgement, interest or a penalty is in the 
public interest.
    (b) Financial disclosure statement. Any respondent who asserts an 
inability to pay disgorgement, interest or penalties may be required to 
file a sworn financial disclosure statement and to keep the statement 
current. The financial statement shall show the respondent's assets, 
liabilities, income or other funds received and expenses or other 
payments, from the date of the first violation alleged against that 
respondent in the order instituting proceedings, or such later date as 
specified by the Commission or a hearing officer, to the date of the 
order requiring the disclosure statement to be filed. By order, the 
Commission or the hearing officer may prescribe the use of the 
Disclosure of Assets and Financial Information Form (see Form D-A at 
Sec. 209.1 of this chapter) or any other form, may specify other time 
periods for which disclosure is required, and may require such other 
information as deemed necessary to evaluate a claim of inability to pay.
    (c) Confidentiality. Any respondent submitting financial information 
pursuant to this section or Sec. 201.410(c) may make a motion, pursuant 
to Sec. 201.322, for the issuance of a protective order against 
disclosure of the information submitted to the public or to any parties 
other than the Division of Enforcement. Prior to a ruling on the motion, 
no party receiving information as to which a motion for a protective 
order has been made may transfer or convey the information to any other 
person without the prior permission of the Commission or the hearing 
officer.
    (d) Service required. Notwithstanding any provision of Sec. 201.322, 
a copy of the financial disclosure statement shall be served on the 
Division of Enforcement.
    (e) Failure to file required financial information: sanction. Any 
respondent who, after making a claim of inability to pay either 
disgorgement, interest or a penalty, fails to file a financial 
disclosure statement when such a filing has been ordered or is required 
by rule may, in the discretion of the Commission or the hearing officer, 
be deemed to have waived the claim of inability to pay. No sanction 
pursuant to Secs. 201.155 or 201.180 shall be imposed for a failure to 
file such a statement.

      Informal Procedures and Supplementary Information Concerning 
                        Adjudicatory Proceedings



Sec. 201.900  Informal Procedures and Supplementary Information Concerning Adjudicatory Proceedings.

    (a) Guidelines for the timely completion of proceedings.(1) Timely 
resolution of adjudicatory proceedings is one factor

[[Page 190]]

in assessing the effectiveness of the adjudicatory program in protecting 
investors, promoting public confidence in the securities markets and 
assuring respondents a fair hearing. Establishment of guidelines for the 
timely completion of key phases of contested administrative proceedings 
provides a standard for both the Commission and the public to gauge the 
Commission's adjudicatory program on this criterion. The Commission has 
directed that, to the extent possible:
    (i) An administrative law judge's initial decision should be filed 
with the Secretary within 10 months of issuance of the order instituting 
proceedings.
    (ii) A decision by the Commission on review of an interlocutory 
matter should be completed within 45 days of the date set for filing the 
final brief on the matter submitted for review.
    (iii) A decision by the Commission on a motion to stay a decision 
that has already taken effect or that will take effect within five days 
of the filing of the motion, should be issued within five days of the 
date set for filing of the opposition to the motion for a stay. If the 
decision complained of has not taken effect, the Commission's decision 
should be issued within 45 days of the date set for filing of the 
opposition to the motion for a stay.
    (iv) A decision by the Commission with respect to an appeal from the 
initial decision of a hearing officer, a review of a determination by a 
self-regulatory organization, or a remand of a prior Commission decision 
by a court of appeals should be issued within 11 months from the date 
the petition for review, application for review, or mandate of the court 
is filed.
    (2) The guidelines in this paragraph (a) do not create a requirement 
that each portion of a proceeding or the entire proceeding be completed 
within the periods described. Among other reasons, a proceeding at 
either the hearing stage or on review by the Commission may require 
additional time because it is unusually complex or because the record is 
exceptionally long. In addition, fairness is enhanced if the 
Commission's deliberative process is not constrained by an inflexible 
schedule. In some proceedings, deliberation may be delayed by the need 
to consider more urgent matters, to permit the preparation of dissenting 
opinions, or for other good cause. The guidelines will be used by the 
Commission as one of several criteria in monitoring and evaluating its 
adjudicatory program. The guidelines will be examined periodically, and, 
if necessary, readjusted in light of changes in the pending caseload and 
the available level of staff resources.
    (b) Reports to the Commission on pending cases. The administrative 
law judges, the Secretary and the General Counsel have each been 
delegated authority to issue certain orders or adjudicate certain 
proceedings. See 17 CFR 200.30-1 et seq. Proceedings are also assigned 
to the General Counsel for the preparation of a proposed order or 
opinion which will then be recommended to the Commission for 
consideration. In order to improve accountability by and to the 
Commission for management of the docket, the Commission has directed 
that confidential status reports with respect to all filed adjudicatory 
proceedings shall be made periodically to the Commission. These reports 
will be made through the Secretary, with a minimum frequency established 
by the Commission. In connection with these periodic reports, if a 
proceeding assigned to an administrative law judge or pending before the 
Commission has not been concluded within 30 days of the guidelines 
established in paragraph (a) of this section, the Chief Administrative 
Law Judge or the General Counsel, respectively, shall specifically 
apprise the Commission of that fact, and shall describe the procedural 
posture of the case, project an estimated date for conclusion of the 
proceeding, and provide such other information as is necessary to enable 
the Commission to determine whether additional steps are necessary to 
reach a fair and timely resolution of the matter.
    (c) Publication of information concerning the pending case docket. 
Ongoing disclosure of information about the adjudication program 
caseload increases awareness of the importance of the program, 
facilitates oversight of the program and promotes confidence in the 
efficiency and fairness of the program

[[Page 191]]

by investors, securities industry participants, self-regulatory 
organizations and other members of the public. The Commission has 
directed the Secretary to publish in the SEC Docket in the first and 
seventh months of each fiscal year summary statistical information about 
the status of pending adjudicatory proceedings and changes in the 
Commission's caseload over the prior six months. The report will include 
the number of cases pending before the administrative law judges and the 
Commission at the beginning and end of the six-month period. The report 
will also show increases in the caseload arising from new cases being 
instituted, appealed or remanded to the Commission and decreases in the 
caseload arising from the disposition of proceedings by issuance of 
initial decisions, issuance of final decisions issued on appeal of 
initial decisions, other dispositions of appeals of initial decisions, 
final decisions on review of self-regulatory organization 
determinations, other dispositions on review of self-regulatory 
organization determinations, and decisions with respect to stays or 
interlocutory motions. For each category of decision, the report shall 
also show the median age of the cases at the time of the decision and 
the number of cases decided within the guidelines for the timely 
completion of adjudicatory proceedings.

     Table I to Subpart D--Adversary Adjudications Conducted by the 
                      Commission under 5 U.S.C. 554

                     Securities Exchange Act of 1934

    Section 11A(b)(6), 15 U.S.C. 78k-1(b)(6) (suspension or revocation 
of registration, or censure of a securities information processor).
    Section 11A(c)(3)(A), 15 U.S.C. 78k-1(c)(3)(A) (prohibition of 
transactions by brokers and dealers in registered securities other than 
on a national securities exchange).
    Section 12(j), 15 U.S.C. 78l(j) (suspensions of effective date or 
revocation of registration of a security).
    Section 15(b)(4), 15 U.S.C. 78o(b)(4) (suspension or revocation of 
registration, or censure of a broker or dealer).
    Section 15(b)(6)(A), 15 U.S.C. 78o(b)(6)(A) (censure, suspension or 
bar an associate of a broker or a dealer).
    Section 15B(c)(2), 15 U.S.C. 78o-4(c)(2) (suspension or revocation 
of registration, or censure of a municipal securities dealer).
    Section 15B(c)(4), 15 U.S.C. 78o-4(c)(4) (censure, suspension or bar 
of an associate of a municipal securities broker or dealer).
    Section 15B(c)(8), 15 U.S.C. 78o-4(c)(8) (removal or censure of 
member of the Municipal Securities Rulemaking Board).
    Section 15C(c)(1)(A), 15 U.S.C. 78o-5(c)(1)(A) (suspension or 
revocation of registration, or censure of a government securities broker 
or dealer).
    Section 15C(c)(1)(C), 15 U.S.C. 78o-5(c)(1)(C) (censure, suspension 
or bar of an associate of a government securities broker or dealer).
    Section 17A(c)(3), 15 U.S.C. 78q-1(c)(3) (deny registration, 
censure, place limitation on, suspend, or revoke registration of a 
transfer agent).
    Section 17A(c)(4)(C), 15 U.S.C. 78q-1(c)(4)(C) (censure, place 
limitations on, suspend or bar certain persons associated or seeking to 
associate with a transfer agent).
    Section 19(h)(1), 15 U.S.C. 78s(h)(1) (suspension or revocation of 
registration, or censure of a self-regulatory organization).
    Section 19(h)(2), 15 U.S.C. 78s(h)(2) (suspension or expulsion of a 
member of a self-regulatory organization).
    Section 19(h)(3), 15 U.S.C. 78s(h)(3) (suspension or bar of a person 
from being associated with a national securities exchange or registered 
securities association).
    Section 19(h)(4), 15 U.S.C. 78s(h)(4) (removal or censure of a 
director or officer of a self-regulatory organization).
    Section 21B(a), 15 U.S.C. 78u-2(a) (imposition of civil penalties 
against any person for violation of the federal securities laws).

                     Investment Company Act of 1940

    Section 9(d)(1), 15 U.S.C. 80a-9(d)(1) (imposition of civil 
penalties against any person for violation of the federal securities 
laws).

                     Investment Advisers Act of 1940

    Section 203(e), 15 U.S.C. 80b-3(e) (suspension or revocation of 
registration, or censure of an investment adviser).
    Section 203(f), 15 U.S.C. 80b-3(f) (censure, suspension, or bar of 
an associate of an investment adviser).
    Section 203(i)(1), 15 U.S.C. 80b-3(i)(1) (imposition of civil 
penalties against any person for violation of the federal securities 
laws).

  Table II to Subpart D--Cross-Reference Showing Location of Rules of 
 Practice Adopted in 1955 With Former Rules of Practice, Related Rules, 
                        and Statutory Provisions

------------------------------------------------------------------------
          New rules (17 CFR 201)               Former rules/Act Sec.
------------------------------------------------------------------------
100.......................................  1.
101.......................................  none.
102.......................................  2.
102(d)(4).................................  none.

[[Page 192]]

 
103(a)-(c)................................  none.
104.......................................  5.
110.......................................  11(b).
111.......................................  11(d)-(e), 16(g).
112.......................................  11(c).
120.......................................  5 U.S.C. 554(d).
121.......................................  5 U.S.C. 554(d).
140(a)....................................  22(h).
140(b)-(c)................................  22(k).
141(a)....................................  6(a), (b), (f).
141(b)....................................  23(d).
150(a)....................................  23(a).
150(b)....................................  2(d), (h).
150(c)....................................  23(b).
150(d)....................................  23(c).
151.......................................  12(b), 22(a).
152(a)-(e)................................  22(a)-(h).
152(f)....................................  20(d).
153.......................................  7(f).
154.......................................  11(e).
155.......................................  12(d).
160.......................................  22(j), 23(b).
161.......................................  13.
180(a)....................................  2(f).
180(b)-(c)................................  none.
190.......................................  25.
191.......................................  27, 28.
192.......................................  4.
193.......................................  29.
200(a)(1).................................  6(a), (b).
200(a)(2).................................  6(f).
200(b), (c)...............................  6(a), (b).
200(d)....................................  6(d).
200(e)....................................  6(c).
201.......................................  10.
202.......................................  8(b), (c).
210.......................................  9.
220.......................................  7(a)-(e).
221(a)-(c), (e)...........................  8(d)
221(d)....................................  none.
221(f)....................................  6(e).
222(a)....................................  8(d).
222(b)....................................  none.
230.......................................  none.
231(a)....................................  11-1.
231(b)....................................  none.
232(a)-(d)................................  14(b).
232(e)-(f)................................  14(b)(2), (c).
233.......................................  15(a)-(e).
234.......................................  15(g).
235.......................................  15(f).
240.......................................  8(a).
250.......................................  11(e).
300.......................................  11(a)-(b).
301.......................................  11(b).
302(a)....................................  11(f).
302(b)....................................  25(d).
302(c)....................................  20(c).
310.......................................  6(e).
320.......................................  14(a).
321(a)....................................  11(e).
321(b)....................................  none.
322.......................................  none.
323.......................................  14(d).
324.......................................  none.
325.......................................  14(a).
326.......................................  14(a).
340.......................................  16(d)-(e).
350.......................................  20(a)-(b).
351.......................................  20(a)(4).
360(a)....................................  16(b).
360(b)....................................  16(a).
360(c)....................................  16(f).
360(d), (e)...............................  17(f).
400.......................................  12(a).
401.......................................  12(c).
401(d)(2).................................  15 U.S.C. 78s(d)(2).
410(a)....................................  17(a).
410(b)....................................  17(b).
410(c)....................................  none.
410(d)....................................  none.
410(e)....................................  17(h).
411(a)....................................  17(g)(2).
411(b)....................................  17(d).
411(c)....................................  17(c).
411(d)....................................  17(g)(1).
411(e)....................................  17(d).
411(f)....................................  17(g)(3).
420(a), (b), (d)..........................  17 CFR 240.19d-3(b).
420(c)....................................  15 U.S.C. 78s(d)(2).
420(d)....................................  58.
421(a)....................................  15 U.S.C. 78s(e)-(f).
421(b)-(c)................................  none.
430.......................................  26(a), (c).
431(a)....................................  none.
431(b)....................................  26(b).
431(c)....................................  26(d).
431(d)-(f)................................  26(e).
450(a)....................................  17(e).
450(b)....................................  18, 17 CFR 240.19d-3(c)-(g).
450(c)....................................  22(d).
451.......................................  21.
452.......................................  21(d).
460.......................................  20, 21(c).
470.......................................  21(e).
490.......................................  23(e).
500.......................................  none.
510.......................................  none.
511.......................................  none.
512.......................................  none.
513.......................................  none.
514.......................................  none.
520.......................................  none.
521.......................................  none.
522.......................................  none.
524.......................................  none.
530.......................................  19.
531.......................................  none.
540.......................................  none.
550.......................................  17 CFR 202.8.
600.......................................  none.
601.......................................  none.
610.......................................  none.
611.......................................  none.
612.......................................  none.
613.......................................  none.
614.......................................  none.
620.......................................  none.
630.......................................  none.
900.......................................  none.
------------------------------------------------------------------------

Table III to Subpart D--Cross-Reference Table Showing Location of Former 
 Rules of Practice and Related Rules With Rules of Practice Adopted in 
                                  1995

------------------------------------------------------------------------
               Former rules                    New rules (17 CFR 201)
------------------------------------------------------------------------
1.........................................  100.
2.........................................  102.
2(d), (h).................................  150(b).
2(f)......................................  180(a).
3 [reserved]..............................  n/a.
4.........................................  192.

[[Page 193]]

 
5.........................................  104.
6(a)......................................  200(b).
6(a),(b),(f)..............................  141(a).
6(a), (b).................................  200(a)(1).
6(b)......................................  200(c).
6(c), (d).................................  200(d), (e).
6(e)......................................  221(f), 310.
6(f)......................................  200(a)(2).
7(a)-(e)..................................  220.
7(f)......................................  153.
8(a)......................................  240.
8(b)-(c)..................................  202.
8(d)......................................  221, 222(a).
9.........................................  210.
10........................................  201.
11(a)-(b).................................  300.
11(b).....................................  110, 301.
11(c).....................................  112.
11(d), (e)................................  111.
11(e).....................................  154, 250, 321(a).
11(f).....................................  302(a).
11-1......................................  231(a).
12(a).....................................  400.
12(b).....................................  151(c).
12(c).....................................  401.
12(d).....................................  155.
13........................................  161.
14(a).....................................  320, 325, 326.
14(b).....................................  232(a)-(d).
14(b)(2), (c).............................  232(e)-(f).
14(d).....................................  323.
15(a)-(e).................................  233.
15(f).....................................  235.
15(g).....................................  234.
16(a).....................................  360(b).
16(b).....................................  360(a).
16(c) [reserved]..........................  n/a.
16(d)-(e).................................  340.
16(f).....................................  351, 360(c).
16(g).....................................  111.
17(a).....................................  410(a).
17(b).....................................  410(b).
17(c).....................................  411(c).
17(d).....................................  411(b), (e).
17(e).....................................  450(a), (d).
17(f).....................................  360(d), (e).
17(g).....................................  411(d), (a), (f).
17(h).....................................  410(e).
18........................................  450(b).
19........................................  530.
20(a)-(b).................................  350, 351, 460.
20(c).....................................  302(c).
20(d).....................................  152(f).
21........................................  451.
21(c).....................................  460.
21(d).....................................  452.
21(e).....................................  470.
22(a).....................................  151(a)-(c), 152.
22(b) [reserved]..........................  n/a.
22(c).....................................  152(d).
22(d).....................................  152(e), 450(c).
22(e)-(g).................................  152(a)-(c).
22(h).....................................  140(a).
22(i).....................................  none.
22(j), (k)................................  160, 140(c).
22(k).....................................  140(b).
23(a).....................................  150(a).
23(b).....................................  150(c), 160.
23(c).....................................  150(d).
23(d).....................................  141(b).
23(e).....................................  490.
24........................................  17 CFR 228.10(f), 17 CFR
                                             229.10(d).
25........................................  190.
25(d).....................................  302(b).
26(a), (c)................................  430.
26(b).....................................  431(b).
26(d).....................................  431(c).
26(e).....................................  431(d)-(f).
27........................................  191.
28........................................  191.
29........................................  193.
17 CFR 202.8..............................  550.
17 CFR 240.19d-2..........................  401(a)-(b), (d).
17 CFR 240.19d-3(a).......................  420,421.
17 CFR 240.19d-3(b).......................  420(a), (b), (d).
17 CFR 240.19d-3(c)-(d)...................  450, 180(c).
17 CFR 240.19d-3(e).......................  452.
17 CFR 240.19d-3(f).......................  451.
17 CFR 240.19d-3(g).......................  100.
------------------------------------------------------------------------



            Subpart E--Adjustment of Civil Monetary Penalties

    Authority: Pub. L. 104-134, 110 Stat. 1321.

    Source: 61 FR 57774, Nov. 8, 1996, unless otherwise noted.



Sec. 201.1001  Adjustment of civil monetary penalties--1996.

    As required by the Debt Collection Improvement Act of 1996, the 
maximum amounts of all civil monetary penalties under the Securities Act 
of 1933, the Securities Exchange Act of 1934, the Investment Company Act 
of 1940, and the Investment Advisers Act of 1940 are adjusted for 
inflation in accordance with Table I to this subpart. The adjustments 
set forth in Table I apply to violations occurring after December 9, 
1996 and before February 2, 2001.

[66 FR 8762, Feb. 2, 2001]

   Table 1 to Subpart E--Civil Monetary Penalty Inflation Adjustments

----------------------------------------------------------------------------------------------------------------
                                                                         Year
                                                                       penalty       Original        Adjusted
       U.S. code citation               Civil monetary penalty        amount was     statutory        maximum
                                             description             last set by      maximum     penalty amount
                                                                         law      penalty amount
----------------------------------------------------------------------------------------------------------------
SECURITIES AND EXCHANGE
 COMMISSION:

[[Page 194]]

 
    15 USC 77t(d)...............  FOR NATURAL PERSON...............         1990          $5,000          $5,500
                                  FOR ANY OTHER PERSON.............         1990          50,000          55,000
                                  FOR NATURAL PERSON/FRAUD.........         1990          50,000          55,000
                                  FOR ANY OTHER PERSON/FRAUD.......         1990         250,000         275,000
                                  FOR NATURAL PERSON/SUBSTANTIAL            1990         100,000         110,000
                                   LOSSES OR RISK OF LOSSES TO
                                   OTHERS.
                                  FOR ANY OTHER PERSON/SUBSTANTIAL          1990         500,000         550,000
                                   LOSSES OR RISK OF LOSSES TO
                                   OTHERS.
    15 USC 78ff(b)..............  EXCHANGE ACT/FAILURE TO FILE              1936             100             110
                                   INFORMATION DOCUMENTS, REPORTS.
    15 USC 78ff(c)(1)(B)........  FOREIGN CORRUPT PRACTICES--ANY            1988          10,000          11,000
                                   ISSUER.
    15 USC 78ff(c)(2)(C)........  FOREIGN CORRUPT PRACTICES--ANY            1988          10,000          11,000
                                   AGENT OR STOCKHOLDER ACTING ON
                                   BEHALF OF ISSUER.
    15 USC 78u-1(a)(3)..........  INSIDER TRADING--CONTROLLING              1988       1,000,000       1,100,000
                                   PERSONS.
    15 USC 78u-2................  FOR NATURAL PERSON...............         1990           5,000           5,500
                                  FOR ANY OTHER PERSON.............         1990          50,000          55,000
                                  FOR NATURAL PERSON/FRAUD.........         1990          50,000          55,000
                                  FOR ANY OTHER PERSON/FRAUD.......         1990         250,000         275,000
                                  FOR NATURAL PERSON/SUBSTANTIAL            1990         100,000         110,000
                                   LOSSES TO OTHERS/GAINS TO SELF.
                                  FOR ANY OTHER PERSONS/SUBSTANTIAL         1990         500,000         550,000
                                   LOSSES TO OTHERS/GAIN TO SELF.
    15 USC 78u(d)(3)............  FOR NATURAL PERSON...............         1990           5,000           5,500
                                  FOR ANY OTHER PERSON.............         1990          50,000          55,000
                                  FOR NATURAL PERSON/FRAUD.........         1990          50,000          55,000
                                  FOR ANY OTHER PERSON/FRAUD.......         1990         250,000         275,000
                                  FOR NATURAL PERSON/SUBSTANTIAL            1990         100,000         110,000
                                   LOSSES OR RISK OF LOSSES TO
                                   OTHERS.
                                  FOR ANY OTHER PERSON/SUBSTANTIAL          1990         500,000         550,000
                                   LOSSES OR RISK OF LOSSES TO
                                   OTHERS.
    15 USC 80a-9(d).............  FOR NATURAL PERSON...............         1990           5,000           5,500
                                  FOR ANY OTHER PERSON.............         1990          50,000          55,000
                                  FOR NATURAL PERSON/FRAUD.........         1990          50,000          55,000
                                  FOR ANY OTHER PERSON/FRAUD.......         1990         250,000         275,000
                                  FOR NATURAL PERSON/SUBSTANTIAL            1990         100,000         110,000
                                   LOSSES TO OTHERS/GAINS TO SELF.
                                  FOR ANY OTHER PERSON/SUBSTANTIAL          1990         500,000         550,000
                                   LOSSES TO OTHER/GAINS TO SELF.
    15 USC 80a-41(e)............  FOR NATURAL PERSON...............         1990           5,000           5,500
                                  FOR ANY OTHER PERSON.............         1990          50,000          55,000
                                  FOR NATURAL PERSON/FRAUD.........         1990          50,000          55,000
                                  FOR ANY OTHER PERSON/FRAUD.......         1990         250,000         275,000
                                  FOR NATURAL PERSON/SUBSTANTIAL            1990         100,000         110,000
                                   LOSSES OR RISK OF LOSSES TO
                                   OTHERS.
                                  FOR ANY OTHER PERSON/SUBSTANTIAL          1990         500,000         550,000
                                   LOSSES OR RISK OF LOSSES TO
                                   OTHERS.
    15 USC 80b-3(i).............  FOR NATURAL PERSON...............         1990           5,000           5,500
                                  FOR ANY OTHER PERSON.............         1990          50,000          55,000
                                  FOR NATURAL PERSON/FRAUD.........         1990          50,000          55,000
                                  FOR ANY OTHER PERSON/FRAUD.......         1990         250,000         275,000
                                  FOR NATURAL PERSON/SUBSTANTIAL            1990         100,000         110,000
                                   LOSSES TO OTHERS/GAIN TO SELF.
                                  FOR ANY OTHER PERSON/SUBSTANTIAL          1990         500,000         550,000
                                   LOSSES TO OTHERS/GAIN TO SELF.
    15 USC 80b-9(e).............  FOR NATURAL PERSON...............         1990           5,000           5,500
                                  FOR ANY OTHER PERSON.............         1990          50,000          55,000
                                  FOR NATURAL PERSON/FRAUD.........         1990          50,000          55,000
                                  FOR ANY OTHER PERSON/FRAUD.......         1990         250,000         275,000
                                  FOR NATURAL PERSON/SUBSTANTIAL            1990         100,000         110,000
                                   LOSSES OR RISK OF LOSSES TO
                                   OTHERS.
                                  FOR ANY OTHER PERSON/SUBSTANTIAL          1990         500,000         550,000
                                   LOSSES OR RISK OF LOSSES TO
                                   OTHERS.
----------------------------------------------------------------------------------------------------------------


[[Page 195]]



Sec. 201.1002  Adjustment of civil monetary penalties--2001.

    As required by the Debt Collection Improvement Act of 1996, the 
maximum amounts of all civil monetary penalties under the Securities Act 
of 1933, the Securities Exchange Act of 1934, the Investment Company Act 
of 1940, and the Investment Advisers Act of 1940 are adjusted for 
inflation in accordance with Table II to this subpart. The adjustments 
set forth in Table II apply to violations occurring after February 2, 
2001.

[66 FR 8762, Feb. 2, 2001]

   Table II to Subpart E--Civil Monetary Penalty Inflation Adjustments

----------------------------------------------------------------------------------------------------------------
                                                                                          Maximum
                                                                               Year       penalty      Adjusted
                                               Civil monetary penalty        penalty       amount      maximum
           U.S. Code citation                       description             amount was    pursuant     penalty
                                                                               last       to 1996       amount
                                                                             adjusted    adjustment
----------------------------------------------------------------------------------------------------------------
Securities and Exchange Commission:
    15 USC 77t(d).......................  For natural person.............         1996       $5,500       $6,500
                                          For any other person...........         1996       55,000       60,000
                                          For natural person/fraud.......         1996       55,000       60,000
                                          For any other person/fraud.....         1996      275,000      300,000
                                          For natural person/substantial          1996      110,000      120,000
                                           losses or risk of losses to
                                           others.
                                          For any other person/                   1996      550,000      600,000
                                           substantial losses or risk of
                                           losses to others.
    15 USC 78ff(b)......................  Exchange Act/failure to file            1996          110          110
                                           information documents, reports.
    15 USC 78ff(c)(1)(B)................  Foreign Corrupt Practices--any          1996       11,000       11,000
                                           issuer.
    15 USC 78ff(c)(2)(C)................  Foreign Corrupt Practices--any          1996       11,000       11,000
                                           agent or stockholder acting on
                                           behalf of issuer.
    15 USC 78u-1(a)(3)..................  Insider Trading--controlling            1996    1,100,000    1,200,000
                                           person.
    15 USC 78u-2........................  For natural person.............         1996        5,500        6,500
                                          For any other person...........         1996       55,000       60,000
                                          For natural person/fraud.......         1996       55,000       60,000
                                          For any other person/fraud.....         1996      275,000      300,000
                                          For natural person/substantial          1996      110,000      120,000
                                           losses to others/gains to self.
                                          For any other person/                   1996      550,000      600,000
                                           substantial losses to others/
                                           gain to self.
    15 USC 78u(d)(3)....................  For natural person.............         1996        5,500        6,500
                                          For any other person...........         1996       55,000       60,000
                                          For natural person/fraud.......         1996       55,000       60,000
                                          For any other person/fraud.....         1996      275,000      300,000
                                          For natural person/substantial          1996      110,000      120,000
                                           losses or risk of losses to
                                           others.
                                          For any other person/                   1996      550,000      600,000
                                           substantial losses or risk of
                                           losses to others.
    15 USC 80a-9(d).....................  For natural person.............         1996        5,500       $6,500
                                          For any other person...........         1996       55,000       60,000
                                          For natural person/fraud.......         1996       55,000       60,000
                                          For any other person/fraud.....         1996      275,000      300,000
                                          For natural person/substantial          1996      110,000      120,000
                                           losses to others/gains to self.
                                          For any other person/                   1996      550,000      600,000
                                           substantial losses to others/
                                           gain to self.
    15 USC 80a-41(e)....................  For natural person.............         1996        5,500        6,500
                                          For any other person...........         1996       55,000       60,000
                                          For natural person/fraud.......         1996       55,000       60,000
                                          For any other person/fraud.....         1996      275,000      300,000
                                          For natural person/substantial          1996      110,000      120,000
                                           losses or risk of losses to
                                           others.
                                          For any other person/                   1996      550,000      600,000
                                           substantial losses or risk of
                                           losses to others.
    15 USC 80b-3(i).....................  For natural person.............         1996        5,500        6,500
                                          For any other person...........         1996       55,000       60,000
                                          For natural person/fraud.......         1996       55,000       60,000
                                          For any other person/fraud.....         1996      275,000      300,000
                                          For natural person/substantial          1996      110,000      120,000
                                           losses to others/gains to self.

[[Page 196]]

 
                                          For any other person/                   1996      550,000      600,000
                                           substantial losses to others/
                                           gain to self.
    15 USC 80b-9(e).....................  For natural person.............         1996        5,500        6,500
                                          For any other person...........         1996       55,000       60,000
                                          For natural person/fraud.......         1996       55,000       60,000
                                          For any other person/fraud.....         1996      275,000      300,000
                                          For natural person/substantial          1996      110,000      120,000
                                           losses or risk of losses to
                                           others.
                                          For any other person/                   1996      550,000      600,000
                                           substantial losses or risk of
                                           losses to others.
----------------------------------------------------------------------------------------------------------------


[66 FR 8762, Feb. 2, 2001]



PART 202--INFORMAL AND OTHER PROCEDURES--Table of Contents




Sec.
202.1  General.
202.2  Pre-filing assistance and interpretative advice.
202.3  Processing of filings.
202.3a  Instructions for filing fees.
202.4  Facilitating administrative hearings.
202.5  Enforcement activities.
202.6  Adoption, revision and rescission of rules and regulations of 
          general application.
202.7  Submittals.
202.8  Small entity compliance guides.
202.9  Small entity enforcement penalty reduction policy.

    Authority: 15 U.S.C. 77s, 77t, 78d-1, 78u, 78w, 78ll(d), 79r, 79t, 
77sss, 77uuu, 80a-37, 80a-41, 80b-9, and 80b-11, unless otherwise noted.
    Section 202.5 is also issued under sec. 20, 48 Stat. 86, sec. 21, 48 
Stat. 899, sec. 18, 49 Stat. 831, sec. 321, 53 Stat. 1174, sec. 1, 76 
Stat. 394, 15 U.S.C. 77t, 78u, 79r, 77uuu, 80a-4l, 80b-9, 78d-1.
    Section 202.9 is also issued under section 223, 110 Stat. 859 (Mar. 
29, 1996).9

    Source: 25 FR 6736, July 15, 1960, unless otherwise noted.



Sec. 202.1  General.

    (a) The statutes administered by the Commission provide generally 
(1) for the filing with it of certain statements, such as registration 
statements, periodic and ownership reports, and proxy solicitation 
material, and for the filing of certain plans of reorganization, 
applications and declarations seeking Commission approvals; (2) for 
Commission determination through formal procedures of matters initiated 
by private parties or by the Commission; (3) for the investigation and 
examination of persons and records where necessary to carry out the 
purposes of the statutes and for enforcement of statutory provisions; 
and (4) for the adoption of rules and regulations where necessary to 
effectuate the purposes of the statutes.
    (b) In addition to the Commission's rules of practice set forth in 
part 201 of this chapter, the Commission has promulgated rules and 
regulations pursuant to the several statutes it administers (parts 230, 
240, 250, 260, 270 and 275 of this chapter). These parts contain 
substantive provisions and include as well numerous provisions detailing 
the procedure for meeting specific standards embodied in the statutes. 
The Commission's rules and regulations under each of the statutes are 
available in pamphlet form upon request to the Superintendent of 
Documents, U.S. Government Printing Office, Washington, DC 20402.
    (c) The statutes and the published rules, regulations and forms 
thereunder prescribe the course and method of formal procedures to be 
followed in Commission proceedings. These are supplemented where 
feasible by certain informal procedures designed to aid the public and 
facilitate the execution of the Commission's functions. There follows a 
brief description of procedures generally followed by the Commission 
which have not been formalized in rules.
    (d) The informal procedures of the Commission are largely concerned 
with the rendering of advice and assistance by the Commission's staff to 
members

[[Page 197]]

of the public dealing with the Commission. While opinions expressed by 
members of the staff do not constitute an official expression of the 
Commission's views, they represent the views of persons who are 
continuously working with the provisions of the statute involved. And 
any statement by the director, associate director, assistant director, 
chief accountant, chief counsel, or chief financial analyst of a 
division can be relied upon as representing the views of that division. 
In certain instances an informal statement of the views of the 
Commission may be obtained. The staff, upon request or on its own 
motion, will generally present questions to the Commission which involve 
matters of substantial importance and where the issues are novel or 
highly complex, although the granting of a request for an informal 
statement by the Commission is entirely within its discretion.



Sec. 202.2  Pre-filing assistance and interpretative advice.

    The staff of the Commission renders interpretative and advisory 
assistance to members of the general public, prospective registrants, 
applicants and declarants. For example, persons having a question 
regarding the availability of an exemption may secure informal 
administrative interpretations of the applicable statute or rule as they 
relate to the particular facts and circumstances presented. Similarly, 
persons contemplating filings with the Commission may receive advice of 
a general nature as to the preparation thereof, including information as 
to the forms to be used and the scope of the items contained in the 
forms. Inquiries may be directed to an appropriate officer of the 
Commission's staff. In addition, informal discussions with members of 
the staff may be arranged whenever feasible, at the Commission's central 
office or, except in connection with matters under the Public Utility 
Holding Company Act of 1935 and certain matters under the Investment 
Company Act of 1940, at one of its regional or district offices.

[25 FR 6736, July 15, 1960, as amended at 59 FR 5945, Feb. 9, 1994]



Sec. 202.3  Processing of filings.

    (a) Registration statements, proxy statements, letters of 
notification, periodic reports, applications for qualification of 
indentures, and similar documents filed with the Commission under the 
Securities Act of 1933 and the Trust Indenture Act of 1939, and certain 
filings under the Securities Exchange Act of 1934 and the Public Utility 
Holding Company Act of 1935 are routed to the Division of Corporation 
Finance, which passes initially on the adequacy of disclosure and 
recommends the initial action to be taken. If the filing appears to 
afford inadequate disclosure, as for example through omission of 
material information or through violation of accepted accounting 
principles and practices, the usual practice is to bring the deficiency 
to the attention of the person who filed the document by letter from the 
Assistant Director assigned supervision over the particular filing, and 
to afford a reasonable opportunity to discuss the matter and make the 
necessary corrections. This informal procedure is not generally employed 
when the deficiencies appear to stem from careless disregard of the 
statutes and rules or a deliberate attempt to conceal or mislead or 
where the Commission deems formal proceedings necessary in the public 
interest. If an electronic filing is not prepared in accordance with the 
requirements of the current EDGAR Filer Manual, the filing may be 
suspended and the filer so notified. Reasonable opportunity will be 
afforded the filer to make the necessary corrections or resubmit the 
filing as needed. Where it appears that the filing affords adequate 
disclosure, acceleration of its effectiveness when appropriate normally 
will be granted. A similar procedure is followed with respect to filings 
under the Investment Company Act of 1940 and certain filings relating to 
investment companies under the Securities Act of 1933, the Securities 
Exchange Act of 1934, and the Trust Indenture Act of 1939, which are 
routed to the Division of Investment Management, and filings under the 
Public Utility Holding Company Act of 1935 which are also routed to the 
Division of Investment Management. A similar procedure is also followed 
in

[[Page 198]]

the Commission's Regional Offices with respect to registration 
statements on Forms SB-1 and SB-2 (17 CFR 239.9 and 239.10) and related 
filings under the Trust Indenture Act of 1939.
    (b)(1) Applications for registration as brokers, dealers, investment 
advisers, municipal securities dealers and transfer agents are submitted 
to the Office of Filings and Information Services where they are 
examined to determine whether all necessary information has been 
supplied and whether all required financial statements and other 
documents have been furnished in proper form. Defective applications may 
be returned with a request for correction or held until corrected before 
being accepted as a filing. The files of the Commission and other 
sources of information are considered to determine whether any person 
connected with the applicant appears to have engaged in activities which 
would warrant commencement of proceedings on the question of denial of 
registration. The staff confers with applicants and makes suggestions in 
appropriate cases for amendments and supplemental information. Where it 
appears appropriate in the public interest and where a basis therefore 
exists, denial proceedings may be instituted. Within 45 days of the date 
of the filing of a broker-dealer, investment adviser or municipal 
securities dealer application (or within such longer period as to which 
the applicant consents), the Commission shall by order grant 
registration or institute proceedings to determine whether registration 
should be denied. An application for registration as a transfer agent 
shall become effective within 30 days after receipt of the application 
(or within such shorter period as the Commission may determine). The 
Office of Filings and Information Services is also responsible for the 
processing and substantive examination of statements of beneficial 
ownership of securities and changes in such ownership filed under the 
Securities Exchange Act of 1934, the Public Utility Holding Company Act 
of 1935, and the Investment Company Act of 1940, and for the examination 
of reports filed pursuant to Sec. 230.144 of this chapter.
    (2) Applications for registration as national securities exchanges, 
or exemption from registration as exchanges by reason of such exchanges' 
limited volume of transactions filed with the Commission are routed to 
the Division of Market Regulation, which examines these applications to 
determine whether all necessary information has been supplied and 
whether all required financial statements and other documents have been 
furnished in proper form. Defective applications may be returned with a 
request for correction or held until corrected before being accepted as 
a filing. The files of the Commission and other sources of information 
are considered to determine whether any person connected with the 
applicant appears to have engaged in activities which would warrant 
commencement of proceedings on the question of denial of registration. 
The staff confers with applicants and makes suggestions in appropriate 
cases for amendments and supplemental information. Where it appears 
appropriate in the public interest and where a basis therefore exists, 
denial proceedings may be instituted. Within 90 days of the date of 
publication of a notice of the filing of an application for registration 
as a national securities exchange, or exemption from registration by 
reason of such exchanges' limited volume of transactions (or within such 
longer period as to which the applicant consents), the Commission shall 
by order grant registration, or institute proceedings to determine 
whether registration should be denied as provided in Sec. 240.19(a)(1) 
of this chapter.
    (3) Notice forms for registration as national securities exchanges 
pursuant to Section 6(g)(1) of the Securities Exchange Act of 1934 (15 
U.S.C. 78f(g)(1)) filed with the Commission are routed to the Division 
of Market Regulation, which examines these notices to determine whether 
all necessary information has been supplied and whether all other 
required documents have been furnished in proper form. Defective notices 
may be returned with a request

[[Page 199]]

for correction or held until corrected before being accepted as a 
filing.

[41 FR 44699, Oct. 12, 1976, as amended at 44 FR 21567, Apr. 10, 1979; 
49 FR 12686, Mar. 30, 1984; 57 FR 18216, Apr. 29, 1992; 58 FR 15004, 
Mar. 18, 1993; 59 FR 5945, Feb. 9, 1994; 63 FR 70916, Dec. 22, 1998; 64 
FR 19451, April 21, 1999; 66 FR 43741, Aug. 20, 2001]



Sec. 202.3a  Instructions for filing fees.

    Payment of filing fees specified by the following rules shall be 
made according to the directions listed in this part: Sec. 230.111 (17 
CFR 230.111), Sec. 240.0-9 (17 CFR 240-0.9), Sec. 260.7a-10 (17 CFR 
260.7a-10), and Sec. 270.0-8 (17 CFR 270.0-8). All such fees payable by 
electronic filers (Sec. 232.11(e) of this chapter), including those 
pertaining to documents filed in paper pursuant to a hardship exemption, 
shall be remitted to the U.S. Treasury designated lockbox depository at 
the Mellon Bank in Pittsburgh, Pennsylvania, by wire transfer, mail or 
hand delivery. Fees payable by paper filers may be either remitted to 
the lockbox depository, or remitted directly to the Commission at 450 
Fifth Street NW., Washington DC 20549. Personal checks cannot be 
accepted for payment of fees. To ensure proper posting, all filers must 
include their assigned CIK account numbers on fee payments. If a third 
party submits a fee payment, the fee payment must specify the account 
number to which the fee is to be applied. Filing fees paid pursuant to 
Section 6(b) of the Securities Act of 1933, including fees paid pursuant 
to section 24(f) of the Investment Company Act of 1940 (15 U.S.C. 80a-
24(f)) or pursuant to Section 307(b) of the Trust Indenture Act of 1939 
should be designated as ``restricted,'' except that filing fees paid 
with respect to registration statements filed pursuant to Rule 462(b) 
(Sec. 230.462(b) of this chapter) should be designated as 
``unrestricted.'' Specific instructions on the various methods of making 
fee payments to the lockbox depository are as follows:
    (a) Wire transfer: Those who wish to wire fee payments may use any 
bank or wire transfer service to initiate the transaction. All remitters 
must follow standard Federal Reserve instructions to ensure that fees 
transferred are received and identifiable. Specific information required 
for transmission to the Mellon Bank is listed below. Where an item is in 
boldface type, the entry should be made exactly as indicated. Where an 
item is in italics, the filer-specific information should be included.
    (1) Receiving Bank's ABA Number (field two); 043000261
    (2) Type Code (field three): 1040
    (3) Name of registrant and name of payor, if different (field nine): 
ORG= registrant's name/payor's name (if different)
    (4) Receiving Bank's Name (field ten): MELLONBANK
    (5) Transaction Code (field eleven): CTR/
    (6) Beneficiary of payment (field twelve): BNF=SEC/AC-9108739/WRE
    (7) Reference for Beneficiary (field thirteen): RFB=account number 
to which the fee is to be applied
    (8) Payment Details (field fourteen): To designate funds as 
restricted: OBI=R, Otherwise: OBI=N.
    (b) Mail and hand delivery: Checks and money orders are to be made 
payable to the Securities and Exchange Commission, omitting the name or 
title of any official of the Commission. The account number and a 
notation of ``R'' (restricted), as applicable, are to be written on the 
front of the check or money order. Fees transmitted by mail must be 
addressed to the Securities and Exchange Commission, Post Office Box 
360055M, Pittsburgh, Pennsylvania 15252. Fees that are hand delivered 
must be brought to the Mellon Bank, 27th floor, Three Mellon Bank 
Center, Fifth Avenue at William Penn Way, Pittsburgh, PA. Hand 
deliveries will be accepted weekdays from 7:30 a.m. to 4:00 p.m. 
(eastern time). No deliveries can be made on Federal holidays. All hand 
deliveries must be in a sealed envelope, with the Commission's lockbox 
number, 360055M, and the Commission's account number, 910-8739, written 
on the outside. Cash payments must be accompanied by a separate sheet of 
paper providing the same information specified for checks and money 
orders.

[58 FR 15010, Mar. 18, 1993, as amended at 60 FR 26613, May 17, 1995; 61 
FR 49959, Sept. 24, 1996; 62 FR 47938, Sept. 12, 1997]

[[Page 200]]



Sec. 202.4  Facilitating administrative hearings.

    (a) Applications, declarations, and other requests involving formal 
Commission action after opportunity for hearing are scrutinized by the 
appropriate division for conformance with applicable statutory standards 
and Commission rules and generally the filing party is advised of 
deficiencies. Prior to passing upon applications and declarations the 
Commission receives the views of all interested persons at public 
hearings whenever appropriate; hence, any applicant or declarant seeking 
Commission approval of proposed transactions by a particular time should 
file his application or declaration in time to allow for the 
presentation and consideration of such views.
    (b) After the staff has had an opportunity to study an application 
or declaration, interested persons may informally discuss the problems 
therein raised to the extent that time and the nature of the case permit 
(e.g., consideration is usually given to whether the proceeding is 
contested and if so to the nature of the contest). In such event, the 
staff will, to the extent feasible, advise as to the nature of the 
issues raised by the filing, the necessity for any amendments to the 
documents filed, the type of evidence it believes should be presented at 
the hearing and, in some instances, the nature, form, and contents of 
documents to be submitted as formal exhibits. The staff will, in 
addition, generally advise as to Commission policy in past cases which 
dealt with the same subject matter as the filing under consideration.
    (c) During the course of the hearings, the staff is generally 
available for informal discussions to reconcile bona fide divergent 
views not only between itself and other persons interested in the 
proceedings, but among all interested persons; and, when circumstances 
permit, an attempt is made to narrow, if possible, the issues to be 
considered at the formal hearing.
    (d) In some instances the Commission in the order accompanying its 
findings and opinion reserves jurisdiction over certain matters relating 
to the proceeding, such as payment of fees and expenses, accounting 
entries, terms and conditions relating to securities to be issued, and 
other matters. In such cases, upon receipt of satisfactory information 
and data the Commission considers whether further hearing is required 
before releasing jurisdiction.



Sec. 202.5  Enforcement activities.

    (a) Where, from complaints received from members of the public, 
communications from Federal or State agencies, examination of filings 
made with the Commission, or otherwise, it appears that there may be 
violation of the acts administered by the Commission or the rules or 
regulations thereunder, a preliminary investigation is generally made. 
In such preliminary investigation no process is issued or testimony 
compelled. The Commission may, in its discretion, make such formal 
investigations and authorize the use of process as it deems necessary to 
determine whether any person has violated, is violating, or is about to 
violate any provision of the federal securities laws or the rules of a 
self-regulatory organization of which the person is a member or 
participant. Unless otherwise ordered by the Commission, the 
investigation or examination is non-public and the reports thereon are 
for staff and Commission use only.
    (b) After investigation or otherwise the Commission may in its 
discretion take one or more of the following actions: Institution of 
administrative proceedings looking to the imposition of remedial 
sanctions, initiation of injunctive proceedings in the courts, and, in 
the case of a willful violation, reference of the matter to the 
Department of Justice for criminal prosecution. The Commission may also, 
on some occasions, refer the matter to, or grant requests for access to 
its files made by, domestic and foreign governmental authorities or 
foreign securities authorities, self-regulatory organizations such as 
stock exchanges or the National Association of Securities Dealers, Inc., 
and other persons or entities.
    (c) Persons who become involved in preliminary or formal 
investigations may, on their own initiative, submit a written statement 
to the Commission setting forth their interests and position in regard 
to the subject matter of the investigation. Upon request, the

[[Page 201]]

staff, in its discretion, may advise such persons of the general nature 
of the investigation, including the indicated violations as they pertain 
to them, and the amount of time that may be available for preparing and 
submitting a statement prior to the presentation of a staff 
recommendation to the Commission for the commencement of an 
administrative or injunction proceeding. Submissions by interested 
persons should be forwarded to the appropriate Division Director, 
Regional Director, or District Administrator with a copy to the staff 
members conducting the investigation and should be clearly referenced to 
the specific investigation to which they relate. In the event a 
recommendation for the commencement of an enforcement proceeding is 
presented by the staff, any submissions by interested persons will be 
forwarded to the Commission in conjunction with the staff memorandum.
    (d) In instances where the staff has concluded its investigation of 
a particular matter and has determined that it will not recommend the 
commencement of an enforcement proceeding against a person, the staff, 
in its discretion, may advise the party that its formal investigation 
has been terminated. Such advice if given must in no way be construed as 
indicating that the party has been exonerated or that no action may 
ultimately result from the staff's investigation of the particular 
matter.
    (e) The Commission has adopted the policy that in any civil lawsuit 
brought by it or in any administrative proceeding of an accusatory 
nature pending before it, it is important to avoid creating, or 
permitting to be created, an impression that a decree is being entered 
or a sanction imposed, when the conduct alleged did not, in fact, occur. 
Accordingly, it hereby announces its policy not to permit a defendant or 
respondent to consent to a judgment or order that imposes a sanction 
while denying the allegations in the complaint or order for proceedings. 
In this regard, the Commission believes that a refusal to admit the 
allegations is equivalent to a denial, unless the defendant or 
respondent states that he neither admits nor denies the allegations.
    (f) In the course of the Commission's investigations, civil 
lawsuits, and administrative proceedings, the staff, with appropriate 
authorization, may discuss with persons involved the disposition of such 
matters by consent, by settlement, or in some other manner. It is the 
policy of the Commission, however, that the disposition of any such 
matter may not, expressly or impliedly, extend to any criminal charges 
that have been, or may be, brought against any such person or any 
recommendation with respect thereto. Accordingly, any person involved in 
an enforcement matter before the Commission who consents, or agrees to 
consent, to any judgment or order does so solely for the purpose of 
resolving the claims against him in that investigative, civil, or 
administrative matter and not for the purpose of resolving any criminal 
charges that have been, or might be, brought against him. This policy 
reflects the fact that neither the Commission nor its staff has the 
authority or responsibility for instituting, conducting, settling, or 
otherwise disposing of criminal proceedings. That authority and 
responsibility are vested in the Attorney General and representatives of 
the Department of Justice.

[25 FR 6736, July 15, 1960, as amended at 37 FR 23829, Nov. 9, 1972; 37 
FR 25224, Nov. 29, 1972; 44 FR 50835, Aug. 30, 1979; 46 FR 47532, Sept. 
29, 1981; 47 FR 26822, June 22, 1982; 54 FR 24332, June 7, 1989; 59 FR 
5945, Feb. 9, 1994]



Sec. 202.6  Adoption, revision, and rescission of rules and regulations of general application.

    (a) The procedure followed by the Commission in connection with the 
adoption, revision, and rescission of rules of general application 
necessarily varies in accordance with the nature of the rule, the extent 
of public interest therein, and the necessity for speed in its adoption. 
Rules relating to Commission organization, procedure and management, for 
example, are generally adopted by the Commission without affording 
public discussion thereof. On the other hand, in the adoption of 
substantive rules materially affecting an industry or a segment of the 
public, such as accounting rules, every feasible effort is made in 
advance of adoption

[[Page 202]]

to receive the views of persons to be affected. In such cases, proposals 
for the adoption, revision, or rescission of rules are initiated either 
by the Commission or by members of the public, and to the extent 
practicable, the practices set forth in paragraph (b) of this section 
are observed.
    (b) After preliminary consideration by the Commission a draft of the 
proposed rule is published in the Federal Register and mailed to 
interested persons (e.g., other interested regulatory bodies, principal 
registrants or persons to be affected, stock exchanges, professional 
societies and leading authorities on the subject concerned and other 
persons requesting such draft) for comments. Unless accorded 
confidential treatment pursuant to statute or rule of the Commission, 
written comments filed with the Commission on or before the closing date 
for comments become a part of the public record upon the proposed rule. 
The Commission, in its discretion, may accept and include in the public 
record written comments received by the Commission after the closing 
date.
    (c) Following analysis of comments received, the rule may be adopted 
in the form published or in a revised form in the light of such 
comments. In some cases, a revised draft is prepared and published and, 
where appropriate, an oral hearing may be held before final action upon 
the proposal. Any interested person may appear at the hearing and/or may 
submit written comment for consideration in accordance with the 
Commission's notice of the rulemaking procedure to be followed. The rule 
in the form in which it is adopted by the Commission is publicly 
released and is published in the Federal Register.

(Sec. 19(a), 48 Stat. 908; sec. 23(a), 48 Stat. 901; sec. 20(a), 49 
Stat. 833; sec. 319(a), 53 Stat. 1173; sec. 38(a), 54 Stat. 841; sec. 
211(a), 54 Stat. 855; (15 U.S.C. 77s(a), 78w(a), 78t(a), 77sss(a), 80a-
37(a), 80b-11(a))

[25 FR 6736, July 15, 1960, as amended at 44 FR 35208, June 19, 1979]



Sec. 202.7  Submittals.

    (a) All required statements, reports, applications, etc. must be 
filed with the principal office of the Commission unless otherwise 
specified in the Commission's rules, schedules and forms. Reports by 
exchange members, brokers and dealers required by Sec. 240.17a-5 of this 
chapter under the Securities Exchange Act of 1934 must be filed with the 
appropriate regional or district office as provided in Sec. 230.255(a) 
of this chapter under the Securities Act of 1933, and with the principal 
office of the Commission and the appropriate regional or district office 
as provided under Sec. 240.17a-5(a) et seq. of this chapter under the 
Securities Exchange Act of 1934.
    (b) Electronic filings. All documents required to be filed in 
electronic format with the Commission pursuant to the federal securities 
laws or the rules and regulations thereunder shall be filed at the 
principal office in Washington, DC via EDGAR by delivery to the 
Commission of a magnetic tape or diskette, or by direct transmission.

[41 FR 44699, Oct. 12, 1976, as amended at 58 FR 14659, Mar. 18, 1993; 
59 FR 5945, Feb. 9, 1994]



Sec. 202.8  Small entity compliance guides.

    The following small entity compliance guides are available to the 
public from the Commission's Publications Room and regional offices:
    (a) Q & A: Small Business and the SEC.\1\
---------------------------------------------------------------------------

    \1\ These items are also available on the Securities and Exchange 
Commission Web site on the Internet, http://www.sec.gov.
---------------------------------------------------------------------------

    (b) The Work of the SEC.\1\
    (c) Broker-Dealer Registration Package.
    (d) Investment Adviser Registration Package.
    (e) Investment Company Registration Package.
    (f) Examination Information for Broker-Dealers, Transfer Agents, 
Investment Advisers and Investment Companies.

[62 FR 4105, Jan. 28, 1997]



Sec. 202.9  Small entity enforcement penalty reduction policy.

    The Commission's policy with respect to whether to reduce or assess 
civil money penalties against a small entity is:
    (a) The Commission will consider on a case-by-case basis whether to 
reduce or not assess civil money penalties against a small entity. In 
determining

[[Page 203]]

whether to reduce or not assess penalties against a specific small 
entity, the following considerations will apply:
    (1) Except as provided in paragraph (a)(3) of this section, penalty 
reduction will not be available for any small entity if:
    (i) The small entity was subject previously to an enforcement 
action;
    (ii) Any of the small entity's violations involved willful or 
criminal conduct; or
    (iii) The small entity did not make a good faith effort to comply 
with the law.
    (2) In considering whether the Commission will reduce or refrain 
from assessing a civil money penalty, the Commission may consider:
    (i) The egregiousness of the violations;
    (ii) The isolated or repeated nature of the violations;
    (iii) The violator's state of mind when committing the violations;
    (iv) The violator's history (if any) of legal or regulatory 
violations;
    (v) The extent to which the violator cooperated during the 
investigation;
    (vi) Whether the violator has engaged in subsequent remedial efforts 
to mitigate the effects of the violation and to prevent future 
violations;
    (vii) The degree to which a penalty will deter the violator or 
others from committing future violations; and
    (viii) Any other relevant fact.
    (3) The Commission also may consider whether to reduce or not assess 
a civil money penalty against a small entity, including a small entity 
otherwise excluded from this policy under paragraphs (a)(1) (i)-(iii) of 
this section, if the small entity can demonstrate to the Commission's 
satisfaction that it is financially unable to pay the penalty, 
immediately or over a reasonable period of time, in whole or in part.
    (4) For purposes of this policy, an entity qualifies as ``small'' if 
it is a small business or small organization as defined by Commission 
rules adopted for the purpose of compliance with the Regulatory 
Flexibility Act.1 An entity not included in these definitions 
will be considered ``small'' for purposes of this policy if it meets the 
total asset amount that applies to issuers as set forth in Sec. 230.157a 
of this chapter.2
---------------------------------------------------------------------------

    \1\ Pursuant to the Reg. Flex. Act, 5 U.S.C. Sec. 601(3), the 
Commission has adopted appropriate definitions of ``small business'' for 
purposes of the Reg. Flex. Act. See 17 CFR 270.0-10, 275.0-7, 240.0-10, 
230.157, 250.110, and 260.0-7. The Commission recently proposed 
amendments to certain of these definitions. Definitions of ``Small 
Business'' or ``Small Organization'' Under the Investment Company Act of 
1940, the Investment Advisers Act of 1940, the Securities Exchange Act 
of 1934, and the Securities Act of 1933, Securities Act Rel. No. 7383, 
62 FR 4106 (Jan. 28, 1997). The Commission extended the comment period 
for the proposed amendments to April 30, 1997, 62 FR 13356 (Mar. 20, 
1997). Based on an analysis of the language and legislative history of 
the Reg. Flex. Act, Congress does not appear to have intended that Act 
to apply to natural persons (as opposed to individual proprietorships) 
or to foreign entities. The Commission understands that staff at the 
Small Business Administration have taken the same position.
    \2\ At present, this threshold is $5 million. Thus, non-regulated 
entities, such as general partnerships, privately held corporations or 
professional service organizations, with assets of $5 million or less 
may qualify for penalty-reduction.
---------------------------------------------------------------------------

    (b) This policy does not create a right or remedy for any person. 
This policy shall not apply to any remedy that may be sought by the 
Commission other than civil money penalties, whether or not such other 
remedy may be characterized as penal or remedial.

[62 FR 16079, Apr. 4, 1997]



PART 203--RULES RELATING TO INVESTIGATIONS--Table of Contents




                          Subpart A--In General

Sec.
203.1  Application of the rules of this part.
203.2  Information obtained in investigations and examinations.
203.3  Suspension and disbarment.

               Subpart B--Formal Investigative Proceedings

203.4  Applicability of Secs. 203.4 through 203.8.
203.5  Non-public formal investigative proceedings.
203.6  Transcripts.
203.7  Rights of witnesses.
203.8  Service of subpoenas.

    Authority: 15 U.S.C 77s, 78w, 79t, 77sss, 80a-37, 80b-11, unless 
otherwise noted.

[[Page 204]]


    Source: 29 FR 3620, Mar. 21, 1964, unless otherwise noted.



                          Subpart A--In General



Sec. 203.1  Application of the rules of this part.

    The rules of this part apply only to investigations conducted by the 
Commission. They do not apply to adjudicative or rulemaking proceedings.



Sec. 203.2  Information obtained in investigations and examinations.

    Information or documents obtained by the Commission in the course of 
any investigation or examination, unless made a matter of public record, 
shall be deemed non-public, but the Commission approves the practice 
whereby officials of the Divisions of Enforcement, Corporation Finance, 
Market Regulation and Investment Management and the Office of 
International Affairs at the level of Assistant Director or higher, and 
officials in Regional Offices at the level of Assistant Regional 
Director or District Administrator or higher, may engage in and may 
authorize members of the Commission's staff to engage in discussions 
with persons identified in Sec. 240.24c-1(b) of this chapter concerning 
information obtained in individual investigations or examinations, 
including formal investigations conducted pursuant to Commission order.

[58 FR 52419, Oct. 8, 1993, as amended at 59 FR 5945, Feb. 9, 1994]



Sec. 203.3  Suspension and disbarment.

    The provisions of Sec. 201.102(e) of this chapter (Rule 102(e) of 
the Commission's rules of practice) are hereby made specifically 
applicable to all investigations.

[29 FR 3620, Mar. 21, 1964, as amended at 60 FR 32823, June 23, 1995]



               Subpart B--Formal Investigative Proceedings



Sec. 203.4  Applicability of Secs. 203.4 through 203.8.

    (a) Sections 203.4 through 203.8 shall be applicable to a witness 
who is sworn in a proceeding pursuant to a Commission order for 
investigation or examination, such proceeding being hereinafter referred 
to as a formal investigative proceeding.
    (b) Formal investigative proceedings may be held before the 
Commission, before one or more of its members, or before any officer 
designated by it for the purpose of taking testimony of witnesses and 
received other evidence. The term officer conducting the investigation 
shall mean any of the foregoing.



Sec. 203.5  Non-public formal investigative proceedings.

    Unless otherwise ordered by the Commission, all formal investigative 
proceedings shall be non-public.



Sec. 203.6  Transcripts.

    Transcripts, if any, of formal investigative proceedings shall be 
recorded solely by the official reporter, or by any other person or 
means designated by the officer conducting the investigation. A person 
who has submitted documentary evidence or testimony in a formal 
investigative proceeding shall be entitled, upon written request, to 
procure a copy of his documentary evidence or a transcript of his 
testimony on payment of the appropriate fees: Provided, however, That in 
a nonpublic formal investigative proceeding the Commission may for good 
cause deny such request. In any event, any witness, upon proper 
identification, shall have the right to inspect the official transcript 
of the witness' own testimony.

(15 U.S.C. 78d-1)

[37 FR 25166, Nov. 28, 1972]



Sec. 203.7  Rights of witnesses.

    (a) Any person who is compelled or requested to furnish documentary 
evidence or testimony at a formal investigative proceeding shall, upon 
request, be shown the Commission's order of investigation. Copies of 
formal orders of investigation shall not be furnished, for their 
retention, to such persons requesting the same except with the express 
approval of officials in the Regional or District Offices at the level 
of Assistant Regional Director or District Administrator or higher, or 
officials in the Division or Divisions conducting or supervising the 
investigation at the

[[Page 205]]

level of Assistant Director or higher. Such approval shall not be given 
unless the person granting such approval, in his or her discretion, is 
satisfied that there exist reasons consistent both with the protection 
of privacy of persons involved in the investigation and with the 
unimpeded conduct of the investigation.
    (b) Any person compelled to appear, or who appears by request or 
permission of the Commission, in person at a formal investigative 
proceeding may be accompanied, represented and advised by counsel, as 
defined in Sec. 201.101(a) of this chapter (Rule 101(a) of the 
Commission's rules of practice): Provided, however, That all witnesses 
shall be sequestered, and unless permitted in the discretion of the 
officer conducting the investigation no witness or the counsel 
accompanying any such witness shall be permitted to be present during 
the examination of any other witness called in such proceeding.
    (c) The right to be accompanied, represented and advised by counsel 
shall mean the right of a person testifying to have an attorney present 
with him during any formal investigative proceeding and to have this 
attorney (1) advise such person before, during and after the conclusion 
of such examination, (2) question such person briefly at the conclusion 
of the examination to clarify any of the answers such person has given, 
and (3) make summary notes during such examination solely for the use of 
such person.
    (d) Unless otherwise ordered by the Commission, in any public formal 
investigative proceeding, if the record shall contain implications of 
wrongdoing by any person, such person shall have the right to appear on 
the record; and in addition to the rights afforded other witnesses 
hereby, he shall have a reasonable opportunity of cross-examination and 
production of rebuttal testimony or documentary evidence. Reasonable 
shall mean permitting persons as full an opportunity to assert their 
position as may be granted consistent with administrative efficiency and 
with avoidance of undue delay. The determination of reasonableness in 
each instance shall be made in the discretion of the officer conducting 
the investigation.
    (e) The officer conducting the investigation may report to the 
Commission any instances where any witness or counsel has been guilty of 
dilatory, obstructionist or contumacious conduct during the course of an 
investigation or any other instance of violation of these rules. The 
Commission will thereupon take such further action as the circumstances 
may warrant, including suspension or disbarment of counsel from further 
appearance or practice before it, in accordance with Sec. 201.2(e) of 
this chapter (Rule 2(e) of the Commission's rules of practice), or 
exclusion from further participation in the particular investigation.

[29 FR 3620, Mar. 21, 1964, as amended at 52 FR 12148, Apr. 15, 1987; 59 
FR 5945, Feb. 9, 1994; 60 FR 32823, June 23, 1995]



Sec. 203.8  Service of subpoenas.

    Service of subpoenas issued in formal investigative proceedings 
shall be effected in the manner prescribed by Rule 232(c) of the 
Commission's Rules of Practice, Sec. 201.232(c) of this chapter.

[29 FR 3620, Mar. 21, 1964, as amended at 60 FR 32823, June 23, 1995]



PART 204--RULES RELATING TO DEBT COLLECTION--Table of Contents




                    Subpart A--Administrative Offset

Sec.
204.1  Applicability and scope.
204.2  Definitions.
204.3  General.
204.4  Demand for payment--notice.
204.5  Debtor's failure to respond.
204.6  Agency review.
204.7  Hearing.
204.8  Written agreement for repayment.
204.9  Administrative offset procedures.
204.10  [Reserved]
204.11  Jeopardy procedure.
204.12-204.29  [Reserved]

                        Subpart B--Salary Offset

204.30  Purpose and scope.
204.31  Excluded debts or claims.
204.32  Definitions.
204.33  Pre-offset notice.
204.34  Employee response.
204.35  Petition for pre-offset hearing.
204.36  Granting of a pre-offset hearing.
204.37  Extensions of time.
204.38  Pre-offset hearing.
204.39  Written decision.
204.40  Deductions.

[[Page 206]]

204.41  Non-waiver of rights.
204.42  Refunds.
204.43  Coordinating offset with another federal agency.
204.44  Interest, penalties, and administrative costs.

                      Subpart C--Tax Refund Offset

204.50  Purpose.
204.51  [Reserved]
204.52  Notification of intent to collect.
204.53  [Reserved]
204.54  Commission action as a result of consideration of evidence 
          submitted in response to the notice of intent.
204.55  Change in notification to Financial Management Service.
204.56  Administrative charges.
204.57-204.59  [Reserved]

               Subpart D--Administrative Wage Garnishment

204.60  Purpose.
204.61  Scope.
204.62  Definitions.
204.63  Notice.
204.64  Hearing.
204.65  Wage Garnishment Order.

 Subpart E--Miscellaneous: Credit Bureau Reporting, Collection Services

204.75  Collection services.
204.76  Use of credit bureau or consumer reporting agencies.
204.77  Referrals to collection agencies.



                    Subpart A--Administrative Offset

    Authority: 31 U.S.C. 3716, 31 CFR 901.3.

    Source: 58 FR 64370, Dec. 7, 1993, unless otherwise noted.



Sec. 204.1  Applicability and scope.

    (a) The procedures authorized for administrative offset are 
contained in Section 10 of the Debt Collection Act (codified at 31 
U.S.C. 3716). The Act requires that notice procedures be observed by the 
agency. The debtor is also afforded an opportunity to inspect and copy 
government records pertaining to the claim, enter into an agreement for 
repayment, and to a review of the claim (if requested). Like salary 
offset, agencies may cooperate with one another in order to effectuate 
recovery of the claim.
    (b) The provisions of this subpart apply to the collection of debts 
owed to the United States arising from transactions with the Securities 
and Exchange Commission (Commission). These regulations are consistent 
with the Debt Collection Act and the Federal Claims Collection Standards 
on administrative offset issued jointly by the Department of Justice and 
the Department of the Treasury (31 CFR 901.3).

[58 FR 64370, Dec. 7, 1993, as amended at 66 FR 54130, Oct. 26, 2001]



Sec. 204.2  Definitions.

    (a) Administrative offset as defined in 31 U.S.C. 3701(a)(1) means 
withholding funds payable by the United States (including funds payable 
by the United States on behalf of a State government) to, or held by the 
United States for, a person to satisfy a claim.
    (b) Person includes a natural person or persons, profit or nonprofit 
corporation, partnership, association, trust, estate, consortium, or 
other entity which is capable of owing a debt to the United States 
Government except that agencies of the United States, or of any State or 
local government shall be excluded.

[58 FR 64370, Dec. 7, 1993, as amended at 66 FR 54130, Oct. 26, 2001]



Sec. 204.3  General.

    (a) The Chairperson (or designee) may initiate administrative offset 
with regard to debts owed by a person to another agency of the United 
States Government, upon receipt of a request from the head of another 
agency or his or her designee, and a certification that the debt exists 
and that the person has been afforded the necessary due process rights.
    (b) The Chairperson (or designee) may notify the Department of the 
Treasury of delinquent debts for purposes of administrative offset, and 
may request another agency which holds funds payable to a Commission 
debtor to offset that debt against the funds held; the Commission will 
provide certification that:
    (1) The debt is past due and legally enforceable; and
    (2) The person has been afforded the necessary due process rights.
    (c) No collection by administrative offset shall be made on any debt 
that

[[Page 207]]

has been outstanding for more than 10 years unless facts material to the 
Government's right to collect the debt were not known, and reasonably 
could not have been known, by the official or officials responsible for 
discovering the debt. This limitation does not apply to debts reduced to 
judgment.
    (d) Administrative offset under this subpart may not be initiated 
against:
    (1) A debt in which administrative offset of the type of debt 
involved is explicitly provided for or prohibited by another statute;
    (2) Debts owed by other agencies of the United States or by any 
State or local Government; or
    (3) Debts arising under the Internal Revenue Code of 1954; the 
Social Security Act; or the tariff laws of the United States.
    (e) The procedures for administrative offset in this subpart do not 
apply to the offset of Federal salaries under 5 U.S.C. 5514 or Federal 
tax refunds under 31 U.S.C. 3720A and 31 CFR 285.2.

[58 FR 64370, Dec. 7, 1993, as amended at 66 FR 54130, Oct. 26, 2001]



Sec. 204.4  Demand for payment--notice.

    (a) Before offset is made, a written notice will be sent to the 
debtor. This notice will include:
    (1) The type and amount of the debt;
    (2) The date when payment is due (not less than thirty days from the 
date of mailing or hand delivery of the notice);
    (3) The agency's intention to collect the debt by administrative 
offset, including asking the assistance of other Federal agencies to 
help in the offset whenever possible, if the debtor has not made payment 
by the payment due date or has not made an arrangement for payment by 
the payment due date;
    (4) The right of the debtor to inspect and copy the Commission's 
records related to the claim;
    (5) The right of the debtor to request a review of the determination 
of indebtedness and, in the circumstances described in Sec. 204.7, to 
request an oral hearing from the Commission's designee; and
    (6) The right of the debtor to enter into a written agreement with 
the agency to repay the debt in some other way.
    (b) Claims for payment of travel advances and employee training 
expenses require notification prior to administrative offset as 
described in this section. Because no oral hearing is required, notice 
of the right to a hearing need not be included in the notification.

[58 FR 64370, Dec. 7, 1993, as amended at 66 FR 54130, Oct. 26, 2001]



Sec. 204.5  Debtor's failure to respond.

    If the debtor fails to respond to the notice described in 
Sec. 204.4(a) by the proposed effective date specified in the notice, 
the Commission may take further action under this section or under the 
Federal Claims Collection Standards (31 CFR 901.3). The commission may 
collect by administrative offset if the debtor:
    (a) Has not made payment by the payment due date;
    (b) Has not requested a review of the claim within the agency as set 
out in Sec. 204.6; or
    (c) Has not made an arrangement for payment by the payment due date.

[58 FR 64370, Dec. 7, 1993, as amended at 66 FR 54130, Oct. 26, 2001]



Sec. 204.6  Agency review.

    (a) To the extent that a debt owed has not been established by 
judicial or administrative order, a debtor may request a hearing 
concerning the existence or amount of the debt or the terms of 
repayment. With respect to debts established by a judicial or 
administrative order, a debtor may request a hearing concerning the 
payment or other discharge of the debt. A request to review a disputed 
debt must be submitted to the Commission official who provided 
notification within 30 calendar days of the receipt of the written 
notice described in Sec. 204.4(c).
    (b) The Commission will provide a copy of the record to the debtor 
and advise him/her to furnish available evidence to support his or her 
position. Upon receipt of the evidence, the written record of 
indebtedness will be reviewed and the debtor will be informed of the 
results of that review.
    (c) Pending the resolution of a dispute by the debtor, transactions 
in any of the debtor's accounts maintained by

[[Page 208]]

the Commission may be temporarily suspended. Depending on the type of 
transaction, the suspension could preclude its payment, removal, or 
transfer, as well as prevent the payment of interest or discount due 
thereon. Should the dispute be resolved in the debtor's favor, the 
suspension will be immediately lifted.
    (d) During the review period, interest, penalties, and 
administrative costs will continue to accrue.

[58 FR 64370, Dec. 7, 1993, as amended at 66 FR 54131, Oct. 26, 2001]



Sec. 204.7  Hearing.

    (a) A debtor will be provided a reasonable opportunity for an oral 
hearing by the Commission's designee when:
    (1) (i) By statute, consideration must be given to a request to 
waive the indebtedness;
    (ii) The debtor requests waiver of the indebtedness; and
    (iii) The waiver determination rests on an issue of credibility or 
veracity; or
    (2) The debtor requests reconsideration and the Commission's 
designee determines that the question of indebtedness cannot be resolved 
by reviewing the documentary evidence.
    (b) In cases where an oral hearing is provided to the debtor, the 
Commission's designee will conduct the hearing, and provide the debtor 
with a written decision 30 days after the hearing.

[58 FR 64370, Dec. 7, 1993, as amended at 66 FR 54131, Oct. 26, 2001]



Sec. 204.8  Written agreement for repayment.

    If the debtor requests a repayment agreement in place of offset, the 
Commission has discretion to determine whether to accept a repayment 
agreement in place of offset. If the debt is delinquent and the debtor 
has not disputed its existence or amount, the Commission will not accept 
a repayment agreement in place of offset unless the debtor is able to 
establish that offset would cause undue financial hardship or be unjust. 
No repayment arrangement will be considered unless the debtor submits a 
financial statement, executed under penalty of perjury, reflecting the 
debtor's assets, liabilities, income, and expenses. The financial 
statement must be submitted within ten business days of the Commission's 
request for the statement. At the Commission's option, a confess-
judgment note or bond of indemnity with surety may be required for 
installment agreements. Notwithstanding the provisions of this section, 
any reduction or compromise of a claim will be governed by the Debt 
Collection Act, 31 U.S.C. 3711-3720E, and the Federal Claims Collection 
Standards, 31 CFR 900.1-904.4.

[ 58 FR 64370, Dec. 7, 1993, as amended at 66 FR 54131, Oct. 26, 2001]



Sec. 204.9  Administrative offset procedures.

    (a) If the debtor does not exercise the right to request a review 
within the time specified in Sec. 204.4, or if as a result of the 
review, it is determined that the debt is due and no written agreement 
is executed, then administrative offset shall be ordered in accordance 
with this subpart without further notice.
    (b) Travel advance. The Commission will deduct outstanding advances 
provided to Commission travelers from other amounts owed the traveler by 
the agency whenever possible and practicable. Monies owed by an employee 
for outstanding travel advances that cannot be deducted from other 
travel amounts due that employee will be collected through salary offset 
as described in subpart B of this part.
    (c) Requests for offset to the Department of the Treasury or other 
Federal agencies. The Chairperson (or his or her designee) may notify 
the Department of the Treasury of delinquent debts for purposes of 
administrative offset, and may request that a debt owed to the 
Commission be administratively offset against funds due and payable to a 
debtor by another Federal agency. In requesting administrative offset, 
the Commission, as creditor, will certify in writing to the Federal 
agency holding funds of the debtor that:
    (1) The debtor owes the past due and legally enforceable debt; and
    (2) The debtor has been afforded the necessary due process rights.
    (d) Requests for offset from other Federal agencies. Any Federal 
agency may request that funds due and payable to

[[Page 209]]

its debtor by the Commission be administratively offset in order to 
collect a debt owed to such Federal agency by the debtor. The Commission 
shall initiate the requested offset only upon:
    (1) Receipt of written certification from the crecitor agency that:
    (i) The debtor owes the past due and legally enforceable debt; and
    (ii) The debtor has been afforded the necessary due process rights.
    (2) A determination by the Commission that collection by offset 
against funds payable by the Commission would be in the best interest of 
the United States as determined by the facts and circumstances of the 
particular case, and that such offset would not otherwise be contrary to 
law.

[58 FR 64370, Dec. 7, 1993, as amended at 66 FR 54131, Oct. 26, 2001]



Sec. 204.10  [Reserved]



Sec. 204.11  Jeopardy procedure.

    The Commission may effect an administrative offset against a payment 
to be made to the debtor prior to the completion of the procedures 
required by Sec. 204.4(a) if failure to take the offset would 
substantially jeopardize the Commission's ability to collect the debt, 
and the time available before the payment is to be made does not 
reasonably permit the completion of those procedures. Such prior offset 
shall be promptly followed by the completion of those procedures. 
Amounts recovered by offset but later found not to be owed to the 
Commission shall be promptly refunded. This section applies only to 
administrative offset pursuant to 31 CFR 901.3(c), and does not apply 
when debts are referred to the Department of the Treasury for mandatory 
centralized administrative offset under 31 CFR 901.3(b)(1).

[ 58 FR 64370, Dec. 7, 1993, as amended at 66 FR 54131, Oct. 26, 2001]



Secs. 204.12-204.29  [Reserved]



                        Subpart B--Salary Offset

    Authority: 5 U.S.C. 5514, 5 CFR 550.1104.

    Source: 58 FR 38520, July 19, 1993, unless otherwise noted.



Sec. 204.30  Purpose and scope.

    (a) This regulation provides procedures for the collection by 
administrative offset against a federal employee's current pay account 
without his/her consent under 5 U.S.C. 5514 to satisfy certain debts 
owed to the Commission. This regulation does not apply when the employee 
consents to recovery from his/her current pay account.
    (b) This regulation does not preclude an employee from requesting a 
waiver or questioning the amount or validity of a debt by submitting a 
claim to the General Accounting Office in accordance with procedures 
prescribed by the General Accounting Office.
    (c) This Salary Offset plan is for internal use and Government-wide 
claims collections. 5 CFR 550.1104(a). This regulation implements 5 
U.S.C. 5514; 5 CFR part 550, subpart K.



Sec. 204.31  Excluded debts or claims.

    This regulation does not apply to:
    (a) Debts or claims arising under the Internal Revenue Code of 1954 
as amended (26 U.S.C. 1), or the tariff laws of the United States.
    (b) Any case where collection of a debt by salary offset is 
explicitly provided for or prohibited by another statute, such as travel 
advances in 5 U.S.C. 5705 and employee training expenses in 5 U.S.C. 
4108.

[58 FR 38520, July 19, 1993, as amended at 66 FR 54131, Oct. 26, 2001]



Sec. 204.32  Definitions.

    The following definitions apply to this regulation:
    Chairman means the Chairman of the Securities and Exchange 
Commission.
    Commission means the Securities and Exchange Commission.
    Creditor agency means the agency to which the debt is owed.
    Debt means an amount owed to the United States from sources which 
include but are not necessarily limited to, erroneous payments made to 
employees such as overpayment of benefits, salary or other allowances; 
loans when insured or guaranteed by the United States; and other amounts 
due the United States from fees, leases, rents, royalties, services, 
sales of real or personal property, overpayment,

[[Page 210]]

penalties, damages, interest, fines and forfeitures (except those 
arising under the Uniform Code of Military Justice) and all other 
similar sources.
    Disposable pay means the amount that remains from an employee's 
federal pay after required deductions for federal, state and local 
income taxes; Social Security taxes, including Medicare taxes; federal 
retirement programs; premiums for life and health insurance benefits; 
and such other deductions that are required by law to be withheld. (See 
5 CFR 581.105(b) through (f) for items required by law to be withheld, 
and therefore excluded from disposable pay for the purposes of this 
regulation.)
    Employee means a current employee of the Securities and Exchange 
Commission, or other agency, including an active duty member or 
reservist in the U.S. Armed Forces or a former employee (or former 
active duty member or Reservist in the Armed Forces) with a current pay 
account.
    FCCS means the Federal Claims Collection Standards jointly published 
by the Justice Department and the Department of the Treasury at 31 CFR 
parts 900-904.
    Hearing official means an individual responsible for conducting any 
hearing with respect to the existence or amount of a debt claimed, and 
who renders a decision on the basis of such hearing. A hearing official 
may not be under the Chairman's supervision or control, except that 
nothing in this regulation shall be construed to prohibit the 
appointment of an administrative law judge.
    Pay means basic pay, special pay, incentive pay, retired pay, 
retainer pay, or in the case of an individual not entitled to basic pay, 
other authorized pay.
    Program official means, for the purpose of implementing this offset 
regulation, the Comptroller or designee.
    Salary offset means an administrative offset to collect a debt under 
5 U.S.C. 5514 by deduction(s), at one or more officially established pay 
intervals, from the current pay account of an employee, without his or 
her consent.
    Waiver means the cancellation, remission, forgiveness, or non-
recovery of a debt allegedly owed by an employee to an agency as 
permitted or required by 5 U.S.C. 5584, 10 U.S.C. 2774, 32 U.S.C. 716, 5 
U.S.C. 8346(b), or any other law.

[58 FR 38520, July 19, 1993, as amended at 66 FR 54131, Oct. 26, 2001]



Sec. 204.33  Pre-offset notice.

    A program official must provide an employee with written notice at 
least 30 calendar days prior to offseting his/her salary. A program 
official need not notify an employee of: any adjustment to pay arising 
out of an employee's election of coverage or a change in coverage under 
a Federal benefits program requiring periodic deductions from pay, it 
the amount to be recovered was accumulated over four pay periods or 
less; a routine intra-agency adjustment of pay that is made to correct 
an overpayment of pay attributable to clerical or administrative errors 
or delays in processing pay documents, if the overpayment occurred 
within the four pay periods preceding the adjustment and, at the time of 
such adjustment, or as soon thereafter as practical, the individual is 
provided written notice of the nature and the amount of the adjustment 
and point of contact for contesting such adjustment; or any adjustment 
to collect a debt amounting to $50 or less, if, at the time of such 
adjustment, or as soon thereafter as practical, the individual is 
provided written notice of the nature and the amount of the adjustment 
and a point of contact for contesting such adjustment. When required, 
the written notice must include the following:
    (a) The nature, origin and amount of the indebtedness determined by 
the Commission to be due;
    (b) The intention of the Commission to collect the debt through 
deductions from the employee's current disposable pay account;
    (c) The frequency and amount of the intended deductions (stated as a 
fixed dollar amount or as a percentage of pay, not to exceed 15 percent 
of disposable pay) and the intention to continue the deductions until 
the debt is paid in full or otherwise resolved;

[[Page 211]]

    (d) An explanation of the Commission's policy concerning interest, 
penalties, and administrative costs, including a statement that such 
assessments must be made unless excused in accordance with the FCCS;
    (e) The employee's right to inspect and copy Commission records 
relating to the debt (if copies of such records are not attached), or if 
the employee or his or her representative cannot personally inspect the 
records, the right to request and receive a copy of such records. The 
Commission will respond to a request for inspection and/or copying as 
soon as practicable;
    (f) The opportunity, under terms agreeable to the Commission, to 
enter into a written agreement to establish a schedule for repayment in 
lieu of offset. The agreement must be in writing, signed by both the 
employee and the Commission, and documented in the Commission's files 
(31 CFR 901.3(b));
    (g) The employee's right to a hearing conducted by an official 
arranged by the Commission if a petition is filed as prescribed by 
Sec. 204.35, Petition for pre-offset hearing. Such hearing official will 
be either an administrative law judge or at the chief administrative law 
judge's discretion, another hearing official who is also not under the 
control of the head of the agency;
    (h) The method and time period for petitioning for a hearing, 
including a statement that the timely filing of a petition for hearing 
will stay the commencement of collection proceedings;
    (i) If a hearing is requested, the hearing official will issue a 
final decision, based on information presented to the hearing official, 
at the earliest practicable date, but no later than 60 days after the 
petition for the hearing is filed unless the employee requests and the 
hearing official, for good cause or in the interests of justice, deems 
it necessary to extend that time period (5 CFR 550.1104(d)(10));
    (j) That any knowingly false or frivolous statements, 
representations, or evidence may subject the employee to:
    (1) Disciplinary procedures appropriate under 5 U.S.C. chapter 75, 5 
CFR part 752, or any other applicable statutes or regulations;
    (2) Penalties under the False Claims Act, 31 U.S.C. 3729-3731, or 
any other applicable statutory authority; and/or
    (3) Criminal penalties under 18 U.S.C. 286, 287, 1001, and 1002, or 
any other applicable statutory authority.
    (k) Any other rights and remedies available to the employee under 
statutes or regulations governing the program for which the collection 
is being made;
    (l) The employee's right to a prompt refund if amounts paid or 
deducted by salary offset are later waived or found not owed to the 
United States, unless otherwise provided by law or contract; and
    (m) The specific address to which all correspondence shall be 
directed regarding the debt.

[58 FR 38520, July 19, 1993, as amended at 66 FR 54131, Oct. 26, 2001]



Sec. 204.34  Employee response.

    (a) Introduction. An employee must respond to a pre-offset notice, 
if at all, within 15 calendar days following receipt, in one or more of 
the ways discussed in Sec. 204.34, Employee response, and Sec. 204.35, 
Petition for pre-offset hearing. Where applicable, the employee bears 
the burdens of proof and persuasion.
    (b) Responses must be submitted in writing to the program official 
who signed the pre-offset notice. A timely response will stay the 
commencement of collection by salary offset, at least until the issuance 
of a written decision. (See Sec. 204.37, Extensions of time). Failure to 
submit a timely response will be treated as an admission of 
indebtedness, and will result in salary offset in accordance with the 
terms specified in the pre-offset notice.
    (c) A response filed after expiration of the 15 day period may be 
accepted if the employee can show that the delay was due to 
circumstances beyond his or her control or failure to receive notice of 
the time limit (unless otherwise aware of it).
    (d) Voluntary repayment agreement. An employee may request to enter 
into a voluntary written agreement for repayment of the debt in lieu of 
offset. It is within the discretion of the program official whether to 
enter into such an agreement, and if so, upon what terms.

[[Page 212]]

Voluntary deductions may exceed 15 percent of the employee's disposable 
pay. If an agreement is reached, the agreement must be in writing, and 
must be signed by both the employee and the program official. A signed 
copy must be sent to the Comptroller's office. The program official 
shall notify the employee in writing of its decision not to accept the 
proposed voluntary repayment schedule before making any deductions from 
the employee's salary.
    (e) Waiver. Any request for waiver of the debt must be accompanied 
by evidence that the waiver is authorized by law.
    (f) Reconsideration. An employee may request reconsideration of the 
existence or amount of the debt or the offset schedule as reflected in 
the pre-offset notice. The request must be accompanied by a detailed 
narrative and supporting documentation as to why the offset decision is 
erroneous and/or why the offset schedule imposes an undue hardship.



Sec. 204.35  Petition for pre-offset hearing.

    (a) The employee may petition for a pre-offset hearing. The petition 
must state with specificity why the employee believes the agency's 
determination is in error. To the extent that a debt has not been 
established by judicial or administrative order, a debtor may request a 
pre-offset hearing concerning the existence or amount of the debt or the 
terms of repayment. With respect to debts established by a judicial or 
administrative order, a debtor may request a pre-offset hearing 
concerning the payment or other discharge of the debt.
    (b) The petition must fully identify and explain, with reasonable 
specificity, all the facts, evidence and witnesses, if any, that the 
employee believes support his or her position. The petition must be 
signed by the employee.

[ 58 FR 38520, July 19, 1993, as amended at 66 FR 54131, Oct. 26, 2001]



Sec. 204.36  Granting of a pre-offset hearing.

    (a) If the employee timely requests a pre-offset hearing or the 
timeliness is waived, the program official must:
    (1) arrange for a hearing official. If the hearing official is an 
administrative law judge, he or she shall be designated by the Chief 
Administrative Law Judge as set forth in 17 CFR 200.310(a)(2); and
    (2) provide the hearing official with a copy of all records on which 
the determination of the debt and any involuntary repayment schedule are 
based.
    (b) The hearing official shall notify the employee by personal 
service, by first class, registered or certified mail, or by a reliable 
commercial courier or overnight delivery service whether the employee is 
entitled to an oral or ``paper'' (i.e., a review on the written record) 
hearing. (See 31 CFR 901.3(e).) Within 20 calendar days of receipt of 
this notice the employee shall provide the hearing official with a full 
description of all relevant facts, documentary evidence, and witnesses 
which the employee believes support his or her position. The hearing 
official may extend the time for the employee to respond to the notice 
for good cause shown.
    (c) If an oral hearing is scheduled, the hearing official shall 
notify the program official and the employee in writing of the date, 
time and location of the hearing. The place for the hearing shall be 
fixed by the hearing official with due regard for the public interest 
and the convenience and necessity of the parties, the participants, or 
their representatives.
    (d) If the employee is entitled to an oral hearing, but requests to 
have the hearing based only on the written submissions, the employee 
must notify the hearing official and the program official at least 3 
calendar days before the date of the oral hearing. The hearing official 
may waive the 3-day requirement for good cause.
    (e) Failure of the employee to appear at the oral hearing may result 
in dismissal of the petition and affirmation of the program official's 
decision.

[58 FR 38520, July 19, 1993, as amended at 66 FR 54131, Oct. 26, 2001]



Sec. 204.37  Extensions of time.

    The hearing official may for good cause or in the interests of 
justice postpone the commencement of the hearing, adjourn a convened 
hearing

[[Page 213]]

for a reasonable period of time or extend or shorten any other time 
limits prescribed under this section. This extension is not intended to 
abridge the 30 day initial notice or extend the 60 day decision 
requirement other than as provided for in 5 CFR 550.1104(d)(10).



Sec. 204.38  Pre-offset hearing.

    (a) The hearing official shall determine the form and content of 
hearings granted under this section, pursuant to 31 CFR 901.3(e). All 
oral hearings shall be on the record. Except as otherwise ordered by the 
hearing official, hearings shall be recorded or transcribed verbatim by 
shorthand, mechanical means, electronic sound recording, or any other 
method, subject to the discretion and approval of the hearing official, 
and a transcript thereof shall be made.
    (b) Oral hearings are informal in nature. The Commission, 
represented by an attorney from the Office of General Counsel, and 
accompanied by a program official and the employee, and/or the 
employee's representative, orally shall explain their respective 
positions using relevant documentation. The employee may testify on his 
or her own behalf, subject to cross examination. Other witnesses may be 
called to testify where the hearing official determines the testimony to 
be relevant and not redundant. The Federal Rules of Evidence serve as a 
guideline, but are not controlling. The employee bears the burdens of 
proof and persuasion.
    (c) The hearing official shall:
    (1) Conduct a fair and impartial hearing;
    (2) Preside over the course of the hearing, maintain decorum and 
avoid delay in the disposition of the hearing; and
    (3) Issue a decision in accordance with Sec. 204.39, Written 
decision, on the basis of the oral hearing and the written record.
    (d) Oral hearings are normally open to the public. However, the 
hearing official may close all or any portion of the hearing at either 
the request of either party or upon the hearing official's initiative 
when doing so is in the best interest[s] of the employee or the public.
    (e) Oral hearings may be conducted by conference call at the request 
of the employee or at the discretion of the hearing official.
    (f) Pre-offset ``paper'' hearing. If a hearing is to be held only 
upon written submissions, the hearing official shall issue a decision 
based solely upon the written record.

[58 FR 38520, July 19, 1993, as amended at 66 FR 54132, Oct. 26, 2001]



Sec. 204.39  Written decision.

    (a) If pre-offset hearing is held. Within 60 days of the filing of 
the employee's petition for a pre-offset hearing, the hearing official 
will issue a written decision setting forth the basis of his/her 
findings in accordance with 5 CFR 550.1104(g)(3).
    (b) If the employee challenges the pre-offset notice under 
Sec. 204.34, Employee response and/or Sec. 204.35, Petition for pre-
offset hearing, without requesting a hearing or a hearing is denied, the 
program official must notify the employee of his/her final determination 
in writing before offset can begin. The agency's execution of a 
voluntary repayment agreement satisfies this requirement.



Sec. 204.40  Deductions.

    (a) When deductions may begin:
    (1) If a pre-offset hearing is held, deductions shall be made in 
accordance with the hearing official's decision.
    (2) If parties execute a voluntary repayment agreement, deductions 
shall be made in accordance with the terms of that agreement.
    (3) If the employee requests a waiver or reconsideration or the 
program official refuses to accept a proposed alternate repayment 
schedule, deductions shall be made in accordance with the program 
official's written decision.
    (4) If the employee consents to the terms and conditions set forth 
in the Commission's Pre-offset Notice or fails to respond in timely 
fashion to the Pre-offset Notice, or waives his/her right to a hearing 
without otherwise challenging the terms of the Pre-offset Notice, 
deductions shall be made in accordance with the terms and conditions set 
forth therein.

[[Page 214]]

    (b) Retired or separated employees. If the employee retires, 
resigns, or is terminated before the debt is fully repaid, the remaining 
indebtedness will be offset pursuant to 31 U.S.C. 3716 and the FCCS.
    (1) To the extent possible, the remaining indebtedness will be 
liquidated from any final payment due the former employee as of the date 
of separation (e.g., final salary payment, lump-sum leave, etc.). See 
Sec. 204.40d(3), Offset deductions from final salary and/or lump-sum 
leave payment.
    (2) Thereafter, the remaining indebtedness will be recovered from 
later payments of any kind due the former employee from the United 
States. See the FCCS.
    (c) Method of collection and source of deduction. The method of 
collecting debts under these regulations shall be by salary offset. 
Deductions will be made from the employee's current disposable pay 
account except as provided for in Sec. 204.34b, Employee response.
    (d) Amount and duration of deductions. Debts must be collected in 
one lump sum where possible. If the employee demonstrates financial 
hardship to the Commission's satisfaction or the amount of the debt 
exceeds 15 percent of the indebted employee's current disposable pay, 
collection must be made in installments over a period not greater than 
the anticipated period of active employment, except as provided in 
Section 34b, Employee Response.
    (1) Installment deductions will be made over the shortest period 
possible. The size and frequency of installment deductions will bear a 
reasonable relation to the size of the debt and the employee's ability 
to pay.
    (2) The amount deducted for any period will not exceed 15 percent of 
the disposable pay from which the deduction is made, unless the employee 
has agreed in writing to the deduction of a greater amount. Installment 
payment of less than $100 per pay period will he accepted only in the 
most unusual circumstances.
    (3) Offset deductions from final salary and/or lump-sum leave 
payment. Such an offset deduction may exceed 15 percent of an employee's 
final salary and/or lump-sum leave payment pursuant to 31 U.S.C. 3716, 
64 CG 907.
    (e) Interest, penalties and administrative costs on debts under this 
part will be assessed and/or waived according to the provisions of 31 
CFR 901.9.

[58 FR 38520, July 19, 1993, as amended at 66 FR 54132, Oct. 26, 2001]



Sec. 204.41  Non-waiver of rights.

    An employee's involuntary payment of all or any portion of a debt 
being collected under 5 U.S.C. 5514 shall not be construed as a waiver 
of any rights that the employee may have under 5 U.S.C. 5514 or any 
other provision of contract or law, unless there are statutory or 
contractual provisions to the contrary.



Sec. 204.42  Refunds.

    (a) The Commission will refund promptly to the appropriate 
individual amounts offset under this regulation when:
    (1) A debt is waived or otherwise found not owing the United States 
(unless expressly prohibited by statute or regulation); or
    (2) The Commission is directed by an administrative or judicial 
order to refund amounts deducted from the employee's current pay.
    (b) Refunds do not bear interest unless required or permitted by law 
or contract.



Sec. 204.43  Coordinating offset with another federal agency.

    (a) Responsibility of the Commission as the Creditor Agency. When 
possible, salary offset through the centralized administrative offset 
procedures in 5 CFR 550.1108 shall be attempted before applying the 
procedures in this section. If centralized administrative offset is not 
possible, the Commission shall request recovery from the current paying 
agency. Upon completion of the procedures established in these 
regulations and pursuant to 5 U.S.C. 5514, 5 CFR 550.1109 the Commission 
must:
    (1) Certify, in writing, that the employee owes the debt, the amount 
and basis of the debt, the date on which payment(s) is due, the date the 
Government's right to collect the debt first accrued and that the 
Commission's regulations implementing 5 U.S.C. 5514 have been approved 
by OPM.

[[Page 215]]

    (2) If the collection must be made in installments, the Commission 
also must advise the paying agency of the amount or percentage of 
disposable pay to be collected in each installment, and if the 
Commission wishes, the number and the commencing date of the 
installments (if a date other than the next officially established pay 
period is required).
    (3) Advise the paying agency of the actions taken pursuant to 5 
U.S.C. 5514(b) and give the date(s) the action(s) was taken (unless the 
employee has consented to the salary offset in writing or signed a 
statement acknowledging receipt of the required procedures and the 
written consent or statement is forwarded to the paying agency).
    (4) Except as otherwise provided in this paragraph (a)(4), the 
Commission must submit a debt claim containing the information specified 
in paragraphs (a)(1) through (3) of this section and an installment 
agreement (or other instruction on the payment schedule), if applicable, 
to the employee's paying agency.
    (5) If the employee is in the process of separating, the Commission 
must submit its debt claim to the employee's paying agency for 
collection as provided in 5 CFR 550.1104(l). Pursuant to 5 CFR 1101, the 
paying agency must certify the total amount of its collection and notify 
the creditor agency and employee. If the paying agency is aware that the 
employee is entitled to payments from the Civil Service Retirement and 
Disability Fund, or other similar payments, it must provide written 
notification to the agency responsible for making such payments that the 
debtor owes a debt (including the amount) and that the paying agency has 
fully complied with the provisions of this section. The Commission must 
submit a properly certified claim to the agency responsible for making 
such payments before the collection can be made.
    (6) If the employee is already separated and all payments due from 
his or her former paying agency have been paid, the Commission may 
request, unless otherwise prohibited, that money due and payable to the 
employee from the Civil Service Retirement and Disability Fund (5 CFR 
831.1801) or other similar funds, be administratively offset to collect 
the debt (See 31 U.S.C. 3716 and the FCCS).
    (7) When an employee transfers to another paying agency, the 
Commission shall not repeat the due process procedures described in 5 
U.S.C. 5514 and subpart B of this part to resume the collection. The 
Commission must review the debt upon receiving the former paying 
agency's notice of the employee's transfer to make sure the collection 
is resumed by the new paying agency. The Commission must submit a 
properly certified claim to the new paying agency before collection can 
be resumed.
    (b) Responsibility of the Commission as the paying agency--(1) 
Complete claim. When the Commission receives a properly certified claim 
from a creditor agency, deductions should be scheduled to begin at the 
next officially established pay interval. The Commission must notify the 
employee in writing that the Commission has received a certified debt 
claim from the creditor agency (including the amount) and the date 
salary offset will begin and the amount of such deductions.
    (2) Incomplete claim. When the Commission receives an incomplete 
certification of debt from a creditor agency, the Commission must return 
the debt claim with notice that procedures under 5 U.S.C. 5514 and 
subpart B of this part must be provided and a properly certified debt 
claim received before action will be taken to collect from the 
employee's current pay account.
    (3) Review. The Commission is not authorized to review the merits of 
the creditor agency's determination with respect to the amount or 
validity of the debt certified by the creditor agency.
    (4) Employees who transfer from one paying agency to another. If, 
after the creditor agency has submitted the debt claim to the Commission 
and before the Commission collects the debt in full, the employee 
transfers to another agency, the Commission must certify the total 
amount collected on the debt. One copy of the certification must be 
furnished to the employee and one copy

[[Page 216]]

to the creditor agency along with notice of the employee's transfer.
    (c) Responsibility of the Program Official. (1) The Program Official 
shall coordinate debt collections and shall, as appropriate:
    (i) Arrange for a hearing upon proper petition by a federal 
employee; and
    (ii) Prescribe, upon consultation with the General Counsel, such 
practices and procedures as may be necessary to carry out the intent of 
this regulation.
    (2) The Program Official shall be responsible for:
    (i) Ensuring that each certification of debt sent to a paying agency 
is consistent with the pre-offset notice (Sec. 204.33, Pre-offset 
notice).
    (ii) Obtaining hearing officials from other agencies pursuant to 
Sec. 204.36, Granting of a pre-offset hearing.
    (iii) Ensuring that hearings are properly scheduled.

[58 FR 38520, July 19, 1993, as amended at 66 FR 54132, Oct. 26, 2001]



Sec. 204.44  Interest, penalties, and administrative costs.

    Charges may be assessed for interest, penalties, and administrative 
costs in accordance with the Federal Claims Collection Standards, 31 CFR 
901.9.

[58 FR 38520, July 19, 1993, as amended at 66 FR 54132, Oct. 26, 2001]



                      Subpart C--Tax Refund Offset

    Authority: 31 U.S.C. 3720A, 31 CFR 285.2(c).

    Source: 58 FR 64372, Dec. 7, 1993, unless otherwise noted.



Sec. 204.50  Purpose.

    This subpart establishes procedures for the Commission's referral of 
past-due legally enforceable debts to the Department of the Treasury's 
Financial Management Service (FMS) for offset against the income tax 
refunds of the debtor.

[66 FR 54132, Oct. 26, 2001]



Sec. 204.51  [Reserved]



Sec. 204.52  Notification of intent to collect.

    (a) Notification before tax refund offset. Reduction of an income 
tax refund will be made only after the Commission makes a determination 
that an amount is owed and past-due and gives or makes a reasonable 
attempt to give the debtor 60 days written notice of the intent to 
collect by tax refund offset.
    (b) Contents of notice. The Commission's notice of intent to collect 
by tax refund offset (Notice of Intent) will state:
    (1) The amount of the debt;
    (2) That unless the debt is repaid within 60 days from the date of 
the Commission's Notice of Intent, the Commission intends to collect the 
debt by requesting a reduction of any amounts payable to the debtor as a 
Federal income tax refund by an amount equal to the amount of the debt 
and all accumulated interest and other charges;
    (3) A mailing address for forwarding any written correspondence and 
a contact name and a telephone number for any questions; and
    (4) That the debtor may present evidence to the Commission that all 
or part of the debt is not past due or legally enforceable by:
    (i) Sending a written request for a review of the evidence to the 
address provided in the notice;
    (ii) Stating in the request the amount disputed and the reasons why 
the debtor believes that the debt is not past due or is not legally 
enforceable; and
    (iii) Including in the request any documents that the debtor wishes 
to be considered or stating that the additional information will be 
submitted within the remainder of the 60-day period.
    (c) To the extent that a debt owed has not been established by 
judicial or administrative order, a debtor may dispute the existence or 
amount of the debt or the terms of repayment. With respect to debts 
established by a judicial or administrative order, Commission review 
will be limited to issues concerning the payment or other discharge of 
the debt.

[58 FR 64372, Dec. 7, 1993, as amended at 66 FR 54132, Oct. 26, 2001; 66 
FR 56383, Nov. 7, 2001]

[[Page 217]]



Sec. 204.53  [Reserved]



Sec. 204.54  Commission action as a result of consideration of evidence submitted in response to the notice of intent.

    (a) Consideration of evidence. If, as a result of the Notice of 
Intent, the Commission receives notice that the debtor will submit 
additional evidence or receives additional evidence from the debtor 
within the prescribed time period, tax refund offset will be stayed 
until the Commission can:
    (1) Consider the evidence presented by the debtor; and
    (2) Determine whether or not all or a portion of the debt is still 
past due and legally enforceable; and
    (3) Notify the debtor of its determination.
    (b) Commission action on the debt. (1) The Commission will notify 
the debtor of its intent to refer the debt to the IRS for offset against 
the debtor's Federal income tax refund if it sustains its decision that 
the debt is past-due and legally enforceable. The Commission will also 
notify the debtor whether the amount of the debt remains the same or is 
modified; and
    (2) The Commission will not refer the debt to the IRS for offset 
against the debtor's Federal income tax refund if it reverses its 
decision that the debt is past due and legally enforceable.

[58 FR 64372, Dec. 7, 1993, as amended at 66 FR 54132, Oct. 26, 2001]



Sec. 204.55  Change in notification to Financial Management Service.

    After the Commission sends FMS notification of an individual's 
liability for a debt, the Commission will promptly notify FMS of any 
change in the notification, if the Commission:
    (a) Determines that an error has been made with respect to the 
information contained in the notification;
    (b) Receives a payment or credits a payment to the account of the 
debtor named in the notification that reduces the amount of the debt 
referred to FMS for offset; or
    (c) If the debt amount is otherwise incorrect, except that the 
amount of a debt referred to FMS will not be increased unless the 
Commission has complied with the due process requirements of this 
subpart and the Federal Claims Collection Standards as to the amount of 
the increase.

[66 FR 54132, Oct. 26, 2001]



Sec. 204.56  Administrative charges.

    To the extent permitted by law, all administrative charges incurred 
in connection with the referral of the debts for tax refund offset will 
be assessed on the debt and thus increase the amount of the offset.

[66 FR 54132, Oct. 26, 2001]



Secs. 204.57-204.59  [Reserved]



               Subpart D--Administrative Wage Garnishment

    Authority: 31 U.S.C. 3720D, 31 CFR 285.11(f).

    Source: 66 FR 54132, Oct. 26, 2001, unless otherwise noted.



Sec. 204.60  Purpose.

    This subpart provides procedures for the Commission to collect money 
from a debtor's disposable pay by means of administrative wage 
garnishment to satisfy a delinquent nontax debt owed to the United 
States.



Sec. 204.61  Scope.

    (a) The receipt of payments pursuant to this subpart does not 
preclude the Commission from pursuing other debt collection remedies, 
including the offset of Federal payments to satisfy a delinquent nontax 
debt owed to the United States. The Commission may pursue such debt 
collection remedies separately or in conjunction with administrative 
wage garnishment.
    (b) This subpart does not apply to the collection of delinquent 
nontax debt owed to the United States from the wages of Federal 
employees from their Federal employment. Federal pay is subject to the 
Federal salary offset procedures set forth in 5 U.S.C. 5514 and other 
applicable laws.



Sec. 204.62  Definitions.

    The following definitions apply to this subpart:
    Debt or delinquent nontax debt means any money, funds or property 
that has

[[Page 218]]

been determined to be owed to the Commission by an individual that has 
not been paid by the date specified in the demand or order for payment, 
or applicable agreement. For purposes of this subpart, the terms 
``debt'' and ``claim'' are synonymous.
    Disposable pay means that part of the debtor's compensation 
(including, but not limited to, salary, bonuses, commissions, and 
vacation pay) from an employer remaining after the deduction of health 
insurance premiums and any amounts required by law to be withheld. For 
purposes of this subpart, ``amounts required by law to be withheld'' 
include amounts for deductions such as social security taxes and 
withholding taxes, but do not include any amount withheld pursuant to a 
court order.
    Employer means a person or entity that employs the services of 
others and that pays their wages or salaries. The term employer 
includes, but is not limited to, State and local Governments, but does 
not include an agency of the Federal Government.
    Garnishment means the process of withholding amounts from an 
employee's disposable pay and the paying of those amounts to a creditor 
in satisfaction of a withholding order.
    Withholding order means any order for withholding or garnishment of 
pay issued by an agency, or judicial or administrative body. For 
purposes of this subpart, the terms ``wage garnishment order'' and 
``garnishment order'' have the same meaning as ``withholding order.''



Sec. 204.63  Notice.

    (a) At least 30 days before the initiation of garnishment 
proceedings, the Commission will mail, by first class mail to the 
debtor's last known address, a written notice informing the debtor of:
    (1) The nature and amount of the debt;
    (2) The Commission's intention to initiate proceedings to collect 
the debt through deductions from pay until the debt and all accumulated 
interest, penalties and administrative costs are paid in full; and
    (3) An explanation of the debtor's rights, including those set forth 
in paragraph (b) of this section, and the time frame within which the 
debtor may exercise these rights.
    (b) The debtor will be afforded the opportunity:
    (1) To inspect and copy records related to the debt;
    (2) To enter into a written repayment agreement with the Commission, 
under terms agreeable to the Commission; and
    (3) To the extent that a debt owed has not been established by 
judicial or administrative order, to request a hearing concerning the 
existence or amount of the debt or the terms of the debt's repayment 
schedule. With respect to debts established by a judicial or 
administrative order, a debtor may request a hearing concerning the 
payment or other discharge of the debt. The debtor is not entitled to a 
hearing concerning the terms of the proposed repayment schedule if these 
terms have been established by written agreement under paragraph (b)(2) 
of this section.
    (c) The notice required by this section may be included with the 
Commission's demand letter required by subpart A of this part.
    (d) The Commission will keep a copy of the certificate of service 
indicating the date of mailing of the notice.



Sec. 204.64  Hearing.

    (a) Request for hearing. The Commission will order a hearing, which 
at the Commission's option may be oral or written, if the debtor submits 
a written request for a hearing concerning, for debts not previously 
established by judicial or administrative order, the existence or amount 
of the debt or the terms of the repayment schedule (for repayment 
schedules established other than by written agreement under 
Sec. 204.63(b)(2)), or for debts established by judicial or 
administrative order, the payment or other discharge of the debt.
    (b) Type of hearing or review. (1) For purposes of this subpart, 
whenever the Commission is required to afford a debtor a hearing, the 
Commission will provide the debtor with a reasonable opportunity for an 
oral hearing when the Commission determined that the issues in dispute 
cannot be resolved by review of the documentary evidence, for example, 
when the validity of the

[[Page 219]]

claim turns on the issue of credibility or veracity.
    (2) If the Commission determines that an oral hearing is 
appropriate, the time and location of the hearing shall be established 
by the Commission. An oral hearing may, at the debtor's option, be 
conducted either in-person or by telephone conference. All travel 
expenses incurred by the debtor in connection with an in-person hearing 
will be borne by the debtor. All telephonic charges incurred during the 
hearing will be the responsibility of the agency.
    (3) In those cases when an oral hearing is not required by this 
section, the Commission will nevertheless accord the debtor a ``paper 
hearing,'' that is, the Commission will decide the issues in dispute 
based upon a review of the written record.
    (c) Effect of timely request. Subject to paragraph (l) of this 
section, if the debtor's written request is received by the Commission 
on or before the 15th business day following the mailing of the notice 
of the Commission's intent to seek garnishment, the Commission will not 
issue a withholding order until the debtor has been provided the 
requested hearing, and a decision in accordance with paragraphs (i) and 
(j) of this section has been rendered.
    (d) Failure to timely request a hearing. If the debtor's written 
request is received by the agency after the 15th business day following 
the mailing of the notice of the Commission's intent to seek 
garnishment, the Commission shall provide a hearing to the debtor. 
However, the Commission will not delay issuance of a withholding order 
unless the Commission determines that the delay in filing the request 
was caused by factors over which the debtor had no control, or the 
Commission receives information that the Commission believes justifies a 
delay or cancellation of the withholding order.
    (e) Hearing official. All hearings shall be presided over by the 
Commission, or if the Commission so orders, by a hearing official. When 
the Commission designates that the hearing official shall be an 
administrative law judge, the Chief Administrative Law Judge shall 
select, pursuant to 17 CFR 200.30-10, the administrative law judge to 
preside.
    (f) Procedure. After the debtor requests a hearing, the hearing 
official shall notify the debtor of:
    (1) The date and time of a telephonic hearing;
    (2) The date, time, and location of an in-person oral hearing; or
    (3) The deadline for the submission of evidence for a written 
hearing.
    (g) Burden of proof. (1) The Commission will have the burden of 
going forward to prove the existence or amount of the debt.
    (2) Thereafter, if the debtor disputes the existence or amount of 
the debt, the debtor must prove by a preponderance of the evidence that 
no debt exists or that the amount of the debt is incorrect. In addition, 
the debtor may present evidence that the terms of the repayment schedule 
are unlawful, would cause a financial hardship to the debtor, or that 
collection of the debt may not be pursued due to operation of law.
    (h) Record. The hearing official will maintain a record of any 
hearing provided under this section. A hearing is not required to be a 
formal evidentiary-type hearing, however, witnesses who testify in oral 
hearings will do so under oath or affirmation.
    (i) Date of decision. The hearing official shall issue a written 
opinion stating his or her decision, as soon as practicable, but not 
later than sixty (60) days after the date on which the request for such 
hearing was received by the Commission. If the Commission is unable to 
provide the debtor with a hearing and a decision is not rendered within 
sixty (60) days after the receipt of the request for such hearing:
    (1) A withholding order will not be issued until the hearing is held 
and a decision rendered; or
    (2) If a withholding order had previously been issued to the 
debtor's employer, the withholding order will be suspended beginning on 
the 61st day after the receipt of the hearing request and continuing 
until a hearing is held and a decision is rendered.
    (j) Content of decision. The written decision shall include:
    (1) A summary of the facts presented;
    (2) The findings, analysis and conclusions; and

[[Page 220]]

    (3) The terms of any repayment schedules, if applicable.
    (k) Finality of agency action. Unless the Commission on its own 
initiative orders review of a decision by a hearing official pursuant to 
17 CFR 201.431(c), a decision by a hearing official shall become the 
final decision of the Commission for the purpose of judicial review 
under the Administrative Procedure Act.
    (l) Failure to appear. In the absence of good cause shown, a debtor 
who fails to appear at a scheduled hearing will be deemed as not having 
timely filed a request for a hearing.



Sec. 204.65  Wage garnishment order.

    (a) Unless the Commission receives information that the Commission 
believes justifies a delay or cancellation of the withholding order, the 
Commission will send, by first class mail, a withholding order to the 
debtor's employer within 30 days after the debtor fails to make a timely 
request for a hearing (i.e., within 15 business days after the mailing 
of the notice of the Commission's intent to seek garnishment) or, if a 
timely request for a hearing is made by the debtor, within 30 days after 
a decision to issue a withholding order becomes final.
    (b) The withholding order sent to the employer will be in the form 
prescribed by the Secretary of the Treasury, on the Commission's 
letterhead, and signed by the Chairperson or his or her delegatee. The 
order will contain the information necessary for the employer to comply 
with the withholding order. This information includes the debtor's name, 
address, and social security number, as well as instructions for 
withholding and information as to where payments should be sent.
    (c) The Commission will keep a copy of the certificate of service 
indicating the date of mailing of the order.
    (d) Certification by employer. Along with the withholding order, the 
Commission will send to the employer a certification in a form 
prescribed by the Secretary of the Treasury. The employer shall complete 
and return the certification to the Commission within the time frame 
prescribed in the instructions to the form. The certification will 
address matters such as information about the debtor's employment status 
and disposable pay available for withholding.
    (e) Amounts withheld. (1) After receipt of the garnishment order 
issued under this section, the employer shall deduct from all disposable 
pay paid to the applicable debtor during each pay period the amount of 
garnishment described in paragraph (e)(2) of this section.
    (2) Subject to the provisions of paragraphs (e)(3) and (e)(4) of 
this section, the amount of garnishment shall be the lesser of:
    (i) The amount indicated on the garnishment order up to 15% of the 
debtor's disposable pay; or
    (ii) The amount set forth in 15 U.S.C. 1673(a)(2) (Restriction on 
Garnishment). The amount set forth at U.S.C. 1673(a)(2) is the amount by 
which the debtor's disposable pay exceeds an amount equivalent to thirty 
times the minimum wage See 29 CFR 870.10.
    (3) When a debtor's pay is subject to withholding orders with 
priority, the following shall apply:
    (i) Unless otherwise provided by Federal law, withholding orders 
issued under this section shall be paid in the amounts set forth under 
paragraph (e)(2) of this section and shall have priority over other 
withholding orders which are served later in time. However, withholding 
orders for family support shall have priority over withholding orders 
issued under this section.
    (ii) If amounts are being withheld from a debtor's pay pursuant to a 
withholding order served on an employer before a withholding order 
issued pursuant to this section, or if a withholding order for family 
support is served on an employer at any time, the amounts withheld 
pursuant to the withholding order issued under this section shall be the 
lesser of:
    (A) The amount calculated under paragraph (e)(2) of this section; or
    (B) An amount equal to 25% of the debtor's disposable pay less the 
amount(s) withheld under the withholding order(s) with priority.
    (iii) If a debtor owes more than one debt to the Commission, the 
Commission may issue multiple withholding orders. The total amount 
garnished from the debtor's pay for such orders

[[Page 221]]

will not exceed the amount set forth in paragraph (e)(2) of this 
section.
    (4) An amount greater than that set forth in paragraphs (e)(2) and 
(e)(3) of this section may be withheld upon the written consent of the 
debtor.
    (5) The employer shall promptly pay to the Commission all amounts 
withheld in accordance with the withholding order issued pursuant to 
this section.
    (6) An employer shall not be required to vary its normal pay and 
disbursement cycles in order to comply with the withholding order.
    (7) Any assignment or allotment by the employee of the employee's 
earnings shall be void to the extent it interferes with or prohibits 
execution of the withholding order under this section, except for any 
assignment or allotment made pursuant to a family support judgment or 
order.
    (8) The employer shall withhold the appropriate amount from the 
debtor's wages for each pay period until the employer receives 
notification from the Commission to discontinue wage withholding. The 
garnishment order shall indicate a reasonable period of time within 
which the employer is required to commence wage withholding.
    (f) Exclusions from garnishment. The Commission will not garnish the 
wages of a debtor it knows has been involuntarily separated from 
employment until the debtor has been reemployed continuously for at 
least 12 months. The debtor has the burden of informing the Commission 
of the circumstances surrounding an involuntary separation from 
employment.
    (g) Financial hardship. (1) A debtor whose wages are subject to a 
wage withholding order under this section, may, at any time, request a 
review by the Commission of the amount garnished, based on materially 
changed circumstances such as disability, divorce, or catastrophic 
illness which result in financial hardship.
    (2) A debtor requesting a review under this section shall submit the 
basis for claiming that the current amount of garnishment results in a 
financial hardship to the debtor, along with supporting documentation.
    (3) If a financial hardship is found, the Commission will downwardly 
adjust, by an amount and for a period of time agreeable to the 
Commission, the amount garnished to reflect the debtor's financial 
condition. The Commission will notify the employer of any adjustments to 
the amounts to be withheld.
    (h) Ending garnishment. (2) Once the Commission has fully recovered 
the amounts owed by the debtor, including interest, penalties, and 
administrative costs consistent with the Federal Claims Collection 
Standards (31 CFR 901.9), the Commission will send the debtor's employer 
notification to discontinue wage withholding.
    (2) At least annually, the Commission will review its debtors' 
accounts to ensure that garnishment has been terminated for accounts 
that have been paid in full.
    (i) Actions prohibited by the employer. The Debt Collection Act 
prohibits an employer from discharging, refusing to employ, or taking 
disciplinary action against the debtor due to the issuance of a 
withholding order under this section (31 U.S.C. 3720D(e)).
    (j) Refunds. (1) If a hearing official determines that a debt is not 
legally due and owing to the United States, the Commission shall 
promptly refund any amount collected by means of administrative wage 
garnishment.
    (2) Unless required by Federal law or contract, refunds under this 
section shall not bear interest.
    (k) Right of action. The Commission may sue any employer for any 
amount that the employer fails to withhold from wages owed and payable 
to an employee in accordance with this section. However, a suit will not 
be filed before the termination of the collection action involving a 
particular debtor, unless earlier filing is necessary to avoid 
expiration of any applicable statute of limitations. For purposes of 
this section, ``termination of the collection action'' occurs when the 
agency has terminated collection action in accordance with the Federal 
Claims Collection Standards (31 CFR 903.1-903.5) or other applicable 
standards. In any event, termination of the collection action will have 
been deemed to occur if the Commission has not received any payments to 
satisfy the debt from the particular debtor whose wages were

[[Page 222]]

subject to garnishment, in whole or in part, for a period of one (1) 
year.



 Subpart E--Miscellaneous: Credit Bureau Reporting, Collection Services

    Authority: 31 U.S.C. 3701, 3711, 3718.

    Source: 58 FR 64373, Dec. 7, 1993, unless otherwise noted.



Sec. 204.75  Collection services.

    Section 13 of the Debt Collection Act (31 U.S.C. 3718) authorizes 
agencies to enter into contracts for collection services to recover 
debts owed the United States. The Act requires that certain provisions 
be contained in such contracts, including:
    (a) The agency retains the authority to resolve a dispute, including 
the authority to terminate a collection action or refer the matter to 
the Attorney General for civil remedies; and
    (b) The contractor is subject to the Privacy Act of 1974, as it 
applies to private contractors, as well as subject to State and Federal 
laws governing debt collection practices.



Sec. 204.76  Use of credit bureau or consumer reporting agencies.

    (a) The Commission may report delinquent debts to consumer reporting 
agencies (See 31 U.S.C. 3701(a)(3), 3711). Sixty days prior to release 
of information to a consumer reporting agency, the debtor shall be 
notified, in writing, of the intent to disclose the existence of the 
debt to a consumer reporting agency. Such notice of intent may be a 
separate correspondence or included in correspondence demanding direct 
payment. The notice shall be in conformance with 31 U.S.C. 3711(e) and 
the Federal Claims Collection Standards. The Commission shall provide, 
in this notice, the debtor with:
    (1) An opportunity to inspect and copy agency records pertaining to 
the debt;
    (2) An opportunity for an administrative review of the legal 
enforceability or past due status of the debt;
    (3) An opportunity to enter into a repayment agreement on terms 
satisfactory to the Commission to prevent the Commission from reporting 
the debt as overdue to consumer reporting agencies, and provide 
deadlines and method for requesting this relief;
    (4) An explanation of the rate of interest that will accrue on the 
debt, that all costs incurred to collect the debt will be charged to the 
debtor, the authority for assessing these costs, and the manner in which 
the Commission will calculate the amount of these cost;
    (5) An explanation that the Commission will report the debt to the 
consumer reporting agencies to the detriment of the debtor's credit 
rating; and
    (6) A description of the collection actions that the agency may take 
in the future if those presently proposed actions do not result in 
repayment of the loan obligation, including the filing of a lawsuit 
against the borrower by the agency and assignment of the debt for 
collection by offset against Federal income tax refunds or the filing of 
a lawsuit against the debtor by the Federal Government.
    (b) The information that may be disclosed to the consumer reporting 
agency is limited to:
    (1) The debtor's name, address, social security number or taxpayer 
identification number, and any other information necessary to establish 
the identity of the individual;
    (2) The amount, status, and history of the claim; and
    (3) The Commission program or activity under which the claim arose.

[58 FR 64373, Dec. 7, 1993, as amended at 66 FR 54135, Oct. 26, 2001]



Sec. 204.77  Referrals to collection agencies.

    (a) The Commission has authority to contract for collection services 
to recover delinquent debts in accordance with 31 U.S.C. 3718(a) and the 
Federal Claims Collection Standards (31 CFR 901.5).
    (b) The Commission will use private collection agencies where it 
determines that their use is in the best interest of the Government. 
Where the Commission determines that there is a need to contract for 
collection services, the contract will provide that:
    (1) The authority to resolve disputes, compromise claims, suspend or 
terminate collection action, or refer the

[[Page 223]]

matter to the Department of Justice for litigation or to take any other 
action under this part will be retained by the Commission;
    (2) Contractors are subject to the Privacy Act of 1974, as amended, 
to the extent specified in 5 U.S.C. 552a(m) and to applicable Federal 
and State laws and regulations pertaining to debt collection practices, 
such as the Fair Debt Collection Practices Act, 15 U.S.C. 1692;
    (3) The contractor is required to strictly account for all amounts 
collected;
    (4) The contractor must agree that uncollectible accounts shall be 
returned with appropriate documentation to enable Commission to 
determine whether to pursue collection through litigation or to 
terminate collection; and
    (5) The contractor must agree to provide any data in its files 
requested by the Commission upon returning the account to the Commission 
for subsequent referral to the Department of Justice for litigation.

[58 FR 64373, Dec. 7, 1993, as amended at 66 FR 54135, Oct. 26, 2001]



PART 205--STANDARDS OF PROFESSIONAL CONDUCT FOR ATTORNEYS APPEARING AND PRACTICING BEFORE THE COMMISSION IN THE REPRESENTATION OF AN ISSUER--Table of Contents




Sec.
205.1  Purpose and scope.
205.2  Definitions.
205.3  Issuer as client.
205.4  Responsibilities of supervisory attorneys.
205.5  Responsibilities of a subordinate attorney.
205.6  Sanctions and discipline.
205.7  No private right of action.

    Authority: 15 U.S.C. 77s, 78d-3, 78w, 80a-37, 80a-38, 80b-11, 7202, 
7245, and 7262.

    Source: 68 FR 6320, Feb. 6, 2003, unless otherwise noted.

    Effective Date Note: At 68 FR 6320, Feb. 6, 2003, part 205 was 
added, effective August 5, 2003.



Sec. 205.1  Purpose and scope.

    This part sets forth minimum standards of professional conduct for 
attorneys appearing and practicing before the Commission in the 
representation of an issuer. These standards supplement applicable 
standards of any jurisdiction where an attorney is admitted or practices 
and are not intended to limit the ability of any jurisdiction to impose 
additional obligations on an attorney not inconsistent with the 
application of this part. Where the standards of a state or other United 
States jurisdiction where an attorney is admitted or practices conflict 
with this part, this part shall govern.



Sec. 205.2  Definitions.

    For purposes of this part, the following definitions apply:
    (a) Appearing and practicing before the Commission:
    (1) Means:
    (i) Transacting any business with the Commission, including 
communications in any form;
    (ii) Representing an issuer in a Commission administrative 
proceeding or in connection with any Commission investigation, inquiry, 
information request, or subpoena;
    (iii) Providing advice in respect of the United States securities 
laws or the Commission's rules or regulations thereunder regarding any 
document that the attorney has notice will be filed with or submitted 
to, or incorporated into any document that will be filed with or 
submitted to, the Commission, including the provision of such advice in 
the context of preparing, or participating in the preparation of, any 
such document; or
    (iv) Advising an issuer as to whether information or a statement, 
opinion, or other writing is required under the United States securities 
laws or the Commission's rules or regulations thereunder to be filed 
with or submitted to, or incorporated into any document that will be 
filed with or submitted to, the Commission; but
    (2) Does not include an attorney who:
    (i) Conducts the activities in paragraphs (a)(1)(i) through 
(a)(1)(iv) of this section other than in the context of providing legal 
services to an issuer with whom the attorney has an attorney-client 
relationship; or
    (ii) Is a non-appearing foreign attorney.

[[Page 224]]

    (b) Appropriate response means a response to an attorney regarding 
reported evidence of a material violation as a result of which the 
attorney reasonably believes:
    (1) That no material violation, as defined in paragraph (i) of this 
section, has occurred, is ongoing, or is about to occur;
    (2) That the issuer has, as necessary, adopted appropriate remedial 
measures, including appropriate steps or sanctions to stop any material 
violations that are ongoing, to prevent any material violation that has 
yet to occur, and to remedy or otherwise appropriately address any 
material violation that has already occurred and to minimize the 
likelihood of its recurrence; or
    (3) That the issuer, with the consent of the issuer's board of 
directors, a committee thereof to whom a report could be made pursuant 
to Sec. 205.3(b)(3), or a qualified legal compliance committee, has 
retained or directed an attorney to review the reported evidence of a 
material violation and either:
    (i) Has substantially implemented any remedial recommendations made 
by such attorney after a reasonable investigation and evaluation of the 
reported evidence; or
    (ii) Has been advised that such attorney may, consistent with his or 
her professional obligations, assert a colorable defense on behalf of 
the issuer (or the issuer's officer, director, employee, or agent, as 
the case may be) in any investigation or judicial or administrative 
proceeding relating to the reported evidence of a material violation.
    (c) Attorney means any person who is admitted, licensed, or 
otherwise qualified to practice law in any jurisdiction, domestic or 
foreign, or who holds himself or herself out as admitted, licensed, or 
otherwise qualified to practice law.
    (d) Breach of fiduciary duty refers to any breach of fiduciary or 
similar duty to the issuer recognized under an applicable Federal or 
State statute or at common law, including but not limited to 
misfeasance, nonfeasance, abdication of duty, abuse of trust, and 
approval of unlawful transactions.
    (e) Evidence of a material violation means credible evidence, based 
upon which it would be unreasonable, under the circumstances, for a 
prudent and competent attorney not to conclude that it is reasonably 
likely that a material violation has occurred, is ongoing, or is about 
to occur.
    (f) Foreign government issuer means a foreign issuer as defined in 
17 CFR 230.405 eligible to register securities on Schedule B of the 
Securities Act of 1933 (15 U.S.C. 77a et seq., Schedule B).
    (g) In the representation of an issuer means providing legal 
services as an attorney for an issuer, regardless of whether the 
attorney is employed or retained by the issuer.
    (h) Issuer means an issuer (as defined in section 3 of the 
Securities Exchange Act of 1934 (15 U.S.C. 78c)), the securities of 
which are registered under section 12 of that Act (15 U.S.C. 78l), or 
that is required to file reports under section 15(d) of that Act (15 
U.S.C. 78o(d)), or that files or has filed a registration statement that 
has not yet become effective under the Securities Act of 1933 (15 U.S.C. 
77a et seq.), and that it has not withdrawn, but does not include a 
foreign government issuer. For purposes of paragraphs (a) and (g) of 
this section, the term ``issuer'' includes any person controlled by an 
issuer, where an attorney provides legal services to such person on 
behalf of, or at the behest, or for the benefit of the issuer, 
regardless of whether the attorney is employed or retained by the 
issuer.
    (i) Material violation means a material violation of an applicable 
United States federal or state securities law, a material breach of 
fiduciary duty arising under United States federal or state law, or a 
similar material violation of any United States federal or state law.
    (j) Non-appearing foreign attorney means an attorney:
    (1) Who is admitted to practice law in a jurisdiction outside the 
United States;
    (2) Who does not hold himself or herself out as practicing, and does 
not give legal advice regarding, United States federal or state 
securities or other laws (except as provided in paragraph (j)(3)(ii) of 
this section); and

[[Page 225]]

    (3) Who:
    (i) Conducts activities that would constitute appearing and 
practicing before the Commission only incidentally to, and in the 
ordinary course of, the practice of law in a jurisdiction outside the 
United States; or
    (ii) Is appearing and practicing before the Commission only in 
consultation with counsel, other than a non-appearing foreign attorney, 
admitted or licensed to practice in a state or other United States 
jurisdiction.
    (k) Qualified legal compliance committee means a committee of an 
issuer (which also may be an audit or other committee of the issuer) 
that:
    (1) Consists of at least one member of the issuer's audit committee 
(or, if the issuer has no audit committee, one member from an equivalent 
committee of independent directors) and two or more members of the 
issuer's board of directors who are not employed, directly or 
indirectly, by the issuer and who are not, in the case of a registered 
investment company, ``interested persons'' as defined in section 
2(a)(19) of the Investment Company Act of 1940 (15 U.S.C. 80a-2(a)(19));
    (2) Has adopted written procedures for the confidential receipt, 
retention, and consideration of any report of evidence of a material 
violation under Sec. 205.3;
    (3) Has been duly established by the issuer's board of directors, 
with the authority and responsibility:
    (i) To inform the issuer's chief legal officer and chief executive 
officer (or the equivalents thereof) of any report of evidence of a 
material violation (except in the circumstances described in 
Sec. 205.3(b)(4));
    (ii) To determine whether an investigation is necessary regarding 
any report of evidence of a material violation by the issuer, its 
officers, directors, employees or agents and, if it determines an 
investigation is necessary or appropriate, to:
    (A) Notify the audit committee or the full board of directors;
    (B) Initiate an investigation, which may be conducted either by the 
chief legal officer (or the equivalent thereof) or by outside attorneys; 
and
    (C) Retain such additional expert personnel as the committee deems 
necessary; and
    (iii) At the conclusion of any such investigation, to:
    (A) Recommend, by majority vote, that the issuer implement an 
appropriate response to evidence of a material violation; and
    (B) Inform the chief legal officer and the chief executive officer 
(or the equivalents thereof) and the board of directors of the results 
of any such investigation under this section and the appropriate 
remedial measures to be adopted; and
    (4) Has the authority and responsibility, acting by majority vote, 
to take all other appropriate action, including the authority to notify 
the Commission in the event that the issuer fails in any material 
respect to implement an appropriate response that the qualified legal 
compliance committee has recommended the issuer to take.
    (l) Reasonable or reasonably denotes, with respect to the actions of 
an attorney, conduct that would not be unreasonable for a prudent and 
competent attorney.
    (m) Reasonably believes means that an attorney believes the matter 
in question and that the circumstances are such that the belief is not 
unreasonable.
    (n) Report means to make known to directly, either in person, by 
telephone, by e-mail, electronically, or in writing.



Sec. 205.3  Issuer as client.

    (a) Representing an issuer. An attorney appearing and practicing 
before the Commission in the representation of an issuer owes his or her 
professional and ethical duties to the issuer as an organization. That 
the attorney may work with and advise the issuer's officers, directors, 
or employees in the course of representing the issuer does not make such 
individuals the attorney's clients.
    (b) Duty to report evidence of a material violation. (1) If an 
attorney, appearing and practicing before the Commission in the 
representation of an issuer, becomes aware of evidence of a material 
violation by the issuer or by any officer, director, employee, or agent 
of the issuer, the attorney shall report such

[[Page 226]]

evidence to the issuer's chief legal officer (or the equivalent thereof) 
or to both the issuer's chief legal officer and its chief executive 
officer (or the equivalents thereof) forthwith. By communicating such 
information to the issuer's officers or directors, an attorney does not 
reveal client confidences or secrets or privileged or otherwise 
protected information related to the attorney's representation of an 
issuer.
    (2) The chief legal officer (or the equivalent thereof) shall cause 
such inquiry into the evidence of a material violation as he or she 
reasonably believes is appropriate to determine whether the material 
violation described in the report has occurred, is ongoing, or is about 
to occur. If the chief legal officer (or the equivalent thereof) 
determines no material violation has occurred, is ongoing, or is about 
to occur, he or she shall notify the reporting attorney and advise the 
reporting attorney of the basis for such determination. Unless the chief 
legal officer (or the equivalent thereof) reasonably believes that no 
material violation has occurred, is ongoing, or is about to occur, he or 
she shall take all reasonable steps to cause the issuer to adopt an 
appropriate response, and shall advise the reporting attorney thereof. 
In lieu of causing an inquiry under this paragraph (b), a chief legal 
officer (or the equivalent thereof) may refer a report of evidence of a 
material violation to a qualified legal compliance committee under 
paragraph (c)(2) of this section if the issuer has duly established a 
qualified legal compliance committee prior to the report of evidence of 
a material violation.
    (3) Unless an attorney who has made a report under paragraph (b)(1) 
of this section reasonably believes that the chief legal officer or the 
chief executive officer of the issuer (or the equivalent thereof) has 
provided an appropriate response within a reasonable time, the attorney 
shall report the evidence of a material violation to:
    (i) The audit committee of the issuer's board of directors;
    (ii) Another committee of the issuer's board of directors consisting 
solely of directors who are not employed, directly or indirectly, by the 
issuer and are not, in the case of a registered investment company, 
``interested persons'' as defined in section 2(a)(19) of the Investment 
Company Act of 1940 (15 U.S.C. 80a-2(a)(19)) (if the issuer's board of 
directors has no audit committee); or
    (iii) The issuer's board of directors (if the issuer's board of 
directors has no committee consisting solely of directors who are not 
employed, directly or indirectly, by the issuer and are not, in the case 
of a registered investment company, ``interested persons'' as defined in 
section 2(a)(19) of the Investment Company Act of 1940 (15 U.S.C. 80a-
2(a)(19))).
    (4) If an attorney reasonably believes that it would be futile to 
report evidence of a material violation to the issuer's chief legal 
officer and chief executive officer (or the equivalents thereof) under 
paragraph (b)(1) of this section, the attorney may report such evidence 
as provided under paragraph (b)(3) of this section.
    (5) An attorney retained or directed by an issuer to investigate 
evidence of a material violation reported under paragraph (b)(1), 
(b)(3), or (b)(4) of this section shall be deemed to be appearing and 
practicing before the Commission. Directing or retaining an attorney to 
investigate reported evidence of a material violation does not relieve 
an officer or director of the issuer to whom such evidence has been 
reported under paragraph (b)(1), (b)(3), or (b)(4) of this section from 
a duty to respond to the reporting attorney.
    (6) An attorney shall not have any obligation to report evidence of 
a material violation under this paragraph (b) if:
    (i) The attorney was retained or directed by the issuer's chief 
legal officer (or the equivalent thereof) to investigate such evidence 
of a material violation and:
    (A) The attorney reports the results of such investigation to the 
chief legal officer (or the equivalent thereof); and
    (B) Except where the attorney and the chief legal officer (or the 
equivalent thereof) each reasonably believes that no material violation 
has occurred, is ongoing, or is about to occur, the chief legal officer 
(or the equivalent thereof) reports the results of the

[[Page 227]]

investigation to the issuer's board of directors, a committee thereof to 
whom a report could be made pursuant to paragraph (b)(3) of this 
section, or a qualified legal compliance committee; or
    (ii) The attorney was retained or directed by the chief legal 
officer (or the equivalent thereof) to assert, consistent with his or 
her professional obligations, a colorable defense on behalf of the 
issuer (or the issuer's officer, director, employee, or agent, as the 
case may be) in any investigation or judicial or administrative 
proceeding relating to such evidence of a material violation, and the 
chief legal officer (or the equivalent thereof) provides reasonable and 
timely reports on the progress and outcome of such proceeding to the 
issuer's board of directors, a committee thereof to whom a report could 
be made pursuant to paragraph (b)(3) of this section, or a qualified 
legal compliance committee.
    (7) An attorney shall not have any obligation to report evidence of 
a material violation under this paragraph (b) if such attorney was 
retained or directed by a qualified legal compliance committee:
    (i) To investigate such evidence of a material violation; or
    (ii) To assert, consistent with his or her professional obligations, 
a colorable defense on behalf of the issuer (or the issuer's officer, 
director, employee, or agent, as the case may be) in any investigation 
or judicial or administrative proceeding relating to such evidence of a 
material violation.
    (8) An attorney who receives what he or she reasonably believes is 
an appropriate and timely response to a report he or she has made 
pursuant to paragraph (b)(1), (b)(3), or (b)(4) of this section need do 
nothing more under this section with respect to his or her report.
    (9) An attorney who does not reasonably believe that the issuer has 
made an appropriate response within a reasonable time to the report or 
reports made pursuant to paragraph (b)(1), (b)(3), or (b)(4) of this 
section shall explain his or her reasons therefor to the chief legal 
officer (or the equivalent thereof), the chief executive officer (or the 
equivalent thereof), and directors to whom the attorney reported the 
evidence of a material violation pursuant to paragraph (b)(1), (b)(3), 
or (b)(4) of this section.
    (10) An attorney formerly employed or retained by an issuer who has 
reported evidence of a material violation under this part and reasonably 
believes that he or she has been discharged for so doing may notify the 
issuer's board of directors or any committee thereof that he or she 
believes that he or she has been discharged for reporting evidence of a 
material violation under this section.
    (c) Alternative reporting procedures for attorneys retained or 
employed by an issuer that has established a qualified legal compliance 
committee. (1) If an attorney, appearing and practicing before the 
Commission in the representation of an issuer, becomes aware of evidence 
of a material violation by the issuer or by any officer, director, 
employee, or agent of the issuer, the attorney may, as an alternative to 
the reporting requirements of paragraph (b) of this section, report such 
evidence to a qualified legal compliance committee, if the issuer has 
previously formed such a committee. An attorney who reports evidence of 
a material violation to such a qualified legal compliance committee has 
satisfied his or her obligation to report such evidence and is not 
required to assess the issuer's response to the reported evidence of a 
material violation.
    (2) A chief legal officer (or the equivalent thereof) may refer a 
report of evidence of a material violation to a previously established 
qualified legal compliance committee in lieu of causing an inquiry to be 
conducted under paragraph (b)(2) of this section. The chief legal 
officer (or the equivalent thereof) shall inform the reporting attorney 
that the report has been referred to a qualified legal compliance 
committee. Thereafter, pursuant to the requirements under Sec. 205.2(k), 
the qualified legal compliance committee shall be responsible for 
responding to the evidence of a material violation reported to it under 
this paragraph (c).
    (d) Issuer confidences. (1) Any report under this section (or the 
contemporaneous record thereof) or any response thereto (or the 
contemporaneous

[[Page 228]]

record thereof) may be used by an attorney in connection with any 
investigation, proceeding, or litigation in which the attorney's 
compliance with this part is in issue.
    (2) An attorney appearing and practicing before the Commission in 
the representation of an issuer may reveal to the Commission, without 
the issuer's consent, confidential information related to the 
representation to the extent the attorney reasonably believes necessary:
    (i) To prevent the issuer from committing a material violation that 
is likely to cause substantial injury to the financial interest or 
property of the issuer or investors;
    (ii) To prevent the issuer, in a Commission investigation or 
administrative proceeding from committing perjury, proscribed in 18 
U.S.C. 1621; suborning perjury, proscribed in 18 U.S.C. 1622; or 
committing any act proscribed in 18 U.S.C. 1001 that is likely to 
perpetrate a fraud upon the Commission; or
    (iii) To rectify the consequences of a material violation by the 
issuer that caused, or may cause, substantial injury to the financial 
interest or property of the issuer or investors in the furtherance of 
which the attorney's services were used.



Sec. 205.4  Responsibilities of supervisory attorneys.

    (a) An attorney supervising or directing another attorney who is 
appearing and practicing before the Commission in the representation of 
an issuer is a supervisory attorney. An issuer's chief legal officer (or 
the equivalent thereof) is a supervisory attorney under this section.
    (b) A supervisory attorney shall make reasonable efforts to ensure 
that a subordinate attorney, as defined in Sec. 205.5(a), that he or she 
supervises or directs conforms to this part. To the extent a subordinate 
attorney appears and practices before the Commission in the 
representation of an issuer, that subordinate attorney's supervisory 
attorneys also appear and practice before the Commission.
    (c) A supervisory attorney is responsible for complying with the 
reporting requirements in Sec. 205.3 when a subordinate attorney has 
reported to the supervisory attorney evidence of a material violation.
    (d) A supervisory attorney who has received a report of evidence of 
a material violation from a subordinate attorney under Sec. 205.3 may 
report such evidence to the issuer's qualified legal compliance 
committee if the issuer has duly formed such a committee.



Sec. 205.5  Responsibilities of a subordinate attorney.

    (a) An attorney who appears and practices before the Commission in 
the representation of an issuer on a matter under the supervision or 
direction of another attorney (other than under the direct supervision 
or direction of the issuer's chief legal officer (or the equivalent 
thereof)) is a subordinate attorney.
    (b) A subordinate attorney shall comply with this part 
notwithstanding that the subordinate attorney acted at the direction of 
or under the supervision of another person.
    (c) A subordinate attorney complies with Sec. 205.3 if the 
subordinate attorney reports to his or her supervising attorney under 
Sec. 205.3(b) evidence of a material violation of which the subordinate 
attorney has become aware in appearing and practicing before the 
Commission.
    (d) A subordinate attorney may take the steps permitted or required 
by Sec. 205.3(b) or (c) if the subordinate attorney reasonably believes 
that a supervisory attorney to whom he or she has reported evidence of a 
material violation under Sec. 205.3(b) has failed to comply with 
Sec. 205.3.



Sec. 205.6  Sanctions and discipline.

    (a) A violation of this part by any attorney appearing and 
practicing before the Commission in the representation of an issuer 
shall subject such attorney to the civil penalties and remedies for a 
violation of the federal securities laws available to the Commission in 
an action brought by the Commission thereunder.
    (b) An attorney appearing and practicing before the Commission who 
violates any provision of this part is subject to the disciplinary 
authority of the Commission, regardless of whether

[[Page 229]]

the attorney may also be subject to discipline for the same conduct in a 
jurisdiction where the attorney is admitted or practices. An 
administrative disciplinary proceeding initiated by the Commission for 
violation of this part may result in an attorney being censured, or 
being temporarily or permanently denied the privilege of appearing or 
practicing before the Commission.
    (c) An attorney who complies in good faith with the provisions of 
this part shall not be subject to discipline or otherwise liable under 
inconsistent standards imposed by any state or other United States 
jurisdiction where the attorney is admitted or practices.
    (d) An attorney practicing outside the United States shall not be 
required to comply with the requirements of this part to the extent that 
such compliance is prohibited by applicable foreign law.



Sec. 205.7  No private right of action.

    (a) Nothing in this part is intended to, or does, create a private 
right of action against any attorney, law firm, or issuer based upon 
compliance or noncompliance with its provisions.
    (b) Authority to enforce compliance with this part is vested 
exclusively in the Commission.



PART 209--FORMS PRESCRIBED UNDER THE COMMISSION'S RULES OF PRACTICE--Table of Contents




Sec.
209.0-1  Availability of forms.
209.1  Form D-A: Disclosure of assets and financial information.

    Authority: 15 U.S.C. 77h-1, 77u, 78u-2, 78u-3, 78v, 78w, 80a-9, 80a-
37, 80a-38, 80a39, 80a-40, 80a-41, 80a-44, 80b-3, 80b-9, 80b-11, and 
80b-12, unless otherwise noted.

    Source: 60 FR 32823, June 23, 1995, unless otherwise noted.



Sec. 209.0-1  Availability of forms.

    (a) This part identifies and describes the forms for use under the 
Securities and Exchange Commission's Rules of Practice, part 201 of this 
chapter.
    (b) Any person may obtain a copy of any form prescribed for use in 
this part by written request to the Securities and Exchange Commission, 
450 Fifth Street, N.W., Washington, D.C. 20549. Any person may inspect 
the forms at this address and at the Commission's regional and district 
offices. (See Sec. 200.11 of this chapter for the addresses of the SEC 
regional and district offices.)



Sec. 209.1  Form D-A: Disclosure of assets and financial information.

    (a) Rules 410 and 630 of the Rules of Practice (17 CFR 201.410 and 
201.630) provide that under certain circumstances a respondent who 
asserts or intends to assert an inability to pay disgorgement, interest 
or penalties may be required to disclose certain financial information. 
Unless otherwise ordered, this form may be used by individuals required 
to supply such information.
    (b) The respondent filing Form D-A is required promptly to notify 
the Commission of any material change in the answer to any question on 
this form.
    (c) Form D-A may not be withheld from the interested division. A 
respondent making financial information disclosures on this form after 
the institution of proceedings may make a motion, pursuant to Rule 322 
of the Commission's Rules of Practice (17 CFR 201.322), for the issuance 
of a protective order to limit disclosure to the public or parties other 
than the interested division of the information submitted on Form D-A. A 
request for a protective order allows the requester an opportunity to 
justify the need for confidentiality. The making of a motion for a 
protective order, however, does not guarantee that disclosure will be 
limited.
    (d) No party receiving information for which a motion for a 
protective order has been made may transfer or convey the information to 
any other person prior to a ruling on the motion without the prior 
permission of the Commission or a hearing officer.
    (e) A person making financial information disclosures on Form D-A 
prior to the institution of proceedings, in connection with an offer of 
settlement or otherwise, may request confidential treatment of the 
information pursuant to the Freedom of Information Act. See

[[Page 230]]

the Commission's Freedom of Information Act (``FOIA'') regulations, 17 
CFR 200.83. A request for confidential treatment allows the requester an 
opportunity to substantiate the need for confidentiality. No 
determination as to the validity of any request for confidential 
treatment will be made until a request for disclosure of the information 
under FOIA is received.




PART 210--FORM AND CONTENT OF AND REQUIREMENTS FOR FINANCIAL STATEMENTS, 
SECURITIES ACT OF 1933, SECURITIES EXCHANGE ACT OF 1934, PUBLIC UTILITY 
HOLDING COMPANY 
ACT OF 1935, INVESTMENT COMPANY ACT OF 1940, INVESTMENT ADVISERS ACT OF 1940, 
AND ENERGY POLICY AND CONSERVATION ACT OF 1975--Table of Contents




             Application of Regulation S-X (17 CFR Part 210)

Sec.
210.1-01  Application of Regulation S-X (17 CFR part 210).
210.1-02  Definitions of terms used in Regulation S-X (17 CFR part 210).

                Qualifications and Reports of Accountants

210.2-01  Qualifications of accountants.
210.2-02  Accountants' reports.
210.2-03  Examination of financial statements by foreign government 
          auditors.
210.2-04  Examination of financial statements of persons other than the 
          registrant.
210.2-05  Examination of financial statements by more than one 
          accountant.
210.2-06  Retention of audit and review records.
210.2-07  Communication with audit committees.

             General Instructions as to Financial Statements

210.3-01  Consolidated balance sheets.
210.3-02  Consolidated statements of income and changes in financial 
          position.
210.3-03  Instructions to income statement requirements.
210.3-04  Changes in other stockholders' equity.
210.3-05  Financial statements of businesses acquired or to be acquired.
210.3-06  Financial statements covering a period of nine to twelve 
          months.
210.3-07--210.3-08  [Reserved]
210.3-09  Separate financial statements of subsidiaries not consolidated 
          and 50 percent or less owned persons.
210.3-10  Financial statements of guarantors and issuers of guaranteed 
          securities registered or being registered.
210.3-11  Financial statements of an inactive registrant.
210.3-12  Age of financial statements at effective date of registration 
          statement or at mailing date of proxy statement.
210.3-13  Filing of other financial statements in certain cases.
210.3-14  Special instructions for real estate operations to be 
          acquired.
210.3-15  Special provisions as to real estate investment trusts.
210.3-16  Financial statements of affiliates whose securities 
          collateralize an issue registered or being registered.
210.3-17  Financial statements of natural persons.
210.3-18  Special provisions as to registered management investment 
          companies and companies required to be registered as 
          management investment companies.
210.3-19  [Reserved]
210.3-20  Currency for financial statements of foreign private issuers.

             Consolidated and Combined Financial Statements

210.3A-01  Application of Secs. 210.3A-01 to 210.3A-05.
210.3A-02  Consolidated financial statements of the registrant and its 
          subsidiaries.
210.3A-03  Statement as to principles of consolidation or combination 
          followed.
210.3A-04  Intercompany items and transactions.
210.3A-05  Special requirements as to public utility holding companies.

                      Rules of General Application

210.4-01  Form, order, and terminology.
210.4-02  Items not material.
210.4-03  Inapplicable captions and omission of unrequired or 
          inapplicable financial statements.
210.4-04  Omission of substantially identical notes.
210.4-05--210.04-06  [Reserved]
210.4-07  Discount on shares.
210.4-08  General notes to financial statements.
210.4-09  [Reserved]
210.4-10  Financial accounting and reporting for oil and gas producing 
          activities pursuant to the Federal securities laws and the 
          Energy Policy and Conservation Act of 1975.

                   Commercial and Industrial Companies

210.5-01  Application of Secs. 210.5-01 to 210.5-04.
210.5-02  Balance sheets.
210.5-03  Income statements.

[[Page 231]]

210.5-04  What schedules are to be filed.

                     Registered Investment Companies

210.6-01  Application of Secs. 210.6-01 to 210.6-10.
210.6-02  Definition of certain terms.
210.6-03  Special rules of general application to registered investment 
          companies.
210.6-04  Balance sheets.
210.6-05  Statements of net assets.
210.6-06  Special provisions applicable to the balance sheets of issuers 
          of face-amount certificates.
210.6-07  Statements of operations.
210.6-08  Special provisions applicable to the statements of operations 
          of issuers of face-amount certificates.
210.6-09  Statements of changes in net assets.
210.6-10  What schedules are to be filed.

           Employee Stock Purchase, Savings and Similar Plans

210.6A-01  Application of Secs. 210.6A-01 to 210.6A-05.
210.6A-02  Special rules applicable to employee stock purchase, savings 
          and similar plans.
210.6A-03  Statements of financial condition.
210.6A-04  Statements of income and changes in plan equity.
210.6A-05  What schedules are to be filed.

                           Insurance Companies

210.7-01  Application of Secs. 210.7-01 to 210.7-05.
210.7-02  General requirement.
210.7-03  Balance sheets.
210.7-04  Income statements.
210.7-05  What schedules are to be filed.

                         Bank Holding Companies

210.9-01  Application of Secs. 210.9-01 to 210.9-07.
210.9-02  General requirement.
210.9-03  Balance sheets.
210.9-04  Income statements.
210.9-05  Foreign activities.
210.9-06  Condensed financial information of registrant.
210.9-07  [Reserved]

                      Interim Financial Statements

210.10-01  Interim financial statements.

                     Pro Forma Financial Information

210.11-01  Presentation requirements.
210.11-02  Preparation requirements.
210.11-03  Presentation of financial forecast.

                      Form and Content of Schedules

                                 general

210.12-01  Application of Secs. 210.12-01 to 210.12-29.
210.12-02--210.12-03  [Reserved]
210.12-04  Condensed financial information of registrant.
210.12-05--210.12-08  [Reserved]
210.12-09  Valuation and qualifying accounts.
210.12-10--210.12-11  [Reserved]

                   for management investment companies

210.12-12  Investments in securities of unaffiliated issuers.
210.12-12A  Investments--securities sold short.
210.12-12B  Open option contracts written.
210.12-13  Investments other than securities.
210.12-14  Investments in and advances to affiliates.
210.12-15  Summary of investments--other than investments in related 
          parties.
210.12-16  Supplementary insurance information.
210.12-17  Reinsurance.
210.12-18  Supplemental information (for property-casualty insurance 
          underwriters).

            for face amount certificate investment companies

210.12-21  Investments in securities of unaffiliated issuers.
210.12-22  Investments in and advances to affiliates and income thereon.
210.12-23  Mortgage loans on real estate and interest earned on 
          mortgages.
210.12-24  Real estate owned and rental income.
210.12-25  Supplementary profit and loss information.
210.12-26  Certificate reserves.
210.12-27  Qualified assets on deposit.

                    for certain real estate companies

210.12-28  Real estate and accumulated depreciation.
210.12-29  Mortgage loans on real estate.

    Authority: 15 U.S.C. 77f, 77g, 77h, 77j, 77s, 77z-2, 77aa(25), 
77aa(26), 78j-1, 78l, 78m, 78n, 78o(d), 78u-5, 78w(a), 78ll(d), 79e(b), 
79j(a), 79n, 79t(a), 80a-8, 80a-20, 80a-29, 80a-30, 80a-31, 80a-37(a), 
unless otherwise noted.

    Editorial Note: Nomenclature changes to part 210 appear at 57 FR 
36501, Aug. 13, 1992 and 57 FR 47409, Oct. 16, 1992.

                       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.

[[Page 232]]

             Application of Regulation S-X (17 CFR Part 210)



Sec. 210.1-01  Application of Regulation S-X (17 CFR part 210).

    (a) This part (together with the Financial Reporting Releases (part 
211 of this chapter)) sets forth the form and content of and 
requirements for financial statements required to be filed as a part of:
    (1) Registration statements under the Securities Act of 1933 (part 
239 of this chapter), except as otherwise specifically provided in the 
forms which are to be used for registration under this Act;
    (2) Registration statements under section 12 (subpart C of part 249 
of this chapter), annual or other reports under sections 13 and 15(d) 
(subparts D and E of part 249 of this chapter), and proxy and 
information statements under section 14 of the Securities Exchange Act 
of 1934 except as otherwise specifically provided in the forms which are 
to be used for registration and reporting under these sections of this 
Act;
    (3) Registration statements and annual reports filed under the 
Public Utility Holding Company Act of 1935 (part 259 of this chapter) by 
public utility holding companies registered under such Act; and
    (4) Registration statements and shareholder reports under the 
Investment Company Act of 1940 (part 274 of this chapter), except as 
otherwise specifically provided in the forms which are to be used for 
registration under this Act.
    (b) The term financial statements as used in this part shall be 
deemed to include all notes to the statements and all related schedules.
    (c) In addition to filings pursuant to the Federal securities laws, 
Sec. 210.4-10 applies to the preparation of accounts by persons engaged, 
in whole or in part, in the production of crude oil or natural gas in 
the United States pursuant to section 503 of the Energy Policy and 
Conservation Act of 1975 (42 U.S.C. 6383) (EPCA) and section 1(c) of the 
Energy Supply and Environmental Coordination Act of 1974 (15 U.S.C. 
796), as amended by section 505 of EPCA.

[37 FR 14593, July 21, 1972, as amended at 43 FR 40712, Sept. 12, 1978; 
45 FR 63680, Sept. 25, 1980; 45 FR 63687, Sept. 25, 1980; 46 FR 36124, 
July 14, 1981; 50 FR 25214, June 18, 1985]



Sec. 210.1-02  Definitions of terms used in Regulation S-X (17 CFR part 210).

    Unless the context otherwise requires, terms defined in the general 
rules and regulations or in the instructions to the applicable form, 
when used in Regulation S-X (this part 210), shall have the respective 
meanings given in such instructions or rules. In addition, the following 
terms shall have the meanings indicated in this section unless the 
context otherwise requires.
    (a) Accountant's report. The term accountant's report, when used in 
regard to financial statements, means a document in which an independent 
public or certified public accountant indicates the scope of the audit 
(or examination) which he has made and sets forth his opinion regarding 
the financial statements taken as a whole, or an assertion to the effect 
that an overall opinion cannot be expressed. When an overall opinion 
cannot be expressed, the reasons therefor shall be stated.
    (b) Affiliate. An affiliate of, or a person affiliated with, a 
specific 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.
    (c) 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.
    (d) Audit (or examination). The term audit (or examination), when 
used in regard to financial statements, means an examination of the 
financial statements by an independent accountant in accordance with 
generally accepted auditing standards, as may be modified or 
supplemented by the Commission, for the purpose of expressing an opinion 
thereon.
    (e) Bank holding company. The term bank holding company means a 
person

[[Page 233]]

which is engaged, either directly or indirectly, primarily in the 
business of owning securities of one or more banks for the purpose, and 
with the effect, of exercising control.
    (f) 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.
    (g) 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 shares, by contract, or otherwise.
    (h) Development stage company. A company shall be considered to be 
in the development stage if it is devoting substantially all of its 
efforts to establishing a new business and either of the following 
conditions exists: (1) Planned principal operations have not commenced. 
(2) Planned principal operations have commenced, but there has been no 
significant revenue therefrom.
    (i) Equity security. The term equity security means any stock or 
similar security; 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.
    (j) Fifty-percent-owned person. The term 50-percent-owned person, in 
relation to a specified person, means a person approximately 50 percent 
of whose outstanding voting shares is owned by the specified person 
either directly, or indirectly through one or more intermediaries.
    (k) 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.
    (l) Foreign business. A business that is majority owned by persons 
who are not citizens or residents of the United States and is not 
organized under the laws of the United States or any state thereof, and 
either:
    (1) More than 50 percent of its assets are located outside the 
United States; or
    (2) The majority of its executive officers and directors are not 
United States citizens or residents.
    (m) Insurance holding company. The term insurance holding company 
means a person which is engaged, either directly or indirectly, 
primarily in the business of owning securities of one or more insurance 
companies for the purpose, and with the effect, of exercising control.
    (n) Majority-owned subsidiary. The term majority-owned subsidiary 
means a subsidiary more than 50 percent of whose outstanding voting 
shares is owned by its parent and/or the parent's other majority-owned 
subsidiaries.
    (o) 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 about which an average prudent 
investor ought reasonably to be informed.
    (p) Parent. A parent of a specified person is an affiliate 
controlling such person directly, or indirectly through one or more 
intermediaries.
    (q) Person. The term person means an individual, a corporation, a 
partnership, an association, a joint-stock company, a business trust, or 
an unincorporated organization.
    (r) Principal holder of equity securities. The term principal holder 
of equity securities, used in respect of a registrant or other person 
named in a particular statement or report, means a holder of record or a 
known beneficial owner of more than 10 percent of any class of equity 
securities of the registrant or other person, respectively, as of the 
date of the related balance sheet filed.
    (s) Promoter. The term promoter includes:
    (1) 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;
    (2) 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

[[Page 234]]

issuer or 10 percent or more of the proceeds from the sale of any class 
of 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.
    (t) Registrant. The term registrant means the issuer of the 
securities for which an application, a registration statement, or a 
report is filed.
    (u) Related parties. The term related parties is used as that term 
is defined in the Glossary to Statement of Financial Accounting 
Standards No. 57, ``Related Party Disclosures.''
    (v) Share. The term share means a share of stock in a corporation or 
unit of interest in an unincorporated person.
    (w) 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 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.
    3. Where the test involves combined entities, as in the case of 
determining whether summarized financial data should be presented, 
entities reporting losses shall not be aggregated with entities 
reporting income.

    (x) Subsidiary. A subsidiary of a specified person is an affiliate 
controlled by such person directly, or indirectly through one or more 
intermediaries.
    (y) Totally held subsidiary. The term totally held subsidiary means 
a subsidiary (1) substantially all of whose outstanding equity 
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 1 year from the date of its 
creation, whether evidenced by securities or not. Indebtedness of a 
subsidiary which is secured by its parent by guarantee, pledge, 
assignment, or otherwise is to be excluded for purposes of paragraph 
(x)(2) of this section.
    (z) Voting shares. The term voting shares means the sum of all 
rights, other than as affected by events of default, to vote for 
election of directors and/or the sum of all interests in an 
unincorporated person.
    (aa) Wholly owned subsidiary. The term wholly owned subsidiary means 
a subsidiary substantially all of whose outstanding voting shares are 
owned

[[Page 235]]

by its parent and/or the parent's other wholly owned subsidiaries.
    (bb) Summarized financial information. (1) Except as provided in 
paragraph (aa)(2), summarized financial information referred to in this 
regulation shall mean the presentation of summarized information as to 
the assets, liabilities and results of operations of the entity for 
which the information is required. Summarized financial information 
shall include the following disclosures:
    (i) Current assets, noncurrent assets, current liabilities, 
noncurrent liabilities, and, when applicable, redeemable preferred 
stocks (see Sec. 210.5-02.28) and minority interests (for specialized 
industries in which classified balance sheets are normally not 
presented, information shall be provided as to the nature and amount of 
the major components of assets and liabilities);
    (ii) Net sales or gross revenues, gross profit (or, alternatively, 
costs and expenses applicable to net sales or gross revenues), income or 
loss from continuing operations before extraordinary items and 
cumulative effect of a change in accounting principle, and net income or 
loss (for specialized industries, other information may be substituted 
for sales and related costs and expenses if necessary for a more 
meaningful presentation); and
    (2) Summarized financial information for unconsolidated subsidiaries 
and 50 percent or less owned persons referred to in and required by 
Sec. 210.10-01(b) for interim periods shall include the information 
required by paragraph (aa)(1)(ii) of this section.

(Secs. 7 and 19a of the Securities Act, 15 U.S.C. 77g, 77s(a), 
77aa(25)(26); secs. 12, 13, 14, 15(d), and 23(a) of the Securities 
ExchangeAct of 1934, 15 U.S.C. 78l, 78m, 78n, 78o(d), 78w(a), secs. 
5(b), 10(a), 14, 20(a) of the Public Utility Holding Company Act, 15 
U.S.C. 79e(a), 79n, 79t(a); secs. 8, 20, 30, 31(c), 38(a) of the 
Investment Company Act of 1940, 15 U.S.C. 80a-8, 80a-20, 80a-29, 80a-
30(c), 80a-37(a))

[37 FR 14593, July 21, 1972, as amended at 38 FR 6066, Mar. 6, 1973; 39 
FR 17931, May 22, 1974; 40 FR 55835, Dec. 2, 1975; 45 FR 63668, Sept. 
25, 1980; 46 FR 56178, Nov. 16, 1981; 47 FR 29836, July 9, 1982; 50 FR 
25214, June 18, 1985; 50 FR 49531, Dec. 3, 1985; 59 FR 65636, Dec. 20, 
1994; 62 FR 12749, Mar. 18, 1997]

                Qualifications and Reports of Accountants

    Source: Sections 210.2-01 to 210.2-05 appear at 37 FR 14594, July 
21, 1972, unless otherwise noted.



Sec. 210.2-01, Note  Qualifications of accountants.

                    Preliminary Note to Sec. 210.2-01

    1. Section 210.2-01 is designed to ensure that auditors are 
qualified and independent of their audit clients both in fact and in 
appearance. Accordingly, the rule sets forth restrictions on financial, 
employment, and business relationships between an accountant and an 
audit client and restrictions on an accountant providing certain non-
audit services to an audit client.
    2. Section 210.2-01(b) sets forth the general standard of auditor 
independence. Paragraphs (c)(1) to (c)(5) reflect the application of the 
general standard to particular circumstances. The rule does not purport 
to, and the Commission could not, consider all circumstances that raise 
independence concerns, and these are subject to the general standard in 
Sec. 210.2-01(b). In considering this standard, the Commission looks in 
the first instance to whether a relationship or the provision of a 
service: creates a mutual or conflicting interest between the accountant 
and the audit client; places the accountant in the position of auditing 
his or her own work; results in the accountant acting as management or 
an employee of the audit client; or places the accountant in a position 
of being an advocate for the audit client.
    3. These factors are general guidance only and their application may 
depend on particular facts and circumstances. For that reason, 
Sec. 210.2-01 provides that, in determining whether an accountant is 
independent, the Commission will consider all relevant facts and 
circumstances. For the same reason, registrants and accountants are 
encouraged to consult with the Commission's Office of the Chief 
Accountant before entering into relationships, including relationships 
involving the provision of services, that are not explicitly described 
in the rule.

    (a) The Commission will not recognize any person as a certified 
public accountant who is not duly registered and in good standing as 
such under the laws of the place of his residence or principal office. 
The Commission will not recognize any person as a public accountant who 
is not in good standing and entitled to practice as such under the laws 
of the place of his residence or principal office.

[[Page 236]]

    (b) The Commission will not recognize an accountant as independent, 
with respect to an audit client, if the accountant is not, or a 
reasonable investor with knowledge of all relevant facts and 
circumstances would conclude that the accountant is not, capable of 
exercising objective and impartial judgment on all issues encompassed 
within the accountant's engagement. In determining whether an accountant 
is independent, the Commission will consider all relevant circumstances, 
including all relationships between the accountant and the audit client, 
and not just those relating to reports filed with the Commission.
    (c) This paragraph sets forth a non-exclusive specification of 
circumstances inconsistent with paragraph (b) of this section.
    (1) Financial relationships. An accountant is not independent if, at 
any point during the audit and professional engagement period, the 
accountant has a direct financial interest or a material indirect 
financial interest in the accountant's audit client, such as:
    (i) Investments in audit clients. An accountant is not independent 
when:
    (A) The accounting firm, any covered person in the firm, or any of 
his or her immediate family members, has any direct investment in an 
audit client, such as stocks, bonds, notes, options, or other 
securities. The term direct investment includes an investment in an 
audit client through an intermediary if:
    (1) The accounting firm, covered person, or immediate family member, 
alone or together with other persons, supervises or participates in the 
intermediary's investment decisions or has control over the 
intermediary; or
    (2) The intermediary is not a diversified management investment 
company, as defined by section 5(b)(1) of the Investment Company Act of 
1940, 15 U.S.C. 80a-5(b)(1), and has an investment in the audit client 
that amounts to 20% or more of the value of the intermediary's total 
investments.
    (B) Any partner, principal, shareholder, or professional employee of 
the accounting firm, any of his or her immediate family members, any 
close family member of a covered person in the firm, or any group of the 
above persons has filed a Schedule 13D or 13G (17 CFR 240.13d-101 or 
240.13d-102) with the Commission indicating beneficial ownership of more 
than five percent of an audit client's equity securities or controls an 
audit client, or a close family member of a partner, principal, or 
shareholder of the accounting firm controls an audit client.
    (C) The accounting firm, any covered person in the firm, or any of 
his or her immediate family members, serves as voting trustee of a 
trust, or executor of an estate, containing the securities of an audit 
client, unless the accounting firm, covered person in the firm, or 
immediate family member has no authority to make investment decisions 
for the trust or estate.
    (D) The accounting firm, any covered person in the firm, any of his 
or her immediate family members, or any group of the above persons has 
any material indirect investment in an audit client. For purposes of 
this paragraph, the term material indirect investment does not include 
ownership by any covered person in the firm, any of his or her immediate 
family members, or any group of the above persons of 5% or less of the 
outstanding shares of a diversified management investment company, as 
defined by section 5(b)(1) of the Investment Company Act of 1940, 15 
U.S.C. 80a-5(b)(1), that invests in an audit client.
    (E) The accounting firm, any covered person in the firm, or any of 
his or her immediate family members:
    (1) Has any direct or material indirect investment in an entity 
where:
    (i) An audit client has an investment in that entity that is 
material to the audit client and has the ability to exercise significant 
influence over that entity; or
    (ii) The entity has an investment in an audit client that is 
material to that entity and has the ability to exercise significant 
influence over that audit client;
    (2) Has any material investment in an entity over which an audit 
client has the ability to exercise significant influence; or
    (3) Has the ability to exercise significant influence over an entity 
that has the ability to exercise significant influence over an audit 
client.

[[Page 237]]

    (ii) Other financial interests in audit client. An accountant is not 
independent when the accounting firm, any covered person in the firm, or 
any of his or her immediate family members has:
    (A) Loans/debtor-creditor relationship. Any loan (including any 
margin loan) to or from an audit client, or an audit client's officers, 
directors, or record or beneficial owners of more than ten percent of 
the audit client's equity securities, except for the following loans 
obtained from a financial institution under its normal lending 
procedures, terms, and requirements:
    (1) Automobile loans and leases collateralized by the automobile;
    (2) Loans fully collateralized by the cash surrender value of an 
insurance policy;
    (3) Loans fully collateralized by cash deposits at the same 
financial institution; and
    (4) A mortgage loan collateralized by the borrower's primary 
residence provided the loan was not obtained while the covered person in 
the firm was a covered person.
    (B) Savings and checking accounts. Any savings, checking, or similar 
account at a bank, savings and loan, or similar institution that is an 
audit client, if the account has a balance that exceeds the amount 
insured by the Federal Deposit Insurance Corporation or any similar 
insurer, except that an accounting firm account may have an uninsured 
balance provided that the likelihood of the bank, savings and loan, or 
similar institution experiencing financial difficulties is remote.
    (C) Broker-dealer accounts. Brokerage or similar accounts maintained 
with a broker-dealer that is an audit client, if:
    (1) Any such account includes any asset other than cash or 
securities (within the meaning of ``security'' provided in the 
Securities Investor Protection Act of 1970 (``SIPA'') (15 U.S.C. 78aaa 
et seq.));
    (2) The value of assets in the accounts exceeds the amount that is 
subject to a Securities Investor Protection Corporation advance, for 
those accounts, under Section 9 of SIPA (15 U.S.C. 78fff-3); or
    (3) With respect to non-U.S. accounts not subject to SIPA 
protection, the value of assets in the accounts exceeds the amount 
insured or protected by a program similar to SIPA.
    (D) Futures commission merchant accounts. Any futures, commodity, or 
similar account maintained with a futures commission merchant that is an 
audit client.
    (E) Credit cards. Any aggregate outstanding credit card balance owed 
to a lender that is an audit client that is not reduced to $10,000 or 
less on a current basis taking into consideration the payment due date 
and any available grace period.
    (F) Insurance products. Any individual policy issued by an insurer 
that is an audit client unless:
    (1) The policy was obtained at a time when the covered person in the 
firm was not a covered person in the firm; and
    (2) The likelihood of the insurer becoming insolvent is remote.
    (G) Investment companies. Any financial interest in an entity that 
is part of an investment company complex that includes an audit client.
    (iii) Exceptions. Notwithstanding paragraphs (c)(1)(i) and 
(c)(1)(ii) of this section, an accountant will not be deemed not 
independent if:
    (A) Inheritance and gift. Any person acquires an unsolicited 
financial interest, such as through an unsolicited gift or inheritance, 
that would cause an accountant to be not independent under paragraph 
(c)(1)(i) or (c)(1)(ii) of this section, and the financial interest is 
disposed of as soon as practicable, but no later than 30 days after the 
person has knowledge of and the right to dispose of the financial 
interest.
    (B) New audit engagement. Any person has a financial interest that 
would cause an accountant to be not independent under paragraph 
(c)(1)(i) or (c)(1)(ii) of this section, and:
    (1) The accountant did not audit the client's financial statements 
for the immediately preceding fiscal year; and
    (2) The accountant is independent under paragraph (c)(1)(i) and 
(c)(1)(ii) of this section before the earlier of:
    (i) Signing an initial engagement letter or other agreement to 
provide audit, review, or attest services to the audit client; or

[[Page 238]]

    (ii) Commencing any audit, review, or attest procedures (including 
planning the audit of the client's financial statements).
    (C) Employee compensation and benefit plans. An immediate family 
member of a person who is a covered person in the firm only by virtue of 
paragraphs (f)(11)(iii) or (f)(11)(iv) of this section has a financial 
interest that would cause an accountant to be not independent under 
paragraph (c)(1)(i) or (c)(1)(ii) of this section, and the acquisition 
of the financial interest was an unavoidable consequence of 
participation in his or her employer's employee compensation or benefits 
program, provided that the financial interest, other than unexercised 
employee stock options, is disposed of as soon as practicable, but no 
later than 30 days after the person has the right to dispose of the 
financial interest.
    (iv) Audit clients' financial relationships. An accountant is not 
independent when:
    (A) Investments by the audit client in the accounting firm. An audit 
client has, or has agreed to acquire, any direct investment in the 
accounting firm, such as stocks, bonds, notes, options, or other 
securities, or the audit client's officers or directors are record or 
beneficial owners of more than 5% of the equity securities of the 
accounting firm.
    (B) Underwriting. An accounting firm engages an audit client to act 
as an underwriter, broker-dealer, market-maker, promoter, or analyst 
with respect to securities issued by the accounting firm.
    (2) Employment relationships. An accountant is not independent if, 
at any point during the audit and professional engagement period, the 
accountant has an employment relationship with an audit client, such as:
    (i) Employment at audit client of accountant. A current partner, 
principal, shareholder, or professional employee of the accounting firm 
is employed by the audit client or serves as a member of the board of 
directors or similar management or governing body of the audit client.
    (ii) Employment at audit client of certain relatives of accountant. 
A close family member of a covered person in the firm is in an 
accounting role or financial reporting oversight role at an audit 
client, or was in such a role during any period covered by an audit for 
which the covered person in the firm is a covered person.
    (iii) Employment at audit client of former employee of accounting 
firm. A former partner, principal, shareholder, or professional employee 
of an accounting firm is in an accounting role or financial reporting 
oversight role at an audit client, unless the individual:
    (A) Does not influence the accounting firm's operations or financial 
policies;
    (B) Has no capital balances in the accounting firm; and
    (C) Has no financial arrangement with the accounting firm other than 
one providing for regular payment of a fixed dollar amount (which is not 
dependent on the revenues, profits, or earnings of the accounting firm):
    (1) Pursuant to a fully funded retirement plan, rabbi trust, or, in 
jurisdictions in which a rabbi trust does not exist, a similar vehicle; 
or
    (2) In the case of a former professional employee who was not a 
partner, principal, or shareholder of the accounting firm and who has 
been disassociated from the accounting firm for more than five years, 
that is immaterial to the former professional employee.
    (iv) Employment at accounting firm of former employee of audit 
client. A former officer, director, or employee of an audit client 
becomes a partner, principal, shareholder, or professional employee of 
the accounting firm, unless the individual does not participate in, and 
is not in a position to influence, the audit of the financial statements 
of the audit client covering any period during which he or she was 
employed by or associated with that audit client.
    (3) Business relationships. An accountant is not independent if, at 
any point during the audit and professional engagement period, the 
accounting firm or any covered person in the firm has any direct or 
material indirect business relationship with an audit client, or with 
persons associated with the

[[Page 239]]

audit client in a decision-making capacity, such as an audit client's 
officers, directors, or substantial stockholders. The relationships 
described in this paragraph do not include a relationship in which the 
accounting firm or covered person in the firm provides professional 
services to an audit client or is a consumer in the ordinary course of 
business.
    (4) Non-audit services. An accountant is not independent if, at any 
point during the audit and professional engagement period, the 
accountant provides the following non-audit services to an audit client:
    (i) Bookkeeping or other services related to the audit client's 
accounting records or financial statements.
    (A) Any service involving:
    (1) Maintaining or preparing the audit client's accounting records;
    (2) Preparing the audit client's financial statements that are filed 
with the Commission or form the basis of financial statements filed with 
the Commission; or
    (3) Preparing or originating source data underlying the audit 
client's financial statements.
    (B) Notwithstanding paragraph (c)(4)(i)(A) of this section, the 
accountant's independence will not be impaired when the accountant 
provides these services:
    (1) In emergency or other unusual situations, provided the 
accountant does not undertake any managerial actions or make any 
managerial decisions; or
    (2) For foreign divisions or subsidiaries of an audit client, 
provided that:
    (i) The services are limited, routine, or ministerial;
    (ii) It is impractical for the foreign division or subsidiary to 
make other arrangements;
    (iii) The foreign division or subsidiary is not material to the 
consolidated financial statements;
    (iv) The foreign division or subsidiary does not have employees 
capable or competent to perform the services;
    (v) The services performed are consistent with local professional 
ethics rules; and
    (vi) The fees for all such services collectively (for the entire 
group of companies) do not exceed the greater of 1% of the consolidated 
audit fee or $10,000.
    (ii) Financial information systems design and implementation.
    (A) Directly or indirectly operating, or supervising the operation 
of, the audit client's information system or managing the audit client's 
local area network.
    (B) Designing or implementing a hardware or software system that 
aggregates source data underlying the financial statements or generates 
information that is significant to the audit client's financial 
statements taken as a whole, unless:
    (1) The audit client's management has acknowledged in writing to the 
accounting firm and the audit client's audit committee, or if there is 
no such committee then the board of directors, the audit client's 
responsibility to establish and maintain a system of internal accounting 
controls in compliance with section 13(b)(2) of the Securities Exchange 
Act of 1934 (15 U.S.C. 78m(b)(2));
    (2) The audit client's management designates a competent employee or 
employees, preferably within senior management, with the responsibility 
to make all management decisions with respect to the design and 
implementation of the hardware or software system;
    (3) The audit client's management makes all management decisions 
with respect to the design and implementation of the hardware or 
software system including, but not limited to, decisions concerning the 
systems to be evaluated and selected, the controls and system procedures 
to be implemented, the scope and timetable of system implementation, and 
the testing, training, and conversion plans;
    (4) The audit client's management evaluates the adequacy and results 
of the design and implementation of the hardware or software system; and
    (5) The audit client's management does not rely on the accountant's 
work as the primary basis for determining the adequacy of its internal 
controls and financial reporting systems.
    (C) Nothing in this paragraph (c)(4)(ii) shall limit services an 
accountant performs in connection with

[[Page 240]]

the assessment, design, and implementation of internal accounting 
controls and risk management controls, provided the auditor does not act 
as an employee or perform management functions.
    (iii) Appraisal or valuation services or fairness opinions.
    (A) Any appraisal service, valuation service, or any service 
involving a fairness opinion for an audit client, where it is reasonably 
likely that the results of these services, individually or in the 
aggregate, would be material to the financial statements, or where the 
results of these services will be audited by the accountant during an 
audit of the audit client's financial statements.
    (B) Notwithstanding paragraph (c)(4)(iii)(A) of this section, the 
accountant's independence will not be impaired when:
    (1) The accounting firm's valuation expert reviews the work of the 
audit client or a specialist employed by the audit client, and the audit 
client or the specialist provides the primary support for the balances 
recorded in the client's financial statements;
    (2) The accounting firm's actuaries value an audit client's pension, 
other post-employment benefit, or similar liabilities, provided that the 
audit client has determined and taken responsibility for all significant 
assumptions and data;
    (3) The valuation is performed in the context of the planning and 
implementation of a tax-planning strategy or for tax compliance 
services; or
    (4) The valuation is for non-financial purposes where the results of 
the valuation do not affect the financial statements.
    (iv) Actuarial services.
    (A) Any actuarially-oriented advisory service involving the 
determination of insurance company policy reserves and related accounts 
for the audit client, unless:
    (1) The audit client uses its own actuaries or third-party actuaries 
to provide management with the primary actuarial capabilities;
    (2) Management accepts responsibility for any significant actuarial 
methods and assumptions; and
    (3) The accountant's involvement is not continuous.
    (B) Subject to complying with paragraph (c)(4)(iv)(A)(1)-(3) of this 
section, the accountant's independence will not be impaired if the 
accountant:
    (1) Assists management to develop appropriate methods, assumptions, 
and amounts for policy and loss reserves and other actuarial items 
presented in financial reports based on the audit client's historical 
experience, current practice, and future plans;
    (2) Assists management in the conversion of financial statements 
from a statutory basis to one conforming with generally accepted 
accounting principles;
    (3) Analyzes actuarial considerations and alternatives in federal 
income tax planning; or
    (4) Assists management in the financial analysis of various matters, 
such as proposed new policies, new markets, business acquisitions, and 
reinsurance needs.
    (v) Internal audit services. Either of:
    (A) Internal audit services in an amount greater than 40% of the 
total hours expended on the audit client's internal audit activities in 
any one fiscal year, unless the audit client has less than $200 million 
in total assets. (For purposes of this paragraph, the term internal 
audit services does not include operational internal audit services 
unrelated to the internal accounting controls, financial systems, or 
financial statements.); or
    (B) Any internal audit services, or any operational internal audit 
services unrelated to the internal accounting controls, financial 
systems, or financial statements, for an audit client, unless:
    (1) The audit client's management has acknowledged in writing to the 
accounting firm and the audit client's audit committee, or if there is 
no such committee then the board of directors, the audit client's 
responsibility to establish and maintain a system of internal accounting 
controls in compliance with section 13(b)(2) of the Securities Exchange 
Act of 1934 (15 U.S.C. 78m(b)(2));
    (2) The audit client's management designates a competent employee or 
employees, preferably within senior management, to be responsible for 
the internal audit function;

[[Page 241]]

    (3) The audit client's management determines the scope, risk, and 
frequency of internal audit activities, including those to be performed 
by the accountant;
    (4) The audit client's management evaluates the findings and results 
arising from the internal audit activities, including those performed by 
the accountant;
    (5) The audit client's management evaluates the adequacy of the 
audit procedures performed and the findings resulting from the 
performance of those procedures by, among other things, obtaining 
reports from the accountant; and
    (6) The audit client's management does not rely on the accountant's 
work as the primary basis for determining the adequacy of its internal 
controls.
    (vi) Management functions. Acting, temporarily or permanently, as a 
director, officer, or employee of an audit client, or performing any 
decision-making, supervisory, or ongoing monitoring function for the 
audit client.
    (vii) Human resources.
    (A) Searching for or seeking out prospective candidates for 
managerial, executive, or director positions;
    (B) Engaging in psychological testing, or other formal testing or 
evaluation programs;
    (C) Undertaking reference checks of prospective candidates for an 
executive or director position;
    (D) Acting as a negotiator on the audit client's behalf, such as 
determining position, status or title, compensation, fringe benefits, or 
other conditions of employment; or
    (E) Recommending, or advising the audit client to hire, a specific 
candidate for a specific job (except that an accounting firm may, upon 
request by the audit client, interview candidates and advise the audit 
client on the candidate's competence for financial accounting, 
administrative, or control positions).
    (viii) Broker-dealer services. Acting as a broker-dealer, promoter, 
or underwriter, on behalf of an audit client, making investment 
decisions on behalf of the audit client or otherwise having 
discretionary authority over an audit client's investments, executing a 
transaction to buy or sell an audit client's investment, or having 
custody of assets of the audit client, such as taking temporary 
possession of securities purchased by the audit client.
    (ix) Legal services. Providing any service to an audit client under 
circumstances in which the person providing the service must be admitted 
to practice before the courts of a United States jurisdiction.
    (5) Contingent fees. An accountant is not independent if, at any 
point during the audit and professional engagement period, the 
accountant provides any service or product to an audit client for a 
contingent fee or a commission, or receives a contingent fee or 
commission from an audit client.
    (d) Quality controls. An accounting firm's independence will not be 
impaired solely because a covered person in the firm is not independent 
of an audit client provided:
    (1) The covered person did not know of the circumstances giving rise 
to the lack of independence;
    (2) The covered person's lack of independence was corrected as 
promptly as possible under the relevant circumstances after the covered 
person or accounting firm became aware of it; and
    (3) The accounting firm has a quality control system in place that 
provides reasonable assurance, taking into account the size and nature 
of the accounting firm's practice, that the accounting firm and its 
employees do not lack independence, and that covers at least all 
employees and associated entities of the accounting firm participating 
in the engagement, including employees and associated entities located 
outside of the United States.
    (4) For an accounting firm that annually provides audit, review, or 
attest services to more than 500 companies with a class of securities 
registered with the Commission under section 12 of the Securities 
Exchange Act of 1934 (15 U.S.C. 78l), a quality control system will not 
provide such reasonable assurance unless it has at least the following 
features:
    (i) Written independence policies and procedures;
    (ii) With respect to partners and managerial employees, an automated 
system to identify their investments in

[[Page 242]]

securities that might impair the accountant's independence;
    (iii) With respect to all professionals, a system that provides 
timely information about entities from which the accountant is required 
to maintain independence;
    (iv) An annual or on-going firm-wide training program about auditor 
independence;
    (v) An annual internal inspection and testing program to monitor 
adherence to independence requirements;
    (vi) Notification to all accounting firm members, officers, 
directors, and employees of the name and title of the member of senior 
management responsible for compliance with auditor independence 
requirements;
    (vii) Written policies and procedures requiring all partners and 
covered persons to report promptly to the accounting firm when they are 
engaged in employment negotiations with an audit client, and requiring 
the firm to remove immediately any such professional from that audit 
client's engagement and to review promptly all work the professional 
performed related to that audit client's engagement; and
    (viii) A disciplinary mechanism to ensure compliance with this 
section.
    (e) Transition and grandfathering.
    (1) Transition.
    (i) Appraisal or valuation services or fairness opinions and 
internal audit services. Until August 5, 2002, providing to an audit 
client the non-audit services set forth in paragraphs (c)(4)(iii) and 
(c)(4)(v) of this section will not impair an accountant's independence 
with respect to the audit client if performing those services did not 
impair the accountant's independence under pre-existing requirements of 
the Commission, the Independence Standards Boards, or the accounting 
profession in the United States.
    (ii) Other financial interests and employment relationships. Until 
May 7, 2001, having the financial interests set forth in paragraph 
(c)(1)(ii) of this section or the employment relationships set forth in 
paragraph (c)(2) of this section will not impair an accountant's 
independence with respect to the audit client if having those financial 
interests or employment relationships did not impair the accountant's 
independence under pre-existing requirements of the Commission, the 
Independence Standards Board, or the accounting profession in the United 
States.
    (iii) Quality controls. Until December 31, 2002, paragraph (d)(4) of 
this section shall not apply to offices of the accounting firm located 
outside of the United States.
    (2) Grandfathering. Financial interests included in paragraphs 
(c)(1)(ii)(A) and (c)(1)(ii)(F) of this section and employment 
relationships included in paragraph (c)(2) of this section in existence 
on May 7, 2001, and contracts for the provision of services described in 
paragraph (c)(4)(ii) of this section in existence on February 5, 2001 
will not be deemed to impair an accountant's independence if they did 
not impair the accountant's independence under pre-existing requirements 
of the Commission, the Independence Standards Board, or the accounting 
profession in the United States.
    (3) Settling financial arrangements with former professionals. To 
the extent not required by pre-existing requirements of the Commission, 
the Independence Standards Board, or the accounting profession in the 
United States, the requirement in paragraph (c)(2)(iii) of this section 
to settle financial arrangements with former professionals applies to 
situations that arise after the effective date of this section.
    (f) Definitions of terms. For purposes of this section:
    (1) Accountant, as used in paragraphs (b) through (e) of this 
section, means a certified public accountant or public accountant 
performing services in connection with an engagement for which 
independence is required. References to the accountant include any 
accounting firm with which the certified public accountant or public 
accountant is affiliated.
    (2) Accounting firm means an organization (whether it is a sole 
proprietorship, incorporated association, partnership, corporation, 
limited liability company, limited liability partnership, or other legal 
entity) that is engaged in the practice of public accounting and 
furnishes reports or other documents filed with the Commission or 
otherwise prepared under the securities

[[Page 243]]

laws, and all of the organization's departments, divisions, parents, 
subsidiaries, and associated entities, including those located outside 
of the United States. Accounting firm also includes the organization's 
pension, retirement, investment, or similar plans.
    (3) Accounting role or financial reporting oversight role means a 
role in which a person is in a position to or does:
    (i) Exercise more than minimal influence over the contents of the 
accounting records or anyone who prepares them; or
    (ii) Exercise influence over the contents of the financial 
statements or anyone who prepares them, such as when the person is a 
member of the board of directors or similar management or governing 
body, chief executive officer, president, chief financial officer, chief 
operating officer, general counsel, chief accounting officer, 
controller, director of internal audit, director of financial reporting, 
treasurer, vice president of marketing, or any equivalent position.
    (4) Affiliate of the audit client means:
    (i) An entity that has control over the audit client, or over which 
the audit client has control, or which is under common control with the 
audit client, including the audit client's parents and subsidiaries;
    (ii) An entity over which the audit client has significant 
influence, unless the entity is not material to the audit client;
    (iii) An entity that has significant influence over the audit 
client, unless the audit client is not material to the entity; and
    (iv) Each entity in the investment company complex when the audit 
client is an entity that is part of an investment company complex.
    (5) Audit and professional engagement period includes both:
    (i) The period covered by any financial statements being audited or 
reviewed (the ``audit period''); and
    (ii) The period of the engagement to audit or review the audit 
client's financial statements or to prepare a report filed with the 
Commission (the ``professional engagement period''):
    (A) The professional engagement period begins when the accountant 
either signs an initial engagement letter (or other agreement to review 
or audit a client's financial statements) or begins audit, review, or 
attest procedures, whichever is earlier; and
    (B) The professional engagement period ends when the audit client or 
the accountant notifies the Commission that the client is no longer that 
accountant's audit client.
    (iii) For audits of the financial statements of foreign private 
issuers, the ``audit and professional engagement period'' does not 
include periods ended prior to the first day of the last fiscal year 
before the foreign private issuer first filed, or was required to file, 
a registration statement or report with the Commission, provided there 
has been full compliance with home country independence standards in all 
prior periods covered by any registration statement or report filed with 
the Commission.
    (6) Audit client means the entity whose financial statements or 
other information is being audited, reviewed, or attested and any 
affiliates of the audit client, other than, for purposes of paragraph 
(c)(1)(i) of this section, entities that are affiliates of the audit 
client only by virtue of paragraph (f)(4)(ii) or (f)(4)(iii) of this 
section.
    (7) Audit engagement team means all partners, principals, 
shareholders, and professional employees participating in an audit, 
review, or attestation engagement of an audit client, including those 
conducting concurring or second partner reviews and all persons who 
consult with others on the audit engagement team during the audit, 
review, or attestation engagement regarding technical or industry-
specific issues, transactions, or events.
    (8) Chain of command means all persons who:
    (i) Supervise or have direct management responsibility for the 
audit, including at all successively senior levels through the 
accounting firm's chief executive;
    (ii) Evaluate the performance or recommend the compensation of the 
audit engagement partner; or
    (iii) Provide quality control or other oversight of the audit.

[[Page 244]]

    (9) Close family members means a person's spouse, spousal 
equivalent, parent, dependent, nondependent child, and sibling.
    (10) Contingent fee means, except as stated in the next sentence, 
any fee established for the sale of a product or the performance of any 
service pursuant to an arrangement in which no fee will be charged 
unless a specified finding or result is attained, or in which the amount 
of the fee is otherwise dependent upon the finding or result of such 
product or service. Solely for the purposes of this section, a fee is 
not a ``contingent fee'' if it is fixed by courts or other public 
authorities, or, in tax matters, if determined based on the results of 
judicial proceedings or the findings of governmental agencies. Fees may 
vary depending, for example, on the complexity of services rendered.
    (11) Covered persons in the firm means the following partners, 
principals, shareholders, and employees of an accounting firm:
    (i) The ``audit engagement team'';
    (ii) The ``chain of command'';
    (iii) Any other partner, principal, shareholder, or managerial 
employee of the accounting firm who has provided ten or more hours of 
non-audit services to the audit client for the period beginning on the 
date such services are provided and ending on the date the accounting 
firm signs the report on the financial statements for the fiscal year 
during which those services are provided, or who expects to provide ten 
or more hours of non-audit services to the audit client on a recurring 
basis; and
    (iv) Any other partner, principal, or shareholder from an ``office'' 
of the accounting firm in which the lead audit engagement partner 
primarily practices in connection with the audit.
    (12) Group means two or more persons who act together for the 
purposes of acquiring, holding, voting, or disposing of securities of a 
registrant.
    (13) Immediate family members means a person's spouse, spousal 
equivalent, and dependents.
    (14) Investment company complex.
    (i) ``Investment company complex'' includes:
    (A) An investment company and its investment adviser or sponsor;
    (B) Any entity controlled by or controlling an investment adviser or 
sponsor in paragraph (f)(14)(i)(A) of this section, or any entity under 
common control with an investment adviser or sponsor in paragraph 
(f)(14)(i)(A) of this section if the entity:
    (1) Is an investment adviser or sponsor; or
    (2) Is engaged in the business of providing administrative, 
custodian, underwriting, or transfer agent services to any investment 
company, investment adviser, or sponsor; and
    (C) Any investment company or entity that would be an investment 
company but for the exclusions provided by section 3(c) of the 
Investment Company Act of 1940 (15 U.S.C. 80a-3(c)) that has an 
investment adviser or sponsor included in this definition by either 
paragraph (f)(14)(i)(A) or (f)(14)(i)(B) of this section.
    (ii) An investment adviser, for purposes of this definition, does 
not include a sub-adviser whose role is primarily portfolio management 
and is subcontracted with or overseen by another investment adviser.
    (iii) Sponsor, for purposes of this definition, is an entity that 
establishes a unit investment trust.
    (15) Office means a distinct sub-group within an accounting firm, 
whether distinguished along geographic or practice lines.
    (16) Rabbi trust means an irrevocable trust whose assets are not 
accessible to the accounting firm until all benefit obligations have 
been met, but are subject to the claims of creditors in bankruptcy or 
insolvency.

[37 FR 14594, July 21, 1972, as amended at 48 FR 9521, Mar. 7, 1983; 65 
FR 76082, Dec. 5, 2000]

    Effective Date Note: At 68 FR 6044, Feb. 5, 2003, Sec. 210.2-01 was 
amended by revising paragraphs (c)(2)(iii), (4), (e)(1), (f)(1), (f)(3), 
and (f)(7), adding paragraphs (c)(6), (c)(7), (c)(8), and (f)(17), 
removing (e) heading and paragraph (e)(2), and redesignating paragraph 
(e)(3) as (e)(2), effective May 6, 2003. For the convenience of the 
user, the added and revised text is set forth as follows:

Sec. 210.2-01  Qualifications of accountants.

                                * * * * *

    (c) * * *
    (2) Employment relationships. * * *
    (i) * * *

[[Page 245]]

    (ii) * * *
    (iii) Employment at audit client of former employee of accounting 
firm.
    (A) A former partner, principal, shareholder, or professional 
employee of an accounting firm is in an accounting role or financial 
reporting oversight role at an audit client, unless the individual:
    (1) Does not influence the accounting firm's operations or financial 
policies;
    (2) Has no capital balances in the accounting firm; and
    (3) Has no financial arrangement with the accounting firm other than 
one providing for regular payment of a fixed dollar amount (which is not 
dependent on the revenues, profits, or earnings of the accounting firm):
    (i) Pursuant to a fully funded retirement plan, rabbi trust, or, in 
jurisdictions in which a rabbi trust does not exist, a similar vehicle; 
or
    (ii) In the case of a former professional employee who was not a 
partner, principal, or shareholder of the accounting firm and who has 
been disassociated from the accounting firm for more than five years, 
that is immaterial to the former professional employee; and
    (B) A former partner, principal, shareholder, or professional 
employee of an accounting firm is in a financial reporting oversight 
role at an issuer (as defined in section 10A(f) of the Securities 
Exchange Act of 1934 (15 U.S.C. 78j-1(f)), except an issuer that is an 
investment company registered under section 8 of the Investment Company 
Act of 1940 (15 U.S.C. 80a-8), unless the individual:
    (1) Employed by the issuer was not a member of the audit engagement 
team of the issuer during the one year period preceding the date that 
audit procedures commenced for the fiscal period that included the date 
of initial employment of the audit engagement team member by the issuer;
    (2) For purposes of paragraph (c)(2)(iii)(B)(1) of this section, the 
following individuals are not considered to be members of the audit 
engagement team:
    (i) Persons, other than the lead partner and the concurring partner, 
who provided ten or fewer hours of audit, review, or attest services 
during the period covered by paragraph (c)(2)(iii)(B)(1) of this 
section;
    (ii) Individuals employed by the issuer as a result of a business 
combination between an issuer that is an audit client and the employing 
entity, provided employment was not in contemplation of the business 
combination and the audit committee of the successor issuer is aware of 
the prior employment relationship; and
    (iii) Individuals that are employed by the issuer due to an 
emergency or other unusual situation provided that the audit committee 
determines that the relationship is in the interest of investors;
    (3) For purposes of paragraph (c)(2)(iii)(B)(1) of this section, 
audit procedures are deemed to have commenced for a fiscal period the 
day following the filing of the issuer's periodic annual report with the 
Commission covering the previous fiscal period; or
    (C) A former partner, principal, shareholder, or professional 
employee of an accounting firm is in a financial reporting oversight 
role with respect to an investment company registered under section 8 of 
the Investment Company Act of 1940 (15 U.S.C. 80a-8), if:
    (1) The former partner, principal, shareholder, or professional 
employee of an accounting firm is employed in a financial reporting 
oversight role related to the operations and financial reporting of the 
registered investment company at an entity in the investment company 
complex, as defined in (f)(14) of this section, that includes the 
registered investment company; and
    (2) The former partner, principal, shareholder, or professional 
employee of an accounting firm employed by the registered investment 
company or any entity in the investment company complex was a member of 
the audit engagement team of the registered investment company or any 
other registered investment company in the investment company complex 
during the one year period preceding the date that audit procedures 
commenced that included the date of initial employment of the audit 
engagement team member by the registered investment company or any 
entity in the investment company complex.
    (3) For purposes of paragraph (c)(2)(iii)(C)(2) of this section, the 
following individuals are not considered to be members of the audit 
engagement team:
    (i) Persons, other than the lead partner and concurring partner, who 
provided ten or fewer hours of audit, review or attest services during 
the period covered by paragraph (c)(2)(iii)(C)(2) of this section;
    (ii) Individuals employed by the registered investment company or 
any entity in the investment company complex as a result of a business 
combination between a registered investment company or any entity in the 
investment company complex that is an audit client and the employing 
entity, provided employment was not in contemplation of the business 
combination and the audit committee of the registered investment company 
is aware of the prior employment relationship; and
    (iii) Individuals that are employed by the registered investment 
company or any entity in the investment company complex due to an 
emergency or other unusual situation provided that the audit committee 
determines that the relationship is in the interest of investors.

[[Page 246]]

    (4) For purposes of paragraph (c)(2)(iii)(C)(2) of this section, 
audit procedures are deemed to have commenced the day following the 
filing of the registered investment company's periodic annual report 
with the Commission.

                                * * * * *

    (4) Non-audit services. An accountant is not independent if, at any 
point during the audit and professional engagement period, the 
accountant provides the following non-audit services to an audit client:
    (i) Bookkeeping or other services related to the accounting records 
or financial statements of the audit client. Any service, unless it is 
reasonable to conclude that the results of these services will not be 
subject to audit procedures during an audit of the audit client's 
financial statements, including:
    (A) Maintaining or preparing the audit client's accounting records;
    (B) Preparing the audit client's financial statements that are filed 
with the Commission or that form the basis of financial statements filed 
with the Commission; or
    (C) Preparing or originating source data underlying the audit 
client's financial statements.
    (ii) Financial information systems design and implementation. Any 
service, unless it is reasonable to conclude that the results of these 
services will not be subject to audit procedures during an audit of the 
audit client's financial statements, including:
    (A) Directly or indirectly operating, or supervising the operation 
of, the audit client's information system or managing the audit client's 
local area network; or
    (B) Designing or implementing a hardware or software system that 
aggregates source data underlying the financial statements or generates 
information that is significant to the audit client's financial 
statements or other financial information systems taken as a whole.
    (iii) Appraisal or valuation services, fairness opinions, or 
contribution-in-kind reports. Any appraisal service, valuation service, 
or any service involving a fairness opinion or contribution-in-kind 
report for an audit client, unless it is reasonable to conclude that the 
results of these services will not be subject to audit procedures during 
an audit of the audit client's financial statements.
    (iv) Actuarial services. Any actuarially-oriented advisory service 
involving the determination of amounts recorded in the financial 
statements and related accounts for the audit client other than 
assisting a client in understanding the methods, models, assumptions, 
and inputs used in computing an amount, unless it is reasonable to 
conclude that the results of these services will not be subject to audit 
procedures during an audit of the audit client's financial statements.
    (v) Internal audit outsourcing services. Any internal audit service 
that has been outsourced by the audit client that relates to the audit 
client's internal accounting controls, financial systems, or financial 
statements, for an audit client unless it is reasonable to conclude that 
the results of these services will not be subject to audit procedures 
during an audit of the audit client's financial statements.
    (vi) Management functions. Acting, temporarily or permanently, as a 
director, officer, or employee of an audit client, or performing any 
decision-making, supervisory, or ongoing monitoring function for the 
audit client.
    (vii) Human resources. (A) Searching for or seeking out prospective 
candidates for managerial, executive, or director positions;
    (B) Engaging in psychological testing, or other formal testing or 
evaluation programs;
    (C) Undertaking reference checks of prospective candidates for an 
executive or director position;
    (D) Acting as a negotiator on the audit client's behalf, such as 
determining position, status or title, compensation, fringe benefits, or 
other conditions of employment; or
    (E) Recommending, or advising the audit client to hire, a specific 
candidate for a specific job (except that an accounting firm may, upon 
request by the audit client, interview candidates and advise the audit 
client on the candidate's competence for financial accounting, 
administrative, or control positions).
    (viii) Broker-dealer, investment adviser, or investment banking 
services. Acting as a broker-dealer (registered or unregistered), 
promoter, or underwriter, on behalf of an audit client, making 
investment decisions on behalf of the audit client or otherwise having 
discretionary authority over an audit client's investments, executing a 
transaction to buy or sell an audit client's investment, or having 
custody of assets of the audit client, such as taking temporary 
possession of securities purchased by the audit client.
    (ix) Legal services. Providing any service to an audit client that, 
under circumstances in which the service is provided, could be provided 
only by someone licensed, admitted, or otherwise qualified to practice 
law in the jurisdiction in which the service is provided.
    (x) Expert services unrelated to the audit. Providing an expert 
opinion or other expert service for an audit client, or an audit 
client's legal representative, for the purpose of advocating an audit 
client's interests in litigation or in a regulatory or administrative 
proceeding or investigation. In any litigation or regulatory or 
administrative proceeding or investigation, an accountant's independence 
shall not be deemed to be impaired if the accountant provides factual 
accounts, including in testimony, of work performed or explains the 
positions taken or conclusions reached during the performance

[[Page 247]]

of any service provided by the accountant for the audit client.

                                * * * * *

    (6) Partner rotation. (i) Except as provided in paragraph (c)(6)(ii) 
of this section, an accountant is not independent of an audit client 
when:
    (A) Any audit partner as defined in paragraph (f)(7)(ii) of this 
section performs:
    (1) The services of a lead partner, as defined in paragraph 
(f)(7)(ii)(A) of this section, or concurring partner, as defined in 
paragraph (f)(7)(ii)(B) of this section, for more than five consecutive 
years; or
    (2) One or more of the services defined in paragraphs (f)(7)(ii)(C) 
and (D) of this section for more than seven consecutive years;
    (B) Any audit partner:
    (1) Within the five consecutive year period following the 
performance of services for the maximum period permitted under paragraph 
(c)(6)(i)(A)(1) of this section, performs for that audit client the 
services of a lead partner, as defined in paragraph (f)(7)(ii)(A) of 
this section, or concurring partner, as defined in paragraph 
(f)(7)(ii)(B) of this section, or a combination of those services, or
    (2) Within the two consecutive year period following the performance 
of services for the maximum period permitted under paragraph 
(c)(6)(i)(A)(2) of this section, performs one or more of the services 
defined in paragraph (f)(7)(ii) of this section.
    (ii) Any accounting firm with less than five audit clients that are 
issuers (as defined in section 10A(f) of the Securities Exchange Act of 
1934 (15 U.S.C. 78j-1(f))) and less than ten partners shall be exempt 
from paragraph (c)(6)(i) of this section provided the Public Company 
Accounting Oversight Board conducts a review at least once every three 
years of each of the audit client engagements that would result in a 
lack of auditor independence under this paragraph.
    (iii) For purposes of paragraph (c)(6)(i) of this section, an audit 
client that is an investment company registered under section 8 of the 
Investment Company Act of 1940 (15 U.S.C. 80a-8), does not include an 
affiliate of the audit client that is an entity in the same investment 
company complex, as defined in paragraph (f)(14) of this section, except 
for another registered investment company in the same investment company 
complex. For purposes of calculating consecutive years of service under 
paragraph (c)(6)(i) of this section with respect to investment companies 
in an investment company complex, audits of registered investment 
companies with different fiscal year-ends that are performed in a 
continuous 12-month period count as a single consecutive year.
    (7) Audit committee administration of the engagement. An accountant 
is not independent of an issuer (as defined in section 10A(f) of the 
Securities Exchange Act of 1934 (15 U.S.C. 78j-1(f))), other than an 
issuer that is an Asset-Backed Issuer as defined in Sec. 240.13a-14(g) 
and Sec. 240.15d-14(g) of this chapter, or an investment company 
registered under section 8 of the Investment Company Act of 1940 (15 
U.S.C. 80a-8), other than a unit investment trust as defined by section 
4(2) of the Investment Company Act of 1940 (15 U.S.C. 80a-4(2)), unless:
    (i) In accordance with Section 10A(i) of the Securities Exchange Act 
of 1934 (15 U.S.C. 78j-1(i)) either:
    (A) Before the accountant is engaged by the issuer or its 
subsidiaries, or the registered investment company or its subsidiaries, 
to render audit or non-audit services, the engagement is approved by the 
issuer's or registered investment company's audit committee; or
    (B) The engagement to render the service is entered into pursuant to 
pre-approval policies and procedures established by the audit committee 
of the issuer or registered investment company, provided the policies 
and procedures are detailed as to the particular service and the audit 
committee is informed of each service and such policies and procedures 
do not include delegation of the audit committees responsibilities under 
the Securities Exchange Act of 1934 to management; or
    (C) With respect to the provision of services other than audit, 
review or attest services the pre-approval requirement is waived if:
    (1) The aggregate amount of all such services provided constitutes 
no more than five percent of the total amount of revenues paid by the 
audit client to its accountant during the fiscal year in which the 
services are provided;
    (2) Such services were not recognized by the issuer or registered 
investment company at the time of the engagement to be non-audit 
services; and
    (3) Such services are promptly brought to the attention of the audit 
committee of the issuer or registered investment company and approved 
prior to the completion of the audit by the audit committee or by one or 
more members of the audit committee who are members of the board of 
directors to whom authority to grant such approvals has been delegated 
by the audit committee.
    (ii) A registered investment company's audit committee also must 
pre-approve its accountant's engagements for non-audit services with the 
registered investment company's investment adviser (not including a sub-
adviser whose role is primarily portfolio management and is sub-
contracted or overseen by another investment adviser) and any entity 
controlling, controlled by, or under common control with the investment 
adviser that provides ongoing services to the registered investment 
company in accordance

[[Page 248]]

with paragraph (c)(7)(i) of this section, if the engagement relates 
directly to the operations and financial reporting of the registered 
investment company, except that with respect to the waiver of the pre-
approval requirement under paragraph (c)(7)(i)(C) of this section, the 
aggregate amount of all services provided constitutes no more than five 
percent of the total amount of revenues paid to the registered 
investment company's accountant by the registered investment company, 
its investment adviser and any entity controlling, controlled by, or 
under common control with the investment adviser that provides ongoing 
services to the registered investment company during the fiscal year in 
which the services are provided that would have to be pre-approved by 
the registered investment company's audit committee pursuant to this 
section.
    (8) Compensation. An accountant is not independent of an audit 
client if, at any point during the audit and professional engagement 
period, any audit partner earns or receives compensation based on the 
audit partner procuring engagements with that audit client to provide 
any products or services other than audit, review or attest services. 
Any accounting firm with fewer than ten partners and fewer than five 
audit clients that are issuers (as defined in section 10A(f) of the 
Securities Exchange Act of 1934 (15 U.S.C. 78j-1(f))) shall be exempt 
from the requirement stated in the previous sentence.

                                * * * * *

    (e)(1) Transition and grandfathering. Provided the following 
relationships did not impair the accountant's independence under pre-
existing requirements of the Commission, the Independence Standards, 
Board, or the accounting profession in the United States, the existence 
of the relationship on May 6, 2003 will not be deemed to impair an 
accountant's independence:
    (i) Employment relationships that commenced at the issuer prior to 
May 6, 2003 as described in paragraph (c)(2)(iii)(B) of this section.
    (ii) Compensation earned or received, as described in paragraph 
(c)(8) of this section during the fiscal year of the accounting firm 
that includes the effective date of this section.
    (iii) Until May 6, 2004, the provision of services described in 
paragraph (c)(4) of this section provided those services are pursuant to 
contracts in existence on May 6, 2003.
    (iv) The provision of services by the accountant under contracts in 
existence on May 6, 2003 that have not been pre-approved by the audit 
committee as described in paragraph (c)(7) of this section.
    (v) Until the first day of the issuer's fiscal year beginning after 
May 6, 2003 by a ``lead'' partner and other audit partner (other than 
the ``concurring'' partner) providing services in excess of those 
permitted under paragraph (c)(6) of this section. An accountant's 
independence will not be deemed to be impaired until the first day of 
the issuer's fiscal year beginning after May 6, 2004 by a ``concurring'' 
partner providing services in excess of those permitted under paragraph 
(c)(6) of this section. For the purposes of calculating periods of 
service under paragraph (c)(6) of this section:
    (A) For the ``lead'' and ``concurring'' partner, the period of 
service includes time served as the ``lead'' or ``concurring'' partner 
prior to May 6, 2003; and
    (B) For audit partners other than the ``lead'' partner or 
``concurring'' partner, and for audit partners in foreign firms, the 
period of service does not include time served on the audit engagement 
team prior to the first day of issuer's fiscal year beginning on or 
after May 6, 2003.

                                * * * * *

    (f) * * *
    (1) Accountant, as used in paragraphs (b) through (e) of this 
section, means a registered public accounting firm, certified public 
accountant or public accountant performing services in connection with 
an engagement for which independence is required. References to the 
accountant include any accounting firm with which the certified public 
accountant or public accountant is affiliated.

                                * * * * *

    (3)(i) Accounting role means a role in which a person is in a 
position to or does exercise more than minimal influence over the 
contents of the accounting records or anyone who prepares them.
    (ii) Financial reporting oversight role means a role in which a 
person is in a position to or does exercise influence over the contents 
of the financial statements or anyone who prepares them, such as when 
the person is a member of the board of directors or similar management 
or governing body, chief executive officer, president, chief financial 
officer, chief operating officer, general counsel, chief accounting 
officer, controller, director of internal audit, director of financial 
reporting, treasurer, or any equivalent position.

                                * * * * *

    (7)(i) Audit engagement team means all partners, principals, 
shareholders and professional employees participating in an audit, 
review, or attestation engagement of an audit client, including audit 
partners and all persons who consult with others on the audit engagement 
team during the audit, review,

[[Page 249]]

or attestation engagement regarding technical or industry-specific 
issues, transactions, or events.
    (ii) Audit partner means a partner or persons in an equivalent 
position, other than a partner who consults with others on the audit 
engagement team during the audit, review, or attestation engagement 
regarding technical or industry-specific issues, transactions, or 
events, who is a member of the audit engagement team who has 
responsibility for decision-making on significant auditing, accounting, 
and reporting matters that affect the financial statements, or who 
maintains regular contact with management and the audit committee and 
includes the following:
    (A) The lead or coordinating audit partner having primary 
responsibility for the audit or review (the ``lead partner'');
    (B) The partner performing a second level of review to provide 
additional assurance that the financial statements subject to the audit 
or review are in conformity with generally accepted accounting 
principles and the audit or review and any associated report are in 
accordance with generally accepted auditing standards and rules 
promulgated by the Commission or the Public Company Accounting Oversight 
Board (the ``concurring or reviewing partner'');
    (C) Other audit engagement team partners who provide more than ten 
hours of audit, review, or attest services in connection with the annual 
or interim consolidated financial statements of the issuer or an 
investment company registered under section 8 of the Investment Company 
Act of 1940 (15 U.S.C. 80a-8); and
    (D) Other audit engagement team partners who serve as the ``lead 
partner'' in connection with any audit or review related to the annual 
or interim financial statements of a subsidiary of the issuer whose 
assets or revenues constitute 20% or more of the assets or revenues of 
the issuer's respective consolidated assets or revenues.

                                * * * * *

    (17) Audit committee means a committee (or equivalent body) as 
defined in section 3(a)(58) of the Securities Exchange Act of 1934 (15 
U.S.C. 78c(a)(58)).



Sec. 210.2-02  Accountants' reports.

    (a) Technical requirements. The accountant's report:
    (1) Shall be dated;
    (2) Shall be signed manually;
    (3) Shall indicate the city and State where issued; and
    (4) Shall identify without detailed enumeration the financial 
statements covered by the report.
    (b) Representations as to the audit. The accountant's report:
    (1) Shall state whether the audit was made in accordance with 
generally accepted auditing standards; and
    (2) Shall designate any auditing procedures deemed necessary by the 
accountant under the circumstances of the particular case, which have 
been omitted, and the reasons for their omission. Nothing in this rule 
shall be construed to imply authority for the omission of any procedure 
which independent accountants would ordinarily employ in the course of 
an audit made for the purpose of expressing the opinions required by 
paragraph (c) of this section.
    (c) Opinion to be expressed. The accountant's report shall state 
clearly:
    (1) The opinion of the accountant in respect of the financial 
statements covered by the report and the accounting principles and 
practices reflected therein; and
    (2) the opinion of the accountant as to the consistency of the 
application of the accounting principles, or as to any changes in such 
principles which have a material effect on the financial statements.
    (d) Exceptions. Any matters to which the accountant takes exception 
shall be clearly identified, the exception thereto specifically and 
clearly stated, and, to the extent practicable, the effect of each such 
exception on the related financial statements given. (See section 101 of 
the Codification of Financial Reporting Policies.)
    (e) Paragraph (e) of this section applies only to registrants that 
are providing financial statements in a filing for a period with respect 
to which Arthur Andersen LLP or a foreign affiliate of Arthur Andersen 
LLP (``Andersen'') issued an accountants' report. Notwithstanding any 
other Commission rule or regulation, a registrant that cannot obtain an 
accountants' report that meets the technical requirements of paragraph 
(a) of this section after reasonable efforts may include in the document 
a copy of the latest signed and dated accountants' report issued by 
Andersen for such period in satisfaction of that requirement, if 
prominent disclosure that the report is

[[Page 250]]

a copy of the previously issued Andersen accountants' report and that 
the report has not been reissued by Andersen is set forth on such copy.

[37 FR 14594, July 21, 1972, as amended at 41 FR 35479, Aug. 23, 1976; 
45 FR 63668, Sept. 25, 1980; 50 FR 25215, June 18, 1985; 67 FR 13533, 
Mar. 22, 2002]



Sec. 210.2-03  Examination of financial statements by foreign government auditors.

    Notwithstanding any requirements as to examination by independent 
accountants, the financial statements of any foreign governmental agency 
may be examined by the regular and customary auditing staff of the 
respective government if public financial statements of such 
governmental agency are customarily examined by such auditing staff.



Sec. 210.2-04  Examination of financial statements of persons other than the registrant.

    If a registrant is required to file financial statements of any 
other person, such statements need not be examined if examination of 
such statements would not be required if such person were itself a 
registrant.



Sec. 210.2-05  Examination of financial statements by more than one accountant.

    If, with respect to the examination of the financial statements, 
part of the examination is made by an independent accountant other than 
the principal accountant and the principal accountant elects to place 
reliance on the work of the other accountant and makes reference to that 
effect in his report, the separate report of the other accountant shall 
be filed. However, notwithstanding the provisions of this section, 
reports of other accountants which may otherwise be required in filings 
need not be presented in annual reports to security holders furnished 
pursuant to the proxy and information statement rules under the 
Securities Exchange Act of 1934 [Secs. 240.14a-3 and 240.14c-3].

[46 FR 40872, Aug. 13, 1981]



Sec. 210.2-06  Retention of audit and review records.

    (a) For a period of seven years after an accountant concludes an 
audit or review of an issuer's financial statements to which section 
10A(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78j-1(a)) 
applies, or of the financial statements of any investment company 
registered under section 8 of the Investment Company Act of 1940 (15 
U.S.C. 80a-8), the accountant shall retain records relevant to the audit 
or review, including workpapers and other documents that form the basis 
of the audit or review, and memoranda, correspondence, communications, 
other documents, and records (including electronic records), which:
    (1) Are created, sent or received in connection with the audit or 
review, and
    (2) Contain conclusions, opinions, analyses, or financial data 
related to the audit or review.
    (b) For the purposes of paragraph (a) of this section, workpapers 
means documentation of auditing or review procedures applied, evidence 
obtained, and conclusions reached by the accountant in the audit or 
review engagement, as required by standards established or adopted by 
the Commission or by the Public Company Accounting Oversight Board.
    (c) Memoranda, correspondence, communications, other documents, and 
records (including electronic records) described in paragraph (a) of 
this section shall be retained whether they support the auditor's final 
conclusions regarding the audit or review, or contain information or 
data, relating to a significant matter, that is inconsistent with the 
auditor's final conclusions regarding that matter or the audit or 
review. Significance of a matter shall be determined based on an 
objective analysis of the facts and circumstances. Such documents and 
records include, but are not limited to, those documenting a 
consultation on or resolution of differences in professional judgment.
    (d) For the purposes of paragraph (a) of this section, the term 
issuer means an issuer as defined in section 10A(f) of

[[Page 251]]

the Securities Exchange Act of 1934 (15 U.S.C. 78j-1(f)).

[68 FR 4872, Jan. 30, 2003]



Sec. 210.2-07  Communication with audit committees.

    (a) Each registered public accounting firm that performs for an 
audit client that is an issuer (as defined in section 10A(f) of the 
Securities Exchange Act of 1934 (15 U.S.C. 78j-1(f))), other than an 
issuer that is an Asset-Backed Issuer as defined in Sec. 240.13a-14(g) 
and Sec. 240.15d-14(g) of this chapter, or an investment company 
registered under section 8 of the Investment Company Act of 1940 (15 
U.S.C. 80a-8), other than a unit investment trust as defined by section 
4(2) of the Investment Company Act of 1940 (15 U.S.C. 80a-4(2)), any 
audit required under the securities laws shall report, prior to the 
filing of such audit report with the Commission (or in the case of a 
registered investment company, annually, and if the annual communication 
is not within 90 days prior to the filing, provide an update, in the 90 
day period prior to the filing, of any changes to the previously 
reported information), to the audit committee of the issuer or 
registered investment company:
    (1) All critical accounting policies and practices to be used;
    (2) All alternative treatments within Generally Accepted Accounting 
Principles for policies and practices related to material items that 
have been discussed with management of the issuer or registered 
investment company, including:
    (i) Ramifications of the use of such alternative disclosures and 
treatments; and
    (ii) The treatment preferred by the registered public accounting 
firm;
    (3) Other material written communications between the registered 
public accounting firm and the management of the issuer or registered 
investment company, such as any management letter or schedule of 
unadjusted differences;
    (4) If the audit client is an investment company, all non-audit 
services provided to any entity in an investment company complex, as 
defined in Sec. 210.2-01 (f)(14), that were not pre-approved by the 
registered investment company's audit committee pursuant to Sec. 210.2-
01 (c)(7).
    (b) [Reserved]

[68 FR 6048, Feb. 5, 2003]

    Effective Date Note: At 68 FR 6048, Feb. 5, 2003, Sec. 210.2-07 was 
added, effective May 6, 2003.

             General Instructions as to Financial Statements

    Source: Sections 210.3-01 to 210.3-16 appear at 45 FR 63687, Sept. 
25, 1980, unless otherwise noted.
    Note: These instructions specify the balance sheets and statements 
of income and cash flows to be included in disclosure documents prepared 
in accordance with Regulation S-X. Other portions of Regulation S-X 
govern the examination, form and content of such financial statements, 
including the basis of consolidation and the schedules to be filed. The 
financial statements described below shall be audited unless otherwise 
indicated.
    For filings under the Securities Act of 1933, attention is directed 
to Sec. 230.411(b) regarding incorporation by reference to financial 
statements and to section 10(a)(3) of the Act regarding information 
required in the prospectus.
    For filings under the Securities Exchange Act of 1934, attention is 
directed to Sec. 240.12b-23 regarding incorporation by reference and 
Sec. 240.12b-36 regarding use of financial statements filed under other 
acts.

[45 FR 63687, Sept. 25, 1980, as amended at 57 FR 45292, Oct. 1, 1992]



Sec. 210.3-01  Consolidated balance sheets.

    (a) There shall be filed, for the registrant and its subsidiaries 
consolidated, audited balance sheets as of the end of each of the two 
most recent fiscal years. If the registrant has been in existence for 
less than one fiscal year, there shall be filed an audited balance sheet 
as of a date within 135 days of the date of filing the registration 
statement.
    (b) If the filing, other than a filing on Form 10-K and Form 10-KSB 
or Form 10 and Form 10-SB, is made within 45 days after the end of the 
registrant's fiscal year and audited financial statements for the most 
recent fiscal year are not available, the balance sheets may be as of 
the end of the two preceding fiscal years and the filing shall include 
an additional balance sheet as of an interim date at least as current

[[Page 252]]

as the end of the registrant's third fiscal quarter of the most recently 
completed fiscal year.
    (c) The instruction in paragraph (b) is also applicable to filings, 
other than on Form 10-K and Form 10-KSB or Form 10 and Form 10-SB, made 
after 45 days but within the number of days of the end of the 
registrant's fiscal year specified in paragraph (i) of this section: 
Provided, That the following conditions are met:
    (1) The registrant files annual, quarterly and other reports 
pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934 
and all reports due have been filed;
    (2) For the most recent fiscal year for which audited financial 
statements are not yet available the registrant reasonably and in good 
faith expects to report income, after taxes but before extraordinary 
items and cumulative effect of a change in accounting principle; and
    (3) For at least one of the two fiscal years immediately preceding 
the most recent fiscal year the registrant reported income, after taxes 
by before extraordinary items and cumulative effect of a change in 
accounting principle.
    (d) For filings made after 45 days but within the number of days of 
the end of the registrant's fiscal year specified in paragraph (i) of 
this section where the conditions set forth in paragraph (c) of this 
section are not met, the filing must include the audited balance sheets 
required by paragraph (a) of this section.
    (e) For filings made after the number of days specified in paragraph 
(i) of this section, the filing shall also include a balance sheet as of 
an interim date within the following number of days of the date of 
filing:
    (1) For accelerated filers (as defined in Sec. 240.12b-2 of this 
chapter):
    (i) 135 days for fiscal years ending on or after December 15, 2002 
and before December 15, 2004;
    (ii) 130 days for fiscal years ending on or after December 15, 2004 
and before December 15, 2005; and
    (iii) 125 days for fiscal years ending on or after December 15, 
2005; and
    (2) 135 days for all other registrants.
    (f) Any interim balance sheet provided in accordance with the 
requirements of this section may be unaudited and need not be presented 
in greater detail than is required by Sec. 210.10-01. Notwithstanding 
the requirements of this section, the most recent interim balance sheet 
included in a filing shall be at least as current as the most recent 
balance sheet filed with the Commission on Form 10-Q and Form 10-QSB.
    (g) For filings by registered management investment companies, the 
requirements of Sec. 210.3-18 shall apply in lieu of the requirements of 
this section.
    (h) Any foreign private issuer, other than a registered management 
investment company or an employee plan, may file the financial 
statements required by Item 8.A of Form 20-F (Sec. 249.220 of this 
chapter) in lieu of the financial statements specified in this rule.
    (i)(1) For purposes of paragraph (c) and (d) of this section, the 
number of days shall be:
    (i) For accelerated filers (as defined in Sec. 240.12b-2 of this 
chapter):
    (A) 90 days for fiscal years ending on or after December 15, 2002 
and before December 15, 2003;
    (B) 75 days for fiscal years ending on or after December 15, 2003 
and before December 15, 2004; and
    (C) 60 days for fiscal years ending on or after December 15, 2004; 
and
    (ii) 90 days for all other registrants.
    (2) For purposes of paragraph (e) of this section, the number of 
days shall be:
    (i) For accelerated filers (as defined in Sec. 240.12b-2 of this 
chapter):
    (A) 134 days subsequent to the end of the registrant's most recent 
fiscal year for fiscal years ending on or after December 15, 2002 and 
before December 15, 2004;
    (B) 129 days subsequent to the end of the registrant's most recent 
fiscal year for fiscal years ending on or after December 15, 2004 and 
before December 15, 2005; and
    (C) 124 days subsequent to the end of the registrant's most recent 
fiscal year for fiscal years ending on or after December 15, 2005; and

[[Page 253]]

    (ii) 134 days subsequent to the end of the registrant's most recent 
fiscal year for all other registrants.

[45 FR 63687, Sept. 25, 1980, as amended at 46 FR 12491, Feb. 17, 1981; 
46 FR 36124, July 14, 1981; 50 FR 49531, Dec. 3, 1985; 56 FR 30053, July 
1, 1991; 64 FR 53908, Oct. 5, 1999; 67 FR 58503, Sept. 16, 2002]



Sec. 210.3-02  Consolidated statements of income and changes in financial positions.

    (a) There shall be filed, for the registrant and its subsidiaries 
consolidated and for its predecessors, audited statements of income and 
cash flows for each of the three fiscal years preceding the date of the 
most recent audited balance sheet being filed or such shorter period as 
the registrant (including predecessors) has been in existence.
    (b) In addition, for any interim period between the latest audited 
balance sheet and the date of the most recent interim balance sheet 
being filed, and for the corresponding period of the preceding fiscal 
year, statements of income and cash flows shall be provided. Such 
interim financial statements may be unaudited and need not be presented 
in greater detail than is required by Sec. 210.10-01.
    (c) For filings by registered management investment companies, the 
requirements of Sec. 210.3-18 shall apply in lieu of the requirements of 
this section.
    (d) Any foreign private issuer, other than a registered management 
investment company or an employee plan, may file the financial 
statements required by Item 8.A of Form 20-F (Sec. 249.220 of this 
chapter) in lieu of the financial statements specified in this rule.

[45 FR 63687, Sept. 25, 1980, as amended at 46 FR 12491, Feb. 17, 1981; 
46 FR 36125, July 14, 1981; 50 FR 49531, Dec. 3, 1985; 56 FR 30053, July 
1, 1991; 57 FR 45292, Oct. 1, 1992; 64 FR 53908, Oct. 5, 1999]



Sec. 210.3-03  Instructions to income statement requirements.

    (a) The statements required shall be prepared in compliance with the 
applicable requirements of this regulation.
    (b) If the registrant is engaged primarily (1) in the generation, 
transmission or distribution of electricity, the manufacture, mixing, 
transmission or distribution of gas, the supplying or distribution of 
water, or the furnishing of telephone or telegraph service; or (2) in 
holding securities of companies engaged in such businesses, it may at 
its option include statements of income and cash flows (which may be 
unaudited) for the twelve-month period ending on the date of the most 
recent balance sheet being filed, in lieu of the statements of income 
and cash flows for the interim periods specified.
    (c) If a period or periods reported on include operations of a 
business prior to the date of acquisition, or for other reasons differ 
from reports previously issued for any period, the statements shall be 
reconciled as to sales or revenues and net income in the statement or in 
a note thereto with the amounts previously reported: Provided, however, 
That such reconciliations need not be made (1) if they have been made in 
filings with the Commission in prior years or (2) the financial 
statements which are being retroactively adjusted have not previously 
been filed with the Commission or otherwise made public.
    (d) Any unaudited interim financial statements furnished shall 
reflect all adjustments which are, in the opinion of management, 
necessary to a fair statement of the results for the interim periods 
presented. A statement to that effect shall be included. Such 
adjustments shall include, for example, appropriate estimated provisions 
for bonus and profit sharing arrangements normally determined or settled 
at year-end. If all such adjustments are of a normal recurring nature, a 
statement to that effect shall be made; otherwise, there shall be 
furnished information describing in appropriate detail the nature and 
amount of any adjustments other than normal recurring adjustments 
entering into the determination of the results shown.
    (e) Disclosures regarding segments required by generally accepted 
accounting principles shall be provided for each year for which an 
audited statement of income is provided. To the extent that the segment 
information presented pursuant to this instruction complies with the 
provisions

[[Page 254]]

of Item 101 of Regulation S-K, the disclosures may be combined by cross 
referencing to or from the financial statements.

[45 FR 63687, Sept. 25, 1980. Redesignated at 47 FR 29836, July 9, 1982, 
and amended at 50 FR 25215, June 18, 1985; 50 FR 49532, Dec. 3, 1985; 57 
FR 45292, Oct. 1, 1992; 64 FR 1734, Jan 12, 1999]



Sec. 210.3-04  Changes in other stockholders' equity.

    An analysis of the changes in each caption of other stockholders' 
equity presented in the balance sheets shall be given in a note or 
separate statement. This analysis shall be presented in the form of a 
reconciliation of the beginning balance to the ending balance for each 
period for which an income statement is required to be filed with all 
significant reconciling items described by appropriate captions. State 
separately the adjustments to the balance at the beginning of the 
earliest period presented for items which were retroactively applied to 
periods prior to that period. With respect to any dividends, state the 
amount per share and in the aggregate for each class of shares.

(Secs. 7 and 19a of the Securities Act, 15 U.S.C. 77g, 77s(a), 
77aa(25)(26); secs. 12, 13, 14, 15(d), and 23(a) of the Securities 
Exchange Act of 1934, 15 U.S.C. 78l, 78m, 78n, 78o(d), 78w(a), secs. 
5(b), 10(a), 14, 20(a) of the Public Utility Holding Company Act, 15 
U.S.C. 79e(a), 79n, 79t(a); secs. 8, 20, 30, 31(c), 38(a) of the 
Investment Company Act of 1940, 15 U.S.C. 80a-8, 80a-20, 80a-29, 80a-
30(c), 80a-37(a))

[47 FR 29836, July 9, 1982]



Sec. 210.3-05  Financial statements of businesses acquired or to be acquired.

    (a) Financial statements required. (1) Financial statements prepared 
and audited in accordance with this regulation should be furnished for 
the periods specified in paragraph (b) below if any of the following 
conditions exist:
    (i) Consummation of a business combination accounted for as a 
purchase has occurred or is probable (for purposes of this rule, the 
term purchase encompasses the purchase of an interest in a business 
accounted for by the equity method); or
    (ii) Consummation of a business combination to be accounted for as a 
pooling of interests is probable.
    (2) For purposes of determining whether the provisions of this rule 
apply, the determination of whether a business has been acquired should 
be made in accordance with the guidance set forth in Sec. 210.11-01(d).
    (3) Acquisitions of a group of related businesses that are probable 
or that have occurred subsequent to the latest fiscal year-end for which 
audited financial statements of the registrant have been filed shall be 
treated under this section as if they are a single business combination. 
The required financial statements of related businesses may be presented 
on a combined basis for any periods they are under common control or 
management. For purposes of this section, businesses shall be deemed to 
be related if:
    (i) They are under common control or management;
    (ii) The acquisition of one business is conditional on the 
acquisition of each other business; or
    (iii) Each acquisition is conditioned on a single common event.
    (4) This rule shall not apply to a business which is totally held by 
the registrant prior to consummation of the transaction.
    (b) Periods to be presented. (1) If securities are being registered 
to be offered to the security holders of the business to be acquired, 
the financial statements specified in Secs. 210.3-01 and 210.3-02 shall 
be furnished for the business to be acquired, except as provided 
otherwise for filings on Form N-14, S-4 or F-4 (Secs. 239.23, 239.25 or 
239.34 of this chapter). The financial statements covering fiscal years 
shall be audited except as provided in Item 14 of Schedule 14A 
(Sec. 240.14a-101 of this chapter) with respect to certain proxy 
statements or in registration statements filed on Forms N-14, S-4 or F-4 
(Secs. 239.23, 239.25 or 239.34 of this chapter).
    (2) In all cases not specified in paragraph (b)(1) of this section, 
financial statements of the business acquired or to be acquired shall be 
filed for the periods specified in this paragraph (b)(2) or such shorter 
period as the business has been in existence. The periods for which such 
financial statements are to

[[Page 255]]

be filed shall be determined using the conditions specified in the 
definition of significant subsidiary in Sec. 210.1-02(w) as follows:
    (i) If none of the conditions exceeds 20 percent, financial 
statements are not required. However, if the aggregate impact of the 
individually insignificant businesses acquired since the date of the 
most recent audited balance sheet filed for the registrant exceeds 50%, 
financial statements covering at least the substantial majority of the 
businesses acquired shall be furnished. Such financial statements shall 
be for at least the most recent fiscal year and any interim periods 
specified in Secs. 210.3-01 and 210.3-02.
    (ii) If any of the conditions exceeds 20 percent, but none exceed 40 
percent, financial statements shall be furnished for at least the most 
recent fiscal year and any interim periods specified in Secs. 210.3-01 
and 210.3-02.
    (iii) If any of the conditions exceeds 40 percent, but none exceed 
50 percent, financial statements shall be furnished for at least the two 
most recent fiscal years and any interim periods specified in 
Secs. 210.3-01 and 210.3-02.
    (iv) If any of the conditions exceeds 50 percent, the full financial 
statements specified in Secs. 210.3-01 and 210.3-02 shall be furnished. 
However, financial statements for the earliest of the three fiscal years 
required may be omitted if net revenues reported by the acquired 
business in its most recent fiscal year are less than $25 million.
    (3) The determination shall be made by comparing the most recent 
annual financial statements of each such business, or group of related 
businesses on a combined basis, to the registrant's most recent annual 
consolidated financial statements filed at or prior to the date of 
acquisition. However, if the registrant made a significant acquisition 
subsequent to the latest fiscal year-end and filed a report on Form 8-K 
(Sec. 249.308 of this chapter) which included audited financial 
statements of such acquired business for the periods required by this 
section and the pro forma financial information required by Sec. 210.11, 
such determination may be made by using pro forma amounts for the latest 
fiscal year in the report on Form 8-K (Sec. 249.308 of this chapter) 
rather than by using the historical amounts of the registrant. The tests 
may not be made by ``annualizing'' data.
    (4) Financial statements required for the periods specified in 
paragraph (b)(2) of this section may be omitted to the extent specified 
as follows:
    (i) Registration statements not subject to the provisions of 
Sec. 230.419 of this chapter (Regulation C) and proxy statements need 
not include separate financial statements of the acquired or to be 
acquired business if it does not exceed any of the conditions of 
significance in the definition of significant subsidiary in Sec. 210.1-
02 at the 50 percent level, and either:
    (A) The consummation of the acquisition has not yet occurred; or
    (B) The date of the final prospectus or prospectus supplement 
relating to an offering as filed with the Commission pursuant to 
Sec. 230.424(b) of this chapter, or mailing date in the case of a proxy 
statement, is no more than 74 days after consummation of the business 
combination, and the financial statements have not previously been filed 
by the registrant.
    (ii) An issuer, other than a foreign private issuer required to file 
reports on Form 6-K, that omits from its initial registration statement 
financial statements of a recently consummated business combination 
pursuant to paragraph (b)(4)(i) of this section shall furnish those 
financial statements and any pro forma information specified by Article 
11 of this chapter under cover of Form 8-K (Sec. 249.308 of this 
chapter) no later than 75 days after consummation of the acquisition.
    (iii) Separate financial statements of the acquired business need 
not be presented once the operating results of the acquired business 
have been reflected in the audited consolidated financial statements of 
the registrant for a complete fiscal year unless such financial 
statements have not been previously filed or unless the acquired 
business is of such significance to the registrant that omission of such 
financial statements would materially impair an investor's ability to 
understand the historical financial results of the registrant. For 
example, if, at the date of acquisition, the acquired business met at 
least one of the conditions in the

[[Page 256]]

definition of significant subsidiary in Sec. 210.1-02 at the 80 percent 
level, the income statements of the acquired business should normally 
continue to be furnished for such periods prior to the purchase as may 
be necessary when added to the time for which audited income statements 
after the purchase are filed to cover the equivalent of the period 
specified in Sec. 210.3-02.
    (iv) A separate audited balance sheet of the acquired business is 
not required when the registrant's most recent audited balance sheet 
required by Sec. 210.3-01 is for a date after the date the acquisition 
was consummated.
    (c) Financial statements of foreign business. If the business 
acquired or to be acquired is a foreign business, financial statements 
of the business meeting the requirements of Item 17 of Form 20-F 
(Sec. 249.220f of this chapter) will satisfy this section.

(Secs. 7 and 19a of the Securities Act, 15 U.S.C. 77g, 77s(a), 
77aa(25)(26); secs. 12, 13, 14, 15(d), and 23(a) of the Securities 
Exchange Act of 1934, 15 U.S.C. 78l, 78m, 78n, 78o(d), 78w(a), secs. 
5(b), 10(a), 14, 20(a) of the Public Utility Holding Company Act, 15 
U.S.C. 79e(a), 79n, 79t(a); secs. 8, 20, 30, 31(c), 38(a) of the 
Investment Company Act of 1940, 15 U.S.C. 80a-8, 80a-20, 80a-29, 80a-
30(c), 80a-37(a))

[47 FR 29836, July 9, 1982, as amended at 50 FR 49532, Dec. 3, 1985; 51 
FR 42056, Nov. 20, 1986; 59 FR 65636, Dec. 20, 1994; 61 FR 54514, Oct. 
18, 1996]



Sec. 210.3-06  Financial statements covering a period of nine to twelve months.

    Except with respect to registered investment companies, the filing 
of financial statements covering a period of 9 to 12 months shall be 
deemed to satisfy a requirement for filing financial statements for a 
period of 1 year where:
    (a) The issuer has changed its fiscal year;
    (b) The issuer has made a significant business acquisition for which 
financial statements are required under Sec. 210.3-05 of this chapter 
and the financial statements covering the interim period pertain to the 
business being acquired; or
    (c) The Commission so permits pursuant to Sec. 210.3-13 of this 
chapter.
    Where there is a requirement for filing financial statements for a 
time period exceeding one year but not exceeding three consecutive years 
(with not more than 12 months included in any period reported upon), the 
filing of financial statements covering a period of nine to 12 months 
shall satisfy a filing requirement of financial statements for one year 
of that time period only if the conditions described in either paragraph 
(a), (b), or (c) of this section exist and financial statements are 
filed that cover the full fiscal year or years for all other years in 
the time period.

[54 FR 10315, Mar. 13, 1989]



Secs. 210.3-07--210.3-08  [Reserved]



Sec. 210.3-09  Separate financial statements of subsidiaries not consolidated and 50 percent or less owned persons.

    (a) If any of the conditions set forth in Sec. 210.1-02(w), 
substituting 20 percent for 10 percent in the tests used therein to 
determine a significant subsidiary, are met for a majority-owned 
subsidiary not consolidated by the registrant or by a subsidiary of the 
registrant, separate financial statements of such subsidiary shall be 
filed. Similarly, if either the first or third condition set forth in 
Sec. 210.1-02(w), substituting 20 percent for 10 percent, is met by a 50 
percent or less owned person accounted for by the equity method either 
by the registrant or a subsidiary of the registrant, separate financial 
statements of such 50 percent or less owned person shall be filed.
    (b) Insofar as practicable, the separate financial statements 
required by this section shall be as of the same dates and for the same 
periods as the audited consolidated financial statements required by 
Secs. 210.3-01 and 3-02. However, these separate financial statements 
are required to be audited only for those fiscal years in which either 
the first or third condition set forth in Sec. 210.1-02(w), substituting 
20 percent for 10 percent, is met. For purposes of a filing on Form 10-K 
(Sec. 249.310 of this chapter):
    (1) If the registrant is an accelerated filer (as defined in 
Sec. 240.12b-2 of this chapter) but the 50 percent or less owned person 
is not an accelerated filer, the required financial statements may be 
filed as an amendment to the

[[Page 257]]

report within 90 days, or within six months if the 50 percent or less 
owned person is a foreign business, after the end of the registrant's 
fiscal year.
    (2) If the fiscal year of any 50 percent or less owned person ends 
within the registrant's number of filing days before the date of the 
filing, or if the fiscal year ends after the date of the filing, the 
required financial statements may be filed as an amendment to the report 
within the subsidiary's number of filing days, or within six months if 
the 50 percent or less owned person is a foreign business, after the end 
of such subsidiary's or person's fiscal year.
    (3) The term registrant's number of filing days means:
    (i) If the registrant is an accelerated filer:
    (A) 90 days for fiscal years ending on or after December 15, 2002 
and before December 15, 2003;
    (B) 75 days for fiscal years ending on or after December 15, 2003 
and before December 15, 2004; and
    (C) 60 days for fiscal years ending on or after December 15, 2004; 
and
    (ii) If the registrant is not an accelerated filer, 90 days.
    (4) The term subsidiary's number of filing days means:
    (i) If the 50 percent or less owned person is an accelerated filer:
    (A) 90 days for fiscal years ending on or after December 15, 2002 
and before December 15, 2003;
    (B) 75 days for fiscal years ending on or after December 15, 2003 
and before December 15, 2004; and
    (C) 60 days for fiscal years ending on or after December 15, 2004; 
and
    (ii) If the 50 percent or less owned person is not an accelerated 
filer, 90 days.
    (c) Notwithstanding the requirements for separate financial 
statements in paragraph (a) of this section, where financial statements 
of two or more majority-owned subsidiaries not consolidated are 
required, combined or consolidated statements of such subsidiaries may 
be filed subject to principles of inclusion and exclusion which clearly 
exhibit the financial position, cash flows and results of operations of 
the combined or consolidated group. Similarly, where financial 
statements of two or more 50 percent or less owned persons are required, 
combined or consolidated statements of such persons may be filed subject 
to the same principles of inclusion or exclusion referred to above.
    (d) If the 50 percent or less owned person is a foreign business, 
financial statements of the business meeting the requirements of Item 17 
of Form 20-F (Sec. 249.220f of this chapter) will satisfy this section.

[46 FR 56179, Nov. 16, 1981, as amended at 47 FR 29837, July 9, 1982; 57 
FR 45292, Oct. 1, 1992; 59 FR 65636, Dec. 20, 1994; 67 FR 58504, Sept. 
16, 2002]



Sec. 210.3-10  Financial statements of guarantors and issuers of guaranteed securities registered or being registered.

    (a)(1) General rule. Every issuer of a registered security that is 
guaranteed and every guarantor of a registered security must file the 
financial statements required for a registrant by Regulation S-X.
    (2) Operation of this rule. Paragraphs (b), (c), (d), (e) and (f) of 
this section are exceptions to the general rule of paragraph (a)(1) of 
this section. Only one of these paragraphs can apply to a single issuer 
or guarantor. Paragraph (g) of this section is a special rule for 
recently acquired issuers or guarantors that overrides each of these 
exceptions for a specific issuer or guarantor. Paragraph (h) of this 
section defines the following terms used in this section: 100% owned, 
full and unconditional, annual report, quarterly report, no independent 
assets or operations, minor, finance subsidiary and operating 
subsidiary. Paragraph (i) of this section states the requirements for 
preparing the condensed consolidating financial information required by 
paragraphs (c), (d), (e) and (f) of this section.

    Note to paragraph (a)(2).
    Where paragraphs (b), (c), (d), (e) and (f) of this section specify 
the filing of financial statements of the parent company, the financial 
statements of an entity that is not an issuer or guarantor of the 
registered security cannot be substituted for those of the parent 
company.


[[Page 258]]


    (3) Foreign private issuers. Where any provision of this section 
requires compliance with Secs. 210.3-01 and 3-02, a foreign private 
issuer may comply by providing financial statements for the periods 
specified by Item 8.A of Form 20-F (Sec. 249.220f of this chapter).
    (b) Finance subsidiary issuer of securities guaranteed by its parent 
company. When a finance subsidiary issues securities and its parent 
company guarantees those securities, the registration statement, parent 
company annual report, or parent company quarterly report need not 
include financial statements of the issuer if:
    (1) The issuer is 100% owned by the parent company guarantor;
    (2) The guarantee is full and unconditional;
    (3) No other subsidiary of the parent company guarantees the 
securities; and
    (4) The parent company's financial statements are filed for the 
periods specified by Secs. 210.3-01 and 210.3-02 and include a footnote 
stating that the issuer is a 100%-owned finance subsidiary of the parent 
company and the parent company has fully and unconditionally guaranteed 
the securities. The footnote also must include the narrative disclosures 
specified in paragraphs (i)(9) and (i)(10) of this section.

    Note to paragraph (b).
    Paragraph (b) is available if a subsidiary issuer satisfies the 
requirements of this paragraph but for the fact that, instead of the 
parent company guaranteeing the security, the subsidiary issuer co-
issued the security, jointly and severally, with the parent company. In 
this situation, the narrative information required by paragraph (b)(4) 
must be modified accordingly.

    (c) Operating subsidiary issuer of securities guaranteed by its 
parent company. When an operating subsidiary issues securities and its 
parent company guarantees those securities, the registration statement, 
parent company annual report, or parent company quarterly report need 
not include financial statements of the issuer if:
    (1) The issuer is 100% owned by the parent company guarantor;
    (2) The guarantee is full and unconditional;
    (3) No other subsidiary of the parent company guarantees the 
securities; and
    (4) The parent company's financial statements are filed for the 
periods specified by Secs. 210.3-01 and 210.3-02 and include, in a 
footnote, condensed consolidating financial information for the same 
periods with a separate column for:
    (i) The parent company;
    (ii) The subsidiary issuer;
    (iii) Any other subsidiaries of the parent company on a combined 
basis;
    (iv) Consolidating adjustments; and
    (v) The total consolidated amounts.

    Notes to paragraph (c).
      
    1. Instead of the condensed consolidating financial information 
required by paragraph (c)(4), the parent company's financial statements 
may include a footnote stating, if true, that the parent company has no 
independent assets or operations, the guarantee is full and 
unconditional, and any subsidiaries of the parent company other than the 
subsidiary issuer are minor. The footnote also must include the 
narrative disclosures specified in paragraphs (i)(9) and (i)(10) of this 
section.
    2. If the alternative disclosure permitted by Note 1 to this 
paragraph is not applicable because the parent company has independent 
assets or operations, the condensed consolidating financial information 
described in paragraph (c)(4) may omit the column for ``any other 
subsidiaries of the parent company on a combined basis'' if those other 
subsidiaries are minor.
    3. Paragraph (c) is available if a subsidiary issuer satisfies the 
requirements of this paragraph but for the fact that, instead of the 
parent company guaranteeing the security, the subsidiary issuer co-
issued the security, jointly and severally, with the parent company. In 
this situation, the narrative information required by paragraph (i)(8) 
of this section must be modified accordingly.

    (d) Subsidiary issuer of securities guaranteed by its parent company 
and one or more other subsidiaries of that parent company. When a 
subsidiary issues securities and both its parent company and one or more 
other subsidiaries of that parent company guarantee those securities, 
the registration statement, parent company annual report, or parent 
company quarterly report need not include financial statements of the 
issuer or any subsidiary guarantor if:
    (1) The issuer and all subsidiary guarantors are 100% owned by the 
parent company guarantor;
    (2) The guarantees are full and unconditional;

[[Page 259]]

    (3) The guarantees are joint and several; and
    (4) The parent company's financial statements are filed for the 
periods specified by Secs. 210.3-01 and 210.3-02 and include, in a 
footnote, condensed consolidating financial information for the same 
periods with a separate column for:
    (i) The parent company;
    (ii) The subsidiary issuer;
    (iii) The guarantor subsidiaries of the parent company on a combined 
basis;
    (iv) Any other subsidiaries of the parent company on a combined 
basis;
    (v) Consolidating adjustments; and
    (vi) The total consolidated amounts.

    Notes to paragraph (d).
      
    1. Paragraph (d) applies in the same manner whether the issuer is a 
finance subsidiary or an operating subsidiary.
    2. The condensed consolidating financial information described in 
paragraph (d)(4) may omit the column for ``any other subsidiaries of the 
parent company on a combined basis'' if those other subsidiaries are 
minor.
    3. Paragraph (d) is available if a subsidiary issuer satisfies the 
requirements of this paragraph but for the fact that, instead of the 
parent company guaranteeing the security, the subsidiary issuer co-
issued the security, jointly and severally, with the parent company. In 
this situation, the narrative information required by paragraph (i)(8) 
of this section must be modified accordingly.
    4. If all of the requirements in paragraph (d) are satisfied except 
that the guarantee of a subsidiary is not joint and several with, as 
applicable, the parent company's guarantee or the guarantees of the 
parent company and the other subsidiaries, then each subsidiary 
guarantor whose guarantee is not joint and several need not include 
separate financial statements, but the condensed consolidating financial 
information should include a separate column for each guarantor whose 
guarantee is not joint and several.
    5. Instead of the condensed consolidating financial information 
required by paragraph (d)(4), the parent company's financial statements 
may include a footnote stating, if true, that the parent company has no 
independent assets or operations, the subsidiary issuer is a 100% owned 
finance subsidiary of the parent company, the parent company has 
guaranteed the securities, all of the parent company's subsidiaries 
other than the subsidiary issuer have guaranteed the securities, all of 
the guarantees are full and unconditional, and all of the guarantees are 
joint and several. The footnote also must include the narrative 
disclosures specified in paragraphs (i)(9) and (i)(10) of this section.

    (e) Single subsidiary guarantor of securities issued by the parent 
company of that subsidiary. When a parent company issues securities and 
one of its subsidiaries guarantees those securities, the registration 
statement, parent company annual report, or parent company quarterly 
report need not include financial statements of the subsidiary guarantor 
if:
    (1) The subsidiary guarantor is 100% owned by the parent company 
issuer;
    (2) The guarantee is full and unconditional;
    (3) No other subsidiary of that parent guarantees the securities; 
and
    (4) The parent company's financial statements are filed for the 
periods specified by Secs. 210.3-01 and 210.3-02 and include, in a 
footnote, condensed consolidating financial information for the same 
periods with a separate column for:
    (i) The parent company;
    (ii) The subsidiary guarantor;
    (iii) Any other subsidiaries of the parent company on a combined 
basis;
    (iv) Consolidating adjustments; and
    (v) The total consolidated amounts.

    Notes to paragraph (e).
      
    1. Paragraph (e) applies in the same manner whether the guarantor is 
a finance subsidiary or an operating subsidiary.
    2. Instead of the condensed consolidating financial information 
required by paragraph (e)(4), the parent company's financial statements 
may include a footnote stating, if true, that the parent company has no 
independent assets or operations, the guarantee is full and 
unconditional, and any subsidiaries of the parent company other than the 
subsidiary guarantor are minor. The footnote also must include the 
narrative disclosures specified in paragraphs (i)(9) and (i)(10) of this 
section.
    3. If the alternative disclosure permitted by Note 2 to this 
paragraph is not applicable because the parent company has independent 
assets or operations, the condensed consolidating financial information 
described in paragraph (e)(4) may omit the column for ``any other 
subsidiaries of the parent company on a combined basis'' if those other 
subsidiaries are minor.
    4. If, instead of guaranteeing the subject security, a subsidiary 
co-issues the security jointly and severally with its parent company, 
this paragraph (e) does not apply. Instead, the appropriate financial 
information requirement would depend on whether the subsidiary is a 
finance subsidiary or an operating subsidiary. If the subsidiary is a 
finance subsidiary, paragraph (b) applies. If

[[Page 260]]

the subsidiary is an operating company, paragraph (c) applies.

    (f) Multiple subsidiary guarantors of securities issued by the 
parent company of those subsidiaries. When a parent company issues 
securities and more than one of its subsidiaries guarantee those 
securities, the registration statement, parent company annual report, or 
parent company quarterly report need not include financial statements of 
the subsidiary guarantors if:
    (1) Each of the subsidiary guarantors is 100% owned by the parent 
company issuer;
    (2) The guarantees are full and unconditional;
    (3) The guarantees are joint and several; and
    (4) The parent company's financial statements are filed for the 
periods specified by Secs. 210.3-01 and 210.3-02 and include, in a 
footnote, condensed consolidating financial information for the same 
periods with a separate column for:
    (i) The parent company;
    (ii) The subsidiary guarantors on a combined basis;
    (iii) Any other subsidiaries of the parent company on a combined 
basis;
    (iv) Consolidating adjustments; and
    (v) The total consolidated amounts.

    Notes to paragraph (f).
      
    1. Instead of the condensed consolidating financial information 
required by paragraph (f)(4), the parent company's financial statements 
may include a footnote stating, if true, that the parent company has no 
independent assets or operations, the guarantees are full and 
unconditional and joint and several, and any subsidiaries of the parent 
company other than the subsidiary guarantors are minor. The footnote 
also must include the narrative disclosures specified in paragraphs 
(i)(9) and (i)(10) of this section.
    2. If the alternative disclosure permitted by Note 1 to this 
paragraph is not applicable because the parent company has independent 
assets or operations, the condensed consolidating financial information 
described in paragraph (f)(4) may omit the column for ``any other 
subsidiaries of the parent company on a combined basis'' if those other 
subsidiaries are minor.
    3. If any of the subsidiary guarantees is not joint and several with 
the guarantees of the other subsidiaries, then each subsidiary guarantor 
whose guarantee is not joint and several need not include separate 
financial statements, but the condensed consolidating financial 
information must include a separate column for each subsidiary guarantor 
whose guarantee is not joint and several.

    (g) Recently acquired subsidiary issuers or subsidiary guarantors.
    (1) The Securities Act registration statement of the parent company 
must include the financial statements specified in paragraph (g)(2) of 
this section for any subsidiary that otherwise meets the conditions in 
paragraph (c), (d), (e) or (f) of this section for omission of separate 
financial statements if:
    (i) The subsidiary has not been included in the audited consolidated 
results of the parent company for at least nine months of the most 
recent fiscal year; and
    (ii) The net book value or purchase price, whichever is greater, of 
the subsidiary is 20% or more of the principal amount of the securities 
being registered.
    (2) Financial statements required.
    (i) Audited financial statements for a subsidiary described in 
paragraph (g)(1) of this section must be filed for the subsidiary's most 
recent fiscal year preceding the acquisition. In addition, unaudited 
financial statements must be filed for any interim periods specified in 
Secs. 210.3-01 and 210.3-02.
    (ii) The financial statements must conform to the requirements of 
Regulation S-X (Secs. 210.1-01 through 12-29), except that supporting 
schedules need not be filed. If the subsidiary is a foreign business, 
financial statements of the subsidiary meeting the requirements of Item 
17 of Form 20-F (Sec. 249.220f) will satisfy this item.
    (3) Instructions to paragraph (g).
    (i) The significance test of paragraph (g)(1)(ii) of this section 
should be computed using net book value of the subsidiary as of the most 
recent fiscal year end preceding the acquisition.
    (ii) Information required by this paragraph (g) is not required to 
be included in an annual report or quarterly report.
    (iii) Acquisitions of a group of subsidiary issuers or subsidiary 
guarantors that are related prior to their acquisition shall be 
aggregated for purposes of applying the 20% test in paragraph (g)(1)(ii) 
of this section. Subsidiaries shall be deemed to be related prior to 
their acquisition if:

[[Page 261]]

    (A) They are under common control or management;
    (B) The acquisition of one subsidiary is conditioned on the 
acquisition of each subsidiary; or
    (C) The acquisition of each subsidiary is conditioned on a single 
common event.
    (h) Definitions. For the purposes of this section:
    (1) A subsidiary is ``100% owned'' if all of its outstanding voting 
shares are owned, either directly or indirectly, by its parent company. 
A subsidiary not in corporate form is 100% owned if the sum of all 
interests are owned, either directly or indirectly, by its parent 
company other than:
    (i) Securities that are guaranteed by its parent and, if applicable, 
other 100%-owned subsidiaries of its parent; and
    (ii) Securities that guarantee securities issued by its parent and, 
if applicable, other 100%-owned subsidiaries of its parent.
    (2) A guarantee is ``full and unconditional,'' if, when an issuer of 
a guaranteed security has failed to make a scheduled payment, the 
guarantor is obligated to make the scheduled payment immediately and, if 
it doesn't, any holder of the guaranteed security may immediately bring 
suit directly against the guarantor for payment of all amounts due and 
payable.
    (3) Annual report refers to an annual report on Form 10-K, Form 10-
KSB, or Form 20-F (Secs. 249.310, 249.310b, or 249.220f of this 
chapter).
    (4) Quarterly report refers to a quarterly report on Form 10-Q or 
Form 10-QSB (Secs. 249.308a or 249.308b of this chapter).
    (5) A parent company has no independent assets or operations if each 
of its total assets, revenues, income from continuing operations before 
income taxes, and cash flows from operating activities (excluding 
amounts related to its investment in its consolidated subsidiaries) is 
less than 3% of the corresponding consolidated amount.
    (6) A subsidiary is minor if each of its total assets, stockholders' 
equity, revenues, income from continuing operations before income taxes, 
and cash flows from operating activities is less than 3% of the parent 
company's corresponding consolidated amount.

    Note to paragraph (h)(6).
    When considering a group of subsidiaries, the definition applies to 
each subsidiary in that group individually and to all subsidiaries in 
that group in the aggregate.

    (7) A subsidiary is a finance subsidiary if it has no assets, 
operations, revenues or cash flows other than those related to the 
issuance, administration and repayment of the security being registered 
and any other securities guaranteed by its parent company.
    (8) A subsidiary is an operating subsidiary if it is not a finance 
subsidiary.
    (i) Instructions for preparation of the condensed consolidating 
financial information required by paragraphs (c), (d), (e) and (f) of 
this section.
    (1) Follow the general guidance in Sec. 210.10-01 for the form and 
content for condensed financial statements and present the financial 
information in sufficient detail to allow investors to determine the 
assets, results of operations and cash flows of each of the 
consolidating groups;
    (2) The financial information should be audited for the same periods 
that the parent company financial statements are required to be audited;
    (3) The parent company column should present investments in all 
subsidiaries under the equity method;
    (4) The parent company's basis shall be ``pushed down'' to the 
applicable subsidiary columns to the extent that push down would be 
required or permitted in separate financial statements of the 
subsidiary;
    (5) All subsidiary issuer or subsidiary guarantor columns should 
present the following investments in subsidiaries under the equity 
method:
    (i) Non-guarantor subsidiaries;
    (ii) Subsidiary issuers or subsidiary guarantors that are not 100% 
owned or whose guarantee is not full and unconditional;
    (iii) Subsidiary guarantors whose guarantee is not joint and several 
with the guarantees of the other subsidiaries; and
    (iv) Subsidiary guarantors with differences in domestic or foreign 
laws that affect the enforceability of the guarantees;

[[Page 262]]

    (6) Provide a separate column for each subsidiary issuer or 
subsidiary guarantor that is not 100% owned, whose guarantee is not full 
and unconditional, or whose guarantee is not joint and several with the 
guarantees of other subsidiaries. Inclusion of a separate column does 
not relieve that issuer or guarantor from the requirement to file 
separate financial statements under paragraph (a) of this section. 
However, paragraphs (b) through (f) of this section will provide this 
relief if the particular paragraph is satisfied except that the 
guarantee is not joint and several;
    (7) Provide separate columns for each guarantor by legal 
jurisdiction if differences in domestic or foreign laws affect the 
enforceability of the guarantees;
    (8) Include the following disclosure, if true:
    (i) Each subsidiary issuer or subsidiary guarantor is 100% owned by 
the parent company;
    (ii) All guarantees are full and unconditional; and
    (iii) Where there is more than one guarantor, all guarantees are 
joint and several;
    (9) Disclose any significant restrictions on the ability of the 
parent company or any guarantor to obtain funds from its subsidiaries by 
dividend or loan;
    (10) Provide the disclosures prescribed by Sec. 210.4-08(e)(3) with 
respect to the subsidiary issuers and subsidiary guarantors;
    (11) The disclosure:
    (i) May not omit any financial and narrative information about each 
guarantor if the information would be material for investors to evaluate 
the sufficiency of the guarantee;
    (ii) Shall include sufficient information so as to make the 
financial information presented not misleading; and
    (iii) Need not repeat information that would substantially duplicate 
disclosure elsewhere in the parent company's consolidated financial 
statements; and
    (12) Where the parent company's consolidated financial statements 
are prepared on a comprehensive basis other than U.S. Generally Accepted 
Accounting Principles, reconcile the information in each column to U.S. 
Generally Accepted Accounting Principles to the extent necessary to 
allow investors to evaluate the sufficiency of the guarantees. The 
reconciliation may be limited to the information specified by Item 17 of 
Form 20-F (Sec. 249.220f of this chapter). The reconciling information 
need not duplicate information included elsewhere in the reconciliation 
of the consolidated financial statements.

[65 FR 51707, Aug. 24, 2000]



Sec. 210.3-11  Financial statements of an inactive registrant.

    If a registrant is an inactive entity as defined below, the 
financial statements required by this regulation for purposes of reports 
pursuant to the Securities Exchange Act of 1934 may be unaudited. An 
inactive entity is one meeting all of the following conditions:
    (a) Gross receipts from all sources for the fiscal year are not in 
excess of $100,000;
    (b) The registrant has not purchased or sold any of its own stock, 
granted options therefor, or levied assessments upon outstanding stock,
    (c) Expenditures for all purposes for the fiscal year are not in 
excess of $100,000;
    (d) No material change in the business has occurred during the 
fiscal year, including any bankruptcy, reorganization, readjustment or 
succession or any material acquisition or disposition of plants, mines, 
mining equipment, mine rights or leases; and
    (e) No exchange upon which the shares are listed, or governmental 
authority having jurisdiction, requires the furnishing to it or the 
publication of audited financial statements.



Sec. 210.3-12  Age of financial statements at effective date of registration statement or at mailing date of proxy statement.

    (a) If the financial statements in a filing are as of a date the 
number of days specified in paragraph (g) of this section or more prior 
to the date the filing is expected to become effective or proposed 
mailing date in the case of a proxy statement, the financial statements 
shall be updated, except as specified in the following paragraphs, with 
a balance sheet as of an interim date within the number of days 
specified in

[[Page 263]]

paragraph (g) of this section and with statements of income and cash 
flows for the interim period between the end of the most recent fiscal 
year and the date of the interim balance sheet provided and for the 
corresponding period of the preceding fiscal year. Such interim 
financial statements may be unaudited and need not be presented in 
greater detail than is required by Sec. 210.10-01. Notwithstanding the 
above requirements, the most recent interim financial statements shall 
be at least as current as the most recent financial statements filed 
with the Commission on Form 10-Q and Form 10-QSB.
    (b) Where the anticipated effective date of a filing, or in the case 
of a proxy statement the proposed mailing date, falls within the number 
of days subsequent to the end of the fiscal year specified in paragraph 
(g) of this section, the filing need not include financial statements 
more current than as of the end of the third fiscal quarter of the most 
recently completed fiscal year unless the audited financial statements 
for such fiscal year are available or unless the anticipated effective 
date or proposed mailing date falls after 45 days subsequent to the end 
of the fiscal year and the registrant does not meet the conditions 
prescribed under paragraph (c) of Sec. 210.3-01. If the anticipated 
effective date or proposed mailing date falls after 45 days subsequent 
to the end of the fiscal year and the registrant does not meet the 
conditions prescribed under paragraph (c) of Sec. 210.3-01, the filing 
must include audited financial statements for the most recently 
completed fiscal year.
    (c) Where a filing is made near the end of a fiscal year and audited 
financial statements for that fiscal year are not included in the 
filing, the filing shall be updated with such audited financial 
statements if they become available prior to the anticipated effective 
date, or proposed mailing date in the case of a proxy statement.
    (d) The age of the registrant's most recent audited financial 
statements included in a registration statement filed under the 
Securities Act of 1933 or filed on Form 10 and Form 10-SB (17 CFR 
249.210) under the Securities Exchange Act of 1934 shall not be more 
than one year and 45 days old at the date the registration statement 
becomes effective if the registration statement relates to the security 
of an issuer that was not subject, immediately prior to the time of 
filing the registration statement, to the reporting requirements of 
section 13 or 15(d) of the Securities Exchange Act of 1934.
    (e) For filings by registered management investment companies, the 
requirements of Sec. 210.3-18 shall apply in lieu of the requirements of 
this section.
    (f) Any foreign private issuer may file financial statements whose 
age is specified in Item 8.A of Form 20-F (Sec. 249.220f of this 
chapter). Financial statements of a foreign business which are furnished 
pursuant to Secs. 210.3-05 or 210.3-09 because it is an acquired 
business or a 50 percent or less owned person may be of the age 
specified in Item 8.A of Form 20-F.
    (g)(1)For purposes of paragraph (a) of this section, the number of 
days shall be:
    (i) For accelerated filers (as defined in Sec. 240.12b-2 of this 
chapter):
    (A) 135 days for fiscal years ending on or after December 15, 2002 
and before December 15, 2004;
    (B) 130 days for fiscal years ending on or after December 15, 2004 
and before December 15, 2005; and
    (C) 125 days for fiscal years ending on or after December 15, 2005; 
and
    (ii) 135 days for all other registrants.
    (2) For purposes of paragraph (b) of this section, the number of 
days shall be:
    (i) For accelerated filers (as defined in Sec. 240.12b-2 of this 
chapter):
    (A) 90 days for fiscal years ending on or after December 15, 2002 
and before December 15, 2003;
    (B) 75 days for fiscal years ending on or after December 15, 2003 
and before December 15, 2004; and
    (C) 60 days for fiscal years ending on or after December 15, 2004; 
and
    (ii) 90 days for all other registrants.

[45 FR 62687, Sept. 25, 1980, as amended at 46 FR 12491, Feb. 17, 1981; 
46 FR 36125, July 14, 1981; 47 FR 54767, Dec. 6, 1982; 54 FR 10316, Mar. 
13, 1989; 56 FR 30053, July 1, 1991; 57 FR 45292, Oct. 1, 1992; 59 FR 
65636, Dec. 20, 1994; 64 FR 53909, Oct. 5, 1999; 67 FR 58504, Sept. 16, 
2002]

[[Page 264]]



Sec. 210.3-13  Filing of other financial statements in certain cases.

    The Commission may, upon the informal written request of the 
registrant, and where consistent with the protection of investors, 
permit the omission of one or more of the financial statements herein 
required or the filing in substitution therefor of appropriate 
statements of comparable character. The Commission may also by informal 
written notice require the filing of other financial statements in 
addition to, or in substitution for, the statements herein required in 
any case where such statements are necessary or appropriate for an 
adequate presentation of the financial condition of any person whose 
financial statements are required, or whose statements are otherwise 
necessary for the protection of investors.



Sec. 210.3-14  Special instructions for real estate operations to be acquired.

    (a) If, during the period for which income statements are required, 
the registrant has acquired one or more properties which in the 
aggregate are significant, or since the date of the latest balance sheet 
required has acquired or proposes to acquire one or more properties 
which in the aggregate are significant, the following shall be furnished 
with respect to such properties:
    (1) Audited income statements (not including earnings per unit) for 
the three most recent fiscal years, which shall exclude items not 
comparable to the proposed future operations of the property such as 
mortgage interest, leasehold rental, depreciation, corporate expenses 
and Federal and state income taxes: Provided, however, That such audited 
statements need be presented for only the most recent fiscal year if
    (i) The property is not acquired from a related party;
    (ii) Material factors considered by the registrant in assessing the 
property are described with specificity in the filing with regard to the 
property, including sources of revenue (including, but not limited to, 
competition in the rental market, comparative rents, occupancy rates) 
and expense (including, but not limited to, utility rates, ad valorem 
tax rates, maintenance expenses, capital improvements anticipated); and
    (iii) The registrant indicates in the appropriate filing that, after 
reasonable inquiry, the registrant is not aware of any material factors 
relating to that specific property other than those discussed in 
response to paragraph (a)(1)(ii) of this section that would cause the 
reported financial information not to be necessarily indicative of 
future operating results.

    Note: The discussion of material factors considered should be 
combined with that required by Item 15 of Form S-11.

    (2) If the property is to be operated by the registrant, there shall 
be furnished a statement showing the estimated taxable operating results 
of the registrant based on the most recent twelve month period including 
such adjustments as can be factually supported. If the property is to be 
acquired subject to a net lease the estimated taxable operating results 
shall be based on the rent to be paid for the first year of the lease. 
In either case, the estimated amount of cash to be made available by 
operations shall be shown. There shall be stated in an introductory 
paragraph the principal assumptions which have been made in preparing 
the statements of estimated taxable operating results and cash to be 
made available by operations.
    (3) If appropriate under the circumstances, there shall be given in 
tablular form for a limited number of years the estimated cash 
distribution per unit showing the portion thereof reportable as taxable 
income and the portion representing a return of capital together with an 
explanation of annual variations, if any. If taxable net income per unit 
will become greater than the cash available for distribution per unit, 
that fact and approximate year of occurrence shall be stated, if 
significant.

[[Page 265]]

    (b) Information required by this section is not required to be 
included in a filing on Form 10-K and Form 10-KSB.

(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. 13, 15(d), 
23(a), 48 Stat. 894, 895, 901; sec. 203(a), 49 Stat. 704; secs. 3, 8, 49 
Stat. 1377, 1379; secs. 4, 6, 78 Stat. 570-574; sec. 2, 82 Stat. 454; 
secs. 1, 2, 84 Stat. 1497; secs. 10, 18, 89 Stat. 119, 155; sec. 308(b), 
90 Stat. 57; secs. 202-204, 91 Stat. 1494, 1498-1500; 15 U.S.C. 77g, 
77j, 77s(a), 78m, 78o(d), 78w(a))

[45 FR 63687, Sept. 25, 1980, as amended at 47 FR 25122, June 10, 1982]



Sec. 210.3-15  Special provisions as to real estate investment trusts.

    (a)(1) The income statement prepared pursuant to Sec. 210.5-03 shall 
include the following additional captions between those required by 
Sec. 210.5-03.15 and 16: (i) Income or loss before gain or loss on sale 
of properties, extraordinary items and cumulative effects of accounting 
changes, and (ii) gain or loss on sale of properties, less applicable 
income tax.
    (2) The balance sheet required by Sec. 210.5-02 shall set forth in 
lieu of the captions required by Sec. 210.5-02.31(a)(3): (i) The balance 
of undistributed income from other than gain or loss on sale of 
properties and (ii) accumulated undistributed net realized gain or loss 
on sale of properties. The information specified in Sec. 210.3-04 shall 
be modified similarly.
    (b) The trust's status as a real estate investment trust under 
applicable provisions of the Internal Revenue Code as amended shall be 
stated in a note referred to in the appropriate statements. Such note 
shall also indicate briefly the principal present assumptions on which 
the trust has relied in making or not making provisons for Federal 
income taxes.
    (c) The tax status of distributions per unit shall be stated (e.g., 
ordinary income, capital gain, return of capital).

[45 FR 63687, Sept. 25, 1980, as amended at 50 FR 49532, Dec. 3, 1985]



Sec. 210.3-16  Financial statements of affiliates whose securities collateralize an issue registered or being registered.

    (a) For each of the registrant's affiliates whose securities 
constitute a substantial portion of the collateral for any class of 
securities registered or being registered, there shall be filed the 
financial statements that would be required if the affiliate were a 
registrant and required to file financial statements. However, financial 
statements need not be filed pursuant to this section for any person 
whose statements are otherwise separately included in the filing on an 
individual basis or on a basis consolidated with its subsidiaries.
    (b) For the purposes of this section, securities of a person shall 
be deemed to constitute a substantial portion of collateral if the 
aggregate principal amount, par value, or book value of the securities 
as carried by the registrant, or the market value of such securities, 
whichever is the greatest, equals 20 percent or more of the principal 
amount of the secured class of securities.

[65 FR 51710, Aug. 24, 2000]



Sec. 210.3-17  Financial statements of natural persons.

    (a) In lieu of the financial statements otherwise required, a 
natural person may file an unaudited balance sheet as of a date within 
90 days of date of filing and unaudited statements of income for each of 
the three most recent fiscal years.
    (b) Financial statements conforming with the instructions as to 
financial statements of subsidiaries not consolidated and 50 percent or 
less owned persons under Sec. 210.3-09(a) shall be separately presented 
for: (1) Each business owned as a sole proprietor, (2) each partnership, 
business trust, unincorporated association, or similar business 
organization of which the person holds a controlling interest and (3) 
each corporation of which the person, directly or indirectly, owns 
securities representing more than 50 percent of the voting power.
    (c) Separate financial statements may be omitted, however, for each 
corporation, business trust, unincorporated association, or similar 
business organization if the person's total investment in such entity 
does not exceed 5 percent of his total assets and the person's total 
income from such entity does not exceed 5 percent of his

[[Page 266]]

gross income; Provided, that the person's aggregate investment in and 
income from all such omitted entities shall not exceed 15 percent of his 
total assets and gross income, respectively.

[46 FR 12491, Feb. 17, 1981, as amended at 50 FR 25215, June 18, 1985]



Sec. 210.3-18  Special provisions as to registered management investment companies and companies required to be registered as management investment companies.

    (a) For filings by registered management investment companies, the 
following financial statements shall be filed:
    (1) An audited balance sheet or statement of assets and liabilities 
as of the end of the most recent fiscal year;
    (2) An audited statement of operations for the most recent fiscal 
year conforming to the requirements of Sec. 210.6-07.
    (3) An audited statement of cash flows for the most recent fiscal 
year if necessary to comply with generally accepted accounting 
principles. (Further references in this rule to the requirement for such 
statement are likewise applicable only to the extent that they are 
consistent with the requirements of generally accepted accounting 
principles.)
    (4) Audited statements of changes in net assets conforming to the 
requirements of Sec. 210.6-09 for the two most recent fiscal years.
    (b) If the filing is made within 60 days after the end of the 
registrant's fiscal year and audited financial statements for the most 
recent fiscal year are not available, the balance sheet or statement of 
assets and liabilities may be as of the end of the preceding fiscal year 
and the filing shall include an additional balance sheet or statement of 
assets and liabilities as of an interim date within 245 days of the date 
of filing. In addition, the statements of operations and cash flows (if 
required by generally accepted accounting principles) shall be provided 
for the preceding fiscal year and the statement of changes in net assets 
shall be provided for the two preceding fiscal years and each of the 
statements shall be provided for the interim period between the end of 
the preceding fiscal year and the date of the most recent balance sheet 
or statement of assets and liabilities being filed. Financial statements 
for the corresponding period of the preceding fiscal year need not be 
provided.
    (c) If the most current balance sheet or statement of assets and 
liabilities in a filing is as of a date 245 days or more prior to the 
date the filing is expected to become effective, the financial 
statements shall be updated with a balance sheet or statement of assets 
and liabilities as of an interim date within 245 days. In addition, the 
statements of operations, cash flows, and changes in net assets shall be 
provided for the interim period between the end of the most recent 
fiscal year for which a balance sheet or statement of assets and 
liabilities is presented and the date of the most recent interim balance 
sheet or statement of assets and liabilities filed.
    (d) Interim financial statements provided in accordance with these 
requirements may be unaudited but shall be presented in the same detail 
as required by Secs. 210.6-01 to 210.6-10. When unaudited financial 
statements are presented in a registration statement, they shall include 
the statement required by Sec. 210.3-03(d).

(Secs. 7 and 19a of the Securities Act, 15 U.S.C. 77g, 77s(a), 
77aa(25)(26); secs. 12, 13, 14, 15(d), and 23(a) of the Securities 
Exchange Act of 1934, 15 U.S.C. 78l, 78m, 78n, 78o(d), 78w(a), secs. 
5(b), 10(a), 14, 20(a) of the Public Utility Holding Company Act, 15 
U.S.C. 79e(a), 79n, 79t(a); secs. 8, 20, 30, 31(c), 38(a) of the 
Investment Company Act of 1940, 15 U.S.C. 80a-8, 80a-20, 80a-29, 80a-
30(c), 80a-37(a))

[46 FR 36125, July 14, 1981; 46 FR 46795, Sept. 22, 1981, as amended at 
47 FR 29837, July 9, 1982; 47 FR 56838, Dec. 21, 1982; 57 FR 45292, Oct. 
1, 1992]



Sec. 210.3-19  [Reserved]



Sec. 210.3-20  Currency for financial statements of foreign private issuers.

    (a) A foreign private issuer, as defined in Sec. 230.405 of this 
chapter, shall state amounts in its primary financial statements in the 
currency which it deems appropriate.
    (b) The currency in which amounts in the financial statements are 
stated shall be disclosed prominently on the face of the financial 
statements. If

[[Page 267]]

dividends on publicly-held equity securities will be declared in a 
currency other than the reporting currency, a note to the financial 
statements shall identify that currency. If there are material exchange 
restrictions or controls relating to the issuer's reporting currency, 
the currency of the issuer's domicile, or the currency in which the 
issuer will pay dividends, prominent disclosure of this fact shall be 
made in the financial statements. If the reporting currency is not the 
U.S. dollar, dollar-equivalent financial statements or convenience 
translations shall not be presented, except a translation may be 
presented of the most recent fiscal year and any subsequent interim 
period presented using the exchange rate as of the most recent balance 
sheet included in the filing, except that a rate as of the most recent 
practicable date shall be used if materially different.
    (c) If the financial statements of a foreign private issuer are 
stated in a currency of a country that has experienced cumulative 
inflationary effects exceeding a total of 100 percent over the most 
recent three year period, and have not been recast or otherwise 
supplemented to include information on a historical cost/constant 
currency or current cost basis prescribed or permitted by appropriate 
authoritative standards, the issuer shall present supplementary 
information to quantify the effects of changing prices upon its 
financial position and results of operations.
    (d) Notwithstanding the currency selected for reporting purposes, 
the issuer shall measure separately its own transactions, and those of 
each of its material operations (e.g., branches, divisions, 
subsidiaries, joint ventures, and similar entities) that is included in 
the issuer's consolidated financial statements and not located in a 
hyperinflationary environment, using the particular currency of the 
primary economic environment in which the issuer or the operation 
conducts its business. Assets and liabilities so determined shall be 
translated into the reporting currency at the exchange rate at the 
balance sheet date; all revenues, expenses, gains, and losses shall be 
translated at the exchange rate existing at the time of the transaction 
or, if appropriate, a weighted average of the exchange rates during the 
period; and all translation effects of exchange rate changes shall be 
included as a separate component (``cumulative translation adjustment'') 
of shareholder's equity. For purposes of this paragraph, the currency of 
an operation's primary economic environment is normally the currency in 
which cash is primarily generated and expended; a hyperinflationary 
environment is one that has cumulative inflation of approximately 100% 
or more over the most recent three year period. Departures from the 
methodology presented in this paragraph shall be quantified pursuant to 
Item 17(c)(2) of Form 20-F (Sec. 249.220f of this chapter).
    (e) The issuer shall state its primary financial statements in the 
same currency for all periods for which financial information is 
presented. If the financial statements are stated in a currency that is 
different from that used in financial statements previously filed with 
the Commission, the issuer shall recast its financial statements as if 
the newly adopted currency had been used since at least the earliest 
period presented in the filing. The decision to change and the reason 
for the change in the reporting currency shall be disclosed in a note to 
the financial statements in the period in which the change occurs.

[59 FR 65631, Dec. 20, 1994, as amended at 64 FR 53908, Oct. 5, 1999]

             Consolidated and Combined Financial Statements



Sec. 210.3A-01  Application of Sec. 210.3A-01 to Sec. 210.3A-05.

    Sections 210.3A-01 to 210.3A-05 shall govern the presentation of 
consolidated and combined financial statements.

[44 FR 19386, Apr. 3, 1979. Redesignated at 45 FR 63687, Sept. 25, 1980, 
and amended at 50 FR 25215, June 18, 1985]



Sec. 210.3A-02  Consolidated financial statements of the registrant and its subsidiaries.

    In deciding upon consolidation policy, the registrant must consider 
what financial presentation is most meaningful in the circumstances and 
should follow in the consolidated financial

[[Page 268]]

statements principles of inclusion or exclusion which will clearly 
exhibit the financial position and results of operations of the 
registrant. There is a presumption that consolidated statements are more 
meaningful than separate statements and that they are usually necessary 
for a fair presentation when one entity directly or indirectly has a 
controlling financial interest in another entity. Other particular facts 
and circumstances may require combined financial statements, an equity 
method of accounting, or valuation allowances in order to achieve a fair 
presentation. In any case, the disclosures required by Sec. 210.3A-03 
should clearly explain the accounting policies followed by the 
registrant in this area, including the circumstances involved in any 
departure from the normal practice of consolidating majority owned 
subsidiaries and not consolidating entities that are less than majority 
owned. Among the factors that the registrant should consider in 
determining the most meaningful presentation are the following:
    (a) Majority ownership: Generally, registrants shall consolidate 
entities that are majority owned and shall not consolidate entities that 
are not majority owned. The determination of majority ownership requires 
a careful analysis of the facts and circumstances of a particular 
relationship among entities. In rare situations, consolidation of a 
majority owned subsidiary may not result in a fair presentation, because 
the registrant, in substance, does not have a controlling financial 
interest (for example, when the subsidiary is in legal reorganization or 
in bankruptcy, or when control is likely to be temporary). In other 
situations, consolidation of an entity, notwithstanding the lack of 
technical majority ownership, is necessary to present fairly the 
financial position and results of operations of the registrant, because 
of the existence of a parent-subsidiary relationship by means other than 
record ownership of voting stock.
    (b) Different fiscal periods: Generally, registrants shall not 
consolidate any entity whose financial statements are as of a date or 
for periods substantially different from those of the registrant. 
Rather, the earnings or losses of such entities should be reflected in 
the registrant's financial statements on the equity method of 
accounting. However:
    (1) A difference in fiscal periods does not of itself justify the 
exclusion of an entity from consolidation. It ordinarily is feasible for 
such entity to prepare, for consolidation purposes, statements for a 
period which corresponds with or closely approaches the fiscal year of 
the registrant. Where the difference is not more than 93 days, it is 
usually acceptable to use, for consolidation purposes, such entity's 
statements for its fiscal period. Such difference, when it exists, 
should be disclosed as follows: the closing date of the entity should be 
expressly indicated, and the necessity for the use of different closing 
dates should be briefly explained. Furthermore, recognition should be 
given by disclosure or otherwise to the effect of intervening events 
which materially affect the financial position or results of operations.
    (2) Notwithstanding the 93-day provision specified in paragraph 
(b)(1) of this section, in connection with the retroactive combination 
of financial statements of entities following a pooling of interests, 
the financial statements of the constituents may be combined even if 
their respective fiscal periods do not end within 93 days, except that 
the financial statements for the latest fiscal year shall be recast to 
dates which do not differ by more than 93 days, if practicable. 
Disclosure shall be made of the periods combined and of the sales or 
revenues, net income before extraordinary items and net income of any 
interim periods excluded from or included more than once in results of 
operations as a result of such recasting.
    (c) Bank Holding Company Act: Registrants shall not consolidate any 
subsidiary or group of subsidiaries of a registrant subject to the Bank 
Holding Company Act of 1956 as amended as to which (1) a decision 
requiring divestiture has been made, or (2) there is substantial 
likelihood that divestiture will be necessary in order to comply with 
provisions of the Bank Holding Company Act.
    (d) Foreign subsidiaries: Due consideration shall be given to the 
propriety of consolidating with domestic corporations foreign 
subsidiaries which are operated under political, economic or

[[Page 269]]

currency restrictions. If consolidated, disclosure should be made as to 
the effect, insofar as this can reasonably be determined, of foreign 
exchange restrictions upon the consolidated financial position and 
operating results of the registrant and its subsidiaries.

[51 FR 17330, May 12, 1986]



Sec. 210.3A-03  Statement as to principles of consolidation or combination followed.

    (a) A brief description of the principles followed in consolidating 
or combining the separate financial statements, including the principles 
followed in determining the inclusion or exclusion of (1) subsidiaries 
in consolidated or combined financial statements and (2) companies in 
consolidated or combined financial statements, shall be stated in the 
notes to the respective financial statements.
    (b) As to each consolidated financial statement and as to each 
combined financial statement, if there has been a change in the persons 
included or excluded in the corresponding statement for the preceding 
fiscal period filed with the Commission which has a material effect on 
the financial statements, the persons included and the persons excluded 
shall be disclosed. If there have been any changes in the respective 
fiscal periods of the persons included made during the periods of the 
report which have a material effect on the financial statements, 
indicate clearly such changes and the manner of treatment.

[37 FR 14597, July 21, 1972. Redesignated at 45 FR 63687, Sept. 25, 
1980, and 46 FR 56179, Nov. 16, 1981]



Sec. 210.3A-04  Intercompany items and transactions.

    In general, there shall be eliminated intercompany items and 
transactions between persons included in the (a) consolidated financial 
statements being filed and, as appropriate, (b) unrealized intercompany 
profits and losses on transactions between persons for which financial 
statements are being filed and persons the investment in which is 
presented in such statements by the equity method. If such eliminations 
are not made, a statement of the reasons and the methods of treatment 
shall be made.

[37 FR 14597, July 21, 1972. Redesignated at 46 FR 56179, Nov. 16, 1981]



Sec. 210.3A-05  Special requirements as to public utility holding companies.

    There shall be shown in the consolidated balance sheet of a public 
utility holding company the difference between the amount at which the 
parent's investment is carried and the underlying book equity of 
subsidiaries as at the respective dates of acquisition.

[37 FR 14597, July 21, 1972. Redesignated at 45 FR 63687, Sept. 25, 
1980, and 46 FR 56179, Nov. 16, 1981]

                      Rules of General Application

    Source: Sections 210.4-01 to 210.4-10 appear at 45 FR 63669, Sept. 
25, 1980, unless otherwise noted.



Sec. 210.4-01  Form, order, and terminology.

    (a) Financial statements should be filed in such form and order, and 
should use such generally accepted terminology, as will best indicate 
their significance and character in the light of the provisions 
applicable thereto. The information required with respect to any 
statement shall be furnished as a minimum requirement to which shall be 
added such further material information as is necessary to make the 
required statements, in the light of the circumstances under which they 
are made, not misleading.
    (1) Financial statements filed with the Commission which are not 
prepared in accordance with generally accepted accounting principles 
will be presumed to be misleading or inaccurate, despite footnote or 
other disclosures, unless the Commission has otherwise provided. This 
article and other articles of Regulation S-X provide clarification of 
certain disclosures which must be included in any event, in financial 
statements filed with the Commission.
    (2) In all filings of foreign private issuers (see Sec. 230.405 of 
this chapter), except as stated otherwise in the applicable form, the 
financial statements may be prepared according to a comprehensive body 
of accounting principles other than those generally accepted in

[[Page 270]]

the United States if a reconciliation to United States generally 
accepted accounting principles and the provisions of Regulation S-X of 
the type specified in Item 18 of Form 20-F (Sec. 249.220f of this 
chapter) is also filed as part of the financial statements. 
Alternatively, the financial statements may be prepared according to 
United States generally accepted accounting principles.
    (b) All money amounts required to be shown in financial statements 
may be expressed in whole dollars or multiples thereof, as appropriate: 
Provided, That, when stated in other than whole dollars, an indication 
to that effect is inserted immediately beneath the caption of the 
statement or schedule, at the top of the money columns, or at an 
appropriate point in narrative material.
    (c) Negative amounts (red figures) shall be shown in a manner which 
clearly distinguishes the negative attribute. When determining methods 
of display, consideration should be given to the limitations of 
reproduction and microfilming processes.

(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. 
565-568, 569, 570-574; 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, 1499, 1500; secs. 8 30, 31(c), 
38(a), 54 Stat. 803, 836, 838, 841; 74 Stat. 201; 84 Stat. 1415; 15 
U.S.C. 77f, 77g, 77h, 77j, 77s(a), 78l, 78m, 78o(d), 78w(a), 80a-8, 80a-
29, 80a-30(c), 80a-37(a))

[45 FR 63669, Sept. 25, 1980, as amended at 47 FR 54767, Dec. 6, 1982]



Sec. 210.4-02  Items not material.

    If the amount which would otherwise be required to be shown with 
respect to any item is not material, it need not be separately set 
forth. The combination of insignificant amounts is permitted.



Sec. 210.4-03  Inapplicable captions and omission of unrequired or inapplicable financial statements.

    (a) No caption should be shown in any financial statement as to 
which the items and conditions are not present.
    (b) Financial statements not required or inapplicable because the 
required matter is not present need not be filed.
    (c) The reasons for the omission of any required financial 
statements shall be indicated.



Sec. 210.4-04  Omission of substantially identical notes.

    If a note covering substantially the same subject matter is required 
with respect to two or more financial statements relating to the same or 
affiliated persons, for which separate sets of notes are presented, the 
required information may be shown in a note to only one of such 
statements: Provided, That a clear and specific reference thereto is 
made in each of the other statements with respect to which the note is 
required.



Sec. Sec. 210.4-05--210.04-06  [Reserved]



Sec. 210.4-07  Discount on shares.

    Discount on shares, or any unamortized balance thereof, shall be 
shown separately as a deduction from the applicable account(s) as 
circumstances require.



Sec. 210.4-08  General notes to financial statements.

    If applicable to the person for which the financial statements are 
filed, the following shall be set forth on the face of the appropriate 
statement or in appropriately captioned notes. The information shall be 
provided for each statement required to be filed, except that the 
information required by paragraphs (b), (c), (d), (e) and (f) shall be 
provided as of the most recent audited balance sheet being filed and for 
paragraph (j) as specified therein. When specific statements are 
presented separately, the pertinent notes shall accompany such 
statements unless cross-referencing is appropriate.
    (a) Principles of consolidation or combination. With regard to 
consolidated or combined financial statements, refer to Secs. 210.3A-01 
to 3A-08 for requirements for supplemental information in notes to the 
financial statements.
    (b) Assets subject to lien. Assets mortgaged, pledged, or otherwise 
subject to

[[Page 271]]

lien, and the approximate amounts thereof, shall be designated and the 
obligations collateralized briefly identified.
    (c) Defaults. The facts and amounts concerning any default in 
principal, interest, sinking fund, or redemption provisions with respect 
to any issue of securities or credit agreements, or any breach of 
covenant of a related indenture or agreement, which default or breach 
existed at the date of the most recent balance sheet being filed and 
which has not been subsequently cured, shall be stated in the notes to 
the financial statements. If a default or breach exists but acceleration 
of the obligation has been waived for a stated period of time beyond the 
date of the most recent balance sheet being filed, state the amount of 
the obligation and the period of the waiver.
    (d) Preferred shares. (1) Aggregate preferences on involuntary 
liquidation, if other than par or stated value, shall be shown 
parenthetically in the equity section of the balance sheet.
    (2) Disclosure shall be made of any restriction upon retained 
earnings that arises from the fact that upon involuntary liquidation the 
aggregate preferences of the preferred shares exceeds the par or stated 
value of such shares.
    (e) Restrictions which limit the payment of dividends by the 
registrant. (1) Describe the most significant restrictions, other than 
as reported under paragraph (d) of this section, on the payment of 
dividends by the registrant, indicating their sources, their pertinent 
provisions, and the amount of retained earnings or net income restricted 
or free of restrictions.
    (2) Disclose the amount of consolidated retained earnings which 
represents undistributed earnings of 50 percent or less owned persons 
accounted for by the equity method.
    (3) The disclosures in paragraphs (e)(3) (i) and (ii) in this 
section shall be provided when the restricted net assets of consolidated 
and unconsolidated subsidiaries and the parent's equity in the 
undistributed earnings of 50 percent or less owned persons accounted for 
by the equity method together exceed 25 percent of consolidated net 
assets as of the end of the most recently completed fiscal year. For 
purposes of this test, restricted net assets of subsidiaries shall mean 
that amount of the registrant's proportionate share of net assets (after 
intercompany eliminations) reflected in the balance sheets of its 
consolidated and unconsolidated subsidiaries as of the end of the most 
recent fiscal year which may not be transferred to the parent company in 
the form of loans, advances or cash dividends by the subsidiaries 
without the consent of a third party (i.e., lender, regulatory agency, 
foreign government, etc.). Not all limitations on transferability of 
assets are considered to be restrictions for purposes of this test, 
which considers only specific third party restrictions on the ability of 
subsidiaries to transfer funds outside of the entity. For example, the 
presence of subsidiary debt which is secured by certain of the 
subsidiary's assets does not constitute a restriction under this rule. 
However, if there are any loan provisions prohibiting dividend payments, 
loans or advances to the parent by a subsidiary, these are considered 
restrictions for purposes of computing restricted net assets. When a 
loan agreement requires that a subsidiary maintain certain working 
capital, net tangible asset, or net asset levels, or where formal 
compensating arrangements exist, there is considered to be a restriction 
under the rule because the lender's intent is normally to preclude the 
transfer by dividend or otherwise of funds to the parent company. 
Similarly, a provision which requires that a subsidiary reinvest all of 
its earnings is a restriction, since this precludes loans, advances or 
dividends in the amount of such undistributed earnings by the entity. 
Where restrictions on the amount of funds which may be loaned or 
advanced differ from the amount restricted as to transfer in the form of 
cash dividends, the amount least restrictive to the subsidiary shall be 
used. Redeemable preferred stocks (Sec. 210.5-02.28) and minority 
interests shall be deducted in computing net assets for purposes of this 
test.
    (i) Describe the nature of any restrictions on the ability of 
consolidated subsidiaries and unconsolidated subsidiaries to transfer 
funds to the registrant in the form of cash dividends,

[[Page 272]]

loans or advances (i.e., borrowing arrangements, regulatory restraints, 
foreign government, etc.).
    (ii) Disclose separately the amounts of such restricted net assets 
for unconsolidated subsidiaries and consolidated subsidiaries as of the 
end of the most recently completed fiscal year.
    (f) Significant changes in bonds, mortgages and similar debt. Any 
significant changes in the authorized or issued amounts of bonds, 
mortgages and similar debt since the date of the latest balance sheet 
being filed for a particular person or group shall be stated.
    (g) Summarized financial information of subsidiaries not 
consolidated and 50 percent or less owned persons. (1) The summarized 
information as to assets, liabilities and results of operations as 
detailed in Sec. 210.1-02(bb) shall be presented in notes to the 
financial statements on an individual or group basis for:
    (i) Subsidiaries not consolidated; or
    (ii) For 50 percent or less owned persons accounted for by the 
equity method by the registrant or by a subsidiary of the registrant, if 
the criteria in Sec. 210.1-02(w) for a significant subsidiary are met:
    (A) Individually by any subsidiary not consolidated or any 50% or 
less owned person; or
    (B) On an aggregated basis by any combination of such subsidiaries 
and persons.
    (2) Summarized financial information shall be presented insofar as 
is practicable as of the same dates and for the same periods as the 
audited consolidated financial statements provided and shall include the 
disclosures prescribed by Sec. 210.1-02(bb). Summarized information of 
subsidiaries not consolidated shall not be combined for disclosure 
purposes with the summarized information of 50 percent or less owned 
persons.
    (h) Income tax expense. (1) Disclosure shall be made in the income 
statement or a note thereto, of (i) the components of income (loss) 
before income tax expense (benefit) as either domestic or foreign; (ii) 
the components of income tax expense, including (A) taxes currently 
payable and (B) the net tax effects, as applicable, of timing 
differences (indicate separately the amount of the estimated tax effect 
of each of the various types of timing differences, such as 
depreciation, warranty costs, etc., where the amount of each such tax 
effect exceeds five percent of the amount computed by multiplying the 
income before tax by the applicable statutory Federal income tax rate; 
other differences may be combined.)

    Note: Amounts applicable to United States Federal income taxes, to 
foreign income taxes and the other income taxes shall be stated 
separately for each major component. Amounts applicable to foreign 
income (loss) and amounts applicable to foreign or other income taxes 
which are less than five percent of the total of income before taxes or 
the component of tax expense, respectively, need not be separately 
disclosed. For purposes of this rule, foreign income (loss) is defined 
as income (loss) generated from a registrant's foreign operations, i.e., 
operations that are located outside of the registrant's home country.

    (2) Provide a reconciliation between the amount of reported total 
income tax expense (benefit) and the amount computed by multiplying the 
income (loss) before tax by the applicable statutory Federal income tax 
rate, showing the estimated dollar amount of each of the underlying 
causes for the difference. If no individual reconciling item amounts to 
more than five percent of the amount computed by multiplying the income 
before tax by the applicable statutory Federal income tax rate, and the 
total difference to be reconciled is less than five percent of such 
computed amount, no reconciliation need be provided unless it would be 
significant in appraising the trend of earnings. Reconciling items that 
are individually less than five percent of the computed amount may be 
aggregated in the reconciliation. The reconciliation may be presented in 
percentages rather than in dollar amounts. Where the reporting person is 
a foreign entity, the income tax rate in that person's country of 
domicile should normally be used in making the above computation, but 
different rates should not be used for subsidiaries or other segments of 
a reporting entity. When the rate used by a reporting person is other 
than the United States Federal corporate income tax rate, the

[[Page 273]]

rate used and the basis for using such rate shall be disclosed.
    (3) Paragraphs (h) (1) and (2) of this section shall be applied in 
the following manner to financial statements which reflect the adoption 
of Statement of Financial Accounting Standards 109, Accounting for 
Income Taxes.
    (i) The disclosures required by paragraph (h)(1)(ii) of this section 
and by the parenthetical instruction at the end of paragraph (h)(1) of 
this section and by the introductory sentence of paragraph (h)(2) of 
this section shall not apply.
    (ii) The instructional note between paragraphs (h) (1) and (2) of 
this section and the balance of the requirements of paragraphs (h) (1) 
and (2) of this section shall continue to apply.
    (i) Warrants or rights outstanding. Information with respect to 
warrants or rights outstanding at the date of the related balance sheet 
shall be set forth as follows:
    (1) Title of issue of securities called for by warrants or rights.
    (2) Aggregate amount of securities called for by warrants or rights 
outstanding.
    (3) Date from which warrants or rights are exercisable.
    (4) Price at which warrant or right is exercisable.
    (j) [Reserved]
    (k) Related party transactions which affect the financial 
statements. (1) Related party transactions should be identified and the 
amounts stated on the face of the balance sheet, income statement, or 
statement of cash flows.
    (2) In cases where separate financial statements are presented for 
the registrant, certain investees, or subsidiaries, separate disclosure 
shall be made in such statements of the amounts in the related 
consolidated financial statements which are (i) eliminated and (ii) not 
eliminated. Also, any intercompany profits or losses resulting from 
transactions with related parties and not eliminated and the effects 
thereof shall be disclosed.
    (l) [Reserved]
    (m) Repurchase and reverse repurchase agreements--(1) Repurchase 
agreements (assets sold under agreements to repurchase). (i) If, as of 
the most recent balance sheet date, the carrying amount (or market 
value, if higher than the carrying amount or if there is no carrying 
amount) of the securities or other assets sold under agreements to 
repurchase (repurchase agreements) exceeds 10% of total assets, disclose 
separately in the balance sheet the aggregate amount of liabilities 
incurred pursuant to repurchase agreements including accrued interest 
payable thereon.
    (ii)(A) If, as of the most recent balance sheet date, the carrying 
amount (or market value, if higher than the carrying amount) of 
securities or other assets sold under repurchase agreements, other than 
securities or assets specified in paragraph (m)(1)(ii)(B) of this 
section, exceeds 10% of total assets, disclose in an appropriately 
captioned footnote containing a tabular presentation, segregated as to 
type of such securities or assets sold under agreements to repurchase 
(e.g., U.S. Treasury obligations, U.S. Government agency obligations and 
loans), the following information as of the balance sheet date for each 
such agreement or group of agreements (other than agreements involving 
securities or assets specified in paragraph (m)(1)(ii)(B) of this 
section) maturing (1) overnight; (2) term up to 30 days; (3) term of 30 
to 90 days; (4) term over 90 days and (5) demand:
    (i) The carrying amount and market value of the assets sold under 
agreement to repurchase, including accrued interest plus any cash or 
other assets on deposit under the repurchase agreements; and
    (ii) The repurchase liability associated with such transaction or 
group of transactions and the interest rate(s) thereon.
    (B) For purposes of paragraph (m)(1)(ii)(A) of this section only, do 
not include securities or other assets for which unrealized changes in 
market value are reported in current income or which have been obtained 
under reverse repurchase agreements.
    (iii) If, as of the most recent balance sheet date, the amount at 
risk under repurchase agreements with any individual counterparty or 
group of related counterparties exceeds 10% of stockholders' equity (or 
in the case of investment companies, net asset value), disclose the name 
of each such

[[Page 274]]

counterparty or group of related counterparties, the amount at risk with 
each, and the weighted average maturity of the repurchase agreements 
with each. The amount at risk under repurchase agreements is defined as 
the excess of carrying amount (or market value, if higher than the 
carrying amount or if there is no carrying amount) of the securities or 
other assets sold under agreement to repurchase, including accrued 
interest plus any cash or other assets on deposit to secure the 
repurchase obligation, over the amount of the repurchase liability 
(adjusted for accrued interest). (Cash deposits in connection with 
repurchase agreements shall not be reported as unrestricted cash 
pursuant to rule 5-02.1.)
    (2) Reverse repurchase agreements (assets purchased under agreements 
to resell). (i) If, as of the most recent balance sheet date, the 
aggregate carrying amount of reverse repurchase agreements (securities 
or other assets purchased under agreements to resell) exceeds 10% of 
total assets: (A) Disclose separately such amount in the balance sheet; 
and (B) disclose in an appropriately captioned footnote: (1) The 
registrant's policy with regard to taking possession of securities or 
other assets purchased under agreements to resell; and (2) whether or 
not there are any provisions to ensure that the market value of the 
underlying assets remains sufficient to protect the registrant in the 
event of default by the counterparty and if so, the nature of those 
provisions.
    (ii) If, as of the most recent balance sheet date, the amount at 
risk under reverse repurchase agreements with any individual 
counterparty or group of related counterparties exceeds 10% of 
stockholders' equity (or in the case of investment companies, net asset 
value), disclose the name of each such counterparty or group of related 
counterparties, the amount at risk with each, and the weighted average 
maturity of the reverse repurchase agreements with each. The amount at 
risk under reverse repurchase agreements is defined as the excess of the 
carrying amount of the reverse repurchase agreements over the market 
value of assets delivered pursuant to the agreements by the counterparty 
to the registrant (or to a third party agent that has affirmatively 
agreed to act on behalf of the registrant) and not returned to the 
counterparty, exept in exchange for their approximate market value in a 
separate transaction.
    (n) Accounting policies for certain derivative instruments. 
Disclosures regarding accounting policies shall include descriptions of 
the accounting policies used for derivative financial instruments and 
derivative commodity instruments and the methods of applying those 
policies that materially affect the determination of financial position, 
cash flows, or results of operation. This description shall include, to 
the extent material, each of the following items:
    (1) A discussion of each method used to account for derivative 
financial instruments and derivative commodity instruments;
    (2) The types of derivative financial instruments and derivative 
commodity instruments accounted for under each method; (3) The criteria 
required to be met for each accounting method used, including a 
discussion of the criteria required to be met for hedge or deferral 
accounting and accrual or settlement accounting (e.g., whether and how 
risk reduction, correlation, designation, and effectiveness tests are 
applied);
    (4) The accounting method used if the criteria specified in 
paragraph (n)(3) of this section are not met;
    (5) The method used to account for terminations of derivatives 
designated as hedges or derivatives used to affect directly or 
indirectly the terms, fair values, or cash flows of a designated item;
    (6) The method used to account for derivatives when the designated 
item matures, is sold, is extinguished, or is terminated. In addition, 
the method used to account for derivatives designated to an anticipated 
transaction, when the anticipated transaction is no longer likely to 
occur; and
    (7) Where and when derivative financial instruments and derivative 
commodity instruments, and their related gains and losses, are reported 
in the statements of financial position, cash flows, and results of 
operations.


[[Page 275]]


Instructions to Paragraph (n): 1. For purposes of this paragraph (n), 
derivative financial instruments and derivative commodity instruments 
(collectively referred to as ``derivatives'') are defined as follows:
    (i) Derivative financial instruments have the same meaning as 
defined by generally accepted accounting principles (see, e.g., 
Financial Accounting Standards Board (``FASB''), Statement of Financial 
Accounting Standards No. 119, ``Disclosure about Derivative Financial 
Instruments and Fair Value of Financial Instruments,'' (``FAS 119'') 
paragraphs 5-7, (October 1994)), and include futures, forwards, swaps, 
options, and other financial instruments with similar characteristics.
    (ii) Derivative commodity instruments include, to the extent such 
instruments are not derivative financial instruments, commodity futures, 
commodity forwards, commodity swaps, commodity options, and other 
commodity instruments with similar characteristics that are permitted by 
contract or business custom to be settled in cash or with another 
financial instrument. For purposes of this paragraph, settlement in cash 
includes settlement in cash of the net change in value of the derivative 
commodity instrument (e.g., net cash settlement based on changes in the 
price of the underlying commodity).
    2. For purposes of paragraphs (n)(2), (n)(3), (n)(4), and (n)(7), 
the required disclosures should address separately derivatives entered 
into for trading purposes and derivatives entered into for purposes 
other than trading. For purposes of this paragraph, trading purposes has 
the same meaning as defined by generally accepted accounting principles 
(see, e.g., FAS 119, paragraph 9a (October 1994)).
    3. For purposes of paragraph (n)(6), anticipated transactions means 
transactions (other than transactions involving existing assets or 
liabilities or transactions necessitated by existing firm commitments) 
an enterprise expects, but is not obligated, to carry out in the normal 
course of business (see, e.g., FASB, Statement of Financial Accounting 
Standards No. 80, ``Accounting for Futures Contracts,'' paragraph 9, 
(August 1984)).
    4. Registrants should provide disclosures required under paragraph 
(n) in filings with the Commission that include financial statements of 
fiscal periods ending after June 15, 1997.

[45 FR 63669, Sept. 25, 1980, as amended at 46 FR 56179, Nov. 16, 1981; 
50 FR 25215, June 18, 1985; 50 FR 49532, Dec. 3, 1985; 51 FR 3770, Jan. 
30, 1986; 57 FR 45293, Oct. 1, 1992; 59 FR 65636, Dec. 20, 1994; 62 FR 
6063, Feb. 10, 1997]



Sec. 210.4-9  [Reserved]



Sec. 210.4-10  Financial accounting and reporting for oil and gas producing activities pursuant to the Federal securities laws and the Energy Policy and 
          Conservation Act of 1975.

    This section prescribes financial accounting and reporting standards 
for registrants with the Commission engaged in oil and gas producing 
activities in filings under the Federal securities laws and for the 
preparation of accounts by persons engaged, in whole or in part, in the 
production of crude oil or natural gas in the United States, pursuant to 
section 503 of the Energy Policy and Conservation Act of 1975 (42 U.S.C. 
6383) (EPCA) and section 11(c) of the Energy Supply and Environmental 
Coordination Act of 1974 (15 U.S.C. 796) (ESECA), as amended by section 
505 of EPCA. The application of this section to those oil and gas 
producing operations of companies regulated for ratemaking purposes on 
an individual-company-cost-of-service basis may, however, give 
appropriate recognition to differences arising because of the effect of 
the ratemaking process.

Exemption. Any person exempted by the Department of Energy from any 
record-keeping or reporting requirements pursuant to section 11(c) of 
ESECA, as amended, is similarly exempted from the related provisions of 
this section in the preparation of accounts pursuant to EPCA. This 
exemption does not affect the applicability of this section to filings 
pursuant to the Federal securities laws.

                               Definitions

    (a) Definitions. The following definitions apply to the terms listed 
below as they are used in this section:
    (1) Oil and gas producing activities. (i) Such activities include:
    (A) The search for crude oil, including condensate and natural gas 
liquids, or natural gas (oil and gas) in their natural states and 
original locations.
    (B) The acquisition of property rights or properties for the purpose 
of further exploration and/or for the purpose of removing the oil or gas 
from existing reservoirs on those properties.

[[Page 276]]

    (C) The construction, drilling and production activities necessary 
to retrieve oil and gas from its natural reservoirs, and the 
acquisition, construction, installation, and maintenance of field 
gathering and storage systems--including lifting the oil and gas to the 
surface and gathering, treating, field processing (as in the case of 
processing gas to extract liquid hydrocarbons) and field storage. For 
purposes of this section, the oil and gas production function shall 
normally be regarded as terminating at the outlet valve on the lease or 
field storage tank; if unusual physical or operational circumstances 
exist, it may be appropriate to regard the production functions as 
terminating at the first point at which oil, gas, or gas liquids are 
delivered to a main pipeline, a common carrier, a refinery, or a marine 
terminal.
    (ii) Oil and gas producing activities do not include:
    (A) The transporting, refining and marketing of oil and gas.
    (B) Activities relating to the production of natural resources other 
than oil and gas.
    (C) The production of geothermal steam or the extraction of 
hydrocarbons as a by-product of the production of geothermal steam or 
associated geothermal resources as defined in the Geothermal Steam Act 
of 1970.
    (D) The extraction of hydrocarbons from shale, tar sands, or coal.
    (2) Proved oil and gas reserves. Proved oil and gas reserves are the 
estimated quantities of crude oil, natural gas, and natural gas liquids 
which geological and engineering data demonstrate with reasonable 
certainty to be recoverable in future years from known reservoirs under 
existing economic and operating conditions, i.e., prices and costs as of 
the date the estimate is made. Prices include consideration of changes 
in existing prices provided only by contractual arrangements, but not on 
escalations based upon future conditions.
    (i) Reservoirs are considered proved if economic producibility is 
supported by either actual production or conclusive formation test. The 
area of a reservoir considered proved includes (A) that portion 
delineated by drilling and defined by gas-oil and/or oil-water contacts, 
if any, and (B) the immediately adjoining portions not yet drilled, but 
which can be reasonably judged as economically productive on the basis 
of available geological and engineering data. In the absence of 
information on fluid contacts, the lowest known structural occurrence of 
hydrocarbons controls the lower proved limit of the reservoir.
    (ii) Reserves which can be produced economically through application 
of improved recovery techniques (such as fluid injection) are included 
in the proved classification when successful testing by a pilot project, 
or the operation of an installed program in the reservoir, provides 
support for the engineering analysis on which the project or program was 
based.
    (iii) Estimates of proved reserves do not include the following: (A) 
Oil that may become available from known reservoirs but is classified 
separately as indicated additional reserves; (B) crude oil, natural gas, 
and natural gas liquids, the recovery of which is subject to reasonable 
doubt because of uncertainty as to geology, reservoir characteristics, 
or economic factors; (C) crude oil, natural gas, and natural gas 
liquids, that may occur in undrilled prospects; and (D) crude oil, 
natural gas, and natural gas liquids, that may be recovered from oil 
shales, coal, gilsonite and other such sources.
    (3) Proved developed oil and gas reserves. Proved developed oil and 
gas reserves are reserves that can be expected to be recovered through 
existing wells with existing equipment and operating methods. Additional 
oil and gas expected to be obtained through the application of fluid 
injection or other improved recovery techniques for supplementing the 
natural forces and mechanisms of primary recovery should be included as 
proved developed reserves only after testing by a pilot project or after 
the operation of an installed program has confirmed through production 
response that increased recovery will be achieved.
    (4) Proved undeveloped reserves. Proved undeveloped oil and gas 
reserves are reserves that are expected to be recovered from new wells 
on undrilled acreage, or from existing

[[Page 277]]

wells where a relatively major expenditure is required for recompletion. 
Reserves on undrilled acreage shall be limited to those drilling units 
offsetting productive units that are reasonably certain of production 
when drilled. Proved reserves for other undrilled units can be claimed 
only where it can be demonstrated with certainty that there is 
continuity of production from the existing productive formation. Under 
no circumstances should estimates for proved undeveloped reserves be 
attributable to any acreage for which an application of fluid injection 
or other improved recovery technique is contemplated, unless such 
techniques have been proved effective by actual tests in the area and in 
the same reservoir.
    (5) Proved properties. Properties with proved reserves.
    (6) Unproved properties. Properties with no proved reserves.
    (7) Proved area. The part of a property to which proved reserves 
have been specifically attributed.
    (8) Field. An area consisting of a single reservoir or multiple 
reservoirs all grouped on or related to the same individual geological 
structural feature and/or stratigraphic condition. There may be two or 
more reservoirs in a field that are separated vertically by intervening 
impervious, strata, or laterally by local geologic barriers, or by both. 
Reservoirs that are associated by being in overlapping or adjacent 
fields may be treated as a single or common operational field. The 
geological terms structural feature and stratigraphic condition are 
intended to identify localized geological features as opposed to the 
broader terms of basins, trends, provinces, plays, areas-of-interest, 
etc.
    (9) Reservoir. A porous and permeable underground formation 
containing a natural accumulation of producible oil and/or gas that is 
confined by impermeable rock or water barriers and is individual and 
separate from other reservoirs.
    (10) Exploratory well. A well drilled to find and produce oil or gas 
in an unproved area, to find a new reservoir in a field previously found 
to be productive of oil or gas in another reservoir, or to extend a 
known reservoir. Generally, an exploratory well is any well that is not 
a development well, a service well, or a stratigraphic test well as 
those items are defined below.
    (11) Development well. A well drilled within the proved area of an 
oil or gas reservoir to the depth of a stratigraphic horizon known to be 
productive.
    (12) Service well. A well drilled or completed for the purpose of 
supporting production in an existing field. Specific purposes of service 
wells include gas injection, water injection, steam injection, air 
injection, salt-water disposal, water supply for injection, observation, 
or injection for in-situ combustion.
    (13) Stratigraphic test well. A drilling effort, geologically 
directed, to obtain information pertaining to a specific geologic 
condition. Such wells customarily are drilled without the intention of 
being completed for hydrocarbon production. This classification also 
includes tests identified as core tests and all types of expendable 
holes related to hydrocarbon exploration. Stratigraphic test wells are 
classified as (i) exploratory-type, if not drilled in a proved area, or 
(ii) development-type, if drilled in a proved area.
    (14) Acquisition of properties. Costs incurred to purchase, lease or 
otherwise acquire a property, including costs of lease bonuses and 
options to purchase or lease properties, the portion of costs applicable 
to minerals when land including mineral rights is purchased in fee, 
brokers' fees, recording fees, legal costs, and other costs incurred in 
acquiring properties.
    (15) Exploration costs. Costs incurred in identifying areas that may 
warrant examination and in examining specific areas that are considered 
to have prospects of containing oil and gas reserves, including costs of 
drilling exploratory wells and exploratory-type stratigraphic test 
wells. Exploration costs may be incurred both before acquiring the 
related property (sometimes referred to in part as prospecting costs) 
and after acquiring the property. Principal types of exploration costs, 
which include depreciation and applicable operating costs of support 
equipment and facilities and other costs of exploration activities, are:

[[Page 278]]

    (i) Costs of topographical, geographical and geophysical studies, 
rights of access to properties to conduct those studies, and salaries 
and other expenses of geologists, geophysical crews, and others 
conducting those studies. Collectively, these are sometimes referred to 
as geological and geophysical or G&G costs.
    (ii) Costs of carrying and retaining undeveloped properties, such as 
delay rentals, ad valorem taxes on properties, legal costs for title 
defense, and the maintenance of land and lease records.
    (iii) Dry hole contributions and bottom hole contributions.
    (iv) Costs of drilling and equipping exploratory wells.
    (v) Costs of drilling exploratory-type stratigraphic test wells.
    (16) Development costs. Costs incurred to obtain access to proved 
reserves and to provide facilities for extracting, treating, gathering 
and storing the oil and gas. More specifically, development costs, 
including depreciation and applicable operating costs of support 
equipment and facilities and other costs of development activities, are 
costs incurred to:
    (i) Gain access to and prepare well locations for drilling, 
including surveying well locations for the purpose of determining 
specific development drilling sites, clearing ground, draining, road 
building, and relocating public roads, gas lines, and power lines, to 
the extent necessary in developing the proved reserves.
    (ii) Drill and equip development wells, development-type 
stratigraphic test wells, and service wells, including the costs of 
platforms and of well equipment such as casing, tubing, pumping 
equipment, and the wellhead assembly.
    (iii) Acquire, construct, and install production facilities such as 
lease flow lines, separators, treaters, heaters, manifolds, measuring 
devices, and production storage tanks, natural gas cycling and 
processing plants, and central utility and waste disposal systems.
    (iv) Provide improved recovery systems.
    (17) Production costs. (i) Costs incurred to operate and maintain 
wells and related equipment and facilities, including depreciation and 
applicable operating costs of support equipment and facilities and other 
costs of operating and maintaining those wells and related equipment and 
facilities. They become part of the cost of oil and gas produced. 
Examples of production costs (sometimes called lifting costs) are:
    (A) Costs of labor to operate the wells and related equipment and 
facilities.
    (B) Repairs and maintenance.
    (C) Materials, supplies, and fuel consumed and supplies utilized in 
operating the wells and related equipment and facilities.
    (D) Property taxes and insurance applicable to proved properties and 
wells and related equipment and facilities.
    (E) Severance taxes.
    (ii) Some support equipment or facilities may serve two or more oil 
and gas producing activities and may also serve transportation, 
refining, and marketing activities. To the extent that the support 
equipment and facilities are used in oil and gas producing activities, 
their depreciation and applicable operating costs become exploration, 
development or production costs, as appropriate. Depreciation, 
depletion, and amortization of capitalized acquisition, exploration, and 
development costs are not production costs but also become part of the 
cost of oil and gas produced along with production (lifting) costs 
identified above.

                        Successful Efforts Method

    (b) A reporting entity that follows the successful efforts method 
shall comply with the accounting and financial reporting disclosure 
requirements of Statement of Financial Accounting Standards No. 19, as 
amended.

                            Full Cost Method

    (c) Application of the full cost method of accounting. A reporting 
entity that follows the full cost method shall apply that method to all 
of its operations and to the operations of its subsidiaries, as follows:
    (1) Determination of cost centers. Cost centers shall be established 
on a country-by-country basis.
    (2) Costs to be capitalized. All costs associated with property 
acquisition, exploration, and development activities

[[Page 279]]

(as defined in paragraph (a) of this section) shall be capitalized 
within the appropriate cost center. Any internal costs that are 
capitalized shall be limited to those costs that can be directly 
identified with acquisition, exploration, and development activities 
undertaken by the reporting entity for its own account, and shall not 
include any costs related to production, general corporate overhead, or 
similar activities.
    (3) Amortization of capitalized costs. Capitalized costs within a 
cost center shall be amortized on the unit-of-production basis using 
proved oil and gas reserves, as follows:
    (i) Costs to be amortized shall include (A) all capitalized costs, 
less accumulated amortization, other than the cost of properties 
described in paragraph (ii) below; (B) the estimated future expenditures 
(based on current costs) to be incurred in developing proved reserves; 
and (C) estimated dismantlement and abandonment costs, net of estimated 
salvage values.
    (ii) The cost of investments in unproved properties and major 
development projects may be excluded from capitalized costs to be 
amortized, subject to the following:
    (A) All costs directly associated with the acquisition and 
evaluation of unproved properties may be excluded from the amortization 
computation until it is determined whether or not proved reserves can be 
assigned to the properties, subject to the following conditions:
    (1) Until such a determination is made, the properties shall be 
assessed at least annually to ascertain whether impairment has occurred. 
Unevaluated properties whose costs are individually significant shall be 
assessed individually. Where it is not practicable to individually 
assess the amount of impairment of properties for which costs are not 
individually significant, such properties may be grouped for purposes of 
assessing impairment. Impairment may be estimated by applying factors 
based on historical experience and other data such as primary lease 
terms of the properties, average holding periods of unproved properties, 
and geographic and geologic data to groupings of individually 
insignificant properties and projects. The amount of impairment assessed 
under either of these methods shall be added to the costs to be 
amortized.
    (2) The costs of drilling exploratory dry holes shall be included in 
the amortization base immediately upon determination that the well is 
dry.
    (3) If geological and geophysical costs cannot be directly 
associated with specific unevaluated properties, they shall be included 
in the amortization base as incurred. Upon complete evaluation of a 
property, the total remaining excluded cost (net of any impairment) 
shall be included in the full cost amortization base.
    (B) Certain costs may be excluded from amortization when incurred in 
connection with major development projects expected to entail 
significant costs to ascertain the quantities of proved reserves 
attributable to the properties under development (e.g., the installation 
of an offshore drilling platform from which development wells are to be 
drilled, the installation of improved recovery programs, and similar 
major projects undertaken in the expectation of significant additions to 
proved reserves). The amounts which may be excluded are applicable 
portions of (1) the costs that relate to the major development project 
and have not previously been included in the amortization base, and (2) 
the estimated future expenditures associated with the development 
project. The excluded portion of any common costs associated with the 
development project should be based, as is most appropriate in the 
circumstances, on a comparison of either (i) existing proved reserves to 
total proved reserves expected to be established upon completion of the 
project, or (ii) the number of wells to which proved reserves have been 
assigned and total number of wells expected to be drilled. Such costs 
may be excluded from costs to be amortized until the earlier 
determination of whether additional reserves are proved or impairment 
occurs.
    (C) Excluded costs and the proved reserves related to such costs 
shall be transferred into the amortization base on an ongoing (well-by-
well or property-by-property) basis as the project

[[Page 280]]

is evaluated and proved reserves established or impairment determined. 
Once proved reserves are established, there is no further justification 
for continued exclusion from the full cost amortization base even if 
other factors prevent immediate production or marketing.
    (iii) Amortization shall be computed on the basis of physical units, 
with oil and gas converted to a common unit of measure on the basis of 
their approximate relative energy content, unless economic circumstances 
(related to the effects of regulated prices) indicate that use of units 
of revenue is a more appropriate basis of computing amortization. In the 
latter case, amortization shall be computed on the basis of current 
gross revenues (excluding royalty payments and net profits 
disbursements) from production in relation to future gross revenues, 
based on current prices (including consideration of changes in existing 
prices provided only by contractual arrangements), from estimated 
production of proved oil and gas reserves. The effect of a significant 
price increase during the year on estimated future gross revenues shall 
be reflected in the amortization provision only for the period after the 
price increase occurs.
    (iv) In some cases it may be more appropriate to depreciate natural 
gas cycling and processing plants by a method other than the unit-of-
production method.
    (v) Amortization computations shall be made on a consolidated basis, 
including investees accounted for on a proportionate consolidation 
basis. Investees accounted for on the equity method shall be treated 
separately.
    (4) Limitation on capitalized costs. (i) For each cost center, 
capitalized costs, less accumulated amortization and related deferred 
income taxes, shall not exceed an amount (the cost center ceiling) equal 
to the sum of:
    (A) The present value of estimated future net revenues computed by 
applying current prices of oil and gas reserves (with consideration of 
price changes only to the extent provided by contractual arrangements) 
to estimated future production of proved oil and gas reserves as of the 
date of the latest balance sheet presented, less estimated future 
expenditures (based on current costs) to be incurred in developing and 
producing the proved reserves computed using a discount factor of ten 
percent and assuming continuation of existing economic conditions; plus
    (B) the cost of properties not being amortized pursuant to paragraph 
(i)(3)(ii) of this section; plus
    (C) the lower of cost or estimated fair value of unproven properties 
included in the costs being amortized; less
    (D) income tax effects related to differences between the book and 
tax basis of the properties referred to in paragraphs (i)(4)(i) (B) and 
(C) of this section.
    (ii) If unamortized costs capitalized within a cost center, less 
related deferred income taxes, exceed the cost center ceiling, the 
excess shall be charged to expense and separately disclosed during the 
period in which the excess occurs. Amounts thus required to be written 
off shall not be reinstated for any subsequent increase in the cost 
center ceiling.
    (5) Production costs. All costs relating to production activities, 
including workover costs incurred solely to maintain or increase levels 
of production from an existing completion interval, shall be charged to 
expense as incurred.
    (6) Other transactions. The provisions of paragraph (h) of this 
section, ``Mineral property conveyances and related transactions if the 
successful efforts method of accounting is followed,'' shall apply also 
to those reporting entities following the full cost method except as 
follows:
    (i) Sales and abandonments of oil and gas properties. Sales of oil 
and gas properties, whether or not being amortized currently, shall be 
accounted for as adjustments of capitalized costs, with no gain or loss 
recognized, unless such adjustments would significantly alter the 
relationship between capitalized costs and proved reserves of oil and 
gas attributable to a cost center. For instance, a significant 
alteration would not ordinarily be expected to occur for sales involving 
less than 25 percent of the reserve quantities of a given cost center. 
If gain or loss is recognized on such a sale, total capitalization costs

[[Page 281]]

within the cost center shall be allocated between the reserves sold and 
reserves retained on the same basis used to compute amortization, unless 
there are substantial economic differences between the properties sold 
and those retained, in which case capitalized costs shall be allocated 
on the basis of the relative fair values of the properties. Abandonments 
of oil and gas properties shall be accounted for as adjustments of 
capitalized costs; that is, the cost of abandoned properties shall be 
charged to the full cost center and amortized (subject to the limitation 
on capitalized costs in paragraph (b) of this section).
    (ii) Purchases of reserves. Purchases of oil and gas reserves in 
place ordinarily shall be accounted for as additional capitalized costs 
within the applicable cost center; however, significant purchases of 
production payments or properties with lives substantially shorter than 
the composite productive life of the cost center shall be accounted for 
separately.
    (iii) Partnerships, joint ventures and drilling arrangements. (A) 
Except as provided in paragraph (i)(6)(i) of this section, all 
consideration received from sales or transfers of properties in 
connection with partnerships, joint venture operations, or various other 
forms of drilling arrangements involving oil and gas exploration and 
development activities (e.g., carried interest, turnkey wells, 
management fees, etc.) shall be credited to the full cost account, 
except to the extent of amounts that represent reimbursement of 
organization, offering, general and administrative expenses, etc., that 
are identifiable with the transaction, if such amounts are currently 
incurred and charged to expense.
    (B) Where a registrant organizes and manages a limited partnership 
involved only in the purchase of proved developed properties and 
subsequent distribution of income from such properties, management fee 
income may be recognized provided the properties involved do not require 
aggregate development expenditures in connection with production of 
existing proved reserves in excess of 10% of the partnership's recorded 
cost of such properties. Any income not recognized as a result of this 
limitation would be credited to the full cost account and recognized 
through a lower amortization provision as reserves are produced.
    (iv) Other services. No income shall be recognized in connection 
with contractual services performed (e.g. drilling, well service, or 
equipment supply services, etc.) in connection with properties in which 
the registrant or an affiliate (as defined in Sec. 210.1-02(b)) holds an 
ownership or other economic interest, except as follows:
    (A) Where the registrant acquires an interest in the properties in 
connection with the service contract, income may be recognized to the 
extent the cash consideration received exceeds the related contract 
costs plus the registrant's share of costs incurred and estimated to be 
incurred in connection with the properties. Ownership interests acquired 
within one year of the date of such a contract are considered to be 
acquired in connection with the service for purposes of applying this 
rule. The amount of any guarantees or similar arrangements undertaken as 
part of this contract should be considered as part of the costs related 
to the properties for purposes of applying this rule.
    (B) Where the registrant acquired an interest in the properties at 
least one year before the date of the service contract through 
transactions unrelated to the service contract, and that interest is 
unaffected by the service contract, income from such contract may be 
recognized subject to the general provisions for elimination of inter-
company profit under generally accepted accounting principles.
    (C) Notwithstanding the provisions of paragraphs (i)(6)(iv) (A) and 
(B) of this section, no income may be recognized for contractual 
services performed on behalf of investors in oil and gas producing 
activities managed by the registrant or an affiliate. Furthermore, no 
income may be recognized for contractual services to the extent that the 
consideration received for such services represents an interest in the 
underlying property.
    (D) Any income not recognized as a result of these rules would be 
credited to the full cost account and recognized

[[Page 282]]

through a lower amortization provision as reserves are produced.
    (7) Disclosures. Reporting entities that follow the full cost method 
of accounting shall disclose all of the information required by 
paragraph (k) of this section, with each cost center considered as a 
separate geographic area, except that reasonable groupings may be made 
of cost centers that are not significant in the aggregate. In addition:
    (i) For each cost center for each year that an income statement is 
required, disclose the total amount of amortization expense (per 
equivalent physical unit of production if amortization is computed on 
the basis of physical units or per dollar of gross revenue from 
production if amortization is computed on the basis of gross revenue).
    (ii) State separately on the face of the balance sheet the aggregate 
of the capitalized costs of unproved properties and major development 
projects that are excluded, in accordance with paragraph (i)(3) of this 
section, from the capitalized costs being amortized. Provide a 
description in the notes to the financial statements of the current 
status of the significant properties or projects involved, including the 
anticipated timing of the inclusion of the costs in the amortization 
computation. Present a table that shows, by category of cost, (A) the 
total costs excluded as of the most recent fiscal year; and (B) the 
amounts of such excluded costs, incurred (1) in each of the three most 
recent fiscal years and (2) in the aggregate for any earlier fiscal 
years in which the costs were incurred. Categories of cost to be 
disclosed include acquisition costs, exploration costs, development 
costs in the case of significant development projects and capitalized 
interest.

                              Income Taxes

    (d) Income taxes. Comprehensive interperiod income tax allocation by 
a method which complies with generally accepted accounting principles 
shall be followed for intangible drilling and development costs and 
other costs incurred that enter into the determination of taxable income 
and pretax accounting income in different periods.

(Secs. 6, 7, 8, 10, and 19(a) (15 U.S.C. 77f, 77g, 77h, 77j, 77s) of the 
Securities Act of 1933; secs. 12, 13, 15(d) and 23(a) (15 U.S.C. 78l, 
78m, 78o(d), 78w), of the Securities Exchange Act of 1934; secs. 5(b), 
14, and 20(a) (15 U.S.C. 79e, 79n, 79t) of the Public Utility Holding 
Company Act of 1935; secs. 8, 30, 31(c) and 38(a) (15 U.S.C. 80a-8, 80a-
29, 80a-30(c), 80a-37(a)) of the Investment Company Act of 1940; sec. 
503 (42 U.S.C. 6383) of the Energy Policy and Conservation Act of 1975; 
secs. 5, 6, 7, 8, 10, 19(a) and Schedule A e(25) and (26) (15 U.S.C. 
77e, 77f, 77g, 77h, 77j, 77s(a) and 77aa (25) and (26)) of the 
Securities Act of 1933; secs. 12, 13, 14, 15(d) and 23(a) (15 U.S.C. 
78l, 78m, 78n, 78o(d), 78w(a)) of the Securities Exchange Act of 1934; 
secs. 5(b), 14 and 20(a) (15 U.S.C. 79e(b), 79n, 79t(a)) of the Public 
Utility Holding Company Act of 1935 and sec. 503 (42 U.S.C. 6383) of the 
Energy Policy and Conservation Act of 1975)

[43 FR 60405, Dec. 27, 1978, as amended at 43 FR 60417, Dec. 27, 1978; 
44 FR 57036, 57038, Oct. 9, 1979; 45 FR 27749, Apr. 24, 1980. 
Redesignated and amended at 45 FR 63669, Sept. 25, 1980; 47 FR 57913, 
Dec. 29, 1982; 48 FR 44200, Sept. 28, 1983; 49 FR 18473, May 1, 1984; 57 
FR 45293, Oct. 1, 1992; 61 FR 30401, June 14, 1996]

                   Commercial and Industrial Companies



Sec. 210.5-01  Application of Secs. 210.5-01 to 210.5-04.

    Sections 210.5-01 to 210.5-04 shall be applicable to financial 
statements filed for all persons except--
    (a) Registered investment companies (see Secs. 210.6-01 to 210.6-
10).
    (b) Employee stock purchase, savings and similar plans (see 
Secs. 210.6A-01 to 210.6A-05).
    (c) Insurance companies (see Secs. 210.7-01 to 210.7-05).
    (d) Bank holding companies and banks (see Secs. 210.9-01 to 210.9-
07).
    (e) Brokers and dealers when filing Form X-17A-5 [249.617] (see 
Secs. 240.17a-5 and 240.17a-10 under the Securities Exchange Act of 
1934).

[50 FR 49533, Dec. 3, 1985]



Sec. 210.5-02  Balance sheets.

    The purpose of this rule is to indicate the various line items and 
certain additional disclosures which, if applicable, and except as 
otherwise permitted by the Commission, should appear on the face of the 
balance sheets or related

[[Page 283]]

notes filed for the persons to whom this article pertains (see 
Sec. 210.4-01(a)).

                         Assets and Other Debits

                    Current Assets, when appropriate

                           [See Sec. 210.4-05]

    1. Cash and cash items. Separate disclosure shall be made of the 
cash and cash items which are restricted as to withdrawal or usage. The 
provisions of any restrictions shall be described in a note to the 
financial statements. Restrictions may include legally restricted 
deposits held as compensating balances against short-term borrowing 
arrangements, contracts entered into with others, or company statements 
of intention with regard to particular deposits; however, time deposits 
and short-term certificates of deposit are not generally included in 
legally restricted deposits. In cases where compensating balance 
arrangements exist but are not agreements which legally restrict the use 
of cash amounts shown on the balance sheet, describe in the notes to the 
financial statements these arrangements and the amount involved, if 
determinable, for the most recent audited balance sheet required and for 
any subsequent unaudited balance sheet required in the notes to the 
financial statements. Compensating balances that are maintained under an 
agreement to assure future credit availability shall be disclosed in the 
notes to the financial statements along with the amount and terms of 
such agreement.
    2. Marketable securities. The accounting and disclosure requirements 
for current marketable equity securities are specified by generally 
accepted accounting principles. With respect to all other current 
marketable securities, state, parenthetically or otherwise, the basis of 
determining the aggregate amount shown in the balance sheet, along with 
the alternatives of the aggregate cost or the aggregate market value at 
the balance sheet date.
    3. Accounts and notes receivable. (a) State separately amounts 
receivable from (1) customers (trade); (2) related parties (see 
Sec. 210.4-08(k)); (3) underwriters, promoters, and employees (other 
than related parties) which arose in other than the ordinary course of 
business; and (4) others.
    (b) If the aggregate amount of notes receivable exceeds 10 percent 
of the aggregate amount of receivables, the above information shall be 
set forth separately, in the balance sheet or in a note thereto, for 
accounts receivable and notes receivable.
    (c) If receivables include amounts due under long-term contracts 
(see Sec. 210.5-02.6(d)), state separately in the balance sheet or in a 
note to the financial statements the following amounts:
    (1) Balances billed but not paid by customers under retainage 
provisions in contracts.
    (2) Amounts representing the recognized sales value of performance 
and such amounts that had not been billed and were not billable to 
customers at the date of the balance sheet. Include a general 
description of the prerequisites for billing.
    (3) Billed or unbilled amounts representing claims or other similar 
items subject to uncertainty concerning their determination or ultimate 
realization. Include a description of the nature and status of the 
principal items comprising such amount.
    (4) With respect to (1) through (3) above, also state the amounts 
included in each item which are expected to be collected after one year. 
Also state, by year, if practicable, when the amounts of retainage (see 
(1) above) are expected to be collected.
    4. Allowances for doubtful accounts and notes receivable. The amount 
is to be set forth separately in the balance sheet or in a note thereto.
    5. Unearned income.
    6. Inventories. (a) State separately in the balance sheet or in a 
note thereto, if practicable, the amounts of major classes of inventory 
such as: (1) Finished goods; (2) inventoried costs relating to long-term 
contracts or programs (see (d) below and Sec. 210.4-05); (3) work in 
process (see Sec. 210.4-05); (4) raw materials; and (5) supplies. If the 
method of calculating a LIFO inventory does not allow for the practical 
determination of amounts assigned to major classes of inventory, the 
amounts of those classes may be stated under cost flow assumptions other 
that LIFO with the excess of such total amount over the agggregate LIFO 
amount shown as a deduction to arrive at the amount of the LIFO 
inventory.
    (b) The basis of determining the amounts shall be stated.
    If cost is used to determine any portion of the inventory amounts, 
the description of this method shall include the nature of the cost 
elements included in inventory. Elements of cost include, among other 
items, retained costs representing the excess of manufacturing or 
production costs over the amounts charged to cost of sales or delivered 
or in-process units, initial tooling or other deferred startup costs, or 
general and administrative costs.
    The method by which amounts are removed from inventory (e.g., 
average cost, first-in, first-out, last-in, first-out, estimated average 
cost per unit) shall be described. If the estimated average cost per 
unit is used as a basis to determine amounts removed from inventory 
under a total program or similar basis of accounting, the principal 
assumptions (including, where meaningful, the aggregate number of units 
expected to be delivered under the program, the number of units

[[Page 284]]

delivered to date and the number of units on order) shall be disclosed.
    If any general and administrative costs are charged to inventory, 
state in a note to the financial statements the aggregate amount of the 
general and administrative costs incurred in each period and the actual 
or estimated amount remaining in inventory at the date of each balance 
sheet.
    (c) If the LIFO inventory method is used, the excess of replacement 
or current cost over stated LIFO value shall, if material, be stated 
parenthetically or in a note to the financial statements.
    (d) For purposes of Secs. 210.5-02.3 and 210.5-02.6, long-term 
contracts or programs include (1) all contracts or programs for which 
gross profits are recognized on a percentage-of-completion method of 
accounting or any variant thereof (e.g., delivered unit, cost to cost, 
physical completion), and (2) any contracts or programs accounted for on 
a completed contract basis of accounting where, in either case, the 
contracts or programs have associated with them material amounts of 
inventories or unbilled receivables and where such contracts or programs 
have been or are expected to be performed over a period of more than 
twelve months. Contracts or programs of shorter duration may also be 
included, if deemed appropriate.
    For all long-term contracts or programs, the following information, 
if applicable, shall be stated in a note to the financial statements:
    (i) The aggregate amount of manufacturing or production costs and 
any related deferred costs (e.g., initial tooling costs) which exceeds 
the aggregate estimated cost of all in-process and delivered units on 
the basis of the estimated average cost of all units expected to be 
produced under long-term contracts and programs not yet complete, as 
well as that portion of such amount which would not be absorbed in cost 
of sales based on existing firm orders at the latest balance sheet date. 
In addition, if practicable, disclose the amount of deferred costs by 
type of cost (e.g., initial tooling, deferred production, etc.).
    (ii) The aggregate amount representing claims or other similar items 
subject to uncertainty concerning their determination or ultimate 
realization, and include a description of the nature and status of the 
principal items comprising such aggregate amount.
    (iii) The amount of progress payments netted against inventory at 
the date of the balance sheet.
    7. Prepaid expenses.
    8. Other current assets. State separately, in the balance sheet or 
in a note thereto, any amounts in excess of five percent of total 
current assets.
    9. Total current assets, when appropriate.
    10. Securities of related parties. (See Sec. 210.4-08(k).)
    11. Indebtedness of related parties--not current. (See Sec. 210.4-
08(k).)
    12. Other investments. The accounting and disclosure requirements 
for non-current marketable equity securities are specified by generally 
accepted accounting principles. With respect to other security 
investments and any other investment, state, parenthetically or 
otherwise, the basis of determining the aggregate amounts shown in the 
balance sheet, along with the alternate of the aggregate cost or 
aggregate market value at the balance sheet date.
    13. Property, plant and equipment.
    (a) State the basis of determining the amounts.
    (b) Tangible and intangible utility plant of a public utility 
company shall be segregated so as to show separately the original cost, 
plant acquisition adjustments, and plant adjustments, as required by the 
system of accounts prescribed by the applicable regulatory authorities. 
This rule shall not be applicable in respect to companies which are not 
required to make such a classification.
    14. Accumulated depreciation, depletion, and amortization of 
property, plant and equipment. The amount is to be set forth separately 
in the balance sheet or in a note thereto.
    15. Intangible assets. State separately each class of such assets 
which is in excess of five percent of the total assets, along with the 
basis of determining the respective amounts. Any significant addition or 
deletion shall be explained in a note.
    16. Accumulated depreciation and amortization of intangible assets. 
The amount is to be set forth separately in the balance sheet or in a 
note thereto.
    17. Other assets. State separately, in the balance sheet or in a 
note thereto, any other item not properly classed in one of the 
preceding asset captions which is in excess of five percent to total 
assets. Any significant addition or deletion should be explained in a 
note. With respect to any significant deferred charge, state the policy 
for deferral and amortization.
    18. Total assets.

                  Liabilities and Stockholders' Equity

        Current Liabilities, When Appropriate (See Sec. 210.4-05)

    19. Accounts and notes payable. (a) State separately amounts payable 
to (1) banks for borrowings; (2) factors or other financial institutions 
for borrowings; (3) holders of commercial paper; (4) trade creditors; 
(5) related parties (see Sec. 210.4-08(k)); (6) underwriters, promoters, 
and employees (other than related parties); and (7) others. Amounts 
applicable to (1), (2) and (3) may be stated separately in the balance 
sheet or in a note thereto.
    (b) The amount and terms (including commitment fees and the 
conditions under which

[[Page 285]]

lines may be withdrawn) of unused lines of credit for short-term 
financing shall be disclosed, if significant, in the notes to the 
financial statements. The weighted average interest rate on short term 
borrowings outstanding as of the date of each balance sheet presented 
shall be furnished in a note. The amount of these lines of credit which 
support a commercial paper borrowing arrangement or similar arrangements 
shall be separately identified.
    20. Other current liabilities. State separately, in the balance 
sheet or in a note thereto, any item in excess of 5 percent of total 
current liabilities. Such items may include, but are not limited to, 
accrued payrolls, accrued interest, taxes, indicating the current 
portion of deferred income taxes, and the current portion of long-term 
debt. Remaining items may be shown in one amount.
    21. Total current liabilities, when appropriate.

                             Long-Term Debt

    22. Bonds, mortgages and other long-term debt, including capitalized 
leases. (a) State separately, in the balance sheet or in a note thereto, 
each issue or type of obligation and such information as will indicate 
(see Sec. 210.4-06):
    (1) The general character of each type of debt including the rate of 
interest; (2) the date of maturity, or, if maturing serially, a brief 
indication of the serial maturities, such as ``maturing serially from 
1980 to 1990''; (3) if the payment of principal or interest is 
contingent, an appropriate indication of such contingency; (4) a brief 
indication of priority; and (5) if convertible, the basis. For amounts 
owed to related parties, see Sec. 210.4-08(k).
    (b) The amount and terms (including commitment fees and the 
conditions under which commitments may be withdrawn) of unused 
commitments for long-term financing arrangements that would be disclosed 
under this rule if used shall be disclosed in the notes to the financial 
statements if significant.
    23. Indebtedness to related parties--noncurrent. Include under this 
caption indebtedness to related parties as required under Sec. 210.4-
08(k).
    24. Other liabilities. State separately, in the balance sheet or in 
a note thereto, any item not properly classified in one of the preceding 
liability captions which is in excess of 5 percent of total liabilities.
    25. Commitments and contingent liabilities.
    26. Deferred credits. State separately in the balance sheet amounts 
for (a) deferred income taxes, (b) deferred tax credits, and (c) 
material items of deferred income.

                           Minority Interests

    27. Minority interests in consolidated subsidiaries. State 
separately in a note the amounts represented by preferred stock and the 
applicable dividend requirements if the preferred stock is material in 
relation to the consolidated stockholders' equity.

                       Redeemable Preferred Stocks

    28. Preferred stocks subject to mandatory redemption requirements or 
whose redemption is outside the control of the issuer. (a) Include under 
this caption amounts applicable to any class of stock which has any of 
the following characteristics: (1) it is redeemable at a fixed or 
determinable price on a fixed or determinable date or dates, whether by 
operation of a sinking fund or otherwise; (2) it is redeemable at the 
option of the holder; or (3) it has conditions for redemption which are 
not solely within the control of the issuer, such as stocks which must 
be redeemed out of future earnings. Amounts attributable to preferred 
stock which is not redeemable or is redeemable solely at the option of 
the issuer shall be included under Sec. 210.5-02.29 unless it meets one 
or more of the above criteria.
    (b) State on the face of the balance sheet the title of each issue, 
the carrying amount, and redemption amount. (If there is more than one 
issue, these amounts may be aggregated on the face of the balance sheet 
and details concerning each issue may be presented in the note required 
by paragraph (c) below.) Show also the dollar amount of any shares 
subscribed but unissued, and show the deduction of subscriptions 
receivable therefrom. If the carrying value is different from the 
redemption amount, describe the accounting treatment for such difference 
in the note required by paragraph (c) below. Also state in this note or 
on the face of the balance sheet, for each issue, the number of shares 
authorized and the number of shares issued or outstanding, as 
appropriate (See Sec. 210.4-07).
    (c) State in a separate note captioned ``Redeemable Preferred 
Stocks'' (1) a general description of each issue, including its 
redemption features (e.g. sinking fund, at option of holders, out of 
future earnings) and the rights, if any, of holders in the event of 
default, including the effect, if any, on junior securities in the event 
a required dividend, sinking fund, or other redemption payment(s) is not 
made; (2) the combined aggregate amount of redemption requirements for 
all issues each year for the five years following the date of the latest 
balance sheet; and (3) the changes in each issue for each period for 
which an income statement is required to be filed. (See also Sec. 210.4-
08(d).)
    (d) Securities reported under this caption are not to be included 
under a general heading ``stockholders' equity'' or combined in a total 
with items described in captions 29, 30 or 31 which follow.

[[Page 286]]

                     Non-Redeemable Preferred Stocks

    29. Preferred stocks which are not redeemable or are redeemable 
solely at the option of the issuer. State on the face of the balance 
sheet, or if more than one issue is outstanding state in a note, the 
title of each issue and the dollar amount thereof. Show also the dollar 
amount of any shares subscribed but unissued, and show the deduction of 
subscriptions receivable therefrom. State on the face of the balance 
sheet or in a note, for each issue, the number of shares authorized and 
the number of shares issued or outstanding, as appropriate (see 
Sec. 210.4-07). Show in a note or separate statement the changes in each 
class of preferred shares reported under this caption for each period 
for which an income statement is required to be filed. (See also 
Sec. 210.4-08(d).)

                              Common Stocks

    30. Common stocks. For each class of common shares state, on the 
face of the balance sheet, the number of shares issued or outstanding, 
as appropriate (see Sec. 210.4-07), and the dollar amount thereof. If 
convertible, this fact should be indicated on the face of the balance 
sheet. For each class of common shares state, on the face of the balance 
sheet or in a note, the title of the issue, the number of shares 
authorized, and, if convertible, the basis of conversion (see also 
Sec. 210.4-08(d)). Show also the dollar amount of any common shares 
subscribed but unissued, and show the deduction of subscriptions 
receivable therefrom. Show in a note or statement the changes in each 
class of common shares for each period for which an income statement is 
required to be filed.

                       Other Stockholders' Equity

    31. Other stockholders' equity. (a) Separate captions shall be shown 
for (1) additional paid-in capital, (2) other additional capital and (3) 
retained earnings (i) appropriated and (ii) unappropriated. (See 
Sec. 210.4-08(e).) Additional paid-in capital and other additional 
capital may be combined with the stock caption to which it applies, if 
appropriate.
    (b) For a period of at least 10 years subsequent to the effective 
date of a quasi-reorganization, any description of retained earnings 
shall indicate the point in time from which the new retained earnings 
dates and for a period of at least three years shall indicate, on the 
face of the balance sheet, the total amount of the deficit eliminated.
    32. Total liabilities and stockholders' equity.

(Secs. 7 and 19a of the Securities Act, 15 U.S.C. 77g, 77s(a), 
77aa(25)(26); secs. 12, 13, 14, 15(d), and 23(a) of the Securities 
Exchange Act of 1934, 15 U.S.C. 78l, 78m, 78n, 78o(d), 78w(a), secs. 
5(b), 10(a), 14, 20(a) of the Public Utility Holding Company Act, 15 
U.S.C. 79e(a), 79n, 79t(a); secs. 8, 20, 30, 31(c), 38(a) of the 
Investment Company Act of 1940, 15 U.S.C. 80a-8, 80a-20, 80a-29, 80a-
30(c), 80a-37(a))

[45 FR 63671, Sept. 25, 1980, as amended at 46 FR 43412, Aug. 28, 1981; 
47 FR 29837, July 9, 1982; 50 FR 25215, June 18, 1985; 50 FR 49533, Dec. 
3, 1985; 59 FR 65636, Dec. 20, 1994]



Sec. 210.5-03  Income statements.

    (a) The purpose of this rule is to indicate the various line items 
which, if applicable, and except as otherwise permitted by the 
Commission, should appear on the face of the income statements filed for 
the persons to whom this article pertains (see Sec. 210.4-01(a)).
    (b) If income is derived from more than one of the subcaptions 
described under Sec. 210.5-03.1, each class which is not more than 10 
percent of the sum of the items may be combined with another class. If 
these items are combined, related costs and expenses as described under 
Sec. 210.5-03.2 shall be combined in the same manner.

    1. Net sales and gross revenues. State separately:
    (a) Net sales of tangible products (gross sales less discounts, 
returns and allowances), (b) operating revenues of public utilities or 
others; (c) income from rentals; (d) revenues from services; and (e) 
other revenues. Amounts earned from transactions with related parties 
shall be disclosed as required under Sec. 210.4-08(k). A public utility 
company using a uniform system of accounts or a form for annual report 
prescribed by federal or state authorities, or a similar system or 
report, shall follow the the general segregation of operating revenues 
and operating expenses reported under Sec. 210.5-03.2 prescribed by such 
system or report. If the total of sales and revenues reported under this 
caption includes excise taxes in an amount equal to 1 percent or more of 
such total, the amount of such excise taxes shall be shown on the face 
of the statement parenthetically or othewise.

[[Page 287]]

    2. Costs and expenses applicable to sales and revenues.
    State separately the amount of (a) cost of tangible goods sold, (b) 
operating expenses of public utilities or others, (c) expenses 
applicable to rental income, (d) cost of services, and (e) expenses 
applicable to other revenues. Merchandising organizations, both 
wholesale and retail, may include occupancy and buying costs under 
caption 2(a). Amounts of costs and expenses incurred from transactions 
with related parties shall be disclosed as required under Sec. 210.4-
08(k).
    3. Other operating costs and expenses. State separately any material 
amounts not included under caption 2 above.
    4. Selling, general and administrative expenses.
    5. Provision for doubtful accounts and notes.
    6. Other general expenses. Include items not normally included in 
caption 4 above. State separately any material item.
    7. Non-operating income.
    State separately in the income statement or in a note thereto 
amounts earned from (a) dividends, (b) interest on securities, (c) 
profits on securities (net of losses), and (d) miscellaneous other 
income. Amounts earned from transactions in securities of related 
parties shall be disclosed as required under Sec. 210.4-08(k). Material 
amounts included under miscellaneous other income shall be separately 
stated in the income statement or in a note thereto, indicating clearly 
the nature of the transactions out of which the items arose.
    8. Interest and amortization of debt discount and expense.
    9. Non-operating expenses.
    State separately in the income statement or in a note thereto 
amounts of (a) losses on securities (net of profits) and (b) 
miscellaneous income deductions. Material amounts included under 
miscellaneous income deductions shall be separately stated in the income 
statement or in a note thereto, indicating clearly the nature of the 
transactions out of which the items arose.
    10. Income or loss before income tax expense and appropriate items 
below.
    11. Income tax expense. Include under this caption only taxes based 
on income (see Sec. 210.4-08(h)).
    12. Minority interest in income of consolidated subsidiaries.
    13. Equity in earnings of unconsolidated subsidiaries and 50 percent 
or less owned persons. State, parenthetically or in a note, the amount 
of dividends received from such persons. If justified by the 
circumstances, this item may be presented in a different position and a 
different manner (see Sec. 210.4-01(a)).
    14. Income or loss from continuing operations.
    15. Discontinued operations.
    16. Income or loss before extraordinary items and cumulative effects 
of changes in accounting principles.
    17. Extraordinary items, less applicable tax.
    18. Cumulative effects of changes in accounting principles.
    19. Net income or loss.
    20. Earnings per share data.

[45 FR 63671, Sept. 25, 1980, as amended at 45 FR 76977, Nov. 21, 1980; 
50 FR 25215, June 18, 1985]



Sec. 210.5-04  What schedules are to be filed.

    (a) Except as expressly provided otherwise in the applicable form:
    (1) The schedules specified below in this Section as Schedules II 
and III shall be filed as of the date of the most recent audited 
balanced sheet for each person or group.
    (2) Schedule II shall be filed for each period for which an audited 
income statement is required to be filed for each person or group.
    (3) Schedules I and IV shall be filed as of the date and for periods 
specified in the schedule.
    (b) When information is required in schedules for both the 
registrant and the registrant and its subsidiaries consolidated it may 
be presented in the form of a single schedule: Provided, That items 
pertaining to the registrant are separately shown and that such single 
schedule affords a properly summarized presentation of the facts. If the 
information required by any schedule (including the notes thereto) may 
be shown in the related financial statement or in a note thereto without 
making such statement unclear or confusing, that procedure may be 
followed and the schedule omitted.
    (c) The schedules shall be examined by the independent accountant if 
the related financial statements are so examined.

    Schedule I--Condensed financial information of registrant. The 
schedule prescribed by Sec. 210.12-04 shall be filed when the restricted 
net assets (Sec. 210.4-08(e)(3)) of consolidated subsidiaries exceed 25 
percent of consolidated net assets as of the end of the most recently 
completed fiscal year. For purposes of the above test, restricted net 
assets of consolidated subsidiaries shall mean that amount of the 
registrant's proportionate share of net assets of consolidated 
subsidiaries (after intercompany eliminations) which as of the end of 
the most recent fiscal year may not be transferred to the parent company 
by subsidiaries in the form of loans, advances or cash dividends without

[[Page 288]]

the consent of a third party (i.e., lender, regulatory agency, foreign 
government, etc.). Where restrictions on the amount of funds which may 
be loaned or advanced differ from the amount restricted as to transfer 
in the form of cash dividends, the amount least restrictive to the 
subsidiary shall be used. Redeemable preferred stocks (Sec. 210.5-02.28) 
and minority interests shall be deducted in computing net assets for 
purposes of this test.
    Schedule II--Valuation and qualifying accounts. The schedule 
prescribed by Sec. 210.12-09 shall be filed in support of valuation and 
qualifying accounts included in each balance sheet but not included in 
Schedule VI. (See Sec. 210.4-02.)
    Schedule III--Real estate and accumulated depreciation. The schedule 
prescribed by Sec. 210.12-28 shall be filed for real estate (and the 
related accumulated depreciation) held by persons a substantial portion 
of whose business is that of acquiring and holding for investment real 
estate or interests in real estate, or interests in other persons a 
substantial portion of whose business is that of acquiring and holding 
real estate or interests in real estate for investment. Real estate used 
in the business shall be excluded from the schedule.
    Schedule IV--Mortgage loans on real estate. The schedule prescribed 
by Sec. 210.12-29 shall be filed by persons specified under Schedule XI 
for investments in mortgage loans on real estate.
    Schedule V--Supplemental Information Concerning Property-casualty 
Insurance Operations. The schedule prescribed by Sec. 210.12-18 shall be 
filed when a registrant, its subsidiaries or 50%-or-less-owned equity 
basis investees, have liabilities for property-casualty (``P/C'') 
insurance claims. The required information shall be presented as of the 
same dates and for the same periods for which the information is 
reflected in the audited consolidated financial statements required by 
Secs. 210.3-01 and 3-02. The schedule may be omitted if reserves for 
unpaid P/C claims and claims adjustment expenses of the registrant and 
its consolidated subsidiaries, its unconsolidated subsidiaries and its 
50%-or-less-owned equity basis investees did not, in the aggregate, 
exceed one-half of common stockholders' equity of the registrant and its 
consolidated subsidiaries as of the beginning of the fiscal year. For 
purposes of this test only the proportionate share of the registrant and 
its other subsidiaries in the reserves for unpaid claims and claim 
adjustment expenses of 50%-or-less-owned equity basis investees taken in 
the aggregate after intercompany eliminations shall be taken into 
account.

[45 FR 63671, Sept. 25, 1980, as amended at 46 FR 48137, Oct. 1, 1981; 
46 FR 56180, Nov. 16, 1981; 49 FR 47598, Dec. 6, 1984; 50 FR 25215, June 
18, 1985; 59 FR 65636, Dec. 20, 1994]

                     Registered Investment Companies

    Source: Sections 210.6-01 to 210.6-10 appear at 47 FR 56838, Dec. 
21, 1982, unless otherwise noted.



Sec. 210.6-01  Application of Secs. 210.6-01 to 210.6-10.

    Sections 210.6-01 to 210.6-10 shall be applicable to financial 
statements filed for registered investment companies.



Sec. 210.6-02  Definition of certain terms.

    The following terms shall have the meaning indicated in this rule 
unless the context otherwise requires. (Also see Sec. 210.1-02 of this 
part.)
    (a) Affiliate. The term affiliate means an affiliated person as 
defined in section 2(a)(3) of the Investment Company Act of 1940 unless 
otherwise indicated. The term control has the meaning in section 2(a)(9) 
of that Act.
    (b) Value. As used in Secs. 210.6-01 to 210.6-10, the term value 
shall have the meaning given in section 2(a)(41)(B) of the Investment 
Company Act of 1940.
    (c) Balance sheets; statements of net assets. As used in 
Secs. 210.6-01 to 210.6-10, the term balance sheets shall include 
statements of assets and liabilities as well as statements of net assets 
unless the context clearly indicates the contrary.
    (d) Qualified assets. (1) For companies issuing face-amount 
certificates subsequent to December 31, 1940 under the provisions of 
section 28 of the Investment Company Act of 1940, the term qualified 
assets means qualified investments as that term is defined in section 
28(b) of the Act. A statement to that effect shall be made in the 
balance sheet.
    (2) For other companies, the term qualified assets means cash and 
investments which such companies do maintain or are required, by 
applicable governing legal instruments, to maintain in respect of 
outstanding face-amount certificates.
    (3) Loans to certificate holders may be included as qualified assets 
in an amount not in excess of certificate reserves carried on the books 
of account in respect of each individual certificate upon which the 
loans were made.

[[Page 289]]



Sec. 210.6-03  Special rules of general application to registered investment companies.

    The financial statements filed for persons to which Secs. 210.6-01 
to 210.6-10 are applicable shall be prepared in accordance with the 
following special rules in addition to the general rules in Secs. 210.1-
01 to 210.4-10 (Articles 1, 2, 3, and 4). Where the requirements of a 
special rule differ from those prescribed in a general rule, the 
requirements of the special rule shall be met.
    (a) Content of financial statements. The financial statements shall 
be prepared in accordance with the requirements of this part (Regulation 
S-X) notwithstanding any provision of the articles of incorporation, 
trust indenture or other governing legal instruments specifying certain 
accounting procedures inconsistent with those required in Secs. 210.6-01 
to 210.6-10.
    (b) Audited financial statements. Where, under Article 3 of this 
part, financial statements are required to be audited, the independent 
accountant shall have been selected and ratified in accordance with 
section 32 of the Investment Company Act of 1940.
    (c) Consolidated and combined statements. (1) Consolidated and 
combined statements filed for registered investment companies shall be 
prepared in accordance with Secs. 210.3A-01 to 210.3A-05 (Article 3A) 
except that (i) statements of the registrant may be consolidated only 
with the statements of subsidiaries which are investment companies; (ii) 
a consolidated statement of the registrant and any of its investment 
company subsidiaries shall not be filed unless accompanied by a 
consolidating statement which sets forth the individual statements of 
each significant subsidiary included in the consolidated statement: 
Provided, however, That a consolidating statement need not be filed if 
all included subsidiaries are totally held; and (iii) consolidated or 
combined statements filed for subsidiaries not consolidated with the 
registrant shall not include any investment companies unless accompanied 
by consolidating or combining statements which set forth the individual 
statements of each included investment company which is a significant 
subsidiary.
    (2) If consolidating or combining statements are filed, the amounts 
included under each caption in which financial data pertaining to 
affiliates is required to be furnished shall be subdivided to show 
separately the amounts: (i) Eliminated in consolidation; and (ii) not 
eliminated in consolidation.
    (d) Valuation of assets. The balance sheets of registered investment 
companies, other than issuers of face-amount certificates, shall reflect 
all investments at value, with the aggregate cost of each category of 
investment reported under Secs. 210.6-04.1, 6-04.2 and 6-04.3 and of the 
total investments reported under Sec. 210.6-04.4 or Sec. 210.6-05.1 
shown parenthetically. State in a note the methods used in determining 
value of investments. As required by section 28(b) of the Investment 
Company Act of 1940, qualified assets of face-amount certificate 
companies shall be valued in accordance with certain provisions of the 
Code of the District of Columbia. For guidance as to valuation of 
securities, see Secs. 404.03 to 404.05 of the Codification of Financial 
Reporting Policies.
    (e) Qualified assets. State in a note the nature of any investments 
and other assets maintained or required to be maintained, by applicable 
legal instruments, in respect of outstanding face-amount certificates. 
If the nature of the qualifying assets and amount thereof are not 
subject to the provisions of section 28 of the Investment Company Act of 
1940, a statement to that effect shall be made.
    (f) Restricted securities. State in a note unless disclosed 
elsewhere the following information as to investment securities which 
cannot be offered for public sale without first being registered under 
the Securities Act of 1933 (restricted securities):
    (1) The policy of the person with regard to acquisition of 
restricted securities.
    (2) The policy of the person with regard to valuation of restricted 
securities. Specific comments shall be given as to the valuation of an 
investment in one or more issues of securities of a company or group of 
affiliated companies if any part of such investment is restricted and 
the aggregate value of

[[Page 290]]

the investment in all issues of such company or affiliated group exceeds 
five percent of the value of total assets. (As used in this paragraph, 
the term affiliated shall have the meaning given in Sec. 210.6-02(a) of 
this part.)
    (3) A description of the person's rights with regard to demanding 
registration of any restricted securities held at the date of the latest 
balance sheet.
    (g) Income recognition. Dividends shall be included in income on the 
ex-dividend date; interest shall be accured on a daily basis. Dividends 
declared on short positions existing on the record date shall be 
recorded on the ex-dividend date and included as an expense of the 
period.
    (h) Federal income taxes. The company's status as a regulated 
investment company as defined in subtitle A, chapter 1, subchapter M of 
the Internal Revenue Code, as amended, shall be stated in a note 
referred to in the appropriate statements. Such note shall also indicate 
briefly the principal assumptions on which the company relied in making 
or not making provisions for income taxes. However, a company which 
retains realized capital gains and designates such gains as a 
distribution to shareholders in accordance with section 852(b)(3)(D) of 
the Internal Revenue Code shall, on the last day of its taxable year 
(and not earlier), make provision for taxes on such undistributed 
capital gains realized during such year.
    (i) Issuance and repurchase by a registered investment company of 
its own securities. Disclose for each class of the company's securities:
    (1) The number of shares, units, or principal amount of bonds sold 
during the period of report, the amount received therefor, and, in the 
case of shares sold by closed-end management investment companies, the 
difference, if any, between the amount received and the net asset value 
or preference in involuntary liquidation (whichever is appropriate) of 
securities of the same class prior to such sale; and
    (2) The number of shares, units, or principal amount of bonds 
repurchased during the period of report and the cost thereof. Closed-end 
management investment companies shall furnish the following additional 
information as to securities repurchased during the period of report:
    (i) As to bonds and preferred shares, the aggregate difference 
between cost and the face amount or preference in involuntary 
liquidation and, if applicable net assets taken at value as of the date 
of repurchase were less than such face amount or preference, the 
aggregate difference between cost and such net asset value;
    (ii) As to common shares, the weighted average discount per share, 
expressed as a percentage, between cost of repurchase and the net asset 
value applicable to such shares at the date of repurchases.

The information required by paragraphs (h)(i)(2) (i) and (ii) of this 
section may be based on reasonable estimates if it is impracticable to 
determine the exact amounts involved.
    (j) Series companies. (1) The information required by this part 
shall, in the case of a person which in essence is comprised of more 
than one separate investment company, be given as if each class or 
series of such investment company were a separate investment company; 
this shall not prevent the inclusion, at the option of such person, of 
information applicable to other classes or series of such person on a 
comparative basis, except as to footnotes which need not be comparative.
    (2) If the particular class or series for which information is 
provided may be affected by other classes or series of such investment 
company, such as by the offset of realized gains in one series with 
realized losses in another, or through contingent liabilities, such 
situation shall be disclosed.
    (k) Certificate reserves. (1) For companies issuing face-amount 
certificates subsequent to December 31, 1940 under the provisions of 
section 28 of the Investment Company Act of 1940, balance sheets shall 
reflect reserves for outstanding certificates computed in accordance 
with the provisions of section 28(a) of the Act.
    (2) For other companies, balance sheets shall reflect reserves for 
outstanding certificates determined as follows:
    (i) For certificates of the installment type, such amount which, 
together

[[Page 291]]

with the lesser of future payments by certificate holders as and when 
accumulated at a rate not to exceed 3\1/2\ per centum per annum (or such 
other rate as may be appropriate under the circumstances of a particular 
case) compounded annually, shall provide the minimum maturity or face 
amount of the certificate when due.
    (ii) For certificates of the fully-paid type, such amount which, as 
and when accumulated at a rate not to exceed 3\1/2\ per centum per annum 
(or such other rate as may be appropriate under the circumstances of a 
particular case) compounded annually, shall provide the amount or 
amounts payable when due.
    (iii) Such amount or accrual therefor, as shall have been credited 
to the account of any certificate holder in the form of any credit, or 
any dividend, or any interest in addition to the minimum maturity or 
face amount specified in the certificate, plus any accumulations on any 
amount so credited or accrued at rates required under the terms of the 
certificate.
    (iv) An amount equal to all advance payments made by certificate 
holders, plus any accumulations thereon at rates required under the 
terms of the certificate.
    (v) Amounts for other appropriate contingency reserves, for death 
and disability benefits or for reinstatement rights on any certificate 
providing for such benefits or rights.
    (l) Inapplicable captions. Attention is directed to the provisions 
of Secs. 210.4-02 and 210.4-03 which permit the omission of separate 
captions in financial statements as to which the items and conditions 
are not present, or the amounts involved not significant. However, 
amounts involving directors, officers, and affiliates shall nevertheless 
be separately set forth except as otherwise specifically permitted under 
a particular caption.



Sec. 210.6-04  Balance sheets.

    This rule is applicable to balance sheets filed by registered 
investment companies except for persons who substitute a statement of 
net assets in accordance with the requirements specified in Sec. 210.6-
05, and issuers of face-amount certificates which are subject to the 
special provisions of Sec. 210.6-06 of this part. Balance sheets filed 
under this rule shall comply with the following provisions:

                                 Assets

    1. Investments in securities of unaffiliated issuers.
    2. Investments in and advances to affiliates. State separately 
investments in and advances to: (a) Controlled companies and (b) other 
affiliates.
    3. Investments--other than securities. State separately each major 
category.
    4. Total investments.
    5. Cash. Include under this caption cash on hand and demand 
deposits. Provide in a note to the financial statements the information 
required under Sec. 210.5-02.1 regarding restrictions and compensating 
balances.
    6. Receivables. (a) State separately amounts receivable from (1) 
sales of investments; (2) subscriptions to capital shares; (3) dividends 
and interest; (4) directors and officers; and (5) others.
    (b) If the aggregate amount of notes receivable exceeds 10 percent 
of the aggregate amount of receivables, the above information shall be 
set forth separately, in the balance sheet or in a note thereto, for 
accounts receivable and notes receivable.
    7. Deposits for securities sold short and open option contracts. 
State separately amounts held by others in connection with: (a) Short 
sales and (b) open option contracts.
    8. Other assets. State separately (a) prepaid and deferred expenses; 
(b) pension and other special funds; (c) organization expenses; and (d) 
any other significant item not properly classified in another asset 
caption.
    9. Total assets.

                               Liabilities

    10. Accounts payable and accrued liabilities. State separately 
amounts payable for: (a) Securities sold short; (b) open option 
contracts written; (c) other purchases of securities; (d) capital shares 
reedeemed; (e) dividends or other distributions on capital shares; and 
(f) others. State separately the amount of any other liabilities which 
are material. Securities sold short and open option contracts written 
shall be stated at value.
    11. Deposits for securities loaned. State the value of securities 
loaned and indicate the nature of the collateral received as security 
for the loan, including the amount of any cash received.
    12. Other liabilities. State separately (a) amounts payable for 
investment advisory, management and service fees; and (b) the total 
amount payable to: (1) Officers and directors; (2) controlled companies; 
and (3) other affiliates, excluding any amounts owing to noncontrolled 
affiliates which arose

[[Page 292]]

in the ordinary course of business and which are subject to usual trade 
terms.
    13. Notes payable, bonds and similar debt. (a) State separately 
amounts payable to: (1) Banks or other financial institutions for 
borrowings; (2) controlled companies; (3) other affiliates; and (4) 
others, showing for each category amounts payable within one year and 
amounts payable after one year.
    (b) Provide in a note the information required under Sec. 210.5-
02.19(b) regarding unused lines of credit for short-term financing and 
Sec. 210.5-02.22(b) regarding unused commitments for long-term financing 
arrangements.
    14. Total liabilities.
    15. Commitments and contingent liabilities.

                               Net Assets

    16. Units of capital. (a) Disclose the title of each class of 
capital shares or other capital units, the number authorized, the number 
outstanding, and the dollar amount thereof.
    (b) Unit investment trusts, including those which are issuers of 
periodic payment plan certificates, also shall state in a note to the 
financial statements: (1) The total cost to the investors of each class 
of units or shares; (2) the adjustment for market depreciation or 
appreciation; (3) other deductions from the total cost to the investors 
for fees, loads and other charges, including an explanation of such 
deductions; and (4) the net amount applicable to the investors.
    17. Accumulated undistributed income (loss). Disclose:
    (a) The accumulated undistributed investment income-net,
    (b) accumulated undistributed net realized gains (losses) on 
investment transactions, and (c) net unrealized appreciation 
(depeciation) in value of investments at the balance sheet date.
    18. Other elements of capital. Disclose any other elements of 
capital or residual interests appropriate to the capital structure of 
the reporting entity.
    19. Net assets applicable to outstanding units of capital. State the 
net asset value per share.



Sec. 210.6-05  Statements of net assets.

    In lieu of the balance sheet otherwise required by Sec. 210.6-04 of 
this part, persons may substitute a statement of net assets if at least 
95 percent of the amount of the person's total assets are represented by 
investments in securities of unaffiliated issuers. If presented in such 
instances, a statement of net assets shall consist of the following:

                        Statements of Net Assets

    1. A schedule of investments in securities of unaffiliated issuers 
as prescribed in Sec. 210.12-12.
    2. The excess (or deficiency) of other assets over (under) total 
liabilities stated in one amount, except that any amounts due from or to 
officers, directors, controlled persons, or other affiliates, excluding 
any amounts owing to noncontrolled affiliates which arose in the 
ordinary course of business and which are subject to usual trade terms, 
shall be stated separately.
    3. Disclosure shall be provided in the notes to the financial 
statements for any item required under Secs. 210.6-04.10 to 210.6-04.13.
    4. The balance of the amounts captioned as net assets. The number of 
outstanding shares and net asset value per share shall be shown 
parenthetically.
    5. The information required by (i) Sec. 210.6-04.16, (ii) 
Sec. 210.6-04.17 and (iii) Sec. 210.6-04.18 shall be furnished in a note 
to the financial statements.



Sec. 210.6-06  Special provisions applicable to the balance sheets of issuers of face-amount certificates.

    Balance sheets filed by issuers of face-amount certificates shall 
comply with the following provisions:

                                 Assets

    1. Investments. State separately each major category: such as, real 
estate owned, first mortgage loans on real estate, other mortgage loans 
on real estate, investments in securities of unaffiliated issuers, and 
investments in and advances to affiliates.
    2. Cash. Include under this caption cash on hand and demand 
deposits. Provide in a note to the financial statements the information 
required under Sec. 210.5-02.1 regarding restrictions and compensating 
balances.
    3. Receivables. (a) State separately amounts receivable from (1) 
sales of investments; (2) dividends and interest; (3) directors and 
officers; and (4) others.
    (b) If the aggregate amount of notes receivable exceeds 10 percent 
of the aggregate amount of receivables, the above information shall be 
set forth separately, in the balance sheet or in a note thereto, for 
accounts receivable and notes receivable.
    4. Total qualified assets. State in a note to the financial 
statements the amount of qualified assets on deposit classified as to 
general categories of assets and as to general types of depositories, 
such as banks and states, together with a statement as to the purpose of 
the deposits.
    5. Other assets. State separately: (a) Investments in securities of 
unaffiliated issuers not included in qualifying assets in item 1 above; 
(b) investments in and advances to affiliates not included in qualifying 
assets in item 1 above; and (c) any other significant item not properly 
classified in another asset caption.
    6. Total assets.

[[Page 293]]

                               Liabilities

    7. Certificate reserves. Issuers of face-amount certificates shall 
state separately reserves for: (a) Certificates of the installment type; 
(b) certificates of the fully-paid type; (c) advance payments; (d) 
additional amounts accrued for or credited to the account of certificate 
holders in the form of any credit, dividend, or interest in addition to 
the minimum amount specified in the certificate; and (e) other 
certificate reserves. State in an appropriate manner the basis used in 
determining the reserves, including the rates of interest of 
accumulation.
    8. Notes payable, bonds and similar debt. (a) State separately 
amounts payable to: (1) Banks or other financial institutions for 
borrowings; (2) controlled companies; (3) other affiliates; and (4) 
others, showing for each category amounts payable within one year and 
amounts payable after one year.
    (b) Provide in a note the information required under Sec. 210.5-
02.19(b) regarding unused lines of credit for short-term financing and 
Sec. 210.5-02.22(b) regarding unused commitments for long-term financing 
arrangements.
    9. Accounts payable and accrued liabilities. State separately (a) 
amounts payable for investment advisory, management and service fees; 
and (b) the total amount payable to: (1) Officers and directors; (2) 
controlled companies; and (3) other affiliates, excluding any amounts 
owing to noncontrolled affiliates which arose in the ordinary course of 
business and which are subject to usual trade terms. State separately 
the amount of any other liabilities which are material.
    10. Total liabilities.
    11. Commitments and contingent liabilities.

                          Stockholders' Equity

    12. Capital shares. Disclose the title of each class of capital 
shares or other capital units, the number authorized, the number 
outstanding and the dollar amount thereof. Show also the dollar amount 
of any capital shares subscribed but unissued, and show the deduction 
for subscriptions receivable therefrom.
    13. Other elements of capital. (a) Disclose any other elements of 
capital or residual interests appropriate to the capital structure of 
the reporting entity.
    (b) A summary of each account under this caption setting forth the 
information prescribed in Sec. 210.3-04 shall be given in a note or 
separate statement for each period in which a statement of operations is 
presented.
    14. Total liabilities and stockholders' equity.



Sec. 210.6-07  Statements of operations.

    Statements of operations filed by registered investment companies, 
other than issuers of face-amount certificates subject to the special 
provisions of Sec. 210.6-08 of this part, shall comply with the 
following provisions:

                        Statements of Operations

    1. Investment income. State separately income from: (a) dividends; 
(b) interest on securities; and (c) other income. If income from 
investments in or indebtedness of affiliates is included hereunder, such 
income shall be segregated under an appropriate caption subdivided to 
show separately income from: (1) Controlled companies; and (2) other 
affiliates. If non-cash dividends are included in income, the bases of 
recognition and measurement used in respect to such amounts shall be 
disclosed. Any other category of income which exceeds five percent of 
the total shown under this caption shall be stated separately.
    2. Expenses. (a) State separately the total amount of investment 
advisory, management and service fees, and expenses in connection with 
research, selection, supervision, and custody of investments. Amounts of 
expenses incurred from transactions with affiliated persons shall be 
disclosed together with the identity of and related amount applicable to 
each such person accounting for five percent or more of the total 
expenses shown under this caption together with a description of the 
nature of the affiliation. Expenses incurred within the person's own 
organization in connection with research, selection and supervision of 
investments shall be stated separately. Reductions or reimbursements of 
management or service fees shall be shown as a negative amount or as a 
reduction of total expenses shown under this caption.
    (b) State separately any other expense item the amount of which 
exeeds five percent of the total expenses shown under this caption.
    (c) A note to the financial statements shall include information 
concerning management and service fees, the rate of fee, and the base 
and method of computation. State separately the amount and a description 
of any fee reductions or reimbursements representing: (1) Expense 
limitation agreements or commitments; and (2) offsets received from 
broker-dealers showing separately for each amount received or due from 
(i) unaffiliated persons; and (ii) affiliated persons. If no management 
or service fees were incurred for a period, state the reason therefor.
    (d) If any expenses were paid otherwise than in cash, state the 
details in a note.
    (e) State in a note to the financial statements the amount of 
brokerage commissions (including dealer markups) paid to affiliated 
broker-dealers in connection with purchase and sale of investment 
securities. Open-end management companies shall state in a note the net 
amounts of sales charges deducted from the proceeds of sale of capital 
shares

[[Page 294]]

which were retained by any affiliated principal underwriter or other 
affiliated broker-dealer.
    (f) State separately all amounts paid in accordance with a plan 
adopted under rule 12b-1 of the Investment Company Act of 1940 [17 CFR 
270.12b-1]. Reimbursement to the fund of expenses incurred under such 
plan (12b-1 expense reimbursement) shall be shown as a negative amount 
and deducted from current 12b-1 expenses. If 12b-1 expense 
reimbursements exceed current 12b-1 costs, such excess shall be shown as 
a negative amount used in the calculation of total expenses under this 
caption.
    (g)(1) Brokerage/Service Arrangements. If a broker-dealer or an 
affiliate of the broker-dealer has, in connection with directing the 
person's brokerage transactions to the broker-dealer, provided, agreed 
to provide, paid for, or agreed to pay for, in whole or in part, 
services provided to the person (other than brokerage and research 
services as those terms are used in section 28(e) of the Securities 
Exchange Act of 1934 [15 U.S.C. 78bb(e)]), include in the expense items 
set forth under this caption the amount that would have been incurred by 
the person for the services had it paid for the services directly in an 
arms-length transaction.
    (2) Expense Offset Arrangements. If the person has entered into an 
agreement with any other person pursuant to which such other person 
reduces, or pays a third party which reduces, by a specified or 
reasonably ascertainable amount, its fees for services provided to the 
person in exchange for use of the person's assets, include in the 
expense items set forth under this caption the amount of fees that would 
have been incurred by the person if the person had not entered into the 
agreement.
    (3) Financial Statement Presentation. Show the total amount by which 
expenses are increased pursuant to paragraphs (1) and (2) of this 
paragraph 2.(g) as a corresponding reduction in total expenses under 
this caption. In a note to the financial statements, state separately 
the total amounts by which expenses are increased pursuant to paragraphs 
(1) and (2) of this paragraph 2.(g), and list each category of expense 
that is increased by an amount equal to at least 5 percent of total 
expenses. If applicable, the note should state that the person could 
have employed the assets used by another person to produce income if it 
had not entered into an arrangement described in paragraph 2.(g)(2) of 
this section.
    3. Interest and amortization of debt discount and expense. Provide 
in the body of the statements or in the footnotes, the average dollar 
amount of borrowings and the average interest rate.
    4. Investment income before income tax expense.
    5. Income tax expense. Include under this caption only taxes based 
on income.
    6. Investment income-net.
    7. Realized and unrealized gain (loss) on investments-net. (a) State 
separately the net realized gain or loss on transactions in: (1) 
Investment securities of unaffiliated issuers, (2) investment securities 
of affiliated issuers, and (3) investments other than securities.
    (b) Distributions of realized gains by other investment companies 
shall be shown separately under this caption.
    (c) State separately: (1) The gain or loss from expiration or 
closing of option contracts written, (2) the gain or loss on closed 
short positions in securities, and (3) other realized gain or loss. 
Disclose in a note to the financial statements the number and associated 
dollar amounts as to option contracts written: (i) At the beginning of 
the period; (ii) during the period; (iii) expired during the period; 
(iv) closed during the period; (v) exercised during the period; (vi) 
balance at end of the period.
    (d) State separately the amount of the net increase or decrease 
during the period in the unrealized appreciation or depreciation in the 
value of investment securities and other investments held at the end of 
the period.
    (e) State separately any: (1) Federal income taxes and (2) other 
income taxes applicable to realized and unrealized gain (loss) on 
investments, distinguishing taxes payable currently from deferred income 
taxes.
    8. Net gain (loss) on investments.
    9. Net increase (decrease) in net assets resulting from operations.

[47 FR 56838, Dec. 21, 1982, as amended at 52 FR 23172, June 18, 1987; 
59 FR 65636, Dec. 20, 1994; 60 FR 38923, July 28, 1995]



Sec. 210.6-08  Special provisions applicable to the statements of operations of issuers of face-amount certificates.

    Statements of operations filed by issuers of face-amount 
certificates shall comply with the following provisions:

                        Statements of Operations

    1. Investment income. State separately income from: (a) Interest on 
mortgages; (b) interest on securities; (c) dividends; (d) rental income; 
and (e) other investment income. If income from investments in or 
indebtedness of affiliates is included hereunder, such income shall be 
segregated under an appropriate caption subdivided to show separately 
income from: (1) Controlled companies; and (2) other affiliates. If non-
cash dividends are included in income, the bases of recognition and 
measurement used in respect to such amounts shall be disclosed. Any 
other category of income which exceeds five percent

[[Page 295]]

of the total shown under this caption shall be stated separately.
    2. Investment expenses. (a) State separately the total amount of 
investment advisory, management and service fees, and expenses in 
connection with research, selection, supervision, and custody of 
investments. Amounts of expenses incurred from transactions with 
affiliated persons shall be disclosed together with the identity of and 
related amount applicable to each such person accounting for five 
percent or more of the total expenses shown under this caption together 
with a description of the nature of the affiliation. Expenses incurred 
within the person's own organization in connection with research, 
selection and supervision of investments shall be stated separately. 
Reductions or reimbursements of management or service fees shall be 
shown as a negative amount or as a reduction of total expenses shown 
under this caption.
    (b) State separately any other expense item the amount of which 
exceeds five percent of the total expenses shown under this caption.
    (c) A note to the financial statements shall include information 
concerning management and service fees, the rate of fee, and the base 
and method of computation. State separately the amount and a description 
of any fee reductions or reimbursements representing: (1) Expense 
limitation agreements or commitments; and (2) offsets received from 
broker-dealers showing separately for each amount received or due from: 
(i) Unaffiliated persons; and (ii) affiliated persons. If no management 
or service fees were incurred for a period, state the reason therefor.
    (d) If any expenses were paid otherwise than in cash, state the 
details in a note.
    (e) State in a note to the financial statements the amount of 
brokerage commissions (including dealer markups) paid to affiliated 
broker-dealers in connection with purchase and sale of investment 
securities.
    3. Interest and amortization of debt discount and expense.
    4. Provision for certificate reserves. State separately any 
provision for additional credits, or dividends, or interests, in 
addition to the minimum maturity or face amount specified in the 
certificates. State also in an appropriate manner reserve recoveries 
from surrenders or other causes.
    5. Investment income before income tax expense.
    6. Income tax expense. Include under this caption only taxes based 
on income.
    7. Investment income-net.
    8. Realized gain (loss) on investments-net.
    (a) State separately the net realized gain or loss on transactions 
in: (1) Investment securities of unaffiliated issuers, (2) investment 
securities of affiliated issuers, and (3) other investments.
    (b) Distributions of capital gains by other investment companies 
shall be shown separately under this caption.
    (c) State separately any: (1) Federal income taxes and (2) other 
income taxes applicable to realized gain (loss) on investments, 
distinguishing taxes payable currently from deferred income taxes.
    9. Net income or loss.



Sec. 210.6-09  Statements of changes in net assets.

    Statements of changes in net assets filed for persons to whom this 
article is applicable shall comply with the following provisions:

                  Statements of Changes in Net Assests

    1. Operations. State separately: (a) Investment income-net as shown 
by Sec. 210.6-07.6; (b) realized gain (loss) on investments-net of any 
Federal or other income taxes applicable to such amounts; (c) increase 
(decrease) in unrealized appreciation or depreciation-net of any Federal 
or other income taxes applicable to such amounts; and (d) net increase 
(decrease) in net assets resulting from operations as shown by 
Sec. 210.6-07.9.
    2. Net equalization charges and credits. State the net amount of 
accrued undivided earnings separately identified in the price of capital 
shares issued and repurchased.
    3. Distributions to shareholders. State separately distributions to 
shareholders from: (a) Investment income-net; (b) realized gain from 
investment transactions-net; and (c) other sources.
    4. Capital share transactions. (a) State the increase or decrease in 
net assets derived from the net change in the number of outstanding 
shares or units.
    (b) Disclose in the body of the statements or in the notes, for each 
class of the person's shares, the number and value of shares issued in 
reinvestment of dividends as well as the number of dollar amounts 
received for shares sold and paid for shares redeemed.
    5. Total increase (decrease).
    6. Net assets at the beginning of the period.
    7. Net assets at the end of the period. Disclose parenthetically the 
balance of undistributed net investment income included in net assets at 
the end of the period.



Sec. 210.6-10  What schedules are to be filed.

    (a) When information is required in schedules for both the person 
and its subsidiaries consolidated, it may be presented in the form of a 
single schedule, provided that items pertaining to the registrant are 
separately shown and that such single schedule affords a properly 
summarized presentation of

[[Page 296]]

the facts. If the information required by any schedule (including the 
notes thereto) is shown in the related financial statement or in a note 
thereto without making such statement unclear or confusing, that 
procedure may be followed and the schedule omitted.
    (b) The schedules shall be examined by an independent accountant if 
the related financial statements are so examined.
    (c) Management investment companies. Except as otherwise provided in 
the applicable form: (1) The schedules specified below in this rule 
shall be filed for management investment companies as of the dates of 
the most recent audited balance sheet and any subsequent unaudited 
statement being filed for each person or group.

    Schedule I--Investments in securities of unaffiliated issuers. The 
schedule prescribed by Sec. 210.12-12 shall be filed in support of 
caption 1 of each balance sheet.
    Schedule II--Investments--other than securities. The schedule 
prescribed by Sec. 210.12-13 shall be filed in support of caption 3 of 
each balance sheet. This schedule may be omitted if the investments, 
other than securities, at both the beginning and end of the period 
amount to less than one percent of the value of total investments 
(Sec. 210.6-04.4).
    Schedule III--Investments in and advances to affiliates. The 
schedule prescribed by Sec. 210.12-14 shall be filed in support of 
caption 2 of each balance sheet.
    Schedule IV--Investments--securities sold short. The schedule 
prescribed by Sec. 210.12-12A shall be filed in support of caption 10(a) 
of each balance sheet.
    Schedule V--Open option contracts written. The schedule prescribed 
by Sec. 210.12-12B shall be filed in support of caption 10(b) of each 
balance sheet.

    (d) Unit investment trusts. Except as otherwise provided in the 
applicable form:
    (1) Schedules I and II, specified below in this section, shall be 
filed for unit investment trusts as of the dates of the most recent 
audited balance sheet and any subsequent unaudited statement being filed 
for each person or group.
    (2) Schedule III, specified below in this section, shall be filed 
for unit investment trusts for each period for which a statement of 
operations is required to be filed for each person or group.

    Schedule I--Investment in securities. The schedule prescribed by 
Sec. 210.12-12 shall be filed in support of caption 1 of each balance 
sheet (Sec. 210.6-04).
    Schedule II--Allocation of trust assets to series of trust shares. 
If the trust assets are specifically allocated to different series of 
trust shares, and if such allocation is not shown in the balance sheet 
in columnar form or by the filing of separate statements for each series 
of trust shares, a schedule shall be filed showing the amount of trust 
assets, indicated by each balance sheet filed, which is applicable to 
each series of trust shares.
    Schedule III--Allocation of trust income and distributable funds to 
series of trust shares. If the trust income and distributable funds are 
specifically allocated to different series of trust shares and if such 
allocation is not shown in the statement of operations in columnar form 
or by the filing of separate statements for each series of trust shares, 
a schedule shall be submitted showing the amount of income and 
distributable funds, indicated by each statement of operations filed, 
which is applicable to each series of trust shares.

    (e) Face-amount certificate investment companies. Except as 
otherwise provided in the applicable form:
    (1) Schedules I, V and X, specified below, shall be filed for face-
amount certificate investment companies as of the dates of the most 
recent audited balance sheet and any subsequent unaudited statement 
being filed for each person or group.
    (2) All other schedules specified below in this seciton shall be 
filed for face-amount certificate investment companies for each period 
for which a statement of operations is filed, except as indicated for 
Schedules III and IV.

    Schedule I--Investment in securities of unaffiliated issuers. The 
schedule prescribed by Sec. 210.12-21 shall be filed in support of 
caption 1 and, if applicable, caption 5(a) of each balance sheet. 
Separate schedules shall be furnished in support of each caption, if 
applicable.
    Schedule II--Investments in and advances to affiliates and income 
thereon. The schedule prescribed by Sec. 210.12-22 shall be filed in 
support of captions 1 and 5(b) of each balance sheet and caption 1 of 
each statement of operations. Separate schedules shall be furnished in 
support of each caption, if applicable.
    Schedule III--Mortage loans on real estate and interest earned on 
mortages. The schedule prescribed by Sec. 210.12-23 shall be filed in 
support of captions 1 and 5(c) of each balance sheet and caption 1 of 
each statement of operations, except that only the information required 
by column G and note 8 of the schedule need be furnished in support of

[[Page 297]]

statements of operations for years for which related balance sheets are 
not required.
    Schedule IV--Real estate owned and rental income. The schedule 
prescribed by Sec. 210.12-24 shall be filed in support of captions 1 and 
5(a) of each balance sheet and caption 1 of each statement of operations 
for rental income included therein, except that only the information 
required by columns H, I and J, and item ``Rent from properties sold 
during the period'' and note 4 of the schedule need be furnished in 
support of statements of operations for years for which related balance 
sheets are not required.
    Schedule V--Qualified assets on deposit. The schedule prescribed by 
Sec. 210.12-27 shall be filed in support of the information required by 
caption 4 of Sec. 210.6-06 as to total amount of qualified assets on 
deposit.
    Schedule VI--Certificate reserves. The schedule prescribed by 
Sec. 210.12-26 shall be filed in support of caption 7 of each balance 
sheet.
    Schedule VII--Valuation and qualifying accounts. The schedule 
prescribed by Sec. 210.12-09 shall be filed in support of all other 
reserves included in the balance sheet.

[47 FR 56838, Dec. 21, 1982, as amended at 59 FR 65636, Dec. 20, 1994]

           Employee Stock Purchase, Savings and Similar Plans



Sec. 210.6A-01  Application of Secs. 210.6A-01 to 210.6A-05.

    (a) Sections 210.6A-01 to 210.6A-05 shall be applicable to financial 
statements filed for employee stock purchase, savings and similar plans.
    (b) [Reserved]

[47 FR 56843, Dec. 21, 1982]



Sec. 210.6A-02  Special rules applicable to employee stock purchase, savings and similar plans.

    The financial statements filed for persons to which this article is 
applicable shall be prepared in accordance with the following special 
rules in addition to the general rules in Secs. 210.1-01 to 210.4-10. 
Where the requirements of a special rule differ from those prescribed in 
a general rule, the requirements of the special rule shall be met.
    (a) Investment programs. If the participating employees have an 
option as to the manner in which their deposits and contributions may be 
invested, a description of each investment program shall be given in a 
footnote or otherwise. The number of employees under each investment 
program shall be stated.
    (b) Net asset value per unit. Where appropriate, the number of units 
and the net asset value per unit shall be given by footnote or 
otherwise.
    (c) Federal income taxes. (1) If the plan is not subject to Federal 
income taxes, a note shall so state indicating briefly the principal 
assumptions on which the plan relied in not making provision for such 
taxes.
    (2) State the Federal income tax status of the employee with respect 
to the plan.
    (d) Valuation of assets. The statement of financial condition shall 
reflect all investments at value, showing cost parenthetically. For 
purposes of this rule, the term value shall mean (1) market value for 
those securities having readily available market quotations and (2) fair 
value as determined in good faith by the trustee(s) for the plan (or by 
the person or persons who exercise similar responsibilities) with 
respect to other securities and assets.

[47 FR 56843, Dec. 21, 1982]



Sec. 210.6A-03  Statements of financial condition.

    Statements of financial condition filed under this rule shall comply 
with the following provisions:

                               Plan Assets

    1. Investments in securities of participating employers. State 
separately each class of securities of the participating employer or 
employers.
    2. Investments in securities of unaffiliated issuers.
    (a) United States Government bonds and other obligations. Include 
only direct obligations of the United States Government.
    (b) Other securities. State separately (1) marketable securities and 
(2) other securities.
    3. Investments. Other than securities. State separately each major 
class.
    4. Dividends and interest receivable.
    5. Cash.
    6. Other assets. State separately (a) total of amounts due from 
participating employers or any of their directors, officers and 
principal holders of equity securities; (b) total of amounts due from 
trustees or managers of the plan; and (c) any other significant amounts.

                       Liabilities and Plan Equity

    7. Liabilities. State separately (a) total of amounts payable to 
participating employers; (b) total of amounts payable to participating

[[Page 298]]

employees; and (c) any other significant amounts.
    8. Reserves and other credits. State separately each significant 
item and describe each such item by using an appropriate caption or by a 
footnote referred to in the caption.
    9. Plan equity at close of period.

[27 FR 7870, Aug. 9, 1962. Redesignated at 47 FR 56843, Dec. 21, 1982]



Sec. 210.6A-04  Statements of income and changes in plan equity.

    Statements of income and changes in plan equity filed under this 
rule shall comply with the following provisions:

    1. Net investment income.
    (a) Income. State separately income from (1) cash dividends; (2) 
interest, and (3) other sources. Income from investments in or 
indebtedness of participating employers shall be segregated under the 
appropriate subcaption.
    (b) Expenses. State separately any significant amounts.
    (c) Net investment income.
    2. Realized gain or loss on investments. (a) State separately the 
net of gains or losses arising from transactions in (1) investments in 
securities of the participating employer or employers; (2) other 
investments in securities; and (3) other investments.
    (b) State in a footnote or otherwise for each category of investment 
in paragraph (a) above the aggregate cost, the aggregate proceeds and 
the net gain or loss. State the principle followed in determining the 
cost of securities sold, e.g., average cost or first-in, first-out.
    3. Unrealized appreciation or depreciation of investments. (a) State 
the amount of increase or decrease in unrealized appreciation or 
depreciation of investments during the period.
    (b) State in a footnote or otherwise the amount of unrealized 
appreciation or depreciation of investments at the beginning of the 
period of report, at the end of the period of report, and the increase 
or decrease during the period.
    4. Contributions and deposits. (a) State separately (1) total of 
amounts deposited by participating employees, and (2) total of amounts 
contributed by the participating employer or employers.
    (b) If employees of more than one employer participate in the plan, 
state in tabular form in a footnote or otherwise the amount contributed 
by each employer and the deposits of the employees of each such 
employer.
    5. Withdrawals, lapses and forfeitures. State separately (a) 
balances of employees' accounts withdrawn, lapsed or forfeited during 
the period; (b) amounts disbursed in settlement of such accounts; and 
(c) disposition of balances remaining after settlement specified in (b).
    6. Plan equity at beginning of period.
    7. Plan equity at end of period.

[27 FR 7870, Aug. 9, 1962. Redesignated at 47 FR 56843, Dec. 21, 1982]



Sec. 210.6A-05  What schedules are to be filed.

    (a) Schedule I, specified below, shall be filed as of the most 
recent audited statement of financial condition and any subsequent 
unaudited statement of financial condition being filed. Schedule II 
shall be filed as of the date of each statement of financial condition 
being filed. Schedule III shall be filed for each period for which a 
statement of income and changes in plan equity is filed. All schedules 
shall be audited if the related statements are audited.

    Schedule I--Investments. A schedule substantially in form prescribed 
by Sec. 210.12-12 shall be filed in support of captions 1, 2 and 3 of 
each statement of financial condition unless substantially all of the 
information is given in the statement of financial condition by footnote 
or otherwise.
    Schedule II--Allocation of plan assets and liabilities to investment 
program. If the plan provides for separate investment programs with 
separate funds, and if the allocation of assets and liabilities to the 
several funds is not shown in the statement of financial condition in 
columnar form or by the submission of separate statements for each fund, 
a schedule shall be submitted showing the allocation of each caption of 
each statement of financial condition filed to the applicable fund.
    Schedule III--Allocation of plan income and changes in plan equity 
to investment programs. If the plan provides for separate investment 
programs with separate funds, and if the allocation of income and 
changes in plan equity to the several funds is not shown in the 
statement of income and changes in plan equity in columnar form or by 
the submission of separate statements for each fund, a schedule shall be 
submitted showing the allocation of each caption of each statement of 
income and changes in plan equity filed to the applicable fund.
    (b) [Reserved]

[45 FR 63676, Sept. 25, 1980. Redesignated at 47 FR 56843, Dec. 21, 
1982, and amended at 50 FR 25215, June 18, 1985]

                           Insurance Companies

    Authority: Secs. 6, 7, 8, 10, 12, 13, 15, 19, 23 (15 U.S.C. 77f, 
77g, 77h, 77j, 77s, 78l, 78m,

[[Page 299]]

78o(d), 78w, 79e, 79n, 79t, 80a-8, 80a-29, 80a-30(c), 80(a)).

    Source: Sections 210.7-01 to 210.7-05 appears at 46 FR 54335, Nov. 
2, 1981, unless otherwise noted.



Sec. 210.7-01  Application of Secs. 210.7-01 to 210.7-05.

    This article shall be applicable to financial statements filed for 
insurance companies.



Sec. 210.7-02  General requirement.

    (a) The requirements of the general rules in Secs. 210.1-01 to 
210.4-10 (Articles 1, 2, 3, 3A and 4) shall be applicable except where 
they differ from requirements of Secs. 210.7-01 to 210.7-05.
    (b) Financial statements filed for mutual life insurance companies 
and wholly owned stock insurance company subsidiaries of mutual life 
insurance companies may be prepared in accordance with statutory 
accounting requirements. Financial statements prepared in accordance 
with statutory accounting requirements may be condensed as appropriate, 
but the amounts to be reported for net gain from operations (or net 
income or loss) and total capital and surplus (or surplus as regards 
policyholders) shall be the same as those reported on the corresponding 
Annual Statement.



Sec. 210.7-03  Balance sheets.

    (a) The purpose of this rule is to indicate the various items which, 
if applicable, and except as otherwise permitted by the Commission, 
should appear on the face of the balance sheets and in the notes thereto 
filed for persons to whom this article pertains. (See Sec. 210.4-01(a).)

                                 Assets

    1. Investments--other than investments in related parties.
    (a) Fixed maturities.
    (b) Equity securities.
    (c) Mortgage loans on real estate.
    (d) Investment real estate.
    (e) Policy loans.
    (f) Other long-term investments.
    (g) Short-term investments.
    (h) Total investments.

    Notes: (1) State parenthetically or otherwise in the balance sheet 
(a) the basis of determining the amounts shown in the balance sheet and 
(b) as to fixed maturities and equity securities either aggregate cost 
or aggregate value at the balance sheet date, whichever is the alternate 
amount of the carrying value in the balance sheet. Consideration shall 
be given to the discussion of ``Valuation of Securities'' in Sec. 404.03 
of the Codification of Financial Reporting Policies.

    (2) Include under fixed maturities: bonds, notes, marketable 
certificates of deposit with maturities beyond one year, and redeemable 
preferred stocks. Include under equity securities: common stocks and 
nonredeemable preferred stocks.
    (3) State separately in the balance sheet or in a note thereto the 
amount of accumulated depreciation and amortization deducted from 
investment real estate. Subcaption (d) shall not include real estate 
acquired in settling title claims, mortgage guaranty claims, and similar 
insurance claims. Real estate acquired in settling claims shall be 
included in caption 10, ``Other Assets,'' or shown separately, if 
material.
    (4) Include under subcaption (g) investments maturing within one 
year, such as commercial paper maturing within one year, marketable 
certificates of deposit maturing within one year, savings accounts, time 
deposits and other cash accounts and cash equivalents earning interest. 
State in a note any amounts subject to withdrawal or usage restrictions. 
(See Sec. 210.5-02.1.)
    (5) State separately in a note the amount of any class of 
investments included in subcaption (f) if such amount exceeds ten 
percent of stockholders' equity.
    (6) State in a note the name of any person in which the total amount 
invested in the person and its affiliates, included in the above 
subcaptions, exceeds ten percent of total stockholders' equity. For this 
disclosure, include in the amount invested in a person and its 
affiliates the aggregate of indebtedness and stocks issued by such 
person and its affiliates that is included in the several subcaptions 
above, and the amount of any real estate included in subcaption (d) that 
was purchased or acquired from such person and its affiliates. Indicate 
the amount included in each subcaption. An investment in bonds and notes 
of the United States Government or of a United States Government agency 
or authority which exceeds ten percent of total stockholders' equity 
need not be reported.
    (7) State in a note the amount of investments included under each 
subcaption (a), (c), (d) and (f) which have been non-income producing 
for the twelve months preceding the balance sheet date.
    2. Cash. Cash on hand or on deposit that is restricted as to 
withdrawal or usage shall be disclosed separately on the balance sheet. 
The provisions of any restrictions shall be

[[Page 300]]

described in a note to the financial statements. Restrictions may 
include legally restricted deposits held as compensating balances 
against short-term borrowing arrangements, contracts entered into with 
others, or company statements of intention with regard to particular 
deposits. In cases where compensating balance arrangements exist but are 
not agreements which legally restrict the use of cash amounts shown on 
the balance sheet, describe in the notes to the financial statements 
these arrangements and the amount involved, if determinable, for the 
most recent audited balance sheet required. Compensating balances that 
are maintained under an agreement to assure future credit availability 
shall be disclosed in the notes to the financial statements along with 
the amount and terms of the agreement.
    3. Securities and indebtedness of related parties. State separately 
(a) investments in related parties and (b) indebtedness from such 
related parties. (See Sec. 210.4-08(k).)
    4. Accrued investment income.
    5. Accounts and notes receivable. Include under this caption (a) 
amounts receivable from agents and insureds, (b) uncollected premiums 
and (c) other receivables. State separately in the balance sheet or in a 
note thereto any category of other receivable which is in excess of five 
percent of total assets. State separately in the balance sheet or in a 
note thereto the amount of allowance for doubtful accounts that was 
deducted.
    6. Reinsurance recoverable on paid losses.
    7. Deferred policy acquisition costs.
    8. Property and equipment. (a) State the basis of determining the 
amounts.
    (b) State separately in the balance sheet or in a note thereto the 
amount of accumulated depreciation and amortization of property and 
equipment.
    9. Title plant.
    10. Other assets. State separately in the balance sheet or in a note 
thereto any other asset the amount of which exceeds five percent of 
total assets.
    11. Assets held in separate accounts. Include under this caption the 
aggregate amount of assets used to fund liabilities related to variable 
annuities, pension funds and similar activities. The aggregate liability 
shall be included under caption 18. Describe in a note to the financial 
statements the general nature of the activities being reported on in the 
separate accounts.
    12. Total assets.

                  Liabilities and Stockholders' Equity

    13. Policy liabilities and accruals. (a) State separately in the 
balance sheet the amounts of (1) future policy benefits and losses, 
claims and loss expenses, (2) unearned preminums and (3) other policy 
claims and benefits payable.
    (b) State in a note to the financial statements the basis of 
assumptions (interest rates, mortality, withdrawals) for future policy 
benefits and claims and settlements which are stated at present value.
    (c) Information shall be given in a note concerning the general 
nature of reinsurance transactions, including a description of the 
significant types of reinsurance agreements executed. The information 
provided shall include (1) the nature of the contingent liability in 
connection with insurance ceded and (2) the nature and effect of 
material nonrecurring reinsurance transactions.
    14. Other policyholders' funds. (a) Include amounts of supplementary 
contracts without life contingencies, policyholders' dividend 
accumulations, undistributed earnings on participating business, 
dividends to policyholders and retrospective return premiums (not 
included elsewhere) and any similar items. State separately in the 
balance sheet or in a note thereto any item the amount of which is in 
excess of five percent of total liabilities.
    (b) State in a note to the financial statements the relative 
significance of participating insurance expressed as percentages of (1) 
insurance in force and (2) premium income; and the method by which 
earnings and dividends allocable to such insurance is determined.
    15. Other liabilities. (a) Include under this caption such items as 
accrued payrolls, accrued interest and taxes. State separately in the 
balance sheet or in a note thereto any item included in other 
liabilities the amount of which exceeds five percent of total 
liabilities.
    (b) State separately in the balance sheet or in a note thereto the 
amount of (1) income taxes payable and (2) deferred income taxes. 
Disclose separately the amount of deferred income taxes applicable to 
unrealized appreciation of equity securities.
    16. Notes payable, bonds, mortgages and similar obligations, 
including capitalized leases. (a) State separately in the balance sheet 
the amounts of (1) short-term debt and (2) long-term debt including 
capitalized leases.
    (b) The disclosure required by Sec. 210.5-02.19(b) shall be given if 
the aggregate of short-term borrowings from banks, factors and other 
financial institutions and commercial paper issued exceeds five percent 
of total liabilities.
    (c) The disclosure requirements of Sec. 210.5-02.22 shall be 
followed for long-term debt.
    17. Indebtedness to related parties. (See Sec. 210.4-0.8(k).)
    18. Liabilities related to separate accounts. [See caption 11.]
    19. Commitments and contingent liabilities.

                           Minority Interests

    20. Minority interests in consolidated subsidiaries. The disclosure 
requirements of Sec. 210.5-02.27 shall be followed.

[[Page 301]]

                       Redeemable Preferred Stocks

    21. Preferred stocks subject to mandatory redemption requirements or 
whose redemption is outside the control of the issuer. The 
classification and disclosure requirements of Sec. 210.5-02.28 shall be 
followed.

                     Nonredeemable Preferred Stocks

    22. Preferred stocks which are not redeemable or are redeemable 
solely at the option of the issuer. The classification and disclosure 
requirements of Sec. 210.5-02.29 shall be followed.

                              Common Stocks

    23. Common stocks. The classification and disclosure requirements of 
Sec. 210.5-02.30 shall be followed.

                       Other Stockholders' Equity

    24. Other stockholders' equity. (a) Separate captions shall be shown 
for (1) additional paid-in capital, (2) other additional capital, (3) 
unrealized appreciation or depreciation of equity securities less 
applicable deferred income taxes, (4) retained earnings (i) appropriated 
and (ii) unappropriated. (See Sec. 210.4-08(e).) Additional paid-in 
capital and other additional capital may be combined with the stock 
caption to which they apply, if appropriate.
    (b) The classification and disclosure requirements of Sec. 210.5-
02.31(b) and (c) shall be followed for (1) dating and effect of a quasi-
reorganization and (2) summaries of each stockholder's equity account.
    (c) State in a note the following information separately for (1) 
life insurance legal entities, and (2) property and liability insurance 
legal entities: the amount of statutory stockholders' equity as of the 
date of each balance sheet presented and the amount of statutory net 
income or loss for each period for which an income statement is 
presented.
    25. Total liabilities and stockholders' equity.

[46 FR 54335, Nov. 2, 1981, as amended at 50 FR 25215, June 18, 1985]



Sec. 210.7-04  Income statements.

    The purpose of this rule is to indicate the various items which, if 
applicable, should appear on the face of the income statements and in 
the notes thereto filed for persons to whom this article pertains. (See 
Sec. 210.4-01(a).)

                                Revenues

    1. Premiums. Include premiums from reinsurance assumed and deduct 
premiums on reinsurance ceded. Where applicable, the amounts included in 
this caption should represent premiums earned.
    2. Net investment income. State in a note to the financial 
statements, in tabular form, the amounts of (a) investment income from 
each category of investments listed in the subcaptions of Sec. 210.7-
03.1 that exceeds five percent of total investment income, (b) total 
investment income, (c) applicable expenses, and (d) net investment 
income.
    3. Realized investment gains and losses. Disclose the following 
amounts:
    (a) Net realized investment gains and losses, which shall be shown 
separately regardless of size.
    (b) Indicate in a footnote the registrant's policy with respect to 
whether investment income and realized gains and losses allocable to 
policyholders and separate accounts are included in the investment 
income and realized gain and loss amounts reported in the income 
statement. If the income statement includes investment income and 
realized gains and losses allocable to policyholders and separate 
accounts, indicate the amounts of such allocable investment income and 
realized gains and losses and the manner in which the insurance 
enterprise's obligation with respect to allocation of such investment 
income and realized gains and losses is otherwise accounted for in the 
financial statements.
    (c) The method followed in determining the cost of investments sold 
(e.g., ``average cost,'' ``first-in, first-out,'' or ``identified 
certificate'') shall be disclosed.
    (d) For each period for which an income statement is filed, include 
in a note an analysis of realized and unrealized investment gains and 
losses on fixed maturities and equity securities. For each period, state 
separately for fixed maturities [see Sec. 210.7-03.1(a)] and for equity 
securities [see Sec. 210.7-03.1(b)] the following amounts:
    (1) Realized investment gains and losses, and
    (2) The change during the period in the difference between value and 
cost.

The change in the difference between value and cost shall be given for 
both categories of investments even though they may be shown on the 
related balance sheet on a basis other than value.
    4. Other income. Include all revenues not included in captions 1 and 
2 above. State separately in the statement any amounts in excess of five 
percent of total revenue, and disclose the nature of the transactions 
from which the items arose.

                      Benefits, Losses and Expenses

    5. Benefits, claims, losses and settlement expenses.
    6. Policyholders' share of earnings on participating policies, 
dividends and similar items. (See Sec. 210.7-03.14(b).)
    7. Underwriting, acquisition and insurance expenses. State 
separately in the income statement or in a note thereto (a) the amount 
included in this caption representing deferred policy acquisition costs 
amortized

[[Page 302]]

to income during the period, and (b) the amount of other operating 
expenses. State separately in the income statement any material amount 
included in all other operating expenses.
    8. Income or loss before income tax expense and appropriate items 
below.
    9. Income tax expense. Include under this caption only taxes based 
on income. (See Sec. 210.4-08(g).)
    10. Minority interest in income of consolidated subsidiaries.
    11. Equity in earnings of unconsolidated subsidiaries and 50% or 
less owned persons. State, parenthetically or in a note, the amount of 
dividends received from such persons. If justified by the circumstances, 
this item may be presented in a different position and a different 
manner. (See Sec. 210.4-01(a).)
    12. Income or loss from continuing operations.
    13. Discontinued operations.
    14. Income or loss before extraordinary items and cumulative effects 
of changes in accounting principles.
    15. Extraordinary items, less applicable tax.
    16. Cumulative effects of changes in accounting principles.
    17. Net income or loss.
    18. Earnings per share data.

[46 FR 54335, Nov. 2, 1981, as amended at 57 FR 45293, Oct. 1, 1992]



Sec. 210.7-05  What schedules are to be filed.

    (a) Except as expressly provided otherwise in the applicable form:
    (1) The schedule specified below in this section as Schedules I 
shall be as of the date of the most recent audited balance sheet for 
each person or group.
    (2) The schedules specified below in this section as Schedule IV and 
V shall be filed for each period for which an audited income statement 
is required to be filed for each person or group.
    (3) Schedules II, III and V shall be filed as of the date and for 
periods specified in the schedule.
    (b) When information is required in schedules for both the 
registrant and the registrant and its subsidiaries consolidated it may 
be presented in the form of a single schedule: Provided, That items 
pertaining to the registrant are shown separately and that such single 
schedule affords a properly summarized presentation of the facts. If the 
information required by any schedule (including the notes thereto) may 
be shown in the related financial statement or in a note thereto without 
making such statement unclear or confusing, that procedure may be 
followed and the schedule omitted.
    (c) The schedules shall be examined by the independent accountant.

    Schedule I--Summary of investments--other than investments in 
related parties. The schedule prescribed by Sec. 210.12-15 shall be 
filed in support of caption 1 of the most recent audited balance sheet.
    Schedule II--Condensed financial information of registrant. The 
schedule prescribed by Sec. 210.12-04 shall be filed when the restricted 
net assets (Sec. 210.4.08(e)(3)) of consolidated subsidiaries exceed 25 
percent of consolidated net assets as of the end of the most recently 
completed fiscal year. For purposes of the above test, restricted net 
assets of consolidated subsidiaries shall mean that amount of the 
registrant's proportionate share of net assets of consolidated 
subsidiaries (after intercompany eliminations) which as of the end of 
the most recent fiscal year may not be transferred to the parent company 
by subsidiaries in the form of loans, advances or cash dividends without 
the consent of a third party (i.e., lender, regulatory agency, foreign 
government, etc.). Where restrictions on the amount of funds which may 
be loaned or advanced differ from the amount restricted as to transfer 
in the form of cash dividends, the amount least restrictive to the 
subsidiary shall be used. Redeemable preferred stocks (Sec. 210.7-03.21) 
and minority interests shall be deducted in computing net assets for 
purposes of this test.
    Schedule III--Supplementary insurance information. The schedule 
prescribed by Sec. 210.12-16 shall be filed giving segment detail in 
support of various balance sheet and income statement captions. The 
required balance sheet information shall be presented as of the date of 
each audited balance sheet filed, and the income statement information 
shall be presented for each period for which an audited income statement 
is required to be filed, for each person or group.
    Schedule IV--Reinsurance. The schedule prescribed by Sec. 210.12-17 
shall be filed for reinsurance ceded and assumed.
    Schedule V--Valuation and qualifying accounts. The schedule 
prescribed by Sec. 210.12-09 shall be filed in support of valuation and 
qualifying accounts included in the balance sheet (see Sec. 210.4-02).
    Schedule VI--Supplemental Information Concerning Property-Casualty 
Insurance Operations. The information required by Sec. 210.12-18 shall 
be presented as of the same dates and for the same periods for which the 
information is reflected in the audited consolidated financial 
statements required by Secs. 210.3-01 and 3-02. The schedule may be 
omitted if reserves for unpaid property-casualty claims and claim 
adjustment expenses of the registrant and its consolidated subsidiaries, 
its unconsolidated subsidiaries and

[[Page 303]]

its 50%-or-less-owned equity basis investees did not in the aggregate, 
exceed one-half of common stockholders' equity of the registrant and its 
consolidated subsidiaries as of the beginning of the fiscal year. For 
purposes of this test, only the proportionate share of the registrant 
and its other subsidiaries in the reserves for unpaid claims and claim 
adjustment expenses of 50%-or-less-owned equity investees taken in the 
aggregate after intercompany eliminations shall be taken into account. 
Article 12--Form and Content of Schedules (17 CFR 210)

(Secs. 7 and 19a of the Securities Act, 15 U.S.C. 77g, 77s(a), 
77aa(25)(26); secs. 12, 13, 14, 15(d), and 23(a) of the Securities 
Exchange Act of 1934, 15 U.S.C. 78l, 78m, 78n, 78o(d), 78w(a), secs. 
5(b), 10(a), 14, 20(a) of the Public Utility Holding Company Act, 15 
U.S.C. 79e(a), 79n, 79t(a); secs. 8, 20, 30, 31(c), 38(a) of the 
Investment Company Act of 1940, 15 U.S.C. 80a-8, 80a-20, 80a-29, 80a-
30(c), 80a-37(a); secs. 6, 7, 8, 10, 19(a))

[46 FR 54335, Nov. 2, 1981, as amended at 47 FR 29837, July 9, 1982; 49 
FR 47598, Dec. 6, 1984; 59 FR 65637, Dec. 20, 1994]

                         Bank Holding Companies

    Source: Sections 210.9-01 to 210.9-07 appear at 48 FR 11107, Mar. 
16, 1983, unless otherwise noted.



Sec. 210.9-01  Application of Secs. 210.9-01 to 210.9-07

    This article is applicable to consolidated financial statements 
filed for bank holding companies and to any financial statements of 
banks that are included in filings with the Commission.



Sec. 210.9-02  General requirement.

    The requirements of the general rules in Secs. 210.1 to 210.4 
(Articles 1, 2, 3, 3A and 4) should be complied with where applicable.



Sec. 210.9-03  Balance sheets.

    The purpose of this rule is to indicate the various items which, if 
applicable, should appear on the face of the balance sheets or in the 
notes thereto.

                                 Assets

    1. Cash and due from banks. The amounts in this caption should 
include all noninterest bearing deposits with other banks.
    (a) Any withdrawal and usage restrictions (including requirements of 
the Federal Reserve to maintain certain average reserve balances) or 
compensating balance requirements should be disclosed (see Sec. 210.5-
02-1).
    2. Interest-bearing deposits in other banks.
    3. Federal funds sold and securities purchased under resale 
agreements of similar arrangements. These amounts should be presented 
gross and not netted against Federal funds purchased and securities sold 
under agreement to repurchase as reported in Caption 13.
    4. Trading account assets. Include securities or any other 
investments held for trading purposes only.
    5. Other short-term investments.
    6. Investment securities Include securities held for investment 
only. Disclose the aggregate book value of investment securities; show 
on the balance sheet the aggregate market value at the balance sheet 
date. The aggregate amounts should include securities pledged, loaned or 
sold under repurchase agreements and similar arrangements; borrowed 
securities and securities purchased under resale agreements or similar 
arrangements should be excluded.
    (a) Disclose in a note the carrying value and market value of 
securities of (1) the U.S. Treasury and other U.S. Government agencies 
and corporations; (2) states of the U.S. and political subdivisions; and 
(3) other securities.
    7. Loans. Disclose separately (1) total loans, (2) the related 
allowance for losses and (3) unearned income.
    (a) Disclose on the balance sheet or in a note the amount of total 
loans in each of the following categories:
    (1) Commercial, financial and agricultural
    (2) Real estate--construction
    (3) Real estate--mortgage
    (4) Installment loans to individuals
    (5) Lease financing
    (6) Foreign
    (7) Other (State separately any other loan category regardless of 
relative size if necessary to reflect any unusual risk concentration).
    (b) A series of categories other than those specified in (a) above 
may be used to present details of loans if considered a more appropriate 
presentation.
    (c) The amount of foreign loans must be presented if the disclosures 
provided by Sec. 210.9-05 are required.
    (d) For each period for which an income statement is required, 
furnish in a note a statement of changes in the allowance for loan 
losses showing the balances at beginning and end of the period provision 
charged to income, recoveries of amounts charged off and losses charged 
to the allowance.
    (e)(1)(i) As of each balance sheet date, disclose in a note the 
aggregate dollar amount of loans (exclusive of loans to any such persons 
which in the aggregate do not exceed $60,000 during the latest year) 
made by the

[[Page 304]]

registrant or any of its subsidiaries to directors, executive officers, 
or principal holders of equity securities (Sec. 210.1-02) of the 
registrant or any of its significant subsidiaries (Sec. 210.1-02), or to 
any associate of such persons. For the latest fiscal year, an analysis 
of activity with respect to such aggregate loans to related parties 
should be provided. The analysis should include the aggregate amount at 
the beginning of the period, new loans, repayments, and other changes. 
(Other changes, if significant, should be explained.)
    (ii) This disclosure need not be furnished when the aggregate amount 
of such loans at the balance sheet date (or with respect to the latest 
fiscal year, the maximum amount outstanding during the period) does not 
exceed 5 percent of stockholders equity at the balance sheet date.
    (2) If a significant portion of the aggregate amount of loans 
outstanding at the end of the fiscal year disclosed pursuant to 
(e)(1)(i) above relates to loans which are disclosed as nonaccrual, past 
due, restructured or potential problems (see Item III.C. 1. or 2. of 
Industry Guide 3, Statistical Disclosure by Bank Holding Companies), so 
state and disclose the aggregate amounts of such loans along with such 
other information necessary to an understanding of the effects of the 
transactions on the financial statements.
    (3) Notwithstanding the aggregate disclosure called for by (e)(1) 
above, if any loans were not made in the ordinary course of business 
during any period for which an income statement is required to be filed, 
provide an appropriate description of each such loan (see Sec. 210.4-
08(L)(3)).
    (4) Definition of terms. For purposes of this rule, the following 
definitions shall apply:
    Associate means (i) a corporation, venture or organization of which 
such person is a general partner or is, directly or indirectly, the 
beneficial owner of 10 percent or more of any class of equity 
securities; (ii) any trust or other estate in which such person has a 
substantial beneficial interest or for which such person serves as 
trustee or in a similar capacity and (iii) any member of the immediate 
family of any of the foregoing persons.
    Executive officers means the president, any vice president in charge 
of a principal business unit, division or function (such as loans, 
investments, operations, administration or finance), and any other 
officer or person who performs similar policymaking functions.
    Immediate Family means such person's spouse; parents; children; 
siblings; mothers and fathers-in-law; sons and daughters-in-law; and 
brothers and sisters-in-law.
    Ordinary course of business means those loans which were made on 
substantially the same terms, including interest rate and collateral, as 
those prevailing at the same time for comparable transactions with 
unrelated persons and did not involve more than the normal risk of 
collectibility or present other unfavorable features.
    8. Premises and equipment.
    9. Due from customers on acceptances. Include amounts receivable 
from customers on unmatured drafts and bills of exchange that have been 
accepted by a bank subsidiary or by other banks for the account of a 
subsidiary and that are outstanding--that is, not held by a subsidiary 
bank, on the reporting date. (If held by a bank subsidiary, they should 
be reported as ``loans'' under Sec. 210.9-03.7.)
    10. Other assets. Disclose separately on the balance sheet or in a 
note thereto any of the following assets or any other asset the amount 
of which exceeds thirty percent of stockholders equity. The remaining 
assets may be shown as one amount.
    (1) Excess of cost over tangible and identifiable intangible assets 
acquired (net of amortization).
    (2) Other intangible assets (net of amortization).
    (3) Investments in and indebtness of affiliates and other persons.
    (4) Other real estates.
    (a) Disclose in a note the basis at which other real estate is 
carried. An reduction to fair market value from the carrying value of 
the related loan at the time of acquisition shall be accounted for as a 
loan loss. Any allowance for losses on other real estate which has been 
established subsequent to acquisition should be deducted from other real 
estate. For each period for which an income statement is required, 
disclosures should be made in a note as to the changes in the 
allowances, including balance at beginning and end of period, provision 
charged to income, and losses charged to the allowance.
    11. Total assets.

                  Liabilities and Stockholders' Equity

                               Liabilities

    12. Deposits. Disclose separately the amounts of noninterest bearing 
deposits and interest bearing deposits.
    (a) The amount of noninterest bearing deposits and interest bearing 
deposits in foreign banking offices must be presented if the disclosure 
provided by Sec. 210.0-05 are required.
    13. Short-term borrowing. Disclosure separately on the balance sheet 
or in a note, amounts payable for (1) Federal funds purchased and 
securities sold under agreements to repurchase; (2) commercial paper, 
and (3) other short-term borrowings.
    (a) Disclose any unused lines of credit for short-term financing: 
(Sec. 210.5-02.19(b)).
    14. Bank acceptances outstanding. Disclose the aggregate of 
unmatured drafts and bills of exchange accepted by a bank subsidiary, or 
by some other bank as its agent, less the amount of such acceptances 
acquired by the

[[Page 305]]

bank subsidiary through discount or purchase.
    15. Other liabilities. Disclose separately on the balance sheet or 
in a note any of the following liabilities or any other items which are 
individually in excess of thirty percent of stockholders' equity (except 
that amounts in excess of 5 percent of stockholders' equity should be 
disclosed with respect to item (4)). The remaining items may be shown as 
one amount.
    (1) Income taxes payable.
    (2) Deferred income taxes.
    (3) Indebtedness to affiliates and other persons the investments in 
which are accounted for by the equity method.
    (4) Indebtedness to directors, executive officers, and principal 
holders of equity securities of the registrant or any of its significant 
subsidiaries (the guidance in Sec. 210.9-03.7(e) shall be used to 
identify related parties for purposes of this disclosure).
    (5) Accounts payable and accrued expenses.
    16. Long-term debt. Disclose in a note the information required by 
Sec. 210.5-02.22.
    17. Commitments and contingent liabilities.
    18. Minority interest in consolidated subsidiaries. The information 
required by Sec. 210.5-02.27 should be disclosed if applicable.

                       Redeemable Preferred Stocks

    19. Preferred stocks subject to mandatory redemption requirements or 
whose redemption is outside the control of the issuer. See Sec. 210.5-
02.28.

                     Non-redeemable Preferred Stocks

    20. Preferred stocks which are not redeemable or are redeemable 
solely at the option of the issuer. See Sec. 210.5-02.29.

                              Common Stocks

    21. Common stocks. See Sec. 210.5-02.30.

                       Other Stockholders' Equity

    22. Other stockholders' equity. See Sec. 210.5-02.31.
    23. Total liabilities and stockholders' equity.

(Secs. 7, 19a, and Schedule A (25) and (26) of the Securities Act of 
1933, 15 U.S.C. 77g, 77s(a), 77nn (25) and (26); and secs. 12, 13, 14, 
15(d), and 23(n) of the Securities Exchange Act of 1934, 15 U.S.C. 78l, 
78m, 78n, 78o(d), 78w(a).

[48 FR 11107, Mar. 16, 1983, as amended at 48 FR 37612, Aug. 19, 1983; 
50 FR 25215, June 18, 1985]



Sec. 210.9-04  Income statements.

    The purpose of this rule is to indicate the various items which, if 
applicable, should appear on the face of the income statement or in the 
notes thereto.

    1. Interest and fees on loans. Include commitment and origination 
fees, late charges and current amortization of premium and accretion of 
discount on loans which are related to or are an adjustment of the loan 
interest rate.
    2. Interest and dividends on investment securities. Disclosure 
separately (1) taxable interest income, (2) nontaxable interest income, 
and (3) dividends.
    3. Trading account interest.
    4. Other interest income.
    5. Total interest income (total of lines 1 through 4).
    6. Interest on deposits.
    7. Interest on short-term borrowings.
    8. Interest on long-term debt.
    9. Total interest expense (total of lines 6 through 8).
    10. Net interest income (line 5 minus line 9).
    11. Provision for loan losses.
    12. Net interest income after provision for loan losses.
    13. Other income. Disclose separately any of the following amounts, 
or any other item of other income, which exceed one percent of the 
aggregate of total interest income and other income. The remaining 
amounts may be shown as one amount, except for investment securities 
gains or losses which shall be shown separately regardless of size.
    (a) Commissions and fees and fiduciary activities.
    (b) Commissions, broker's fees and markups on securities 
underwriting and other securities activities.
    (c) Insurance commissions, fees and premiums.
    (d) Fees for other customer services.
    (e) Profit or loss on transactions in securities in dealer trading 
account.
    (f) Equity in earnings of unconsolidated subsidiaries and 50 percent 
or less owned persons.
    (g) Gains or losses on disposition of equity in securities of 
subsidiaries or 50 percent or less owned persons.
    (h) Investment securities gains or losses. The method followed in 
determining the cost of investments sold (e.g., ``average cost,'' 
``first-in, first-out,'' or ``identified certificate) and related income 
taxes shall be disclosed.
    14. Other expenses. Disclose separately any of the following 
amounts, or any other item of other expense, which exceed one percent of 
the aggregate of total interest income and other income. The remaining 
amounts may be shown as one amount.
    (a) Salaries and employee benefits.
    (b) Net occupancy expense of premises.
    (c) Goodwill amortization.
    (d) Net cost of operation of other real estate (including provisions 
for real estate losses, rental income and gains and losses on sales of 
real estate).

[[Page 306]]

    (e) Minority interest in income of consolidated subsidiaries.
    15. Income or loss before income tax expense.
    16. Income tax expense. The information required by Sec. 210.4-08(h) 
should be disclosed.
    17. Income or loss before extraordinary items and cumulative effects 
of changes in accounting principles.
    18. Extraordinary items, less applicable tax.
    19. Cumulative effects of changes in accounting principles.
    20. Net income or loss.
    21. Earnings per share data.

[48 FR 11107, Mar. 16, 1983, as amended at 50 FR 25215, June 18, 1985]



Sec. 210.9-05  Foreign activities.

    (a) General requirement. Separate disclosure concerning foreign 
activities shall be made for each period in which either (1) assets, or 
(2) revenue, or (3) income (loss) before income tax expense, or (4) net 
income (loss), each as associated with foreign activities, exceeded ten 
percent of the corresponding amount in the related financial statements.
    (b) Disclosures. (1) Disclose total identifiable assets (net of 
valuation allowances) associated with foreign activities.
    (2) For each period for which an income statement is filed, state 
the amount of revenue, income (loss) before taxes, and net income (loss) 
associated with foreign activities. Disclose significant estimates and 
assumptions (including those related to the cost of capital) used in 
allocating revenue and expenses to foreign activities; describe the 
nature and effects of any changes in such estimates and assumptions 
which have a significant impact on interperiod comparability.
    (3) The information in paragraph (b) (1) and (2) of this section 
shall be presented separately for each significant geographic area and 
in the aggregate for all other geographic areas not deemed significant.
    (c) Definitions. (1) Foreign activities include loans and other 
revenues producing assets and transactions in which the debtor or 
customer, whether an affiliated or unaffiliated person, is domiciled 
outside the United States.
    (2) The term revenue includes the total of the amount reported at 
Secs. 210.9-04.5 and 210.9-04.13.
    (3) A significant geographic area is one in which assets or revenue 
or income before income tax or net income exceed 10 percent of the 
comparable amount as reported in the financial statements.



Sec. 210.9-06  Condensed financial information of registrant.

    The information prescribed by Sec. 210.12-04 shall be presented in a 
note to the financial statements when the restricted net assets 
(Sec. 210.4-08(e)(3)) of consolidated subsidiaries exceed 25 percent of 
consolidated net assets as of the end of the most recently completed 
fiscal year. The investment in and indebtedness of and to bank 
subsidiaries shall be stated separately in the condensed balance sheet 
from amounts for other subsidiaries; the amount of cash dividends paid 
to the registrant for each of the last three years by bank subsidiaries 
shall be stated separately in the condensed income statement from 
amounts for other subsidiaries. For purposes of the above test, 
restricted net assets of consolidated subsidiaries shall mean that 
amount of the registrant's proportionate share of net assets of 
consolidated subsidiaries (after intercompany eliminations) which as of 
the end of the most recent fiscal year may not be transferred to the 
parent company by subsidiaries in the form of loans, advances or cash 
dividends without the consent of a third party (i.e., lender, regulatory 
agency, foreign government, etc.). Where restrictions on the amount of 
funds which may be loaned or advanced differ from the amount restricted 
as to transfer in the form of cash dividends, the amount least 
restrictive to the subsidiary shall be used. Redeemable preferred stocks 
(Sec. 210.5-02.28) and minority interests shall be deducted in computing 
net assets for purposes of this test.



Sec. 210.9-07  [Reserved]

                      Interim Financial Statements



Sec. 210.10-01  Interim financial statements.

    (a) Condensed statements. Interim financial statements shall follow 
the general form and content of presentation prescribed by the other 
sections

[[Page 307]]

of this Regulation with the following exceptions:
    (1) Interim financial statements required by this rule need only be 
provided as to the registrant and its subsidiaries consolidated and may 
be unaudited. Separate statements of other entities which may otherwise 
be required by this regulation may be omitted.
    (2) Interim balance sheets shall include only major captions (i.e., 
numbered captions) prescribed by the applicable sections of this 
Regulation with the exception of inventories. Data as to raw materials, 
work in process and finished goods inventories shall be included either 
on the face of the balance sheet or in the notes to the financial 
statements, if applicable. Where any major balance sheet caption is less 
than 10% of total assets, and the amount in the caption has not 
increased or decreased by more than 25% since the end of the preceding 
fiscal year, the caption may be combined with others.
    (3) Interim statements of income shall also include major captions 
prescribed by the applicable sections of this Regulation. When any major 
income statement caption is less than 15% of average net income for the 
most recent three fiscal years and the amount in the caption has not 
increased or decreased by more than 20% as compared to the corresponding 
interim period of the preceding fiscal year, the caption may be combined 
with others. In calculating average net income, loss years should be 
excluded. If losses were incurred in each of the most recent three 
years, the average loss shall be used for purposes of this test. 
Notwithstanding these tests, Sec. 210.4-02 applies and de minimis 
amounts therefore need not be shown separately, except that registrants 
reporting under Sec. 210.9 shall show investment securities gains or 
losses separately regardless of size.
    (4) The statement of cash flows may be abbreviated starting with a 
single figure of net cash flows from operating activities and showing 
cash changes from investing and financing activities individually only 
when they exceed 10% of the average of net cash flows from operating 
activities for the most recent three years. Notwithstanding this test, 
Sec. 210.4-02 applies and de minimis amounts therefore need not be shown 
separately.
    (5) The interim financial information shall include disclosures 
either on the face of the financial statements or in accompanying 
footnotes sufficient so as to make the interim information presented not 
misleading. Registrants may presume that users of the interim financial 
information have read or have access to the audited financial statements 
for the preceding fiscal year and that the adequacy of additional 
disclosure needed for a fair presentation, except in regard to material 
contingencies, may be determined in that context. Accordingly, footnote 
disclosure which would substantially duplicate the disclosure contained 
in the most recent annual report to security holders or latest audited 
financial statements, such as a statement of significant accounting 
policies and practices, details of accounts which have not changed 
significantly in amount or composition since the end of the most 
recently completed fiscal year, and detailed disclosures prescribed by 
Rule 4-08 of this Regulation, may be omitted. However, disclosure shall 
be provided where events subsequent to the end of the most recent fiscal 
year have occurred which have a material impact on the registrant. 
Disclosures should encompass for example, significant changes since the 
end of the most recently completed fiscal year in such items as: 
accounting principles and practices; estimates inherent in the 
preparation of financial statements; status of long-term contracts; 
capitalization including significant new borrowings or modification of 
existing financing arrangements; and the reporting entity resulting from 
business combinations or dispositions. Notwithstanding the above, where 
material contingencies exist, disclosure of such matters shall be 
provided even though a significant change since year end may not have 
occurred.
    (6) Detailed schedules otherwise required by this Regulation may be 
omitted for purposes of preparing interim financial statements.
    (7) In addition to the financial statements required by paragraphs 
(a) (2),

[[Page 308]]

(3) and (4) of this section, registrants in the development stage shall 
provide the cumulative financial statements (condensed to the same 
degree as allowed in this paragraph) and disclosures required by 
Statement of Financial Accounting Standards No. 7, ``Accounting and 
Reporting by Development Stage Enterprises'' to the date of the latest 
balance sheet presented.
    (b) Other instructions as to content. The following additional 
instructions shall be applicable for purposes of preparing interim 
financial statements:
    (1) Summarized income statement information shall be given 
separately as to each subsidiary not consolidated or 50 percent or less 
owned persons or as to each group of such subsidiaries or fifty percent 
or less owned persons for which separate individual or group statements 
would otherwise be required for annual periods. Such summarized 
information, however, need not be furnished for any such unconsolidated 
subsidiary or person which would not be required pursuant to Rule 13a-13 
or 15d-13 to file quarterly financial information with the Commission if 
it were a registrant.
    (2) If appropriate, the income statement shall show earnings per 
share and dividends declared per share applicable to common stock. The 
basis of the earnings per share computation shall be stated together 
with the number of shares used in the computation. In addition, see Item 
601(b)(11) of Regulation S-K, (17 CFR 229.601(b)(11)).
    (3) If, during the most recent interim period presented, the 
registrant or any of its consolidated subsidiaries entered into a 
business combination treated for accounting purposes as a pooling of 
interests, the interim financial statements for both the current year 
and the preceding year shall reflect the combined results of the pooled 
businesses. Supplemental disclosure of the separate results of the 
combined entities for periods prior to the combination shall be given, 
with appropriate explanations.
    (4) Where a material business combination accounted for as a 
purchase has occurred during the current fiscal year, pro forma 
disclosure shall be made of the results of operations for the current 
year up to the date of the most recent interim balance sheet provided 
(and for the corresponding period in the preceding year) as though the 
companies had combined at the beginning of the period being reported on. 
This pro forma information should as a minimum show revenue, income 
before extraordinary items and the cumulative effect of accounting 
changes, including such income on a per share basis, and net income and 
net income per share.
    (5) Where the registrant has disposed of any significant segment of 
its business (as defined in paragraph 13 of Accounting Principles Board 
Opinion No. 30) during any of the periods covered by the interim 
financial statements, the effect thereof on revenues and net income--
total and per share--for all periods shall be disclosed.
    (6) In addition to meeting the reporting requirements specified by 
existing standards for accounting changes, the registrant shall state 
the date of any material accounting change and the reasons for making 
it. In addition, for filings on Form 10-Q and Form 10-QSB, a letter from 
the registrant's independent accountant shall be filed as an exhibit (in 
accordance with the provisions of Item 601 of Regulation S-K, 17 CFR 
229.601) in the first Form 10-Q and Form 10-QSB subsequent to the date 
of an accounting change indicating whether or not the change is to an 
alternative principle which in his judgment is preferable under the 
circumstances; except that no letter from the accountant need be filed 
when the change is made in response to a standard adopted by the 
Financial Accounting Standards Board which requires such change.
    (7) Any material retroactive prior period adjustment made during any 
period convered by the interim financial statements shall be disclosed, 
together with the effect thereof upon net income--total and per share--
of any prior period included and upon the balance of retained earnings. 
If results of operations for any period presented have been adjusted 
retroactively by such an item subsequent to the initial reporting of 
such period, similar disclosure of the effect of the change shall be 
made.

[[Page 309]]

    (8) Any unaudited interim financial statements furnished shall 
reflect all adjustments which are, in the opinion of management, 
necessary to a fair statement of the results for the interim periods 
presented. A statement to that effect shall be included. Such 
adjustments shall include, for example, appropriate estimated provisions 
for bonus and profit sharing arrangements normally determined or settled 
at year-end. If all such adjustments are of a normal recurring nature, a 
statement to that effect shall be made; otherwise, there shall be 
furnished information describing in appropriate detail the nature and 
amount of any adjustments other than normal recurring adjustments 
entering into the determination of the results shown.
    (c) Periods to be covered. The periods for which interim financial 
statements are to be provided in registration statements are prescribed 
elsewhere in this Regulation (see Secs. 210.3-01 and 3-02). For filings 
on Form 10-Q and Form 10-QSB, financial statements shall be provided as 
set forth below:
    (1) An interim balance sheet as of the end of the most recent fiscal 
quarter and a balance sheet as of the end of the preceding fiscal year 
shall be provided. The balance sheet as of the end of the preceding 
fiscal year may be condensed to the same degree as the interim balance 
sheet provided. An interim balance sheet as of the end of the 
corresponding fiscal quarter of the preceding fiscal year need not be 
provided unless necessary for an understanding of the impact of seasonal 
fluctuations on the registrant's financial condition.
    (2) Interim statements of income shall be provided for the most 
recent fiscal quarter, for the period between the end of the preceding 
fiscal year and the end of the most recent fiscal quarter, and for the 
corresponding periods of the preceding fiscal year. Such statements may 
also be presented for the cumulative twelve month period ended during 
the most recent fiscal quarter and for the corresponding preceding 
period.
    (3) Interim statements of cash flows shall be provided for the 
period between the end of the preceding fiscal year and the end of the 
most recent fiscal quarter, and for the corresponding period of the 
preceding fiscal year. Such statements may also be presented for the 
cumulative twelve month period ended during the most recent fiscal 
quarter and for the corresponding preceding period.
    (4) Registrants engaged in seasonal production and sale of a single-
crop agricultural commodity may provide interim statements of income and 
cash flows for the twelve month period ended during the most recent 
fiscal quarter and for the corresponding preceding period in lieu of the 
year-to-date statements specified in (2) and (3) above.
    (d) Interim review by independent public accountant. Prior to 
filing, interim financial statements included in quarterly reports on 
Form 10-Q (17 CFR 249.308(a)) must be reviewed by an independent public 
accountant using professional standards and procedures for conducting 
such reviews, as established by generally accepted auditing standards, 
as may be modified or supplemented by the Commission. If, in any filing, 
the company states that interim financial statements have been reviewed 
by an independent public accountant, a report of the accountant on the 
review must be filed with the interim financial statements.
    (e) Filing of other interim financial information in certain cases. 
The Commission may, upon the informal written request of the registrant, 
and where consistent with the protection of investors, permit the 
omission of any of the interim financial information herein required or 
the filing in substitution thereof of appropriate information of 
comparable character. The Commission may also by informal written notice 
require the filing of other information in addition to, or in 
substitution for, the interim information herein required in any case 
where such information is necessary or appropriate for an adequate 
presentation of the financial condition of any person for which interim 
financial information is required, or whose financial information is 
otherwise necessary for the protection of investors.

[46 FR 12489, Feb. 17, 1981, as amended at 50 FR 25215, June 18, 1985; 
50 FR 49533, Dec. 3, 1985; 57 FR 45293, Oct. 1, 1992; 64 FR 73401, Dec. 
30, 1999]

[[Page 310]]

                     Pro Forma Financial Information

    Authority: Secs. 210.11-01 to 210.11-03 issued under secs. 7 and 19a 
of the Securities Act, 15 U.S.C. 77g, 77s(a), 77aa(25)(26); secs. 12, 
13, 14, 15(d), and 23(a) of the Securities Exchange Act of 1934, 15 
U.S.C. 78l, 78m, 78n, 78o(d), 78w(a); secs. 5(b), 10(a), 14, 20(a) of 
the Public Utility Holding Company Act, 15 U.S.C. 79e(a), 79n, 79t(a); 
secs. 8, 20, 30, 31(c), 38(a) of the Investment Company Act of 1940, 15 
U.S.C. 80a-8, 80a-20, 80a-29, 80a-30(c), 80a-37(a).

    Source: Sections 210.11-01 to 210.11-03 appear at 47 FR 29837, July 
9, 1982, unless otherwise noted.



Sec. 210.11-01  Presentation requirements.

    (a) Pro forma financial information shall be furnished when any of 
the following conditions exist:
    (1) During the most recent fiscal year or subsequent interim period 
for which a balance sheet is required by Sec. 210.3-01, a significant 
business combination accounted for as a purchase has occurred (for 
purposes of these rules, the term ``purchase'' encompasses the purchase 
of an interest in a business accounted for by the equity method);
    (2) After the date of the most recent balance sheet filed pursuant 
to Sec. 210.3-01, consummation of a significant business combination to 
be accounted for by either the purchase method or pooling-of-interests 
method of accounting has occurred or is probable;
    (3) Securities being registered by the registrant are to be offered 
to the security holders of a significant business to be acquired or the 
proceeds from the offered securities will be applied directly or 
indirectly to the purchase of a specific significant business;
    (4) The disposition of a significant portion of a business either by 
sale, abandonment or distribution to shareholders by means of a spin-
off, split-up or split-off has occurred or is probable and such 
disposition is not fully reflected in the financial statements of the 
registrant included in the filing;
    (5) During the most recent fiscal year or subsequent interim period 
for which a balance sheet is required by Sec. 210.3-01, the registrant 
has acquired one or more real estate operations or properties which in 
the aggregate are significant, or since the date of the most recent 
balance sheet filed pursuant to that section the registrant has acquired 
or proposes to acquire one or more operations or properties which in the 
aggregate are significant.
    (6) Pro forma financial information required by Sec. 229.914 is 
required to be provided in connection with a roll-up transaction as 
defined in Sec. 229.901(c).
    (7) The registrant previously was a part of another entity and such 
presentation is necessary to reflect operations and financial position 
of the registrant as an autonomous entity; or
    (8) Consummation of other events or transactions has occurred or is 
probable for which disclosure of pro forma financial information would 
be material to investors.
    (b) A business combination or disposition of a business shall be 
considered significant if:
    (1) A comparison of the most recent annual financial statements of 
the business acquired or to be acquired and the registrant's most recent 
annual consolidated financial statements filed at or prior to the date 
of acquisition indicates that the business would be a significant 
subsidiary pursuant to the conditions specified in Sec. 210.1-02(w), 
substituting 20 percent for 10 percent each place it appears therein; or
    (2) The business to be disposed of meets the conditions of a 
significant subsidiary in Sec. 210.1-02(w).
    (c) The pro forma effects of a business combination need not be 
presented pursuant to this section if separate financial statements of 
the acquired business are not included in the filing.
    (d) For purposes of this rule, the term business should be evaluated 
in light of the facts and circumstances involved and whether there is 
sufficient continuity of the acquired entity's operations prior to and 
after the transactions so that disclosure of prior financial information 
is material to an understanding of future operations. A presumption 
exists that a separate entity, a subsidiary, or a division is a 
business. However, a lesser component of an entity may also constitute a 
business. Among the facts and circumstances which should be considered 
in evaluating whether an acquisition of a lesser component of an entity 
constitutes a business are the following:

[[Page 311]]

    (1) Whether the nature of the revenue-producing activity of the 
component will remain generally the same as before the transaction; or
    (2) Whether any of the following attributes remain with the 
component after the transaction:
    (i) Physical facilities,
    (ii) Employee base,
    (iii) Market distribution system,
    (iv) Sales force,
    (v) Customer base,
    (vi) Operating rights,
    (vii) Production techniques, or
    (viii) Trade names.
    (e) This rule does not apply to transactions between a parent 
company and its totally held subsidiary.

[47 FR 29837, July 9, 1982, as amended at 50 FR 49533, Dec. 3, 1985; 56 
FR 57247, Nov. 8, 1991; 61 FR 54514, Oct. 18, 1996]



Sec. 210.11-02  Preparation requirements.

    (a) Objective. Pro forma financial information should provide 
investors with information about the continuing impact of a particular 
transaction by showing how it might have affected historical financial 
statements if the transaction had been consummated at an earlier time. 
Such statements should assist investors in analyzing the future 
prospects of the registrant because they illustrate the possible scope 
of the change in the registrant's historical financial position and 
results of operations caused by the transaction.
    (b) Form and content. (1) Pro forma financial information shall 
consist of a pro forma condensed balance sheet, pro forma condensed 
statements of income, and accompanying explanatory notes. In certain 
circumstances (i.e., where a limited number of pro forma adjustments are 
required and those adjustments are easily understood), a narrative 
description of the pro forma effects of the transaction may be furnished 
in lieu of the statements described herein.
    (2) The pro forma financial information shall be accompanied by an 
introductory paragraph which briefly sets forth a description of (i) the 
transaction, (ii) the entities involved, and (iii) the periods for which 
the pro forma information is presented. In addition, an explanation of 
what the pro forma presentation shows shall be set forth.
    (3) The pro forma condensed financial information need only include 
major captions (i.e., the numbered captions) prescribed by the 
applicable sections of this Regulation. Where any major balance sheet 
caption is less than 10 percent of total assets, the caption may be 
combined with others. When any major income statement caption is less 
than 15 percent of average net income of the registrant for the most 
recent three fiscal years, the caption may be combined with others. In 
calculating average net income, loss years should be excluded unless 
losses were incurred in each of the most recent three years, in which 
case the average loss shall be used for purposes of this test. 
Notwithstanding these tests, de minimis amounts need not be shown 
separately.
    (4) Pro forma statements shall ordinarily be in columnar form 
showing condensed historical statements, pro forma adjustments, and the 
pro forma results.
    (5) The pro forma condensed income statement shall disclose income 
(loss) from continuing operations before nonrecurring charges or credits 
directly attributable to the transaction. Material nonrecurring charges 
or credits and related tax effects which result directly from the 
transaction and which will be included in the income of the registrant 
within the 12 months succeeding the transaction shall be disclosed 
separately. It should be clearly indicated that such charges or credits 
were not considered in the pro forma condensed income statement. If the 
transaction for which pro forma financial information is presented 
relates to the disposition of a business, the pro forma results should 
give effect to the disposition and be presented under an appropriate 
caption.
    (6) Pro forma adjustments related to the pro forma condensed income 
statement shall be computed assuming the transaction was consummated at 
the beginning of the fiscal year presented and shall include adjustments 
which give effect to events that are (i) directly attributable to the 
transaction,

[[Page 312]]

(ii) expected to have a continuing impact on the registrant, and (iii) 
factually supportable. Pro forma adjustments related to the pro forma 
condensed balance sheet shall be computed assuming the transaction was 
consummated at the end of the most recent period for which a balance 
sheet is required by Sec. 210.3-01 and shall include adjustments which 
give effect to events that are directly attributable to the transaction 
and factually supportable regardless of whether they have a continuing 
impact or are nonrecurring. All adjustments should be referenced to 
notes which clearly explain the assumptions involved.
    (7) Historical primary and fully diluted per share data based on 
continuing operations (or net income if the registrant does not report 
either discontinued operations, extraordinary items, or the cumulative 
effects of accounting changes) for the registrant, and primary and fully 
diluted pro forma per share data based on continuing operations before 
nonrecurring charges or credits directly attributable to the transaction 
shall be presented on the face of the pro forma condensed income 
statement together with the number of shares used to compute such per 
share data. For transactions involving the issuance of securities, the 
number of shares used in the calculation of the pro forma per share data 
should be based on the weighted average number of shares outstanding 
during the period adjusted to give effect to shares subsequently issued 
or assumed to be issued had the particular transaction or event taken 
place at the beginning of the period presented. If a convertible 
security is being issued in the transaction, consideration should be 
given to the possible dilution of the pro forma per share data.
    (8) If the transaction is structured in such a manner that 
significantly different results may occur, additional pro forma 
presentations shall be made which give effect to the range of possible 
results.

    Instructions: 1. The historical statement of income used in the pro 
forma financial information shall not report operations of a segment 
that has been discontinued, extraordinary items, or the cumulative 
effects of accounting changes. If the historical statement of income 
includes such items, only the portion of the income statement through 
``income from continuing operations'' (or the appropriate modification 
thereof) should be used in preparing pro forma results.
    2. For a purchase transaction, pro forma adjustments for the income 
statement shall include amortization of goodwill, depreciation and other 
adjustments based on the allocated purchase price of net assets 
acquired. In some transactions, such as in financial institution 
acquisitions, the purchase adjustments may include significant discounts 
of the historical cost of the acquired assets to their fair value at the 
acquisition date. When such adjustments will result in a significant 
effect on earnings (losses) in periods immediately subsequent to the 
acquisition which will be progressively eliminated over a relatively 
short period, the effect of the purchase adjustments on reported results 
of operations for each of the next five years should be disclosed in a 
note.
    3. For a disposition transaction, the pro forma financial 
information shall begin with the historical financial statements of the 
existing entity and show the deletion of the business to be divested 
along with the pro forma adjustments necessary to arrive at the 
remainder of the existing entity. For example, pro forma adjustments 
would include adjustments of interest expense arising from revised debt 
structures and expenses which will be or have been incurred on behalf of 
the business to be divested such as advertising costs, executive 
salaries and other costs.
    4. For entities which were previously a component of another entity, 
pro forma adjustments should include adjustments similar in nature to 
those referred to in Instruction 3 above. Adjustments may also be 
necessary when charges for corporate overhead, interest, or income taxes 
have been allocated to the entity on a basis other than one deemed 
reasonable by management.
    5. Adjustments to reflect the acquisition of real estate operations 
or properties for the pro forma income statement shall include a 
depreciation charge based on the new accounting basis for the assets, 
interest financing on any additional or refinanced debt, and other 
appropriate adjustments that can be factually supported. See also 
Instruction 4 above.
    6. When consummation of more than one transaction has occurred or is 
probable during a fiscal year, the pro forma financial information may 
be presented on a combined basis; however, in some circumstances (e.g., 
depending upon the combination of probable and consummated transactions, 
and the nature of the filing) it may be more useful to present the pro 
forma financial information on a disaggregated basis even though some or 
all of the transactions would not meet the tests of significance 
individually. For combined presentations, a note should explain

[[Page 313]]

the various transactions and disclose the maximum variances in the pro 
forma financial information which would occur for any of the possible 
combinations. If the pro forma financial information is presented in a 
proxy or information statement for purposes of obtaining shareholder 
approval of one of the transactions, the effects of that transaction 
must be clearly set forth.
    7. Tax effects, if any, of pro forma adjustments normally should be 
calculated at the statutory rate in effect during the periods for which 
pro forma condensed income statements are presented and should be 
reflected as a separate pro forma adjustment.

    (c) Periods to be presented. (1) A pro forma condensed balance sheet 
as of the end of the most recent period for which a consolidated balance 
sheet of the registrant is required by Sec. 210.3-01 shall be filed 
unless the transaction is already reflected in such balance sheet.
    (2)(i) Pro forma condensed statements of income shall be filed for 
only the most recent fiscal year and for the period from the most recent 
fiscal year end to the most recent interim date for which a balance 
sheet is required. A pro forma condensed statement of income may be 
filed for the corresponding interim period of the preceding fiscal year. 
A pro forma condensed statement of income shall not be filed when the 
historical income statement reflects the transaction for the entire 
period.
    (ii) For a business combination accounted for as a pooling of 
interests, the pro forma income statements (which are in effect a 
restatement of the historical income statements as if the combination 
had been consummated) shall be filed for all periods for which 
historical income statements of the registrant are required.
    (3) Pro forma condensed statements of income shall be presented 
using the registrant's fiscal year end. If the most recent fiscal year 
end of any other entity involved in the transaction differs from the 
registrant's most recent fiscal year end by more than 93 days, the other 
entity's income statement shall be brought up to within 93 days of the 
registrant's most recent fiscal year end, if practicable. This updating 
could be accomplished by adding subsequent interim period results to the 
most recent fiscal year-end information and deducting the comparable 
preceding year interim period results. Disclosure shall be made of the 
periods combined and of the sales or revenues and income for any periods 
which were excluded from or included more than once in the condensed pro 
forma income statements (e.g., an interim period that is included both 
as part of the fiscal year and the subsequent interim period). For 
investment companies subject to Secs. 210.6-01 to 210.6-10, the periods 
covered by the pro forma statements must be the same.
    (4) Whenever unusual events enter into the determination of the 
results shown for the most recently completed fiscal year, the effect of 
such unusual events should be disclosed and consideration should be 
given to presenting a pro forma condensed income statement for the most 
recent twelve-month period in addition to those required in paragraph 
(c)(2)(i) above if the most recent twelve-month period is more 
representative of normal operations.

[47 FR 29837, July 9, 1982, as amended at 50 FR 49533, Dec. 3, 1985]



Sec. 210.11-03  Presentation of financial forecast.

    (a) A financial forecast may be filed in lieu of the pro forma 
condensed statements of income required by Sec. 210.11-02(b)(1).
    (1) The financial forecast shall cover a period of at least 12 
months from the latest of (i) the most recent balance sheet included in 
the filing or (ii) the consummation date or estimated consummation date 
of the transaction.
    (2) The forecasted statement of income shall be presented in the 
same degree of detail as the pro forma condensed statement of income 
required by Sec. 210.11-02(b)(3).
    (3) Assumptions particularly relevant to the transaction and effects 
thereof should be clearly set forth.
    (4) Historical condensed financial information of the registrant and 
the business acquired or to be acquired, if any, shall be presented for 
at least a recent 12 month period in parallel columns with the financial 
forecast.
    (b) Such financial forecast shall be presented in accordance with 
the guidelines established by the American Institute of Certified Public 
Accountants.

[[Page 314]]

    (c) Forecasted earnings per share data shall be substituted for pro 
forma per share data.
    (d) This rule does not permit the filing of a financial forecast in 
lieu of pro forma information required by generally accepted accounting 
principles.

                      Form and Content of Schedules



general--Table of Contents






Sec. 210.12-01  Application of Secs. 210.12-01 to 210.12-29.

    These sections prescribe the form and content of the schedules 
required by Secs. 210.5-04, 210.6-10, 210.6A-05, and 210.7-05.

[59 FR 65637, Dec. 20, 1994]



Sec. 210.12-02-- 210.12-03  [Reserved]



Sec. 210.12-04  Condensed financial information of registrant.

    (a) Provide condensed financial information as to financial 
position, cash flows and results of operations of the registrant as of 
the same dates and for the same periods for which audited consolidated 
financial statements are required. The financial information required 
need not be presented in greater detail than is required for condensed 
statements by Sec. 210.10-01(a) (2), (3) and (4). Detailed footnote 
disclosure which would normally be included with complete financial 
statements may be omitted with the exception of disclosures regarding 
material contingencies, long-term obligations and guarantees. 
Descriptions of significant provisions of the registrant's long-term 
obligations, mandatory dividend or redemption requirements of redeemable 
stocks, and guarantees of the registrant shall be provided along with a 
five-year schedule of maturities of debt. If the material contingencies, 
long-term obligations, redeemable stock requirements and guarantees of 
the registrant have been separately disclosed in the consolidated 
statements, they need not be repeated in this schedule.
    (b) Disclose separately the amounts of cash dividends paid to the 
registrant for each of the last three fiscal years by consolidated 
subsidiaries, unconsolidated subsidiaries and 50 percent or less owned 
persons accounted for by the equity method, respectively.

[46 FR 56180, Nov. 16, 1981, as amended at 57 FR 45293, Oct. 1, 1992]



Sec. 210.12-05--210.12-08  [Reserved]



Sec. 210.12-09  Valuation and qualifying accounts.

----------------------------------------------------------------------------------------------------------------
                                                  Column C--Additions
                           Column B--    ------------------------------------    Column D--        Column E--
 Column A--Description     Balance at      (1)--Charged to   (2)--Charged to    Deductions--     Balance at end
          \1\             beginning of        costs and     other accounts--      describe          of period
                             period           expenses          describe
----------------------------------------------------------------------------------------------------------------
 
 
 
----------------------------------------------------------------------------------------------------------------
\1\ List, by major classes, all valuation and qualifying accounts and reserves not included in specific
  schedules. Identify each class of valuation and qualifying accounts and reserves by descriptive title. Group
  (a) those valuation and qualifying accounts which are deducted in the balance sheet from the assets to which
  they apply and (b) those reserves which support the balance sheet caption, Reserves. Valuation and qualifying
  accounts and reserves as to which the additions, deductions, and balances were not individually significant
  may be grouped in one total and in such case the information called for under columns C and D need not be
  given.


[37 FR 14602, July 21, 1972. Redesignated and amended at 45 FR 63679, 
Sept. 25, 1980]



Sec. 210.12-10--210.12-11  [Reserved]



for management investment companies--Table of Contents




[[Page 315]]



Sec. 210.12-12  Investments in securities of unaffiliated issuers.

------------------------------------------------------------------------
             Col. A                     Col. B              Col. C
------------------------------------------------------------------------
Name of issuer and title of       Balance held at     Value of each item
 issue 1, 2                        close of period.    at close of
                                   Number of shares--  period.3, 4, 6, 7
                                   principal amount    , 8
                                   of bonds and
                                   notes \5\
------------------------------------------------------------------------
\1\ Each issue shall be listed separately: Provided, however, that an
  amount not exceeding five percent of the total of Column C may be
  listed in one amount as ``Miscellaneous securities,'' provided the
  securities so listed are not restricted, have been held for not more
  than one year prior to the date of the related balance sheet, and have
  not previously been reported by name to the shareholders of the person
  for which the schedule is filed or to any exchange, or set forth in
  any registration statement, application, or annual report or otherwise
  made available to the public.
\2\ List separately: (a) Common shares; (b) preferred shares; (c) bonds
  and notes; (d) time deposits; and (e) put and call options purchased.
  Within each of these subdivisions, classify in an appropriate manner
  according to type of business; e.g., aerospace, banking, chemicals,
  machinery and machine tools, petroleum, utilities, etc.; or according
  to type of instrument; e.g., commercial paper, bankers' acceptances,
  certificates of deposit. Short-term debt instruments of the same
  issuer may be aggregated, in which case the range of interest rates
  and maturity dates shall be indicated. For issuers of periodic payment
  plan certificates and unit investment trusts, list separately: (i)
  Trust shares in trusts created or serviced by the depositor or sponsor
  of this trust; (ii) trust shares in other trusts; and (iii) securities
  of other investment companies. Restricted securities shall not be
  combined with unrestricted securities of the same issuer. Repurchase
  agreements shall be stated separately showing for each the name of the
  party or parties to the agreement, the date of the agreement, the
  total amount to be received upon repurchase, the repurchase date and
  description of securities subject to the repurchase agreements.
\3\ The subtotals for each category of investments, subdivided by
  business grouping or instrument type, shall be shown together with
  their percentage value compared to net assets (Secs.  210.6-04.19 or
  210.6-05.4).
\4\ Column C shall be totaled. The total of column C shall agree with
  the correlative amounts shown on the related balance sheet.
\5\ Indicate by an appropriate symbol each issue of securities which is
  non-income producing. Evidences of indebtedness and preferred shares
  may be deemed to be income producing if, on the respective last
  interest payment date or date for the declaration of dividends prior
  to the date of the related balance sheet, there was only a partial
  payment of interest or a declaration of only a partial amount of the
  dividends payable; in such case, however, each such issue shall be
  indicated by an appropriate symbol referring to a note to the effect
  that, on the last interest or dividend date, only partial interest was
  paid or partial dividends declared. If, on such respective last
  interest or dividend date, no interest was paid or no cash or in kind
  dividends declared, the issue shall not be deemed to be income
  producing. Common shares shall not be deemed to be income producing
  unless, during the last year preceding the date of the related balance
  sheet, there was at least one dividend paid upon such common shares.
\6\ Indicate by an appropriate symbol each issue of restricted
  securities. State the following in a footnote: (a) As to each such
  issue: (1) Acquisition date, (2) carrying value per unit of investment
  at date of related balance sheet, e.g., a percentage of current market
  value of unrestricted securities of the same issuer, etc., and (3) the
  cost of such securities; (b) as to each issue acquired during the year
  preceding the date of the related balance sheet, the carrying value
  per unit of investment of unrestricted securities of the same issuer
  at: (1) The day the purchase price was agreed to; and (2) the day on
  which an enforceable right to acquire such securities was obtained;
  and (c) the aggregate value of all restricted securities and the
  percentage which the aggregate value bears to net assets.
\7\ Indicate by an appropriate symbol each issue of securities held in
  connection with open put or call option contracts or loans for short
  sales.
\8\ State in a footnote the following amounts based on cost for Federal
  income tax purposes: (a) Aggregate gross unrealized appreciation for
  all securities in which there is an excess of value over tax cost, (b)
  the aggregate gross unrealized depreciation for all securities in
  which there is an excess of tax cost over value, (c) the net
  unrealized appreciation or depreciation, and (d) the aggregate cost of
  securities for Federal income tax purposes.


[47 FR 56843, Dec. 21, 1982]



Sec. 210.12-12A  Investments--securities sold short.

               [For management investment companies only]
------------------------------------------------------------------------
             Col. A                     Col. B              Col. C
------------------------------------------------------------------------
Name of issuer and title of       Balance of short    Value of each open
 issue \1\                         position at close   short position
                                   of period.          \2\
                                   (number of
                                   shares).
------------------------------------------------------------------------
\1\ Each issue shall be listed separately.
\2\ Column C shall be totaled. The total of column C shall agree with
  the correlative amounts shown on the related balance sheet.


[47 FR 56844, Dec. 21, 1982]



Sec. 210.12-12B  Open option contracts written.

                                   [For management investment companies only]
----------------------------------------------------------------------------------------------------------------
             Col. A                     Col. B              Col. C              Col. D              Col. E
----------------------------------------------------------------------------------------------------------------
Name of issuer 1, 2               Number of           Exercise price      Expiration date     Value.\4\
                                   contracts \3\
----------------------------------------------------------------------------------------------------------------
\1\ Information as to put options shall be shown separately from information as to call options.
\2\ Options of an issuer where exercise prices or expiration dates differ shall be listed separately.
\3\ If the number of shares subject to option is substituted for number of contracts, the column name shall
  reflect that change.
\4\ Column E shall be totaled and shall agree with the correlative amount shown on the related balance sheet.


[47 FR 56844, Dec. 21, 1982]

[[Page 316]]



Sec. 210.12-13  Investments other than securities.

               [For management investment companies only]
------------------------------------------------------------------------
             Col. A                     Col. B              Col. C
------------------------------------------------------------------------
Description \1\                   Balance held at     Value of each item
                                   close of period--   at close of
                                   quantity 2, 3, 5    period 4, 6, 7
------------------------------------------------------------------------
\1\ List each major category of investments by descriptive title.
\2\ If practicable, indicate the quantity or measure in appropriate
  units.
\3\ Indicate by an appropriate symbol each investment which is non-
  income producing.
\4\ Indicate by an appropriate symbol each investment not readily
  marketable. The term ``investment not readily marketable'' shall
  include investments for which there is no independent publicly quoted
  market and investments which cannot be sold because of restrictions or
  conditions applicable to the investment or the company.
\5\ Indicate by an appropriate symbol each investment subject to option.
  State in a footnote: (a) The quantity subject to option, (b) nature of
  option contract, (c) option price, and (d) dates within which options
  may be exercised.
\6\ Column C shall be totaled and shall agree with the correlative
  amount shown on the related balance sheet.
\7\ Sate in a footnote the following amounts based on cost for Federal
  income tax purposes: (a) Aggregate gross unrealized appreciation for
  all investments in which there is an excess of value over tax cost,
  (b) the aggregate gross unrealized depreciation for all investments in
  which there is an excess of tax cost over value, (c) the net
  unrealized appreciation or depreciation, and (d) the aggregate cost of
  investments for Federal income tax purposes.



Sec. 210.12-14  Investments in and advances to affiliates.

                                   [For management investment companies only]
----------------------------------------------------------------------------------------------------------------
             Col. A                     Col. B              Col. C              Col. D              Col. E
----------------------------------------------------------------------------------------------------------------
Name of issuer and title of       Number of shares--  Amount of equity    Amount of           Value of each item
 issue or nature of indebtedness   principal amount    in net profit and   dividends or        at close of
 \1\                               of bonds, notes     loss for the        interest 2, 5       period 2, 3, 4, 5
                                   and other           period 2, 6
                                   indebtedness held
                                   at close of
                                   period
                                                                         --------------------
                                                                          (1) Credited to
                                                                           income.
                                                                         --------------------
                                                                          (2) Other.........  ..................
----------------------------------------------------------------------------------------------------------------
\1\ (a) List each issue separately and group (1) Investments in majority-owned subsidiaries, segregating
  subsidiaries consolidated; (2) other controlled companies; and (3) other affiliates. (b) If during the period
  there has been any increase or decrease in the amount of investment in and advance to any affiliate, state in
  a footnote (or if there have been changes to numerous affiliates, in a supplementary schedule) (1) name of
  each issuer and title of issue or nature of indebtedness; (2) balance at beginning of period; (3) gross
  additions; (4) gross reductions; (5) balance at close of period as shown in Column E. Include in the footnote
  or schedule comparable information as to affiliates in which there was an investment at any time during the
  period even though there was no investment at the close of the period of report.
\2\ Give totals for each group. If operations of any controlled companies are different in character from those
  of the company, group such affiliates (1) within divisions and (2) by type of activities.--f\3\ columns C, D
  and E shall be totaled. The totals of Column E shall agree with the correlative amount shown on the related
  balance sheet.
\4\ (a) indicate by an appropriate symbol each issue of restricted securities. The information required by
  instruction 5 of Sec.  210.12-12 shall be given in a footnote. (b) Indicate by an appropriate symbol each
  issue of securities subject to option. The information required by instruction 5 of Sec.  210.12-13 shall be
  given in a footnote.
\5\ (a) include in Column D (1) as to each issue held at the close of the period, the dividends or interest
  included in caption 1 of the statement of operations. In addition, show as the final item in column D (1) the
  aggregate of dividends and interest included in the statement of operations in respect of investments in
  affiliates not held at the close of the period. The total of this column shall agree with the correlative
  amount shown on the related statement of operations.
(b) Include in Column D (2) all other dividends and interest. Explain in an appropriate footnote the treatment
  accorded each item.
(c) Indicate by an appropriate symbol all non-cash dividends and explain the circumstances in a footnote.
(d) Indicate by an appropriate symbol each issue of securities which is non-income producing.
\6\ The information required by column C shall be furnished only as to controlled companies.


[47 FR 56844, Dec. 21, 1982]



Sec. 210.12-15  Summary of investments--other than investments in related parties.

                        [For Insurance Companies]
------------------------------------------------------------------------
           Column A               Column B      Column C      Column D
------------------------------------------------------------------------
                                                              Amount at
                                                             which shown
      Type of investment          Cost \1\        Value        in the
                                                               balance
                                                              sheet \2\
------------------------------------------------------------------------
Fixed maturities:
  Bonds:
    United States Government    ............  ............  ............
     and government agencies
     and authorities..........
    States, municipalities and  ............  ............  ............
     political subdivisions...
    Foreign governments.......  ............  ............  ............
    Public utilities..........  ............  ............  ............
    Convertibles and bonds      ............  ............  ............
     with warrants attached
     \3\......................
    All other corporate bonds.  ............  ............  ............
Certificates of deposit.......  ............  ............  ............

[[Page 317]]

 
Redeemable preferred stock....  ............  ............  ............
                               -----------------------------------------
    Total fixed maturities....  ............  ............  ............
                               -----------------------------------------
Equity securities:
  Common stocks:
    Public utilities..........  ............  ............  ............
    Banks, trust and insurance  ............  ............  ............
     companies................
    Industrial, miscellaneous   ............  ............  ............
     and all other............
Nonredeemable preferred stocks  ............  ............  ............
                               -----------------------------------------
    Total equity securities...  ............  ............  ............
                               -----------------------------------------
Mortgage loans on real estate.  ............                ............
Real estate \4\...............  ............                ............
Policy loans..................  ............                ............
Other long-term investments...  ............                ............
Short-term investments........  ............                ............
                               --------------              -------------
    Total investments.........  ............                ............
                               --------------              -------------
  ............................
------------------------------------------------------------------------
\1\ Original cost of equity securities and, as to fixed maturities,
  original cost reduced by repayments and adjusted for amortization of
  premiums or accrual of discounts.
\2\ If the amount at which shown in the balance sheet is different from
  the amount shown in either column B or C, state the reason for such
  difference. The total of this column should agree with the balance
  sheet.
\3\ All convertibles and bonds with warrants shall be included in this
  caption, regardless of issuer.
\4\ State separately any real estate acquired in satisfaction of debt.


[46 FR 54337, Nov. 2, 1981]



Sec. 210.12-16  Supplementary insurance information.

                                                                                                        [For insurance companies]
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
            Column A                   Column B            Column C            Column D            Column E            Column F            Column G            Column H            Column I            Column J            Column K
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                         Future policy                                                                                     Benefits, claims,
                                    Deferred policy    benefits, losses,                         Other policy                           Net investment        losses, and       Amortization of
           Segment \1\             acquisition cost     claims and loss    Unearned premiums      claims and        Premium revenue   income (caption 2)      settlement        deferred policy     Other operating    Premiums written
                                      (caption 7)      expenses (caption   (caption 13-a-2)    benefits payable       (caption 1)             \3\          expenses (caption   acquisition costs     expenses 3, 4            \2\
                                                            13-a-1)                            (caption 13-a-3)                                                   5)                  \4\
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                  ..................  ..................  ..................  ..................  ..................  ..................  ..................  ..................  ..................  ..................
  Total \5\.....................  ..................  ..................  ..................  ..................  ..................  ..................  ..................  ..................  ..................  ..................
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Segments shown should be the same as those presented in the footnote disclosures called for by generally accepted accounting principles.
\2\ Does not apply to life insurance or title insurance. This amount should include premiums from reinsurance assumed, and be net of premiums on reinsurance ceded.
\3\ State the basis for allocation of net investment income and, where applicable, other operating expenses.
\4\ The total of columns I and J should agree with the amount shown for income statement caption 7.
\5\ Totals should agree with the indicated balance sheet and income statement caption amounts, where a caption number is shown.


[46 FR 54338, Nov. 2, 1981, as amended at 57 FR 45293, Oct. 1, 1992; 64 
FR 1734, Jan. 12, 1999]

[[Page 318]]



Sec. 210.12-17  Reinsurance.

                                                                [For insurance companies]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                            Column B                Column C                Column D               Column E               Column F
                                    --------------------------------------------------------------------------------------------------------------------
              Column A                                           Ceded to other        Assumed from other                           Percentage of amount
                                          Gross amount            companies \1\            companies            Net amount \2\       assumed to net \3\
--------------------------------------------------------------------------------------------------------------------------------------------------------
Life insurance in force............    ....................    ....................    ...................    ...................
Premiums:
  Life insurance...................    ....................    ....................    ...................    ...................
  Accident and health insurance....    ....................    ....................    ...................    ...................
  Property and liability insurance.    ....................    ....................    ...................    ...................
  Title insurance..................    ....................    ....................    ...................    ...................
                                    --------------------------------------------------------------------------------------------------------------------
    Total premiums.................    ....................    ....................    ...................    ...................
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Indicate in a note any amounts of reinsurance or coinsurance income netted against premiums ceded.
\2\ This Column represents the total of column B less column C plus column D. The total premiums in this column should represent the amount of premium
  revenue on the income statement.
\3\ Calculated as the amount in column D divided by amount in column E.


[46 FR 54338, Nov. 2, 1981]

[[Page 319]]



Sec. 210.12-18  Supplemental information (for property-casualty insurance underwriters).

------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                         Claims and claim
                                                                               Reserves   Discount,                                     adjustment expenses  Amortization     Paid
                                                                   Deferred   for unpaid   if any,                             Net      incurred related to   of deferred  claims and
                  Affiliation with registrant                       policy    claims and   deducted   Unearned    Earned   investment ----------------------    policy        claim     Premiums
                                                                 acquisition     claim    in column   premiums   premiums    income       (1)                 acquisition  adjustment   written
                                                                    costs     adjustment    C \4\                                       Current   (2) Prior      costs      expenses
                                                                               expenses                                                   year      years
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Column A                                                           Column B     Column C   Column D   Column E   Column F    Column G              Column H     Column I     Column J   Column K
 
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
(a) Consolidated property-casualty entities \2\
(b) Unconsolidated property-casualty subsidiaries 2, 3
(c) Proportionate share of registrant and its subsidiaries' 50%-
 or-less-owned property-casualty equity investees 2, 3
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Information included in audited financial statements, including other schedules, need not be repeated in this schedule. Columns B, C, D, and E are as of the balance sheet dates, columns F,
  G, H, I, J, and K are for the same periods for which income statements are presented in the registrant's audited consolidated financial statements.
\2\ Present combined or consolidated amounts, as appropriate for each category, after intercompany eliminations.
\3\ Information is not required here for 50%-or-less-owned equity investees that file similar information with th Commission as registrants in their own right, if that fact and the name of the
  affiliated registrant is stated. If ending reserves in any category (a), (b), or (c) above is less than 5% of the total reserves otherwise required to be reported in this schedule, that
  category may be omitted and that fact so noted. If the amount of the reserves attributable to 50%-or-less-owned equity investors that file this information as registrants in their own right
  exceeds 95% of the total category (c) reserves, information for the other 50%-or-less-owned equity investees need not be provided.
\4\ Disclose in a footnote to this schedule the rate, or range of rates, estimated if necessary, at which the discount was computed for each category.


[49 FR 47599, Dec. 6, 1984]

[[Page 320]]

            for face-amount certificate investment companies

    Source: Sections 210.12-21 to 210.12-41 appear at 16 FR 348, Jan. 
13, 1951, unless otherwise noted. Redesignated at 45 FR 63679, Sept. 25, 
1980.



Sec. 210.12-21  Investments in securities of unaffiliated issuers.

------------------------------------------------------------------------
                   Column B--Balance
                    held at close of                     Column D--Value
Column A--Name of  period. Number of   Column C--Cost    of each item at
 issuer and title  shares--principal   of each item 3,   close of period
   of issue \1\     amount of bonds           4               3, 5
                     and notes \2\
------------------------------------------------------------------------
 
 
 
------------------------------------------------------------------------
\1\ (a) The required information is to be given as to all securities
  held as of the close of the period of report. Each issue shall be
  listed separately.
(b) Indicate by an appropriate symbol those securities which are non-
  income-producing securities. Evidences of indebtedness and preferred
  shares may be deemed to be income-producing if, on the respective last
  interest payment date or dates for the declaration of dividends prior
  to the date of the related balance sheet, there was only a partial
  payment of interest or a declaration of only a partial amount of the
  dividends payable; in such case, however, each such issue shall be
  indicated by an appropriate symbol referring to a note to the effect
  that, on the last interest or dividend date, only partial interest was
  paid or partial dividends declared. If, on such respective last
  interest or dividend date, no interest was paid or no dividends
  declared, the issue shall not be deemed to be income-producing. Common
  shares shall not be deemed to be income-producing unless, during the
  last year preceding the date of the related balance sheet, there was
  at least one dividend paid upon such common shares. List separately
  (1) bonds; (2) preferred shares; (3) common shares. Within each of
  these subdivisions classify according to type of business, insofar as
  practicable: e.g., investment companies, railroads, utilities, banks,
  insurance companies, or industrials. Give totals for each group,
  subdivision, and class.
\2\ Indicate any securities subject to option at the end of the most
  recent period and state in a note the amount subject to option, the
  option prices, and the dates within which such options may be
  exercised.
\3\ Columns C and D shall be totaled. The totals of columns C and D
  should agree with the correlative amounts required to be shown by the
  related balance sheet captions. State in a footnote to column C the
  aggregate cost for Federal income tax purposes.
\4\ If any investments have been written down or reserved against by
  such companies pursuant to Sec.  210.6-21(f), indicate each such item
  by means of an appropriate symbol and explain in a footnote.
\5\ Where value is determined on any other basis than closing prices
  reported on any national securities exchange, explain such other basis
  in a footnote.


[47 FR 56844, Dec. 21, 1982]



Sec. 210.12-22  Investments in and advances to affiliates and income thereon.

----------------------------------------------------------------------------------------------------------------
                                      Column B--                                Column E--Amount of
                                    Balance held at               Column D--   dividends or interest  Column F--
                                   close of period-- Column C--   Amount at            4, 6            Amount of
   Column A--Name of issuer and    Number of shares-   Cost of      which    ------------------------  equity in
   title of issue or amount of        -principal      each item   carried at                          net profit
         indebtedness \1\          amount of bonds,     3, 4       close of      (1)--                 and loss
                                    notes and other              period 4, 5   Credited   (2)--Other    for the
                                   indebtedness \2\                            to income              period \7\
----------------------------------------------------------------------------------------------------------------
 
 
 
----------------------------------------------------------------------------------------------------------------
\1\ (a) The required information is to be given as to all investments in affiliates as of the close of the
  period. See captions 10, 13 and 20 of Sec.  210.6-22. List each issue and group separately (1) investments in
  majority-owned subsidiaries, segregating subsidiaries consolidated; (2) other controlled companies; and (3)
  other affiliates. Give totals for each group. If operations of any controlled companies are different in
  character from those of the registrant, group such affiliates within divisions (1) and (2) by type of
  activities.
(b) Changes during the period. If during the period there has been any increase or decrease in the amount of
  investment in any affiliate, state in a footnote (or if there have been changes as to numerous affiliates, in
  a supplementary schedule) (1) name of each issuer and title of issue; (2) balance at beginning of period; (3)
  gross purchases and additions; (4) gross sales and reductions; (5) balance at close of period as shown in
  column C. Include in such footnote or schedule comparable information as to affiliates in which there was an
  investment at any time during the period even though there was no investment in such affiliate as of the close
  of such period.
\2\ Indicate any securities subject to option at the end of the most recent period and state in a footnote the
  amount subject to option, the option prices, and the dates within which such options may be exercised.
\3\ If the cost in column C represents other than cash expenditure, explain.
\4\ (a) Columns C, D and E shall be totaled. The totals of columns C and D should agree with correlative amounts
  required to be shown by the related balance sheet captions. State in a footnote the aggregate cost for Federal
  income tax purposes.
(b) If any investments have been written down or reserved against by such companies pursuant to Sec.  210.6-
  21(f), indicate each such item by means of an appropriate symbol and explain in a footnote.
\5\ State the basis of determining the amounts shown in column D.

[[Page 321]]

 
\6\ Show in column E(1) as to each issue held at close of period, the dividends or interest included in caption
  1 of the profit and loss or income statement. In addition, show as the final item in column E(1) the aggregate
  dividends and interest included in the profit and loss or income statement in respect of investments in
  affiliates not held at the close of the period. The total of this column should agree with the amounts shown
  under such caption. Include in column E(2) all other dividends and interest. Explain briefly in an appropriate
  footnote the treatment accorded each item. Identify by an appropriate symbol all non-cash dividends and
  explain the circumstances in a footnote. See Secs.  210.6-22(b) and 210.6-23(a).
\7\ The information required by column F need be furnished only as to controlled companies. The equity in the
  net profit and loss of each person required to be listed separately shall be computed on an individual basis.
  In addition, there may be submitted the information required as computed on the basis of the statements of
  each such person and its subsidiaries consolidated.



Sec. 210.12-23  Mortgage loans on real estate and interest earned on mortgages.\1\

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                    Part 1--Mortgage loans on real estate at close of period                                         Part 2--Interest
---------------------------------------------------------------------------------------------------------------------------------   earned on mortgages
                                                                                               Column D--Amount of               -----------------------
                                                                                               principal unpaid at                            Column G--
                                                                                                 close of period      Column E--  Column F--   Interest
 Column A--List by classification indicated below 2, 3,  Column B--    Column C--Carrying  --------------------------  Amount of   Interest     income
                           7                                Prior    amount of mortgage 8,              (2)--Subject   mortgage     due and     earned
                                                          liens \2\        9, 10, 11                         to          being    accrued at  applicable
                                                                                            (1)--Total   delinquent   foreclosed    end of     to period
                                                                                                        interest \4\              period \6\      \5\
--------------------------------------------------------------------------------------------------------------------------------------------------------
Liens on:
  Farms (total)...........................................................................
  Residential (total).....................................................................
  Apartments and business (total).........................................................
  Unimproved (total)......................................................................
                                                                                           -------------------------------------------------------------
        Total \12\........................................................................
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ All money columns shall be totaled.
\2\ If mortgages represent other than first liens, list separately in a schedule in a like manner, indicating briefly the nature of the lien.
  Information need not be furnished as to such liens which are fully insured or wholly guaranteed by an agency of the United States Government.
\3\ In a separate schedule classify by states in which the mortgaged property is located the total amounts in support of columns B, C, D and E.
\4\ (a) Interest in arrears for less than 3 months may be disregarded in computing the total amount of principal subject to delinquent interest.
(b) Of the total principal amount, state the amount acquired from controlled and other affiliates.
\5\ In order to reconcile the total of column G with the amount shown in the profit and loss or income statement, interest income earned applicable to
  period from mortgages sold or canceled during period should be added to the total of this column.
\6\ If the information required by columns F and G is not reasonably available because the obtaining thereof would involve unreasonable effort or
  expense, such information may be omitted if the registrant shall include a statement showing that unreasonable effort or expense would be involved. In
  such an event, state in column G for each of the above classes of mortgage loans the average gross rate of interest on mortgage loans held at the end
  of the fiscal period.
\7\ Each mortgage loan included in column C in an amount in excess of $500,000 shall be listed separately. Loans from $100,000 to $500,000 shall be
  grouped by $50,000 groups, indicating the number of loans in each group.
\8\ In a footnote to this schedule, furnish a reconciliation, in the following form, of the carrying amount of mortgage loans at the beginning of the
  period with the total amount shown in column C:


Balance at beginning of period..  .............  $............
  Additions during period:
    New mortgage loans..........  .............  $............
    Other (describe)............  .............  .............
  Deductions during period:
    Collections of principal....  .............  $............
    Foreclosures................  .............    ...........
    Cost of mortgages sold......  .............    ...........
    Amortization of premium.....  .............    ...........
    Other (describe)............  .............    ...........
Balance at close of period......  .............  $............
 
If additions represent other than cash expenditures, explain. If any of
  the changes during the period result from transactions, directly or
  indirectly with affiliates, explain the bases of such transactions,
  and amounts involved. State the aggregate amount of mortgages (a)
  renewed and (b) extended. If the carrying amount of the new mortgages
  is in excess of the unpaid amount (not including interest) of prior
  mortgages, explain.
\9\ If any item of mortgage loans on real estate investments has been
  written down or reserved against pursuant to Sec.  210.6-21 describe
  the item and explain the basis for the write-down or reserve.
\10\ State in a footnote to column C the aggregate cost for Federal
  income tax purposes.
\11\ If the total amount shown in column C includes intercompany
  profits, state the bases of the transactions resulting in such profits
  and, if practicable, state the amounts thereof.
\12\ Summarize the aggregate amounts for each column applicable to
  captions 6(b), 6(c) and 12 of Sec.  210.6-22.


[16 FR 348, Jan. 13, 1951, as amended at 16 FR 2655, Mar. 24, 1951]

[[Page 322]]



Sec. 210.12-24  Real estate owned and rental income.\1\

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                 Part 1--Real estate owned at end of period                                              Part 2--Rental income
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                               Column              Column I--
                                                                                                                G--    Column H--   Expended
                                                      Column    Column D--    Column E--Amount                 Rents      Total       for     Column J--
   Column A--List classification of     Column B--     C--       Cost of      at which carried   Column F--   due and    rental    interest,  Net income
   property as indicated below 2, 3      Amount of   Initial  improvements,     at close of      Reserve for  accrued    income      taxes,   applicable
                                       incombrances  cost to       etc.      period 4, 5, 6, 7  depreciation   at end  applicable   repairs    to period
                                                     company                                                     of     to period     and
                                                                                                               period               expenses
--------------------------------------------------------------------------------------------------------------------------------------------------------
Farms................................  ............  .......  .............  .................  ............  .......  ..........  .........  ..........
Residential..........................  ............  .......  .............  .................  ............  .......  ..........  .........  ..........
Apartments and business..............  ............  .......  .............  .................  ............  .......  ..........  .........  ..........
Unimproved...........................  ............  .......  .............  .................  ............  .......  ..........  .........  ..........
                                      ------------------------------------------------------------------------------------------------------------------
      Total \8\......................  ............  .......  .............  .................  ............  .......  ..........  .........  ..........
                                      ------------------------------------------------------------------------------------------------------------------
Rent from properties sold during                                                                                       ..........  .........  ..........
 period..............................
                                      ------------------------------------------------------------------------------------------------------------------
      Total..........................                                                                                  ..........  .........  ..........
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ All money columns shall be totaled.
\2\ Each item of property included in column E in an amount in excess of $100,000 shall be listed separately.
\3\ In a separate schedule classify by states in which the real estate owned is located the total amounts in support of columns E and F.
\4\ In a footnote to this schedule, furnish a reconciliation, in the following form, of the total amount at which real estate was carried at the
  beginning of the period with the total amount shown in column E:


Balance at beginning of period..  .............  $............
  Additions during period:
    Acquisitions through          $............
     foreclosure.
    Other acquisitions..........  .............
    Improvements, etc...........  .............
    Other (describe)............  .............
  Deductions during period:
    Cost of real estate sold....  $............
    Other (describe)............  .............  .............
Balance at close of period......  .............  $............
 
If additions, except acquisitions through foreclosure, represent other
  than cash expenditures, explain. If any of the changes during the
  period result from transactions, directly or indirectly, with
  affiliates, explain and state the amount of any intercompany gain or
  loss.
\5\ If any item of real estate investments has been written down or
  reserved against pursuant to Sec.  210.6-21(f), describe the item and
  explain the basis for the write-down or reserve.
\6\ State in a footnote to column E the aggregate cost for Federal
  income tax purposes.
\7\ The amount of all intercompany profits included in the total of
  column E shall be stated if material.
\8\ Summarize the aggregate amounts for each column applicable to
  captions 7 and 12 of Sec.  210.6-22.


[16 FR 348, Jan. 13, 1951, as amended at 16 FR 2655, Mar. 24, 1951. 
Redesignated at 45 FR 63679, Sept. 25, 1980]



Sec. 210.12-25  Supplementary profit and loss information.

----------------------------------------------------------------------------------------------------------------
                                                                             Column C--Charged to
                                                               Column B--       other accounts
                     Column A--Item \1\                        Charged to --------------------------  Column D--
                                                               investment     (1)--                     Total
                                                                expense      Account    (2)--Amount
----------------------------------------------------------------------------------------------------------------
1. Legal expenses (including those in connection with any     ...........  ...........  ...........  ...........
 matter, measure or proceeding before legislative bodies,
 officers or government departments)........................
2. Advertising and publicity................................  ...........  ...........  ...........  ...........
3. Sales promotion \2\......................................  ...........  ...........  ...........  ...........
4. Payments directly and indirectly to trade associations     ...........  ...........  ...........  ...........
 and service organizations, and contributions to other
 organizations..............................................
----------------------------------------------------------------------------------------------------------------
\1\ Amounts resulting from transactions with affiliates shall be stated separately.
\2\ State separately each category of expense representing more than 5 percent of the total expense shown under
  this item.


[[Page 323]]



Sec. 210.12-26  Certificate reserves.

--------------------------------------------------------------------------------------------------------------------------------------------------------
                      Column B--Balance at beginning         Column C--Additions             Column D--Deductions         Column E--Balance at close of
                                 of period            -----------------------------------------------------------------              period
                    ----------------------------------                                                                 ---------------------------------
                       (1)--                            (1)--                                                             (1)--
     Column A--       Number     (2)--                 Charged     (2)--       (3)--               (2)--Cash             Number     (2)--
  Description \1\       of      Amount    (3)--Amount     to      Reserve     Charged     (1)--    surenders    (3)--      of      Amount    (3)--Amount
                     accounts     of      of reserved   profit  payments by  to other  Maturities   prior to   Other--  accounts     of      of reserves
                       with    maturity       \2\        and    certificate  accounts               maturity  describe    with    maturity       \2\
                     security    value                 loss or    holders    describe                                   security    value
                      bidders                           income                                                           holders
--------------------------------------------------------------------------------------------------------------------------------------------------------
 
 
 
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ (a) Each series of certificates shall be stated separately. The description shall include the yield to maturity on an annual payment basis.
(b) For certificates of the installment type, information required by columns B, D (2) and (3) and E shall be given by age groupings, according to the
  number of months paid by security holders, grouped to show those upon which 1-12 monthly payments have been made, 13-24 payments, etc.
\2\ (a) If the total of the reserves shown in these columns differs from the total of the reserves per the accounts, there should be stated (i) the
  aggregate difference and (ii) the difference on a $1,000 face-amount certificate basis.
(b) There shall be shown by footnote or by supplemental schedule (i) the amounts periodically credited to each class of security holders' accounts from
  installment payments and (ii) such other amounts periodically credited to accumulate the maturity amount of the certificate. Such information shall be
  stated on a $1,000 face-amount certificate basis for the term of the certificate.



Sec. 210.12-27  Qualified assets on deposit.\1\

----------------------------------------------------------------------------------------------------------------
                                                                    Column D--
                                                                       First
                                                    Column C--     mortgages and    Column E--      Column F--
 Column A--Name of depositary\2\  Column B--Cash  Investments in    other first        Other         Total \3\
                                                    securities     liens on real
                                                                      estate
----------------------------------------------------------------------------------------------------------------
 
 
 
----------------------------------------------------------------------------------------------------------------
\1\ All money columns shall be totaled.
\2\ Classify names of individual depositaries under group headings, such as banks and states.
\3\ Total of column F shall agree with note required by caption 11 of Sec.  210.6-22 as to total amount of
  qualified Assets on Deposit.

                    for certain real estate companies



Sec. 210.12-28  Real estate and accumulated depreciation.\1\

                                                                               [For Certain Real Estate Companies]
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                   Column C--Initial        Column D--Cost        Column E--Gross amount of                                          Column I--
                                                                    cost to company     capitalized subsequent    which carried at close of                                            Life on
                                                                -----------------------     to acquisition          period 3, 4, 5, 6, 7                                                which
                                                    Column B--                         ------------------------------------------------------  Column F--    Column G--   Column H- depreciation
            Column A--Description \2\              Encumbrances             Buildings                                                          Accumulated     Date of      -Date     in latest
                                                                   Land        and                    Carrying             Buildings          depreciation  construction  acquired     income
                                                                          improvements  Improvements    costs     Land        and      Total                                         statements
                                                                                                                         improvements                                                is computed
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
 
 
 
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ All money columns shall be totaled.
\2\ The description for each property should include type of property (e.g., unimproved land, shopping center, garden apartments, etc.) and the geographical location.
\3\ The required information is to be given as to each individual investment included in column E except that an amount not exceeding 5 percent of the total of column E may be listed in one
  amount as ``miscellaneous investments.''
\4\ In a note to this schedule, furnish a reconciliation, in the following form, of the total amount at which real estate was carried at the beginning of each period for which income
  statements are required, with the total amount shown in column E:


Balance at beginning of period.....  ...................  $..................
  Additions during period:
    Acquisitions through             $..................  ...................
     foreclosure.

[[Page 324]]

 
    Other acquisitions.............  ...................  ...................
    Improvements, etc..............  ...................  ...................
    Other (describe)...............  ...................  $..................
  Deductions during period:
    Cost of real estate sold.......  $..................  ...................
    Other (describe)...............  ...................  ...................
Balance at close of period.........  ...................  $..................
 
If additions, except acquisitions through foreclosure, represent other than cash expenditures, explain. If any
  of the changes during the period result from transactions, directly or indirectly with affiliates, explain the
  bases of such transactions and state the amounts involved.
A similar reconciliation shall be furnished for the accumulated depreciation.
\5\ If any item of real estate investments has been written down or reserved against, describe the item and
  explain the basis for the write-down or reserve.
\6\ State in a note to column E the aggregate cost for Federal income tax purposes.
\7\ The amount of all intercompany profits included in the total of column E shall be stated if material.


[38 FR 6068, Mar. 6, 1983. Redesignated at 45 FR 63630, Sept. 25, 1980]



Sec. 210.12-29  Mortgage loans on real estate.\1\

                                       [For Certain Real Estate Companies]
----------------------------------------------------------------------------------------------------------------
                                                                                                     Column H--
                                                                                      Column G--     Principal
    Column A--       Column B--   Column C--   Column D--                Column F--    Carrying      amount of
 Description 2, 3,    Interest      Final       Periodic    Column E--  Face amount    amount of   loans subject
         4              rate       maturity     payment    Prior liens       of      mortgages 3,  to delinquent
                                     date      terms \5\                 mortgages    6, 7, 8, 9    principal or
                                                                                                   interest \10\
----------------------------------------------------------------------------------------------------------------
 
 
 
----------------------------------------------------------------------------------------------------------------
\1\ All money columns shall be totaled.
\2\ The required information is to be given for each individual mortgage loan which exceeds three percent of the
  total of column G.
\3\ If the portfolio includes large numbers of mortgages most of which are less than three percent of column G,
  the mortgages not required to be reported separately should be grouped by classifications that will indicate
  the dispersion of the portfolio, i.e., for a portfolio of mortgages on single family residential housing. The
  description should also include number of loans by original loan amounts (e.g., over $100,000, $50,000-
  $99,999, $20,000-$49,000, under $20,000) and type loan (e.g., VA, FHA, Conventional). Interest rates and
  maturity dates may be stated in terms of ranges. Data required by columns D, E and F may be omitted for
  mortgages not required to be reported individually.
\4\ Loans should be grouped by categories, e.g., first mortgage, second mortgage, construction loans, etc., and
  for each loan the type of property, e.g., shopping center, high rise apartments, etc., and its geographic
  location should be stated.
\5\ State whether principal and interest is payable at level amount over life to maturity or at varying amounts
  over life to maturity. State amount of balloon payment at maturity, if any. Also state prepayment penalty
  terms, if any.
\6\ In a note to this schedule, furnish a reconciliation, in the following form, of the carrying amount of
  mortgage loans at the beginning of each period for which income statements are required, with the total amount
  shown in column G:


Balance at beginning of period...  .............  $...........
  Additions during period:
    New mortgage loans...........  $............
    Other (describe).............  .............  $...........
  Deductions during period:
    Collections of principal.....  $............
    Foreclosures.................  .............
    Cost of mortgages sold.......  .............
    Amortization of premium......  .............
    Other (describe).............  .............  ............
                                  -----------------------------
Balance at close of period.......  .............  $...........
 
If additions represent other than cash expenditures, explain. If any of
  the changes during the period result from transactions, directly or
  indirectly with affiliates, explain the bases of such transactions,
  and state the amounts involved. State the aggregate mortgages (a)
  renewed and (b) extended. If the carrying amount of new mortgages is
  in excess of the unpaid amount of the extended mortgages, explain.
\7\ If any item of mortgage loans on real estate investments has been
  written down or reserved against, describe the item and explain the
  basis for the write-down or reserve.
\8\ State in a note to column G the aggregate cost for Federal income
  tax purposes.
\9\ The amount of all intercompany profits in the total of column G
  shall be stated, if material.
\10\ (a) Interest in arrears for less than 3 months may be disregarded
  in computing the total amount of principal subject to delinquent
  interest.
(b) Of the total principal amount, state the amount acquired from
  controlled and other affiliates.


[38 FR 6069, Mar. 6, 1973; 38 FR 7323, Mar. 20, 1973. Redesignated at 45 
FR 63680, Sept. 25, 1980]

[[Page 325]]



PART 211--INTERPRETATIONS RELATING TO FINANCIAL REPORTING MATTERS--Table of Contents






                 Subpart A--Financial Reporting Releases

----------------------------------------------------------------------------------------------------------------
                                                      Release
                      Subject                           No.         Date            Fed. Reg. Vol. and page
----------------------------------------------------------------------------------------------------------------
Codification of financial reporting policies.......         1   Apr. 15, 1982  47 FR 21030
Disclosure considerations relating to foreign               6   Nov. 18, 1982  47 FR 53330
 operations and foreign currency translation
 effects.
Accounting for extinguishment of debt..............        15   Dec. 22, 1983  49 FR 54
Certification of financial statements..............        16   Feb. 15, 1984  49 FR 6707y
Independence of accountants........................       291   Apr. 10, 1981  46 FR 22569
Last-In, First-Out method of accounting for               889    July 2, 1981  46 FR 36127
 inventories.
Significance of oral guarantees to the financial           22   Dec. 19, 1985  50 FR 51671
 reporting process.
Disclosure of the effects of the Tax Reform Act of         26   Oct. 30, 1986  51 FR 39652
 1986.
Accounting for loan losses by registrants engaged          28    Dec. 1, 1986  51 FR 44446
 in lending activities.
Statement of the Commission Regarding Disclosure           32    Aug. 1, 1988  53 FR 29226
 Obligations of Companies Affected by the
 Government's Defense Contract Procurement Inquiry
 and Related Issues.
Management's Discussion and Analysis of Financial          36    May 18, 1989  54 FR 22427
 Condition and Results of Operations; Certain
 Investment Company Disclosures.
Acceptability in financial statements of an                37   July 29, 1991  56 FR 37000
 accounting standard permitting the return of a
 nonaccrual loan to accrual status after a partial
 charge-off.
Statement of the Commission Regarding Disclosure           42    Mar. 9, 1994  59 FR 12758
 Obligations of Municipal Securities Issuers and
 Others.
Interpretation Regarding Substantive Repossession         28A    May 12, 1994  59 FR 26109
 of Collateral.
Financial Statements and Periodic Reports For              55    Aug. 4, 2000  65 FR 51710
 Related Issuers and Guarantors, Appendices A, B
 and C.
Bookkeeping Services Provided by Auditors to Audit         57  Sept. 14, 2001  66 FR 48336
 Clients in Emergency or Other Unusual Situations.
Calculation of Average Weekly Trading Volume.......       58A  Sept. 27, 2001  66 FR 49274
----------------------------------------------------------------------------------------------------------------



                  Subpart B--Staff Accounting Bulletins

----------------------------------------------------------------------------------------------------------------
                 Subject                          Release No.              Date         Fed. Reg. Vol. and page
----------------------------------------------------------------------------------------------------------------
Publication of Staff Accounting Bulletin   SAB-39...................   Oct. 15, 1980  45 FR 68388
 No. 39.
Publication of Staff Accounting Bulletin   SAB-40...................    Feb. 9, 1981  46 FR 11513
 No. 40.
Publication of Staff Accounting Bulletin   SAB-41...................   Feb. 18, 1981  46 FR 12698
 No. 41.
Publication of Staff Accounting Bulletin   SAB-42...................   Dec. 23, 1981  46 FR 63252
 No. 42.
Publication of Staff Accounting Bulletin   SAB-43...................    Jan. 5, 1982  47 FR 1266
 No. 43.
Publication of Staff Accounting Bulletin   SAB-44...................    Mar. 3, 1982  47 FR 10789
 No. 44.
Publication of Staff Accounting Bulletin   SAB-45...................    May 20, 1982  47 FR 23915
 No. 45.
Publication of Staff Accounting Bulletin   SAB-46...................    May 20, 1982  47 FR 23916
 No. 46.
Publication of Staff Accounting Bulletin   SAB-47...................  Sept. 16, 1982  47 FR 41727
 No. 47.
Publication of Staff Accounting Bulletin   SAB-48...................  Sept. 27, 1982  47 FR 43673
 No. 48.
Publication of Staff Accounting Bulletin   SAB-47A..................  Sept. 29, 1982  47 FR 44722
 No. 47A.
Publication of Staff Accounting Bulletin   SAB-49...................   Oct. 26, 1982  47 FR 49628
 No. 49.
Publication of Staff Accounting Bulletin   SAB-49A..................   Jan. 18, 1983  48 FR 3585
 No. 49A.
Publication of Staff Accounting Bulletin   SAB-50...................    Mar. 3, 1983  48 FR 10043
 No. 50.
Publication of Staff Accounting Bulletin   SAB-51...................   Mar. 29, 1983  48 FR 14595
 No. 51.
Publication of Staff Accounting Bulletin   SAB-52...................    May 16, 1983  48 FR 23173
 No. 52.
Publication of Staff Accounting Bulletin     .......................
 No. 53 [Reserved].
Publication of Staff Accounting Bulletin   SAB-54...................    Nov. 3, 1983  48 FR 51769
 No. 54.
Publication of Staff Accounting Bulletin   SAB-55...................   Nov. 30, 1983  48 FR 54811
 No. 55.
Publication of Staff Accounting Bulletin   SAB-56...................    Jan. 1, 1984  49 FR 4936
 No. 56.
Publication of Staff Accounting Bulletin   SAB-58...................   Mar. 19, 1985  50 FR 11657
 No. 58.
Publication of Staff Accounting Bulletin   SAB-59...................  Sept. 13, 1985  50 FR 37346
 No. 59.
Publication of Staff Accounting Bulletin   SAB-60...................   Dec. 27, 1985  50 FR 52916
 No. 60.
Publication of Staff Accounting Bulletin   SAB-42A..................    Jan. 8, 1986  51 FR 739
 No. 42A.
Publication of Staff Accounting Bulletin   SAB-61...................     May 6, 1986  51 FR 17331
 No. 61.
Publication of Staff Accounting Bulletin   SAB-62...................    July 7, 1986  51 FR 25194
 No. 62.
Publication of Staff Accounting Bulletin   SAB-63...................  Sept. 24, 1986  51 FR 33886
 No. 63.
Publication of Staff Accounting Bulletin   SAB-64...................    Oct. 8, 1986  51 FR 36007
 No. 64.
Publication of Staff Accounting Bulletin   SAB-65...................   Nov. 13, 1986  51 FR 41080
 No. 65.
Publication of Staff Accounting Bulletin   SAB-66...................   Nov. 25, 1986  51 FR 43594
 No. 66.
Publication of Staff Accounting Bulletin   SAB-67...................    Dec. 8, 1986  51 FR 45314
 No. 67.
Publication of Staff Accounting Bulletin   SAB-68...................     May 4, 1987  52 FR 17396
 No. 68.
Publication of Staff Accounting Bulletin   SAB-69...................     May 8, 1987  52 FR 18200
 No. 69.
Publication of Staff Accounting Bulletin   SAB-70...................    June 5, 1987  52 FR 21933
 No. 70.

[[Page 326]]

 
Publication of Staff Accounting Bulletin   SAB-71...................   Aug. 12, 1987  52 FR 31027
 No. 71.
Publication of Staff Accounting Bulletin   SAB-72...................   Nov. 10, 1987  52 FR 46454
 No. 72.
Publication of Staff Accounting Bulletin   SAB-71A..................   Dec. 15, 1987  52 FR 48193
 No. 71A.
Publication of Staff Accounting Bulletin   SAB-73...................   Dec. 30, 1987  53 FR 109
 No. 73.
Publication of Staff Accounting Bulletin   SAB-74...................   Dec. 30, 1987  53 FR 110
 No. 74.
Publication of Staff Accounting Bulletin   SAB-75...................    Jan. 4, 1988  53 FR 865
 No. 75.
Publication of Staff Accounting Bulletin   SAB-76...................   Jan. 12, 1988  53 FR 1341
 No. 76.
Publication of Staff Accounting Bulletin   SAB-77...................    Mar. 4, 1988  53 FR 7892
 No. 77.
Publication of Staff Accounting Bulletin   SAB-78...................   Aug. 25, 1988  53 FR 33454
 No. 78.
Publication of Staff Accounting Bulletin   SAB-79...................   Sept. 2, 1988  53 FR 34715
 No. 79.
Publication of Staff Accounting Bulletin   SAB-80...................   Nov. 21, 1988  53 FR 47801
 No. 80.
Publication of Staff Accounting Bulletin   SAB-81...................    Apr. 4, 1989  54 FR 14073
 No. 81.
Publication of Staff Accounting Bulletin   SAB-82...................    July 5, 1989  54 FR 29333
 No. 82.
Publication of Staff Accounting Bulletin   SAB-83...................   July 31, 1989  54 FR 32333
 No. 83.
Publication of Staff Accounting Bulletin   SAB-84...................   July 31, 1989  54 FR 32334
 No. 84.
Publication of Staff Accounting Bulletin   SAB-85...................  Sept. 18, 1989  54 FR 39351
 No. 85.
Publication of Staff Accounting Bulletin   SAB-86...................  Sept. 28, 1989  54 FR 41084
 No. 86.
Publication of Staff Accounting Bulletin   SAB-87...................   Dec. 12, 1989  54 FR 51880
 No. 87.
Publication of Staff Accounting Bulletin   SAB-88...................   Aug. 10, 1990  55 FR 33284
 No. 88.
Publication of Staff Accounting Bulletin   SAB-89...................    Jan. 7, 1991  56 FR 951
 No. 89.
Publication of Staff Accounting Bulletin   SAB-90...................   Jan. 31, 1991  56 FR 4939
 No. 90.
Publication of Staff Accounting Bulletin   SAB-91...................   July 17, 1991  56 FR 33376
 No. 91.
Publication of Staff Accounting Bulletin   SAB-92...................   June 14, 1993  58 FR 32843
 No. 92.
Publication of Staff Accounting Bulletin   SAB-93...................    Nov. 9, 1993  58 FR 59361
 No. 93.
Publication of Staff Accounting Bulletin   SAB-94...................   Apr. 24, 1995  60 FR 20022
 No. 94.
Publication of Staff Accounting Bulletin   SAB-95...................   Dec. 21, 1995  60 FR 66072
 No. 95.
Publication of Staff Accounting Bulletin   SAB-96...................   Mar. 25, 1996  61 FR 12020
 No. 96.
Publication of Staff Accounting Bulletin   SAB-97...................    Aug. 6, 1996  61 FR 40721
 No. 97.
Publication of Staff Accounting Bulletin   SAB-98...................    Feb. 9, 1998  63 FR 6474
 No. 98.
Publication of Staff Accounting Bulletin   SAB-99...................   Aug. 19, 1999  64 FR 45150
 No. 99.
Publication of Staff Accounting Bulletin   SAB-100..................    Dec. 1, 1999  64 FR 67154
 No. 100.
Publication of Staff Accounting Bulletin   SAB-101..................    Dec. 9, 1999  64 FR 68936
 No. 101.
Publication of Staff Accounting Bulletin   SAB-102..................    July 6, 2001  66 FR 36457
 No. 102.
----------------------------------------------------------------------------------------------------------------



         Subpart C--Accounting and Auditing Enforcement Releases

----------------------------------------------------------------------------------------------------------------
               Subject                       Release No.                  Date           Fed. Reg. vol. and page
----------------------------------------------------------------------------------------------------------------
Index of Accounting and Auditing       1......................  Apr. 15, 1982..........  47 FR 21030
 Enforcement Releases.
----------------------------------------------------------------------------------------------------------------



PART 228--INTEGRATED DISCLOSURE SYSTEM FOR SMALL BUSINESS ISSUERS--Table of Contents




                        Subpart A--Regulation S-B

Sec.
228.10  (Item 10) General.
228.101  (Item 101) Description of Business.
228.102  (Item 102) Description of Property.
228.103  (Item 103) Legal Proceedings.
228.201  (Item 201) Market for Common Equity and Related Stockholder 
          Matters.
228.202  (Item 202) Description of Securities.
228.303  (Item 303) Management's Discussion and Analysis or Plan of 
          Operation.
228.304  (Item 304) Changes In and Disagreements With Accountants on 
          Accounting and Financial Disclosure.
228.305  [Reserved]
228.306  (Item 306) Audit committee report.
228.307  (Item 307) Controls and procedures.
228.310  (Item 310) Financial Statements.
228.401  (Item 401) Directors, Executive Officers, Promoters and Control 
          Persons.
228.402  (Item 402) Executive Compensation.
228.403  (Item 403) Security Ownership of Certain Beneficial Owners and 
          Management.
228.404  (Item 404) Certain Relationships and Related Transactions.
228.405  (Item 405) Compliance With Section 16(a) of the Exchange Act.
228.406  (Item 406) Code of ethics.
228.501  (Item 501) Front of registration statement and front cover of 
          prospectus.
228.502  (Item 502) Inside front and outside back cover pages of 
          prospectus.
228.503  (Item 503) Summary information and risk factors.
228.504  (Item 504) Use of Proceeds.
228.505  (Item 505) Determination of Offering Price.
228.506  (Item 506) Dilution.
228.507  (Item 507) Selling Security Holders.
228.508  (Item 508) Plan of Distribution.
228.509  (Item 509) Interest of Named Experts and Counsel.

[[Page 327]]

228.510  (Item 510) Disclosure of Commission Position on Indemnification 
          for Securities Act Liabilities.
228.511  (Item 511) Other Expenses of Issuance and Distribution.
228.512  (Item 512) Undertakings.
228.601  (Item 601) Exhibits.
228.701  (Item 701) Recent sales of unregistered securities; use of 
          proceeds from registered securities.
228.702  (Item 702) Indemnification of Directors and Officers.

    Authority: 15 U.S.C. 77e, 77f, 77g, 77h, 77j, 77k, 77s, 77z-2, 77z-
3, 77aa(25), 77aa(26), 77ddd, 77eee, 77ggg, 77hhh, 77jjj, 77nnn, 77sss, 
78l, 78m, 78n, 78o, 78u-5, 78w, 78ll, 78mm, 80a-8, 80a-29, 80a-30, 80a-
37 and 80b-11.
    Section 228.307 is also issued under secs. 3(a) and 302, Pub.L. No. 
107-204, 116 Stat. 745.
    Section 228.401 is also issued under secs. 3(a) and 407, Pub. L. 
107-204, 116 Stat. 745.
    Section 228.406 is also issued under secs. 3(a) and 406, Pub. L. 
107-204, 116 Stat. 745.
    Section 228.601 is also issued under secs. 3(a) and 406, Pub. L. 
107-204, 116 Stat. 745.

    Effective Date Note: At 68 FR 5998, Feb. 5, 2003, the authority 
citation for part 228 was amended by adding an entry for Sec. 228.303, 
effective April 7, 2003. For the convenience of the user, the added text 
is set forth as follows:

      

    Section 228.303 is also issued under secs. 3(a) and 401(a), Pub. L. 
No. 107-204, 116 Stat. 745.

    Source: 57 FR 36449, Aug. 13, 1992, 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.



                        Subpart A--Regulation S-B



Sec. 228.10  (Item 10) General.

    (a) Application of Regulation S-B. Regulation S-B is the source of 
disclosure requirements for ``small business issuer'' filings under the 
Securities Act of 1933 (the ``Securities Act'') and the Securities 
Exchange Act of 1934 (the ``Exchange Act'').
    (1) Definition of small business issuer. A small business issuer is 
defined as a company that meets all of the following criteria:
    (i) has revenues of less than $25,000,000;
    (ii) is a U.S. or Canadian issuer;
    (iii) is not an investment company; and
    (iv) 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 voting and non-voting common equity 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.

    (2) Entering and Exiting the Small Business Disclosure System. (i) A 
company that meets the definition of small business issuer may use Form 
SB-2 for registration of its securities under the Securities Act; Form 
10-SB for registration of its securities under the Exchange Act; and 
Forms 10-KSB and 10-QSB for its annual and quarterly reports.
    (ii) For a non-reporting company entering the disclosure system for 
the first time either by filing a registration statement under the 
Securities Act on Form SB-2 or a registration statement under the 
Exchange Act on Form 10-SB, the determination as to whether a company is 
a small business issuer is made with reference to its revenues during 
its last fiscal year and public float as of a date within 60 days of the 
date the registration statement is filed. See Note to paragraph (a) of 
this Item.
    (iii) Once a small business issuer becomes a reporting company it 
will remain a small business issuer until it

[[Page 328]]

exceeds the revenue limit or the public float limit at the end of two 
consecutive years. For example, if a company exceeds the revenue limit 
for two consecutive years, it will no longer be considered a small 
business. However, if it exceeds the revenue limit in one year and the 
next year exceeds the public float limit, but not the revenue limit, it 
will still be considered a small business. See Note to paragraph (a) of 
this Item.
    (iv) A reporting company that is not a small business company must 
meet the definition of a small business issuer at the end of two 
consecutive fiscal years before it will be considered a small business 
issuer for purposes of using Form SB-2, Form 10-SB, Form 10-KSB and Form 
10-QSB. See Note to paragraph (a) of this Item.
    (v) The determination as to the reporting category (small business 
issuer or other issuer) made for a non-reporting company at the time it 
enters the disclosure system governs all reports relating to the 
remainder of the fiscal year. The determination made for a reporting 
company at the end of its fiscal year governs all reports relating to 
the next fiscal year. An issuer may not change from one category to 
another with respect to its reports under the Exchange Act for a single 
fiscal year. A company may, however, choose not to use a Form SB-2 for a 
registration under the Securities Act.
    (b) Definitions of terms.
    (1) Common Equity--means the small business issuer's common stock. 
If the small business issuer is a limited partnership, the term refers 
to the equity interests in the partnership.
    (2) Public market--no public market shall be deemed to exist unless, 
within the past 60 business days, both bid and asked quotations at fixed 
prices (excluding ``bid wanted'' or ``offer wanted'' quotations) have 
appeared regularly in any established quotation system on at least half 
of such business days. Transactions arranged without the participation 
of a broker or dealer functioning as such are not indicative of a 
``public market.''
    (3) Reporting company--means a company that is obligated to file 
periodic reports with the Securities and Exchange Commission under 
section 15(d) or 13(a) of the Exchange Act.
    (4) Small business issuer--refers to the issuer and all of its 
consolidated subsidiaries.
    (c) Preparing the disclosure document. (1) The purpose of a 
disclosure document is to inform investors. Hence, information should be 
presented in a clear, concise and understandable fashion. Avoid 
unnecessary details, repetition or the use of technical language. The 
responses to the items of this Regulation should be brief and to the 
point.
    (2) Small business issuers should consult the General Rules and 
Regulations under the Securities Act and Exchange Act for requirements 
concerning the preparation and filing of documents. Small business 
issuers should be aware that there are special rules concerning such 
matters as the kind and size of paper that is allowed and how filings 
should be bound. These special rules are located in Regulation C of the 
Securities Act (17 CFR 230.400 et seq.) and in Regulation 12B of the 
Exchange Act (17 CFR 240.12b-1 et seq.).
    (d) Commission policy on projections. The Commission encourages the 
use of management's projections of future economic performance that have 
a reasonable basis and are presented in an appropriate format. The 
guidelines below set forth the Commission's views on important factors 
to be considered in preparing and disclosing such projections. (See also 
17 CFR 230.175 and 240.3b-6).
    (1) Basis for projections. Management has the option to present in 
Commission filings its good faith assessment of a small business 
issuer's future performance. Management, however, must have a reasonable 
basis for such an assessment. An outside review of management's 
projections may furnish additional support in this regard. If management 
decides to include a report of such a review in a Commission filing, it 
should also disclose the qualifications of the reviewer, the extent of 
the review, the relationship between the reviewer and the registrant, 
and other material factors concerning the process by which any outside 
review was sought or obtained. Moreover, in the case of a registration 
statement under

[[Page 329]]

the Securities Act, the reviewer would be deemed an expert and an 
appropriate consent must be filed with the registration statement.
    (2) Format for projections. Traditionally, projections have been 
given for three financial items generally considered to be of primary 
importance to investors (revenues, net income (loss) and earnings (loss) 
per share), projection information need not necessarily be limited to 
these three items. However, management should take care to assure that 
the choice of items projected is not susceptible to misleading 
inferences through selective projection of only favorable items. It 
generally would be misleading to present sales or revenue projections 
without one of the foregoing measures of income. The period that 
appropriately may be covered by a projection depends to a large extent 
on the particular circumstances of the company involved. For certain 
companies in certain industries, a projection covering a two or three 
year period may be entirely reasonable. Other companies may not have a 
reasonable basis for projections beyond the current year.
    (3) Investor understanding. Disclosures accompanying the projections 
should facilitate investor understanding of the basis for and 
limitations of projections. The Commission believes that investor 
understanding would be enhanced by disclosure of the assumptions which 
in management's opinion are most significant to the projections or are 
the key factors upon which the financial results of the enterprise 
depend and encourages disclosure of assumptions in a manner that will 
provide a frame-work for analysis of the projection. Management also 
should consider whether disclosure of the accuracy or inaccuracy of 
previous projections would provide investors with important insights 
into the limitations of projections.
    (e) Commission policy on security ratings. In view of the importance 
of security ratings (``ratings'') to investors and the marketplace, the 
Commission permits small business issuers to disclose ratings assigned 
by rating organizations to classes of debt securities, convertible debt 
securities and preferred stock in registration statements and periodic 
reports. In addition, the Commission permits, disclosure of ratings 
assigned by any nationally recognized statistical rating organizations 
(``NRSROs'') in certain communications deemed not to be a prospectus 
(``tombstone advertisements''). Below are the Commission's views on 
important matters to be considered in disclosing security ratings.
    (1)(i) If a small business issuer includes in a filing any rating(s) 
assigned to a class of securities, it should consider including any 
other rating assigned by a different NRSRO that is materially different. 
A statement that a security rating is not a recommendation to buy, sell 
or hold securities and that it may be subject to revision or withdrawal 
at any time by the assigning rating organization should also be 
included.
    (ii)(A) If the rating is included in a filing under the Securities 
Act, the written consent of any rating organization that is not a NRSRO 
whose rating is included should be filed. The consent of any NRSRO is 
not required. (See Rule 436(g) under the Securities Act (Sec. 230.436(g) 
of this chapter.)
    (B) If a change in a rating already included is available before 
effectiveness of the registration statement, the small business issuer 
should consider including such rating change in the prospectus. If the 
rating change is material, consideration should be given to 
recirculating the preliminary prospectus.
    (C) If a materially different additional NRSRO rating or a material 
change in a rating already included becomes available during any period 
in which offers or sales are being made, the small business issuer 
should consider disclosing this information in a sticker to the 
prospectus.
    (iii) If there is a material change in the rating(s) assigned by any 
NRSRO(s) to any outstanding class(es) of securities of a reporting 
company, the registrant should consider filing a report on Form 8-K 
(Sec. 249.308 of this chapter) or other appropriate report under the 
Exchange Act disclosing such rating change.
    (2) [Reserved]
    (f) Incorporation by Reference. Where rules, regulations, or 
instructions to

[[Page 330]]

forms of the Commission permit incorporation by reference, a document 
may be so incorporated by reference to the specific document and to the 
prior filing or submission in which such document was physically filed 
or submitted. Except where a registrant or issuer is expressly required 
to incorporate a document or documents by reference, reference may not 
be made to any document which incorporates another document by reference 
if the pertinent portion of the document containing the information or 
financial statements to be incorporated by reference includes an 
incorporation by reference to another document. No document on file with 
the Commission for more than five years may be incorporated by reference 
except:
    (1) Documents contained in registration statements, which may be 
incorporated by reference as long as the registrant has a reporting 
requirement with the Commission; or
    (2) Documents that the registrant specifically identifies by 
physical location by SEC file number reference, provided such materials 
have not been disposed of by the Commission pursuant to its Records 
Control Schedule (17 CFR 200.80f).
    (g) Quantitative and qualitative disclosures about market risk. The 
safe harbor provision included in paragraph (d) of Item 305 of 
Regulation S-K (Sec. 229.305(d) of this chapter) shall apply to 
information required by Item 305 of Regulation S-K (Sec. 229.305 of this 
chapter) that is voluntarily provided by or on behalf of a small 
business issuer as defined in Rule 12b-2 of the Exchange Act.
    Note to paragraph (g): Such small business issuers are not required 
to provide the information required by Item 305 of Regulation S-K.
    (h) Use of non-GAAP financial measures in Commission filings. (1) 
Whenever one or more non-GAAP financial measures are included in a 
filing with the Commission:
    (i) The registrant must include the following in the filing:
    (A) A presentation, with equal or greater prominence, of the most 
directly comparable financial measure or measures calculated and 
presented in accordance with Generally Accepted Accounting Principles 
(GAAP);
    (B) A reconciliation (by schedule or other clearly understandable 
method), which shall be quantitative for historical non-GAAP measures 
presented, and quantitative, to the extent available without 
unreasonable efforts, for forward-looking information, of the 
differences between the non-GAAP financial measure disclosed or released 
with the most directly comparable financial measure or measures 
calculated and presented in accordance with GAAP identified in paragraph 
(h)(1)(i)(A) of this section;
    (C) A statement disclosing the reasons why the registrant's 
management believes that presentation of the non-GAAP financial measure 
provides useful information to investors regarding the registrant's 
financial condition and results of operations; and
    (D) To the extent material, a statement disclosing the additional 
purposes, if any, for which the registrant's management uses the non-
GAAP financial measure that are not disclosed pursuant to paragraph 
(h)(1)(i)(C) of this section; and
    (ii) A registrant must not:
    (A) Exclude charges or liabilities that required, or will require, 
cash settlement, or would have required cash settlement absent an 
ability to settle in another manner, from non-GAAP liquidity measures, 
other than the measures earnings before interest and taxes (EBIT) and 
earnings before interest, taxes, depreciation, and amortization 
(EBITDA);
    (B) Adjust a non-GAAP performance measure to eliminate or smooth 
items identified as non-recurring, infrequent or unusual, when the 
nature of the charge or gain is such that it is reasonably likely to 
recur within two years or there was a similar charge or gain within the 
prior two years;
    (C) Present non-GAAP financial measures on the face of the 
registrant's financial statements prepared in accordance with GAAP or in 
the accompanying notes;
    (D) Present non-GAAP financial measures on the face of any pro forma 
financial information required to be disclosed by Article 11 of 
Regulation S-X (17 CFR 210.11-01 through 210.11-03); or

[[Page 331]]

    (E) Use titles or descriptions of non-GAAP financial measures that 
are the same as, or confusingly similar to, titles or descriptions used 
for GAAP measures; and
    (iii) If the filing is not an annual report on Form 10-KSB (17 CFR 
249.310b), a registrant need not include the information required by 
paragraphs (h)(1)(i)(C) and (h)(1)(i)(D) of this section if that 
information was included in its most recent annual report on Form 10-KSB 
or a more recent filing, provided that the required information is 
updated to the extent necessary to meet the requirements of paragraphs 
(h)(1)(i)(C) and (h)(1)(i)(D) of this section at the time of the 
registrant's current filing.
    (2) For purposes of this paragraph (h), a non-GAAP financial measure 
is a numerical measure of a registrant's historical or future financial 
performance, financial position or cash flow that:
    (i) Excludes amounts, or is subject to adjustments that have the 
effect of excluding amounts, that are included in the most directly 
comparable measure calculated and presented in accordance with GAAP in 
the statement of income, balance sheet or statement of cash flows (or 
equivalent statements) of the issuer; or
    (ii) Includes amounts, or is subject to adjustments that have the 
effect of including amounts, that are excluded from the most directly 
comparable measure so calculated and presented.
    (3) For purposes of this paragraph (h), GAAP refers to generally 
accepted accounting principles in the United States.
    (4) For purposes of this paragraph (h), non-GAAP financial measures 
exclude:
    (i) Operating and other statistical measures; and
    (ii) Ratios or statistical measures calculated using exclusively one 
or both of:
    (A) Financial measures calculated in accordance with GAAP; and
    (B) Operating measures or other measures that are not non-GAAP 
financial measures.
    (5) For purposes of this paragraph (h), non-GAAP financial measures 
exclude financial measures required to be disclosed by GAAP, Commission 
rules, or a system of regulation of a government or governmental 
authority or self-regulatory organization that is applicable to the 
registrant. However, the financial measure should be presented outside 
of the financial statements unless the financial measure is required or 
expressly permitted by the standard setter that is responsible for 
establishing the GAAP used in such financial statements.
    (6) The requirements of paragraph (h) of this section shall not 
apply to a non-GAAP financial measure included in disclosure relating to 
a proposed business combination, the entity resulting therefrom or an 
entity that is a party thereto, if the disclosure is contained in a 
communication that is subject to Sec. 230.425 of this chapter, 
Sec. 240.14a-12 or Sec. 240.14d-2(b)(2) of this chapter or Sec. 229.1015 
of this chapter.

[57 FR 36449, Aug. 13, 1992, as amended at 60 FR 32824, June 23, 1995; 
62 FR 6064, Feb. 10, 1997; 62 FR 26388, May 14, 1997; 68 FR 4830, Jan. 
30, 2003]



Sec. 228.101  (Item 101) Description of Business.

    (a) Business Development. Describe the development of the small 
business issuer during the last three years. If the small business 
issuer has not been in business for three years, give the same 
information for predecessor(s) of the small business issuer if there are 
any. This business development description should include:
    (1) Form and year of organization;
    (2) Any bankruptcy, receivership or similar proceeding; and
    (3) Any material reclassification, merger, consolidation, or 
purchase or sale of a significant amount of assets not in the ordinary 
course of business.
    (b) Business of Issuer. Briefly describe the business and include, 
to the extent material to an understanding of the issuer:
    (1) Principal products or services and their markets;
    (2) Distribution methods of the products or services;
    (3) Status of any publicly announced new product or service;
    (4) Competitive business conditions and the small business issuer's 
competitive position in the industry and methods of competition;

[[Page 332]]

    (5) Sources and availability of raw materials and the names of 
principal suppliers;
    (6) Dependence on one or a few major customers;
    (7) Patents, trademarks, licenses, franchises, concessions, royalty 
agreements or labor contracts, including duration;
    (8) Need for any government approval of principal products or 
services. If government approval is necessary and the small business 
issuer has not yet received that approval, discuss the status of the 
approval within the government approval process;
    (9) Effect of existing or probable governmental regulations on the 
business;
    (10) Estimate of the amount spent during each of the last two fiscal 
years on research and development activities, and if applicable the 
extent to which the cost of such activities are borne directly by 
customers;
    (11) Costs and effects of compliance with environmental laws 
(federal, state and local); and
    (12) Number of total employees and number of full time employees.
    (c) Reports to security holders. Disclose the following in any 
registration statement you file under the Securities Act of 1933:
    (1) If you are not required to deliver an annual report to security 
holders, whether you will voluntarily send an annual report and whether 
the report will include audited financial statements;
    (2) Whether you file reports with the Securities and Exchange 
Commission. If you are a reporting company, identify the reports and 
other information you file with the SEC; and
    (3) That the public may read and copy any materials you file with 
the SEC at the SEC's Public Reference Room at 450 Fifth Street, N.W., 
Washington, D.C. 20549. State that the public may obtain information on 
the operation of the Public Reference Room by calling the SEC at 1-800-
SEC-0330. If you are an electronic filer, state that the SEC maintains 
an Internet site that contains reports, proxy and information 
statements, and other information regarding issuers that file 
electronically with the SEC and state the address of that site (http://
www.sec.gov). You are encouraged to give your Internet address, if 
available.
    (d) Canadian Issuers. Provide the information required by Items 
101(f)(2) and 101(g) of Regulation S-K (Sec. 229.101(f)(2) and (g)).

[57 FR 36449, Aug. 13, 1992, as amended at 63 FR 6379, Feb. 6, 1998]



Sec. 228.102  (Item 102) Description of Property.

    (a) Give the location of the principal plants and other property of 
the small business issuer and describe the condition of the property. If 
the small business issuer does not have complete ownership of the 
property, for example, others also own the property or there is a 
mortgage or lien on the property, describe the limitations on the 
ownership.

Instructions to Item 102(a): 1. Small business issuers engaged in 
significant mining operations also should provide the information in 
Guide 7 (Sec. 229.801(g) and Sec. 229.802(g) of this chapter).
    2. Small business issuers engaged in oil and gas producing 
activities also should provide the information in Guide 2 
(Sec. 229.801(b) and Sec. 229.802(b) of this chapter).
    3. Small business issuers engaged in real estate activities should, 
in addition to Guide 5 (Sec. 229.801(e) of this chapter) provide 
responses to the following Items:

    (b) Investment policies. Describe the policy of the small business 
issuer with respect to each of the following types of investments. State 
whether there are any limitations on the percentage of assets which may 
be invested in any one investment, or type of investment, and indicate 
whether such policy may be changed without a vote of security holders. 
State whether it is the small business issuer's policy to acquire assets 
primarily for possible capital gain or primarily for income.
    (1) Investments in real estate or interests in real estate. Indicate 
the types of real estate in which the small business issuer may invest, 
for example, office or apartment buildings, shopping centers, industrial 
or commercial properties, special purpose buildings and undeveloped 
acreage, and the geographic area(s) of these properties.

[[Page 333]]

Briefly describe the method, or proposed method, of operating and 
financing these properties. Indicate any limitations on the number or 
amount of mortgages which may be placed on any one piece of property.
    (2) Investments in real estate mortgages. Indicate the types of 
mortgages, for example, first or second mortgages, and the types of 
properties subject to mortgages in which the small business issuer 
intends to invest, for example, single family dwellings, apartment 
buildings, office buildings, unimproved land, and the nature of any 
guarantees or insurance. Describe each type of mortgage activity in 
which the small business issuer intends to engage such as originating, 
servicing and warehousing, and the portfolio turnover policy.
    (3) Securities of or interests in persons primarily engaged in real 
estate activities. Indicate the types of securities in which the small 
business issuer may invest, for example, common stock, interest in real 
estate investment trusts, partnership interests. Indicate the primary 
activities of persons in which the small business issuer will invest, 
such as mortgage sales, investments in developed or undeveloped 
properties and state the investment policies of such persons.
    (c) Description of real estate and operating data. This information 
shall be furnished separately for each property the book value of which 
amounts to ten percent or more of the total assets of the small business 
issuer and its consolidated subsidiaries for the last fiscal year. With 
respect to other properties, the information shall be given by such 
classes or groups and in such detail as will reasonably convey the 
information required.
    (1) Describe the general character and location of all materially 
important properties held or intended to be acquired by or leased to the 
small business issuer and describe the present or proposed use of such 
properties and their suitability and adequacy for such use. Properties 
not yet acquired shall be identified as such.
    (2) State the nature of the small business issuer's title to, or 
other interest in such properties and the nature and amount of all 
material mortgages, liens or encumbrances against such properties. 
Disclose the current principal amount of each material encumbrance, 
interest and amortization provisions, prepayment provisions, maturity 
date and the balance due at maturity assuming no prepayments.
    (3) Outline briefly the principal terms of any lease of any of such 
properties or any option or contract to purchase or sell any of such 
properties.
    (4) Outline briefly any proposed program for the renovation, 
improvement or development of such properties, including the estimated 
cost thereof and the method of financing to be used. If there are no 
present plans for the improvement or development of any unimproved or 
undeveloped property, so state and indicate the purpose for which the 
property is to be held or acquired.
    (5) Describe the general competitive conditions to which the 
properties are or may be subject.
    (6) Include a statement as to whether, in the opinion of the 
management of the small business issuer, the properties are adequately 
covered by insurance.
    (7) With respect to each improved property which is separately 
described, provide the following in addition to the above:
    (i) Occupancy rate;
    (ii) Number of tenants occupying ten percent or more of the rentable 
square footage and principal nature of business of each such tenant and 
the principal provisions of each of their leases;
    (iii) Principal business, occupations and professions carried on in, 
or from the building;
    (iv) The average effective annual rental per square foot or unit;
    (v) Schedule of the lease expirations for each of the ten years 
starting with the year in which the registration statement is filed, 
stating:
    (A) the number of tenants whose leases will expire,
    (B) the total area in square feet covered by such leases,
    (C) the annual rental represented by such leases, and
    (D) the percentage of gross annual rental represented by such 
leases;

[[Page 334]]

    (vi) Each of the properties and components thereof upon which 
depreciation is taken, setting forth the:
    (A) federal tax basis,
    (B) rate,
    (C) method, and
    (D) life claimed with respect to such property or component thereof 
for purposes of depreciation;
    (vii) The realty tax rate, annual realty taxes and estimated taxes 
on any proposed improvements.

Instruction: If the small business issuer has a number of properties, 
the information may be given in tabular form.



Sec. 228.103  (Item 103) Legal Proceedings.

    (a) If a small business issuer is a party to any pending legal 
proceeding (or its property is the subject of a pending legal 
proceeding), give the following information (no information is necessary 
as to routine litigation that is incidental to the business):
    (1) Name of court or agency where proceeding is pending;
    (2) Date proceeding began;
    (3) Principal parties;
    (4) Description of facts underlying the proceedings; and
    (5) Relief sought.
    (b) Include the information called for by paragraphs (a) (1) through 
(5) of this Item for any proceeding that a governmental authority is 
contemplating (if the small business issuer is aware of the proceeding).

Instructions to Item 103: 1. A proceeding that primarily involves a 
claim for damages does not need to be described if the amount involved, 
exclusive of interest and costs, does not exceed 10% of the current 
assets of the small business issuer. If any proceeding presents the same 
legal and factual issues as other proceedings pending or known to be 
contemplated, the amount involved in such other proceedings shall be 
included in computing such percentage.
    2. The following types of proceedings with respect to the registrant 
are not ``routine litigation incidental to the business'' and, 
notwithstanding instruction 1 of this Item, must be described: 
bankruptcy, receivership, or similar proceeding.
    3. Any proceeding that involves federal, state or local 
environmental laws must be described if it is material; involves a 
damages claim for more than 10% of the current assets of the issuer; or 
potentially involves more than $100,000 in sanctions and a governmental 
authority is a party.
    4. Disclose any material proceeding to which any director, officer 
or affiliate of the issuer, any owner of record or beneficially of more 
than 5% of any class of voting securities of the small business issuer, 
or security holder is a party adverse to the small business issuer or 
has a material interest adverse to the small business issuer.



Sec. 228.201  (Item 201) Market for Common Equity and Related Stockholder Matters.

    (a) Market information. (1) Identify the principal market or markets 
where the small business issuer's common equity is traded. If there is 
no public trading market, so state.
    (i) If the principal market for the small business issuer's common 
equity is an exchange, give the high and low sales prices for each 
quarter within the last two fiscal years and any subsequent interim 
period for which financial statements are required by Item 310(b).
    (ii) If the principal market is not an exchange, give the range of 
high and low bid information for the small business issuer's common 
equity for each quarter within the last two fiscal years and any 
subsequent interim period for which financial statements are required by 
Item 310(b). Show the source of the high and low bid information. If 
over-the-counter market quotations are provided, also state that the 
quotations reflect inter-dealer prices, without retail mark-up, mark-
down or commission and may not represent actual transactions.
    (2) If the information called for by paragraph (a) of this Item is 
being presented in a registration statement relating to a class of 
common equity for which at the time of filing there is no established 
public trading market, indicate the amount(s) of common equity:
    (i) that is subject to outstanding options or warrants to purchase, 
or securities convertible into, common equity of the registrant;
    (ii) that could be sold pursuant to Rule 144 under the Securities 
Act or that the registrant has agreed to register under the Securities 
Act for sale by security holders; or
    (iii) that is being or has been proposed to be, publicly offered by 
the registrant unless such common equity is

[[Page 335]]

being offered pursuant to an employee benefit plan (or dividend 
reinvestment plan), the offering of which could have a material effect 
on the market price of the registrant's common equity.
    (b) Holders. Give the approximate number of holders of record of 
each class of common equity.
    (c) Dividends. (1) Discuss any cash dividends declared on each class 
of common equity for the last two fiscal years and in any subsequent 
period for which financial information is required.
    (2) Describe any restrictions that limit the ability to pay 
dividends on common equity or that are likely to do so in the future.
    (d) Securities authorized for issuance under equity compensation 
plans. (1) In the following tabular format, provide the information 
specified in paragraph (d)(2) of this Item as of the end of the most 
recently completed fiscal year with respect to compensation plans 
(including individual compensation arrangements) under which equity 
securities of the small business issuer are authorized for issuance, 
aggregated as follows:
    (i) All compensation plans previously approved by security holders; 
and
    (ii) All compensation plans not previously approved by security 
holders.

                                      Equity Compensation Plan Information
----------------------------------------------------------------------------------------------------------------
                                                                                           Number of securities
                                                                                         remaining available for
                                       Number of securities to      Weighted-average      future issuance under
            Plan category              be issued upon exercise     exercise price of       equity compensation
                                       of outstanding options,    outstanding options,       plans (excluding
                                         warrants and rights      warrants and rights    securities reflected in
                                                                                               column (a))
----------------------------------------------------------------------------------------------------------------
                                       (a)....................  (b)....................  (c)
----------------------------------------------------------------------------------------------------------------
Equity compensation plans approved by
 security holders
Equity compensation plans not
 approved by security holders
    Total
----------------------------------------------------------------------------------------------------------------

    (2) The table shall include the following information as of the end 
of the most recently completed fiscal year for each category of equity 
compensation plan described in paragraph (d)(1) of this Item:
    (i) The number of securities to be issued upon the exercise of 
outstanding options, warrants and rights (column (a));
    (ii) The weighted-average exercise price of the outstanding options, 
warrants and rights disclosed pursuant to paragraph (d)(2)(i) of this 
Item (column (b)); and
    (iii) Other than securities to be issued upon the exercise of the 
outstanding options, warrants and rights disclosed in paragraph 
(d)(2)(i) of this Item, the number of securities remaining available for 
future issuance under the plan (column (c)).
    (3) For each compensation plan under which equity securities of the 
small business issuer are authorized for issuance that was adopted 
without the approval of security holders, describe briefly, in narrative 
form, the material features of the plan.

    Instructions to Paragraph (d).
    1. Disclosure shall be provided with respect to any compensation 
plan and individual compensation arrangement of the small business 
issuer (or parent, subsidiary or affiliate of the small business issuer) 
under which equity securities of the small business issuer are 
authorized for issuance to employees or non-employees (such as 
directors, consultants, advisors, vendors, customers, suppliers or 
lenders) in exchange for consideration in the form of goods or services 
as described in Statement of Financial Accounting Standards No. 123, 
Accounting for Stock-Based Compensation, or any successor standard. No 
disclosure is required with respect to:
    a. Any plan, contract or arrangement for the issuance of warrants or 
rights to all security holders of the small business issuer as such on a 
pro rata basis (such as a stock rights offering) or

[[Page 336]]

    b. Any employee benefit plan that is intended to meet the 
qualification requirements of Section 401(a) of the Internal Revenue 
Code (26 U.S.C. 401(a)).
    2. For purposes of this paragraph, an ``individual compensation 
arrangement'' includes, but is not limited to, the following: a written 
compensation contract within the meaning of ``employee benefit plan'' 
under Sec. 230.405 of this chapter and a plan (whether or not set forth 
in any formal document) applicable to one person as provided under Item 
402(a)(7)(ii) of Regulation S-B (Sec. 228.402(a)(7)(ii)).
    3. If more than one class of equity security is issued under its 
equity compensation plans, a small business issuer should aggregate plan 
information for each class of security.
    4. A small business issuer may aggregate information regarding 
individual compensation arrangements with the plan information required 
under paragraph (d)(1)(i) and (ii) of this item, as applicable.
    5. A small business issuer may aggregate information regarding a 
compensation plan assumed in connection with a merger, consolidation or 
other acquisition transaction pursuant to which the small business 
issuer may make subsequent grants or awards of its equity securities 
with the plan information required under paragraph (d)(1)(i) and (ii) of 
this Item, as applicable. A small business issuer shall disclose on an 
aggregated basis in a footnote to the table the information required 
under paragraph (d)(2)(i) and (ii) of this Item with respect to any 
individual options, warrants or rights assumed in connection with a 
merger, consolidation or other acquisition transaction.
    6. To the extent that the number of securities remaining available 
for future issuance disclosed in column (c) includes securities 
available for future issuance under any compensation plan or individual 
compensation arrangement other than upon the exercise of an option, 
warrant or right, disclose the number of securities and type of plan 
separately for each such plan in a footnote to the table.
    7. If the description of an equity compensation plan set forth in a 
small business issuer's financial statements contains the disclosure 
required by paragraph (d)(3) of this Item, a cross-reference to such 
description will satisfy the requirements of paragraph (d)(3) of this 
Item.
    8. If an equity compensation plan contains a formula for calculating 
the number of securities available for issuance under the plan, 
including, without limitation, a formula that automatically increases 
the number of securities available for issuance by a percentage of the 
number of outstanding securities of the small business issuer, a 
description of this formula shall be disclosed in a footnote to the 
table.
    9. Except where it is part of a document that is incorporated by 
reference into a prospectus, the information required by this paragraph 
need not be provided in any registration statement filed under the 
Securities Act.

Instruction: Canadian issuers should, in addition to the information 
called for by this Item, provide the information in Item 201(a)(1)(iv) 
of Regulation S-K and Instruction 4 thereto.

[57 FR 36449, Aug. 13, 1992, as amended at 67 FR 245]



Sec. 228.202  (Item 202) Description of Securities.

    (a) Common or Preferred Stock. (1) If the small business issuer is 
offering common equity, describe any dividend, voting and preemption 
rights.
    (2) If the small business issuer is offering preferred stock, 
describe the dividend, voting, conversion and liquidation rights as well 
as redemption or sinking fund provisions.
    (3) Describe any other material rights of common or preferred 
stockholders.
    (4) Describe any provision in the charter or by-laws that would 
delay, defer or prevent a change in control of the small business 
issuer.
    (b) Debt Securities. (1) If the small business issuer is offering 
debt securities, describe the maturity date, interest rate, conversion 
or redemption features and sinking fund requirements.
    (2) Describe all other material provisions giving or limiting the 
rights of debtholders. For example, describe subordination provisions, 
limitations on the declaration of dividends, restrictions on the 
issuance of additional debt, maintenance of asset ratios, etc.
    (3) Give the name of any trustee(s) designated by the indenture and 
describe the circumstances under which the trustee must act on behalf of 
the debtholders.
    (4) Discuss the tax effects of any securities offered at an 
``original issue discount.''
    (c) Other Securities To Be Registered. If the small business issuer 
is registering other securities, provide similar information concerning 
the material provisions of those securities.

[[Page 337]]



Sec. 228.303, Note  (Item 303) Management's Discussion and Analysis or Plan of Operation.

    Small business issuers that have not had revenues from operations in 
each of the last two fiscal years, or the last fiscal year and any 
interim period in the current fiscal year for which financial statements 
are furnished in the disclosure document, shall provide the information 
in paragraph (a) of this Item. All other issuers shall provide the 
information in paragraph (b) of this Item.
    (a) Plan of Operation. (1) Describe the small business issuer's plan 
of operation for the next twelve months. This description should include 
such matters as:
    (i) a discussion of how long the small business issuer can satisfy 
its cash requirements and whether it will have to raise additional funds 
in the next twelve months;
    (ii) a summary of any product research and development that the 
small business issuer will perform for the term of the plan;
    (iii) any expected purchase or sale of plant and significant 
equipment; and
    (iv) any expected significant changes in the number of employees.
    (2) [Reserved]
    (b) Management's Discussion and Analysis of Financial Condition and 
Results of Operations--(1) Full fiscal years. Discuss the small business 
issuer's financial condition, changes in financial condition and results 
of operations for each of the last two fiscal years. This discussion 
should address the past and future financial condition and results of 
operation of the small business issuer, with particular emphasis on the 
prospects for the future. The discussion should also address those key 
variable and other qualitative and quantitative factors which are 
necessary to an understanding and evaluation of the small business 
issuer. If material, the small business issuer should disclose the 
following:
    (i) Any known trends, events or uncertainties that have or are 
reasonably likely to have a material impact on the small business 
issuer's short-term or long-term liquidity;
    (ii) Internal and external sources of liquidity;
    (iii) Any material commitments for capital expenditures and the 
expected sources of funds for such expenditures;
    (iv) Any known trends, events or uncertainties that have had or that 
are reasonably expected to have a material impact on the net sales or 
revenues or income from continuing operations;
    (v) Any significant elements of income or loss that do not arise 
from the small business issuer's continuing operations;
    (vi) The causes for any material changes from period to period in 
one or more line items of the small business issuer's financial 
statements; and
    (vii) Any seasonal aspects that had a material effect on the 
financial condition or results of operation.
    (2) Interim Periods. If the small business issuer must include 
interim financial statements in the registration statement or report, 
provide a comparable discussion that will enable the reader to assess 
material changes in financial condition and results of operations since 
the end of the last fiscal year and for the comparable interim period in 
the preceding year.

Instructions to Item 303: 1. The discussion and analysis shall focus 
specifically on material events and uncertainties known to management 
that would cause reported financial information not to be necessarily 
indicative of future operating results or of future financial condition.
    2. Small business issuers are encouraged, but not required, to 
supply forward looking information. This is distinguished from presently 
known data which will impact upon future operating results, such as 
known future increases in costs of labor or materials. This latter data 
may be required to be disclosed.

    Effective Date Note: At 68 FR 5998, Feb. 5, 2003, Sec. 228.303 was 
amended by removing the phrase ``paragraph (a)'' and adding, in its 
place, the phrase ``paragraphs (a) and (c)'' in the first sentence of 
the introductory text, removing the phrase ``paragraph (b)'' and adding, 
in its place, the phrase ``paragraphs (b) and (c)'' in the second 
sentence of the introductory text and adding paragraphs (c) and (d), 
effective April 7, 2003. For the convenience of the user, the added text 
is set forth as follows:

Sec. 228.303  (Item 303) Management's discussion and analysis or plan of 
          operation.

                                * * * * *

[[Page 338]]

    (c) Off-balance sheet arrangements. (1) In a separately-captioned 
section, discuss the small business issuer's off-balance sheet 
arrangements that have or are reasonably likely to have a current or 
future effect on the small business issuer's financial condition, 
changes in financial condition, revenues or expenses, results of 
operations, liquidity, capital expenditures or capital resources that is 
material to investors. The disclosure shall include the items specified 
in paragraphs (c)(1)(i), (ii), (iii) and (iv) of this Item to the extent 
necessary to an understanding of such arrangements and effect and shall 
also include such other information that the small business issuer 
believes is necessary for such an understanding.
    (i) The nature and business purpose to the small business issuer of 
such off-balance sheet arrangements;
    (ii) The importance to the small business issuer of such off-balance 
sheet arrangements in respect of its liquidity, capital resources, 
market risk support, credit risk support or other benefits; (iii) The 
amounts of revenues, expenses and cash flows of the small business 
issuer arising from such arrangements; the nature and amounts of any 
interests retained, securities issued and other indebtedness incurred by 
the small business issuer in connection with such arrangements; and the 
nature and amounts of any other obligations or liabilities (including 
contingent obligations or liabilities) of the small business issuer 
arising from such arrangements that are or are reasonably likely to 
become material and the triggering events or circumstances that could 
cause them to arise; and
    (iv) Any known event, demand, commitment, trend or uncertainty that 
will result in or is reasonably likely to result in the termination, or 
material reduction in availability to the small business issuer, of its 
off-balance sheet arrangements that provide material benefits to it, and 
the course of action that the small business issuer has taken or 
proposes to take in response to any such circumstances.
    (2) As used in paragraph (c) of this Item, the term off-balance 
sheet arrangement means any transaction, agreement or other contractual 
arrangement to which an entity unconsolidated with the small business 
issuer is a party, under which the small business issuer has:
    (i) Any obligation under a guarantee contract that has any of the 
characteristics identified in paragraph 3 of FASB Interpretation No. 45, 
Guarantor's Accounting and Disclosure Requirements for Guarantees, 
Including Indirect Guarantees of Indebtedness of Others (November 2002) 
(``FIN 45''), as may be modified or supplemented, and that is not 
excluded from the initial recognition and measurement provisions of FIN 
45 pursuant to paragraphs 6 or 7 of that Interpretation;
    (ii) A retained or contingent interest in assets transferred to an 
unconsolidated entity or similar arrangement that serves as credit, 
liquidity or market risk support to such entity for such assets;
    (iii) Any obligation, including a contingent obligation, under a 
contract that would be accounted for as a derivative instrument, except 
that it is both indexed to the small business issuer's own stock and 
classified in stockholders' equity in the small business issuer's 
statement of financial position, and therefore excluded from the scope 
of FASB Statement of Financial Accounting Standards No. 133, Accounting 
for Derivative Instruments and Hedging Activities (June 1998), pursuant 
to paragraph 11(a) of that Statement, as may be modified or 
supplemented; or
    (iv) Any obligation, including a contingent obligation, arising out 
of a variable interest (as referenced in FASB Interpretation No. 46, 
Consolidation of Variable Interest Entities (January 2003), as may be 
modified or supplemented) in an unconsolidated entity that is held by, 
and material to, the small business issuer, where such entity provides 
financing, liquidity, market risk or credit risk support to, or engages 
in leasing, hedging or research and development services with, the small 
business issuer.
    Instructions to paragraph (c) of Item 303. 1. No obligation to make 
disclosure under paragraph (c) of this Item shall arise in respect of an 
off-balance sheet arrangement until a definitive agreement that is 
unconditionally binding or subject only to customary closing conditions 
exists or, if there is no such agreement, when settlement of the 
transaction occurs.
    2. Small business issuers should aggregate off-balance sheet 
arrangements in groups or categories that provide material information 
in an efficient and understandable manner and should avoid repetition 
and disclosure of immaterial information. Effects that are common or 
similar with respect to a number of off-balance sheet arrangements must 
be analyzed in the aggregate to the extent the aggregation increases 
understanding. Distinctions in arrangements and their effects must be 
discussed to the extent the information is material, but the discussion 
should avoid repetition and disclosure of immaterial information.
    3. For purposes of paragraph (c) of this Item only, contingent 
liabilities arising out of litigation, arbitration or regulatory actions 
are not considered to be off-balance sheet arrangements.
    4. Generally, the disclosure required by paragraph (c) of this Item 
shall cover the most recent fiscal year. However, the discussion should 
address changes from the previous year where such discussion is 
necessary to an understanding of the disclosure.
    5. In satisfying the requirements of paragraph (c) of this Item, the 
discussion of off-

[[Page 339]]

balance sheet arrangements need not repeat information provided in the 
footnotes to the financial statements, provided that such discussion 
clearly cross-references to specific information in the relevant 
footnotes and integrates the substance of the footnotes into such 
discussion in a manner designed to inform readers of the significance of 
the information that is not included within the body of such discussion.
    (d) Safe harbor. (1) The safe harbor provided in section 27A of the 
Securities Act of 1933 (15 U.S.C. 77z-2) and section 21E of the 
Securities Exchange Act of 1934 (15 U.S.C. 78u-5) (``statutory safe 
harbors'') shall apply to forward-looking information provided pursuant 
to paragraph (c) of this Item, provided that the disclosure is made by: 
an issuer; a person acting on behalf of the issuer; an outside reviewer 
retained by the issuer making a statement on behalf of the issuer; or an 
underwriter, with respect to information provided by the issuer or 
information derived from information provided by the issuer.
    (2) For purposes of paragraph (d) of this Item only:
    (i) All information required by paragraph (c) of this Item is deemed 
to be a ``forward looking statement'' as that term is defined in the 
statutory safe harbors, except for historical facts.
    (ii) With respect to paragraph (c) of this Item, the meaningful 
cautionary statements element of the statutory safe harbors will be 
satisfied if a small business issuer satisfies all requirements of that 
same paragraph (c) of this Item.



Sec. 228.304  (Item 304) Changes In and Disagreements With Accountants on Accounting and Financial Disclosure.

    (a)(1) If, during the small business issuer's two most recent fiscal 
years or any later interim period, the principal independent accountant 
or a significant subsidiary's independent accountant on whom the 
principal accountant expressed reliance in its report, resigned (or 
declined to stand for re-election) or was dismissed, then the small 
business issuer shall state:
    (i) Whether the former accountant resigned, declined to stand for 
re-election or was dismissed and the date;
    (ii) Whether the principal accountant's report on the financial 
statements for either of the past two years contained an adverse opinion 
or disclaimer of opinion, or was modified as to uncertainty, audit 
scope, or accounting principles, and also describe the nature of each 
such adverse opinion, disclaimer of opinion or modification;
    (iii) Whether the decision to change accountants was recommended or 
approved by the board of directors or an audit or similar committee of 
the board of directors; and
    (iv)(A) Whether there were any disagreements with the former 
accountant, whether or not resolved, on any matter of accounting 
principles or practices, financial statement disclosure, or auditing 
scope or procedure, which, if not resolved to the former accountant's 
satisfaction, would have caused it to make reference to the subject 
matter of the disagreement(s) in connection with its report; or
    (B) The following information only if applicable. Indicate whether 
the former accountant advised the small business issuer that:
    (1) internal controls necessary to develop reliable financial 
statements did not exist; or
    (2) information has come to the attention of the former accountant 
which made the accountant unwilling to rely on management's 
representations, or unwilling to be associated with the financial 
statements prepared by management; or
    (3) the scope of the audit should be expanded significantly, or 
information has come to the accountant's attention that the accountant 
has concluded will, or if further investigated might, materially impact 
the fairness or reliability of a previously issued audit report or the 
underlying financial statements, or the financial statements issued or 
to be issued covering the fiscal period(s) subsequent to the date of the 
most recent audited financial statements (including information that 
might preclude the issuance of an unqualified audit report), and the 
issue was not resolved to the accountant's satisfaction prior to its 
resignation or dismissal; and
    (C) The subject matter of each such disagreement or event identified 
in response to paragraph (a)(1)(iv) of this Item;
    (D) Whether any committee of the board of directors, or the board of 
directors, discussed the subject matter of the disagreement with the 
former accountant; and

[[Page 340]]

    (E) Whether the small business issuer has authorized the former 
accountant to respond fully to the inquiries of the successor accountant 
concerning the subject matter of each of such disagreements or events 
and, if not, describe the nature of and reason for any limitation.
    (2) If during the period specified in paragraph (a)(1) of this Item, 
a new accountant has been engaged as either the principal accountant to 
audit the issuer's financial statements or as the auditor of a 
significant subsidiary and on whom the principal accountant is expected 
to express reliance in its report, identify the new accountant and the 
engagement date. Additionally, if the issuer (or someone on its behalf) 
consulted the new accountant regarding:
    (i) The application of accounting principles to a specific completed 
or contemplated transaction, or the type of audit opinion that might be 
rendered on the small business issuer's financial statements and either 
written or oral advice was provided that was an important factor 
considered by the small business issuer in reaching a decision as to the 
accounting, auditing or financial reporting issue; or
    (ii) Any matter that was the subject of a disagreement or event 
identified in response to paragraph (a)(1)(iv) of this Item, then the 
small business issuer shall:
    (A) Identify the issues that were the subjects of those 
consultations;
    (B) Briefly describe the views of the new accountant given to the 
small business issuer and, if written views were received by the small 
business issuer, file them as an exhibit to the report or registration 
statement;
    (C) State whether the former accountant was consulted by the small 
business issuer regarding any such issues, and if so, describe the 
former accountant's views; and
    (D) Request the new accountant to review the disclosure required by 
this Item before it is filed with the Commission and provide the new 
accountant the opportunity to furnish the small business issuer with a 
letter addressed to the Commission containing any new information, 
clarification of the small business issuer's expression of its views, or 
the respects in which it does not agree with the statements made in 
response to this Item. Any such letter shall be filed as an exhibit to 
the report or registration statement containing the disclosure required 
by this Item.
    (3) The small business issuer shall provide the former accountant 
with a copy of the disclosures it is making in response to this Item no 
later than the day that the disclosures are filed with the Commission. 
The small business issuer shall request the former accountant to furnish 
a letter addressed to the Commission stating whether it agrees with the 
statements made by the issuer and, if not, stating the respects in which 
it does not agree. The small business issuer shall file the letter as an 
exhibit to the report or registration statement containing this 
disclosure. If the letter is unavailable at the time of filing, the 
small business issuer shall request the former accountant to provide the 
letter so that it can be filed with the Commission within ten business 
days after the filing of the report or registration statement. 
Notwithstanding the ten business day period, the letter shall be filed 
within two business days of receipt. The former accountant may provide 
an interim letter highlighting specific areas of concern and indicating 
that a more detailed letter will be forthcoming within the ten business 
day period noted above. The interim letter, if any, shall be filed with 
the report or registration statement or by amendment within two business 
days of receipt.
    (b) If the conditions in paragraphs (b)(1) through (b)(3) of this 
Item exist, the small business issuer shall describe the nature of the 
disagreement or event and the effect on the financial statements if the 
method had been followed which the former accountants apparently would 
have concluded was required (unless that method ceases to be generally 
accepted because of authoritative standards or interpretations issued 
after the disagreement or event):
    (1) In connection with a change in accountants subject to paragraph 
(a) of this Item, there was any disagreement

[[Page 341]]

or event as described in paragraph (a)(1)(iv) of this Item;
    (2) During the fiscal year in which the change in accountants took 
place or during the later fiscal year, there have been any transactions 
or events similar to those involved in such disagreement or event; and
    (3) Such transactions or events were material and were accounted for 
or disclosed in a manner different from that which the former 
accountants apparently would have concluded was required.

Instructions to Item 304: 1. The disclosure called for by paragraph (a) 
of this Item need not be provided if it has been previously reported as 
that term is defined in Rule 12b-2 under the Exchange Act (Sec. 240.12b-
2); the disclosure called for by paragraph (a) of this Item must be 
provided, however, notwithstanding prior disclosure, if required 
pursuant to Item 9 of Schedule 14A (Sec. 249.14a-101 et seq.). The 
disclosure called for by paragraph (b) of this Item must be furnished, 
where required, notwithstanding any prior disclosure about accountant 
changes or disagreements.
    2. When disclosure is required by paragraph (a) of this Item in an 
annual report to security holders pursuant to Rule 14a-3 or Rule 14c-3 
(Sec. 240.14a-3 or 240.14c-3 of this chapter), or in a proxy or 
information statement filed pursuant to the requirements of Schedule 14A 
(Sec. 240.14a-101 et seq.) or 14C (Sec. 240.14c-101 et seq.), in lieu of 
a letter pursuant to paragraph (a)(2)(ii)(D) or (a)(3) of this Item, 
before filing such materials with or furnishing such materials to the 
Commission, the small business issuer shall furnish the disclosure 
required by paragraph (a) of this Item to each accountant who was 
engaged during the period set forth in paragraph (a) of this Item. If 
any such accountant believes that the statements made in response to 
paragraph (a) of this Item are incorrect or incomplete, it may present 
its views in a brief statement, ordinarily expected not to exceed 200 
words, to be included in the annual report or proxy or information 
statement. This statement shall be submitted to the small business 
issuer within ten business days of the date the accountant receives the 
small business issuer's disclosure. Further, unless the written views of 
the newly engaged accountant required to be filed as an exhibit by 
paragraph (a)(2)(ii)(D) of this Item have been previously filed with the 
Commission, the small business issuer shall file a Form 8-K (17 CFR 
249.308 of this chapter) along with the annual report or proxy or 
information statement for the purpose of filing the written views as 
exhibits.
    3. The information required by this Item need not be provided for a 
company being acquired by the small business issuer if such acquiree has 
not been subject to the filing 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 or Rule 14c-3 (Sec. 240.14a-3 or 240.14c-3 of this chapter) 
for its latest fiscal year.
    4. In determining whether any disagreement or reportable event has 
occurred, an oral communication from the engagement partner or another 
person responsible for rendering the accounting firm's opinion (or their 
designee) will generally suffice as the accountant advising the small 
business issuer of a reportable event or as a statement of a 
disagreement at the ``decision-making level'' within the accounting firm 
and require disclosure under this Item.



Sec. 228.305  [Reserved]



Sec. 228.306  (Item 306) Audit committee report.

    (a) The audit committee must state whether:
    (1) The audit committee has reviewed and discussed the audited 
financial statements with management;
    (2) The audit committee has discussed with the independent auditors 
the matters required to be discussed by SAS 61, as may be modified or 
supplemented;
    (3) The audit committee has received the written disclosures and the 
letter from the independent accountants required by Independence 
Standards Board Standard No. 1 (Independence Standards Board Standard 
No. 1, Independence Discussions with Audit Committees), as may be 
modified or supplemented, and has discussed with the independent 
accountant the independent accountant's independence; and
    (4) Based on the review and discussions referred to in paragraphs 
(a)(1) through (a)(3) of this Item, the audit committee recommended to 
the Board of Directors that the audited financial statements be included 
in the company's Annual Report on Form 10-KSB (17 CFR 249.310b) for the 
last fiscal year for filing with the Commission.
    (b) The name of each member of the company's audit committee (or, in 
the absence of an audit committee, the

[[Page 342]]

board committee performing equivalent functions or the entire board of 
directors) must appear below the disclosure required by this Item.
    (c) The information required by paragraphs (a) and (b) of this Item 
shall not be deemed to be ``soliciting material,'' or to be ``filed'' 
with the Commission or subject to Regulation 14A or 14C (17 CFR 240.14a-
1 et seq. or 240.14c-1 et seq.), other than as provided in this Item, or 
to the liabilities of section 18 of the Exchange Act (15 U.S.C. 78r), 
except to the extent that the company specifically requests that the 
information be treated as soliciting material or specifically 
incorporates it by reference into a document filed under the Securities 
Act or the Exchange Act.
    (d) The information required by paragraphs (a) and (b) of this Item 
need not be provided in any filings other than a registrant proxy or 
information statement relating to an annual meeting of security holders 
at which directors are to be elected (or special meeting or written 
consents in lieu of such meeting). Such information will not be deemed 
to be incorporated by reference into any filing under the Securities Act 
or the Exchange Act, except to the extent that the registrant 
specifically incorporates it by reference.

[64 FR 73401, Dec. 30, 1999]



Sec. 228.307  (Item 307) Controls and procedures.

    (a) Evaluation of disclosure controls and procedures. Disclose the 
conclusions of the small business issuer's principal executive officer 
or officers and principal financial officer or officers, or persons 
performing similar functions, about the effectiveness of the small 
business issuer's disclosure controls and procedures (as defined in 
Secs. 240.13a-14(c) and 240.15d-14(c) of this chapter) based on their 
evaluation of these controls and procedures as of a date within 90 days 
of the filing date of the quarterly or annual report that includes the 
disclosure required by this paragraph.
    (b) Changes in internal controls. Disclose whether or not there were 
significant changes in the small business issuer's internal controls or 
in other factors that could significantly affect these controls 
subsequent to the date of their evaluation, including any corrective 
actions with regard to significant deficiencies and material weaknesses.
    (c) Asset-Backed Issuers. A small business issuer that is an Asset-
Backed Issuer (as defined in Rule 13a-14(g) and Rule 15d-14(g) under the 
Securities Exchange Act of 1934 (17 CFR 240.13a-14(g) and 17 CFR 
240.15d-14(g) of this chapter) is not required to disclose the 
information required by this Item.

[67 FR 57287, Sept. 9, 2002]



Sec. 228.310  (Item 310) Financial Statements.

    Notes: 1. Financial statements of a small business issuer, its 
predecessors or any businesses to which the small business issuer is a 
successor shall be prepared in accordance with generally accepted 
accounting principles in the United States.
    2. Regulation S-X (17 CFR 210.1 through 210.12) Form and Content of 
and Requirements for Financial Statements shall not apply to the 
preparation of such financial statements, except that the report and 
qualifications of the independent accountant shall comply with the 
requirements of Article 2 of Regulation S-X (17 CFR 210.2), Item 8.A of 
Form 20-F (17 CFR 249.220f) and Article 3-20 of Regulation S-X (17 CFR 
210.3-20) shall apply to financial statements of foreign private 
issuers, the description of accounting policies shall comply with 
Article 4-08(n) of Regulation S-X (17 CFR 210.4-08(n)), and small 
business issuers engaged in oil and gas producing activities shall 
follow the financial accounting and reporting standards specified in 
Article 4-10 of Regulation S-X (17 CFR 210.4-10) with respect to such 
activities. To the extent that Article 11-01 [17 CFR 210.11-01] (Pro 
Forma Presentation Requirements) offers enhanced guidelines for the 
preparation, presentation and disclosure of pro forma financial 
information, small business issuers may wish to consider these items. 
Financial statements of foreign private issuers shall be prepared and 
presented in accordance with the requirements of Item 18 of Form 20-F 
except that Item 17 may be followed for financial statements included in 
filings other than registration statements for offerings of securities 
unless the only securities being offered are: (a) upon the exercise of 
outstanding rights granted by the issuer of the securities to be 
offered, if such rights are granted by the issuer of the securities to 
be offered, if such rights are granted on a pro rata basis to all 
existing securities holders of the class of securities to which the 
rights attach and there is no standby underwriting in the United States 
or similar arrangement; or (b) pursuant to a dividend or

[[Page 343]]

interest reinvestment plan; or (c) upon the conversion of outstanding 
convertible securities or upon the exercise of outstanding transferrable 
warrants issued by the issuer of the securities being offered, or by an 
affiliate of such issuer.
    3. Financial statements for a subsidiary of a small business issuer 
that issues securities guaranteed by the small business issuer or 
guarantees securities issued by the small business issuer must be 
presented as required by Rule 3-10 of Regulation S-X (17 CFR 210.3-10), 
except that the periods presented are those required by paragraph (a) of 
this item.
    4. Financial statements for a small business issuer's affiliates 
whose securities constitute a substantial portion of the collateral for 
any class of securities registered or being registered must be presented 
as required by Rule 3-16 of Regulation S-X (17 CFR 210.3-16), except 
that the periods presented are those required by paragraph (a) of this 
item.
    5. The Commission, where consistent with the protection of 
investors, may permit the omission of one or more of the financial 
statements or the substitution of appropriate statements of comparable 
character. The Commission by informal written notice may require the 
filing of other financial statements where necessary or appropriate.

    (a) Annual Financial Statements. Small business issuers shall file 
an audited balance sheet as of the end of the most recent fiscal year, 
or as of a date within 135 days if the issuers existed for a period less 
than one fiscal year, and audited statements of income, cash flows and 
changes in stockholders' equity for each of the two fiscal years 
preceding the date of such audited balance sheet (or such shorter period 
as the registrant has been in business).
    (b) Interim Financial Statements. Interim financial statements may 
be unaudited; however, prior to filing, interim financial statements 
included in quarterly reports on Form 10-QSB (17 CFR 249.308b) must be 
reviewed by an independent public accountant using professional 
standards and procedures for conducting such reviews, as established by 
generally accepted auditing standards, as may be modified or 
supplemented by the Commission. If, in any filing, the issuer states 
that interim financial statements have been reviewed by an independent 
public accountant, a report of the accountant on the review must be 
filed with the interim financial statements. Interim financial 
statements shall include a balance sheet as of the end of the issuer's 
most recent fiscal quarter and income statements and statements of cash 
flows for the interim period up to the date of such balance sheet and 
the comparable period of the preceding fiscal year.

Instructions to Item 310(b): 1. Where Item 310 is applicable to a Form 
10-QSB (Sec. 249.308b) and the interim period is more than one quarter, 
income statements must also be provided for the most recent interim 
quarter and the comparable quarter of the preceding fiscal year.
    2. Interim financial statements must include all adjustments which 
in the opinion of management are necessary in order to make the 
financial statements not misleading. An affirmative statement that the 
financial statements have been so adjusted must be included with the 
interim financial statements.

    (1) Condensed Format. Interim financial statements may be condensed 
as follows:
    (i) Balance sheets should include separate captions for each balance 
sheet component presented in the annual financial statements which 
represents 10% or more of total assets. Cash and retained earnings 
should be presented regardless of relative significance to total assets. 
Registrants which present a classified balance sheet in their annual 
financial statements should present totals for current assets and 
current liabilities.
    (ii) Income statements should include net sales or gross revenue, 
each cost and expense category presented in the annual financial 
statements which exceeds 20% of sales or gross revenues, provision for 
income taxes, discontinued operations, extraordinary items and 
cumulative effects of changes in accounting principles or practices. 
(Financial institutions should substitute net interest income for sales 
for purposes of determining items to be disclosed.) Dividends per share 
should be presented.
    (iii) Cash flow statements should include cash flows from operating, 
investing and financing activities as well as cash at the beginning and 
end of each period and the increase or decrease in such balance.
    (iv) Additional line items may be presented to facilitate the 
usefulness of

[[Page 344]]

the interim financial statements including their comparability with 
annual financial statements.
    (2) Disclosure required and additional instructions as to Content.--
(i) Footnotes. Footnote and other disclosures should be provided as 
needed for fair presentation and to ensure that the financial statements 
are not misleading.
    (ii) Material Subsequent Events and Contingencies. Disclosure must 
be provided of material subsequent events and material contingencies 
notwithstanding disclosure in the annual financial statements.
    (iii) Significant Equity Investees. Sales, gross profit, net income 
(loss) from continuing operations and net income must be disclosed for 
equity investees which constitute 20% or more of a registrant's 
consolidated assets, equity or income from continuing operations.
    (iv) Significant Dispositions and Purchase Business Combinations. If 
a significant disposition or purchase business combination has occurred 
during the most recent interim period and the transaction required the 
filing of a Form 8-K (Sec. 249.308 of this chapter), pro forma data must 
be presented which reflects revenue, income from continuing operations, 
net income and income per share for the current interim period and the 
corresponding interim period of the preceding fiscal year as though the 
transaction occurred at the beginning of the periods.
    (v) Material Accounting Changes. Disclosure must be provided of the 
date and reasons for any material accounting change. The registrant's 
independent accountant must provide a letter in the first Form 10-QSB 
(Sec. 249.308b of this chapter) filed subsequent to the change 
indicating whether or not the change is to a preferable method. 
Disclosure must be provided of any retroactive change to prior period 
financial statements, including the effect of any such change on income 
and income per share.
    (vi) Development Stage Companies. A registrant in the development 
stage must provide cumulative from inception financial information.
    (c) Financial Statements of Businesses Acquired or to be Acquired. 
(1) If a business combination accounted for as a ``purchase'' has 
occurred or is probable, or if a business combination accounted for as a 
``pooling of interest'' is probable, financial statements of the 
business acquired or to be acquired shall be furnished for the periods 
specified in paragraph (c)(3) of this Item.
    (i) The term ``purchase'' encompasses the purchase of an interest in 
a business accounted for by the equity method.
    (ii) Acquisitions of a group of related businesses that are probable 
or that have occurred subsequent to the latest fiscal year-end for which 
audited financial statements of the issuer have been filed shall be 
treated as if they are a single business combination for purposes of 
this section. The required financial statements of related businesses 
may be presented on a combined basis for any periods they are under 
common control or management. A group of businesses are deemed to be 
related if:
    (A) They are under common control or management;
    (B) The acquisition of one business is conditional on the 
acquisition of each other business; or
    (C) Each acquisition is conditioned on a single common event.
    (iii) Annual financial statements required by this paragraph (c) 
shall be audited. The form and content of the financial statements shall 
be in accordance with paragraphs (a) and (b) of this Item.
    (2) The periods for which financial statements are to be presented 
are determined by comparison of the most recent annual financial 
statements of the business acquired or to be acquired and the small 
business issuer's most recent annual financial statements filed at or 
prior to the date of acquisition to evaluate each of the following 
conditions:
    (i) Compare the small business issuer's investments in and advances 
to the acquiree to the total consolidated assets of the small business 
issuer 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, also compare the number of common shares exchanged or to be 
exchanged by the small business issuer to its total common shares

[[Page 345]]

outstanding at the date the combination is initiated.
    (ii) Compare the small business issuer's proportionate share of the 
total assets (after intercompany eliminations) of the acquiree to the 
total consolidated assets of the small business issuer as of the end of 
the most recently completed fiscal year.
    (iii) Compare the small business issuer's equity in the income from 
continuing operations before income taxes, extraordinary items and 
cumulative effect of a change in accounting principles of the acquiree 
to such consolidated income of the small business issuer for the most 
recently completed fiscal year.

Computational note to paragraph (c)(2): For purposes of making the 
prescribed income test the following guidance should be applied: If 
income of the small business issuer 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.

    (3)(i) If none of the conditions specified in paragraph (c)(2) of 
this Item exceeds 20%, financial statements are not required. If any of 
the conditions exceed 20%, but none exceeds 40%, financial statements 
shall be furnished for the most recent fiscal year and any interim 
periods specified in paragraph (b) of this item. If any of the 
conditions exceed 40%, financial statements shall be furnished for the 
two most recent fiscal years and any interim periods specified in 
paragraph (b) of this item.
    (ii) The separate audited balance sheet of the acquired business is 
not required when the small business issuer's most recent audited 
balance sheet filed is for a date after the acquisition was consummated.
    (iii) If the aggregate impact of individually insignificant 
businesses acquired since the date of the most recent audited balance 
sheet filed for the registrant exceeds 50%, financial statements 
covering at least the substantial majority of the businesses acquired 
shall be furnished. Such financial statements shall be for the most 
recent fiscal year and any interim periods specified in paragraph (b) of 
this Item.
    (iv) Registration statements not subject to the provisions of 
Sec. 230.419 of this chapter (Regulation C) and proxy statements need 
not include separate financial statements of the acquired or to be 
acquired business if it does not meet or exceed any of the conditions 
specified in paragraph (c)(2) of this Item at the 50 percent level, and 
either:
    (A) The consummation of the acquisition has not yet occurred; or
    (B) The effective date of the registration statement, or mailing 
date in the case of a proxy statement, is no more than 74 days after 
consummation of the business combination, and the financial statements 
have not been filed previously by the registrant.
    (v) An issuer that omits from its initial registration statement 
financial statements of a recently consummated business combination 
pursuant to paragraph (c)(3)(iv) of this section shall furnish those 
financial statements and any pro forma information specified by 
paragraph (d) of this Item under cover of Form 8-K (Sec. 249.308 of this 
chapter) no later than 75 days after consummation of the acquisition.
    (4) If the small business issuer made a significant business 
acquisition subsequent to the latest fiscal year end and filed a report 
on Form 8-K which included audited financial statements of such acquired 
business for the periods required by paragraph (c)(3) of this Item and 
the pro forma financial information required by paragraph (d) of this 
Item, the determination of significance may be made by using pro forma 
amounts for the latest fiscal year in the report on Form 8-K rather than 
by using the historical amounts of the registrant. The tests may not be 
made by ``annualizing'' data.
    (d) Pro Forma Financial Information. (1) Pro forma information 
showing the effects of the acquisition shall be furnished if financial 
statements of a business acquired or to be acquired are presented.
    (2) Pro forma statements should be condensed, in columnar form 
showing pro forma adjustments and results and should include the 
following:
    (i) If the transaction was consummated during the most recent fiscal 
year or subsequent interim period,

[[Page 346]]

pro forma statements of income reflecting the combined operations of the 
entities for the latest fiscal year and interim period, if any, or;
    (ii) If consummation of the transaction has occurred or is probable 
after the date of the most recent balance sheet required by paragraph 
(a) or (b) of this Item, a pro forma balance sheet giving effect to the 
combination as of the date of the most recent balance sheet. For a 
purchase, pro forma statements of income reflecting the combined 
operations of the entities for the latest fiscal year and interim 
period, if any, and for a pooling of interests, pro forma statements of 
income for all periods for which income statements of the small business 
issuer are required.
    (e) Real Estate Operations Acquired or to be Acquired. If, during 
the period for which income statements are required, the small business 
issuer has acquired one or more properties which in the aggregate are 
significant, or since the date of the latest balance sheet required by 
paragraph (a) or (b) of this Item, has acquired or proposes to acquire 
one or more properties which in the aggregate are significant, the 
following shall be furnished with respect to such properties:
    (1) Audited income statements (not including earnings per unit) for 
the two most recent years, which shall exclude items not comparable to 
the proposed future operations of the property such as mortgage 
interest, leasehold rental, depreciation, corporate expenses and federal 
and state income taxes; Provided, however, That such audited statements 
need be presented for only the most recent fiscal year if:
    (i) the property is not acquired from a related party;
    (ii) material factors considered by the small business issuer in 
assessing the property are described with specificity in the 
registration statement with regard to the property, including source of 
revenue (including, but not limited to, competition in the rental 
market, comparative rents, occupancy rates) and expenses (including but 
not limited to, utilities, ad valorem tax rates, maintenance expenses, 
capital improvements anticipated); and
    (iii) the small business issuer indicates that, after reasonable 
inquiry, it is not aware of any material factors relating to the 
specific property other than those discussed in response to paragraph 
(e)(1)(ii) of this Item that would cause the reported financial 
information not to be necessarily indicative of future operating 
results.
    (2) If the property will be operated by the small business issuer, a 
statement shall be furnished showing the estimated taxable operating 
results of the small business issuer based on the most recent twelve-
month period including such adjustments as can be factually supported. 
If the property will be acquired subject to a net lease, the estimated 
taxable operating results shall be based on the rent to be paid for the 
first year of the lease. In either case, the estimated amount of cash to 
be made available by operations shall be shown. Disclosure must be 
provided of the principal assumptions which have been made in preparing 
the statements of estimated taxable operating results and cash to be 
made available by operations.
    (3) If appropriate under the circumstances, a table should be 
provided which shows, for a limited number of years, the estimated cash 
distribution per unit indicating the portion reportable as taxable 
income and the portion representing a return of capital with an 
explanation of annual variations, if any. If taxable net income per unit 
will be greater than the cash available for distribution per unit, that 
fact and approximate year of occurrence shall be stated, if significant.
    (f) Limited Partnerships. (1) Small business issuers which are 
limited partnerships must provide the balance sheets of the general 
partners as described in paragraphs (f)(2) through (f)(4) of this Item.
    (2) Where a general partner is a corporation, the audited balance 
sheet of the corporation as of the end of its most recently completed 
fiscal year must be filed. Receivables, other than trade receivables, 
from affiliates of the general partner should be deducted from 
shareholders' equity of the general partner. Where an affiliate has 
committed itself to increase or maintain the general partner's capital, 
the audited balance sheet of such affiliate must also be presented.

[[Page 347]]

    (3) Where a general partner is a partnership, there shall be filed 
an audited balance sheet of such partnership as of the end of its most 
recently completed fiscal year.
    (4) Where the general partner is a natural person, there shall be 
filed, as supplemental information, a balance sheet of such natural 
person as of a recent date. Such balance sheet need not be audited. The 
assets and liabilities should be carried at estimated fair market value, 
with provisions for estimated income taxes on unrealized gains. The net 
worth of such general partner(s), based on such balance sheet(s), singly 
or in the aggregate, shall be disclosed in the registration statement.
    (g) Age of Financial Statements. At the date of filing, financial 
statements included in filings other than filings on Form 10-KSB must be 
not less current than financial statements which would be required in 
Forms 10-KSB and 10-QSB if such reports were required to be filed. If 
required financial statements are as of a date 135 days or more prior to 
the date a registration statement becomes effective or proxy material is 
expected to be mailed, the financial statements shall be updated to 
include financial statements for an interim period ending within 135 
days of the effective or expected mailing date. Interim financial 
statements should be prepared and presented in accordance with paragraph 
(b) of this Item:
    (1) When the anticipated effective or mailing date falls within 45 
days after the end of the fiscal year, the filing may include financial 
statements only as current as the end of the third fiscal quarter; 
Provided, however, That if the audited financial statements for the 
recently completed fiscal year are available or become available prior 
to effectiveness or mailing, they must be included in the filing;
    (2) If the effective date or anticipated mailing date falls after 45 
days but within 90 days of the end of the small business issuer's fiscal 
year, the small business issuer is not required to provide the audited 
financial statements for such year end provided that the following 
conditions are met:
    (i) If the small business issuer is a reporting company, all reports 
due must have been filed;
    (ii) For the most recent fiscal year for which audited financial 
statements are not yet available, the small business issuer reasonably 
and in good faith expects to report income from continuing operations 
before taxes; and
    (iii) For at least one of the two fiscal years immediately preceding 
the most recent fiscal year the small business issuer reported income 
from continuing operations before taxes.

[57 FR 36449, Aug. 13, 1992, as amended at 58 FR 26514, May 4, 1993; 61 
FR 54515, Oct. 18, 1996; 62 FR 6064, Feb. 10, 1997; 64 FR 53909, Oct. 5, 
1999; 64 FR 73401, Dec. 30, 1999; 65 FR 51710, Aug. 24, 2000]



Sec. 228.401  (Item 401) Directors, Executive Officers, Promoters and Control Persons.

    (a) Identify directors and executive officers. (1) List the names 
and ages of all directors and executive officers and all persons 
nominated or chosen to become such;
    (2) List the positions and offices that each such person held with 
the small business issuer;
    (3) Give the person's term of office as a director and the period 
during which the person has served;
    (4) Briefly describe the person's business experience during the 
past five years; and
    (5) If a director, identify other directorships held in reporting 
companies naming each company.
    (b) Identify Significant Employees. Give the information specified 
in paragraph (a) of this Item for each person who is not an executive 
officer but who is expected by the small business issuer to make a 
significant contribution to the business.
    (c) Family relationships. Describe any family relationships among 
directors, executive officers, or persons nominated or chosen by the 
small business issuer to become directors or executive officers.
    (d) Involvement in certain legal proceedings. Describe any of the 
following events that occurred during the past five years that are 
material to an evaluation of the ability or integrity of any director, 
person nominated to become a

[[Page 348]]

director, executive officer, promoter or control person of the small 
business issuer:
    (1) Any bankruptcy petition filed by or against any business of 
which such person was a general partner or executive officer either at 
the time of the bankruptcy or within two years prior to that time;
    (2) Any conviction in a criminal proceeding or being subject to a 
pending criminal proceeding (excluding traffic violations and other 
minor offenses);
    (3) Being subject to any order, judgment, or decree, not 
subsequently reversed, suspended or vacated, of any court of competent 
jurisdiction, permanently or temporarily enjoining, barring, suspending 
or otherwise limiting his involvement in any type of business, 
securities or banking activities; and
    (4) Being found by a court of competent jurisdiction (in a civil 
action), the Commission or the Commodity Futures Trading Commission to 
have violated a federal or state securities or commodities law, and the 
judgment has not been reversed, suspended, or vacated.
    (e) Audit committee financial expert. (1)(i) Disclose that the small 
business issuer's board of directors has determined that the small 
business issuer either:
    (A) Has at least one audit committee financial expert serving on its 
audit committee; or
    (B) Does not have an audit committee financial expert serving on its 
audit committee.
    (ii) If the small business issuer provides the disclosure required 
by paragraph (e)(1)(i)(A) of this Item, it must disclose the name of the 
audit committee financial expert and whether that person is independent, 
as that term is used in Item 7(d)(3)(iv) of Schedule 14A (240.14a-101 of 
this chapter) under the Exchange Act.
    (iii) If the small business issuer provides the disclosure required 
by paragraph (e)(1)(i)(B) of this Item, it must explain why it does not 
have an audit committee financial expert.

    Instruction to paragraph (e)(1) of Item 401. If the small business 
issuer's board of directors has determined that the small business 
issuer has more than one audit committee financial expert serving on its 
audit committee, the small business issuer may, but is not required to, 
disclose the names of those additional persons. A small business issuer 
choosing to identify such persons must indicate whether they are 
independent pursuant to Item 401(e)(1)(ii).

    (2) For purposes of this Item, an audit committee financial expert 
means a person who has the following attributes:
    (i) An understanding of generally accepted accounting principles and 
financial statements;
    (ii) The ability to assess the general application of such 
principles in connection with the accounting for estimates, accruals and 
reserves;
    (iii) Experience preparing, auditing, analyzing or evaluating 
financial statements that present a breadth and level of complexity of 
accounting issues that are generally comparable to the breadth and 
complexity of issues that can reasonably be expected to be raised by the 
small business issuer's financial statements, or experience actively 
supervising one or more persons engaged in such activities;
    (iv) An understanding of internal controls and procedures for 
financial reporting; and
    (v) An understanding of audit committee functions.
    (3) A person shall have acquired such attributes through:
    (i) Education and experience as a principal financial officer, 
principal accounting officer, controller, public accountant or auditor 
or experience in one or more positions that involve the performance of 
similar functions;
    (ii) Experience actively supervising a principal financial officer, 
principal accounting officer, controller, public accountant, auditor or 
person performing similar functions;
    (iii) Experience overseeing or assessing the performance of 
companies or public accountants with respect to the preparation, 
auditing or evaluation of financial statements; or
    (iv) Other relevant experience.
    (4) Safe Harbor. (i) A person who is determined to be an audit 
committee financial expert will not be deemed an expert for any purpose, 
including without limitation for purposes of section 11 of the 
Securities Act of 1933 (15

[[Page 349]]

U.S.C. 77k), as a result of being designated or identified as an audit 
committee financial expert pursuant to this Item 401.
    (ii) The designation or identification of a person as an audit 
committee financial expert pursuant to this Item 401 does not impose on 
such person any duties, obligations or liability that are greater than 
the duties, obligations and liability imposed on such person as a member 
of the audit committee and board of directors in the absence of such 
designation or identification.
    (iii) The designation or identification of a person as an audit 
committee financial expert pursuant to this Item 401 does not affect the 
duties, obligations or liability of any other member of the audit 
committee or board of directors.

    Instructions to Item 401(e). 1. The disclosure under Item 401(e) is 
required only in a small business issuer's annual report. The small 
business issuer need not provide the disclosure required by this Item 
401(e) in a proxy or information statement unless that small business 
issuer is electing to incorporate this information by reference from the 
proxy or information statement into its annual report pursuant to 
general instruction E(3) to Form 10-KSB.
    2. If a person qualifies as an audit committee financial expert by 
means of having held a position described in paragraph (e)(3)(iv) of 
this Item, the small business issuer shall provide a brief listing of 
that person's relevant experience. Such disclosure may be made by 
reference to disclosures required under paragraph (a)(4) of this Item 
401 (Sec. 229.401(a)(4) or this chapter).
    3. In the case of a foreign private issuer with a two-tier board of 
directors, for purposes of this Item 401(e), the term board of directors 
means the supervisory or non-management board. Also, in the case of a 
foreign private issuer, the term generally accepted accounting 
principles in paragraph (e)(2)(i) of this Item means the body of 
generally accepted accounting principles used by that issuer in its 
primary financial statements filed with the Commission.
    4. A small business issuer that is an Asset-Backed Issuer (as 
defined in Sec. 240.13a-14(g) and Sec. 240.15d-14(g) of this chapter) is 
not required to disclose the information required by this Item 401(e).
    5. Following the effective date of the first registration statement 
filed under the Securities Act (15 U.S.C. 77a et seq.) or Securities 
Exchange Act (15 U.S.C. 78a et seq.) by a small business issuer, the 
small business issuer or successor issuer need not make the disclosures 
required by this Item in its first annual report filed pursuant to 
Section 13(a) or 15(d) (15 U.S.C. 78m(a) or 78o(d)) of the Exchange Act 
after effectiveness.

[57 FR 36449, Aug. 13, 1992, as amended at 68 FR 5125, Jan. 31, 2003; 68 
FR 15353, Mar. 31, 2003]



Sec. 228.402  (Item 402) Executive compensation.

    (a) General--(1) All compensation covered. This item requires clear, 
concise and understandable disclosure of all plan and non-plan 
compensation awarded to, earned by, or paid to the named executive 
officers designated under paragraph (a)(2) of this item, and directors 
covered by paragraph (f) of this item by any person for all services 
rendered in all capacities to the registrant and its subsidiaries, 
unless otherwise specified in this item. Except as provided by paragraph 
(a)(4) of this item, all such compensation shall be reported pursuant to 
this item even if also called for by another requirement, including 
transactions between the registrant and a third party where the primary 
purpose of the transaction is to furnish compensation to any such named 
executive officer or director. No item reported as compensation for one 
fiscal year need be reported as compensation for a subsequent fiscal 
year.
    (2) Persons covered. Disclosure shall be provided pursuant to this 
item for each of the following (the ``named executive officers''):
    (i) All individuals serving as the registrant's chief executive 
officer or acting in a similar capacity during the last completed fiscal 
year (``CEO''), regardless of compensation level;
    (ii) The registrant's four most highly compensated executive 
officers other than the CEO who were serving as executive officers at 
the end of the last completed fiscal year; and
    (iii) Up to two additional individuals for whom disclosure would 
have been provided pursuant to paragraph (a)(2)(ii) of this item but for 
the fact that the individual was not serving as an executive officer of 
the registrant at the end of the last completed fiscal year.

Instructions to Item 402(a)(2): 1. Determination of Most Highly 
Compensated Executive Officers. The determination as to which executive 
officers are most highly compensated shall be

[[Page 350]]

made by reference to total annual salary and bonus for the last 
completed fiscal year (as required to be disclosed pursuant to paragraph 
(b)(2)(iii)(A) and (B) of this item), but including the dollar value of 
salary or bonus amounts forgone pursuant to Instruction 3 to paragraph 
(b)(2)(iii)(A) and (B) of this item, provided, however, that no 
disclosure need be provided for any executive officer, other than the 
CEO, whose total annual salary and bonus, as so determined, does not 
exceed $100,000.
    2. Inclusion of Executive Officer of Subsidiary. It may be 
appropriate in certain circumstances for a registrant to include an 
executive officer of a subsidiary in the disclosure required by this 
item. See Rule 3b-7 under the Exchange Act [17 CFR 240.3b-7].
    3. Exclusion of Executive Officer due to Unusual or Overseas 
Compensation. It may be appropriate in limited circumstances for a 
registrant not to include in the disclosure required by this item an 
individual, other than its CEO, who is one of the registrant's most 
highly compensated executive officers. Among the factors that should be 
considered in determining not to name an individual are: (a) the 
distribution or accrual of an unusually large amount of cash 
compensation (such as a bonus or commission) that is not part of a 
recurring arrangement and is unlikely to continue; and (b) the payment 
of amounts of cash compensation relating to overseas assignments that 
may be attributed predominantly to such assignments.

    (3) Information for full fiscal year. If the CEO served in that 
capacity during any part of a fiscal year with respect to which 
information is required, information should be provided as to all of his 
or her compensation for the full fiscal year. If a named executive 
officer (other than the CEO) served as an executive officer of the 
registrant (whether or not in the same position) during any part of a 
fiscal year with respect to which information is required, information 
shall be provided as to all compensation of that individual for the full 
fiscal year.
    (4) Transactions with third parties reported under item 404. This 
item includes transactions between the registrant and a third party 
where the primary purpose of the transaction is to furnish compensation 
to a named executive officer. No information need be given in response 
to any paragraph of this item as to any such third-party transaction if 
the transaction has been reported in response to Item 404 of Regulation 
S-B (Sec. 228.404).
    (5) Omission of table or column. A table or column may be omitted, 
if there has been no compensation awarded to, earned by or paid to any 
of the named executives required to be reported in that table or column 
in any fiscal year covered by that table.
    (6) Definitions. For purposes of this item:
    (i) The term stock appreciation rights (SARs) refers to SARs payable 
in cash or stock, including SARs payable in cash or stock at the 
election of the registrant or a named executive officer.
    (ii) The term plan includes, but is not limited to, the following: 
any plan, contract, authorization or arrangement, whether or not set 
forth in any formal documents, pursuant to which the following may be 
received: cash, stock, restricted stock or restricted stock units, 
phantom stock, stock options, SARs, stock options in tandem with SARs, 
warrants, convertible securities, performance units and performance 
shares, and similar instruments. A plan may be applicable to one person. 
Registrants may omit information regarding group life, health, 
hospitalization, medical reimbursement or relocation plans that do not 
discriminate in scope, terms or operation, in favor of executive 
officers or directors of the registrant and that are available generally 
to all salaried employees.
    (iii) The term long-term incentive plan means any plan providing 
compensation intended to serve as incentive for performance to occur 
over a period longer than one fiscal year, whether such performance is 
measured by reference to financial performance of the registrant or an 
affiliate, the registrant's stock price, or any other measure, but 
excluding restricted stock, stock option and SAR plans.
    (7) Location of specified information. The information required by 
paragraph (h) of this item need not be provided in any filings other 
than a registrant proxy or information statement relating to an annual 
meeting of security holders at which directors are to be elected (or 
special meeting or written consents in lieu of such meeting). Such 
information will not be deemed to be incorporated by reference into any 
filing under the Securities Act or the Exchange Act, except to the 
extent that

[[Page 351]]

the registrant specifically incorporates it by reference.
    (b) Summary compensation table--(1) General. The information 
specified in paragraph (b)(2) of this item, concerning the compensation 
of the named executive officers for each of the registrant's last three 
completed fiscal years, shall be provided in a Summary Compensation 
Table, in the tabular format specified below.

[[Page 352]]



                                                               Summary Compensation Table
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                       Annual compensation                                   Long term compensation
                                          --------------------------------------------------------------------------------------------------------------
                                                                                                    Awards                           Payouts
                                                                                      ------------------------------------------------------------------
   Name and principal position      Year                               Other annual                       Securities
                                            Salary ($)   Bonus ($)   compensation ($)    Restricted       underlying     LTIP payouts       All other
                                                                                       stock award(s)    options/SARs         ($)       compensation ($)
                                                                                             ($)         ()
--------------------------------------------------------------------------------------------------------------------------------------------------------
(a)                                   (b)  (c)          (d)          (e)               (f)             (g)              (h)             (i)
--------------------------------------------------------------------------------------------------------------------------------------------------------
 
CEO.............................       --  ...........  ...........  ................  ..............  ...............  ..............  ................
                                       --  ...........  ...........  ................  ..............  ...............  ..............  ................
                                       --  ...........  ...........  ................  ..............  ...............  ..............  ................
A...............................       --  ...........  ...........  ................  ..............  ...............  ..............  ................
                                       --  ...........  ...........  ................  ..............  ...............  ..............  ................
                                       --  ...........  ...........  ................  ..............  ...............  ..............  ................
B...............................       --  ...........  ...........  ................  ..............  ...............  ..............  ................
                                       --  ...........  ...........  ................  ..............  ...............  ..............  ................
                                       --  ...........  ...........  ................  ..............  ...............  ..............  ................
C...............................       --  ...........  ...........  ................  ..............  ...............  ..............  ................
                                       --  ...........  ...........  ................  ..............  ...............  ..............  ................
                                       --  ...........  ...........  ................  ..............  ...............  ..............  ................
D...............................       --  ...........  ...........  ................  ..............  ...............  ..............  ................
                                       --  ...........  ...........  ................  ..............  ...............  ..............  ................
                                       --  ...........  ...........  ................  ..............  ...............  ..............  ................


[[Page 353]]

    (2) The Table shall include: (i) The name and principal position of 
the executive officer (column (a));
    (ii) Fiscal year covered (column (b));
    (iii) Annual compensation (columns (c), (d) and (e)), including:
    (A) The dollar value of base salary (cash and non-cash) earned by 
the named executive officer during the fiscal year covered (column (c));
    (B) The dollar value of bonus (cash and non-cash) earned by the 
named executive officer during the fiscal year covered (column (d)); and

Instructions to Item 402(b)(2)(iii) (A) and (B): 1. Amounts deferred at 
the election of a named executive officer, whether pursuant to a plan 
established under section 401(k) of the Internal Revenue Code [26 U.S.C. 
401(k)], or otherwise, shall be included in the salary column (column 
(c)) or bonus column (column (d)), as appropriate, for the fiscal year 
in which earned. If the amount of salary or bonus earned in a given 
fiscal year is not calculable through the latest practicable date, that 
fact must be disclosed in a footnote and such amount must be disclosed 
in the subsequent fiscal year in the appropriate column for the fiscal 
year in which earned.
    2. For stock or any other form of non-cash compensation, disclose 
the fair market value at the time the compensation is awarded, earned or 
paid.
    3. Registrants need not include in the salary column (column (c)) or 
bonus column (column (d)) any amount of salary or bonus forgone at the 
election of a named executive officer pursuant to a registrant program 
under which stock, stock-based or other forms of non-cash compensation 
may be received by a named executive in lieu of a portion of annual 
compensation earned in a covered fiscal year. However, the receipt of 
any such form of non-cash compensation in lieu of salary or bonus earned 
for a covered fiscal year must be disclosed in the appropriate column of 
the Table corresponding to that fiscal year (i.e., restricted stock 
awards (column (f)); options or SARs (column (g)); all other 
compensation (column (i)), or, if made pursuant to a long-term incentive 
plan and therefore not reportable at grant in the Summary Compensation 
Table, a footnote must be added to the salary or bonus column so 
disclosing and referring to the Long-Term Incentive Plan Table (required 
by paragraph (e) of this item) where the award is reported.

    (C) The dollar value of other annual compensation not properly 
categorized as salary or bonus, as follows (column (e)):
    (1) Perquisites and other personal benefits, securities or property, 
unless the aggregate amount of such compensation is the lesser of either 
$50,000 or 10% of the total of annual salary and bonus reported for the 
named executive officer in columns (c) and (d);
    (2) Above-market or preferential earnings on restricted stock, 
options, SARs or deferred compensation paid during the fiscal year or 
payable during that period but deferred at the election of the named 
executive officer;
    (3) Earnings on long-term incentive plan compensation paid during 
the fiscal year or payable during that period but deferred at the 
election of the named executive officer;
    (4) Amounts reimbursed during the fiscal year for the payment of 
taxes; and
    (5) The dollar value of the difference between the price paid by a 
named executive officer for any security of the registrant or its 
subsidiaries purchased from the registrant or its subsidiaries (through 
deferral of salary or bonus, or otherwise), and the fair market value of 
such security at the date of purchase, unless that discount is available 
generally, either to all security holders or to all salaried employees 
of the registrant.

Instructions to Item 402(b)(2)(iii)(C): 1. Each perquisite or other 
personal benefit exceeding 25% of the total perquisites and other 
personal benefits reported for a named executive officer must be 
identified by type and amount in a footnote or accompanying narrative 
discussion to column (e).
    2. Perquisites and other personal benefits shall be valued on the 
basis of the aggregate incremental cost to the registrant and its 
subsidiaries.
    3. Interest on deferred or long-term compensation is above-market 
only if the rate of interest exceeds 120% of the applicable federal 
long-term rate, with compounding (as prescribed under section 1274(d) of 
the Internal Revenue Code, [26 U.S.C. 1274(d)]) at the rate that 
corresponds most closely to the rate under the registrant's plan at the 
time the interest rate or formula is set. In the event of a 
discretionary reset of the interest rate, the requisite calculation must 
be made on the basis of the interest rate at the time of such reset, 
rather than when originally established. Only the above-market portion 
of the interest must be included. If the applicable interest rates vary 
depending upon conditions such as a minimum period of continued

[[Page 354]]

service, the reported amount should be calculated assuming satisfaction 
of all conditions to receiving interest at the highest rate.
    4. Dividends (and dividend equivalents) on restricted stock, 
options, SARs or deferred compensation denominated in stock (``deferred 
stock'') are preferential only if earned at a rate higher than dividends 
on the registrant's common stock. Only the preferential portion of the 
dividends or equivalents must be included.

    (iv) Long-term compensation (columns (f), (g) and (h)), including:
    (A) The dollar value (net of any consideration paid by the named 
executive officer) of any award of restricted stock, including share 
units (calculated by multiplying the closing market price of the 
registrant's unrestricted stock on the date of grant by the number of 
shares awarded) (column (f));
    (B) The sum of the number of securities underlying stock options 
granted (including options that subsequently have been transferred), 
with or without tandem SARs, and the number of freestanding SARs (column 
(g)); and
    (C) The dollar value of all payouts pursuant to long-term incentive 
plans (``LTIPs'') as defined in paragraph (a)(6)(iii) of this item 
(column (h)).

Instructions to Item 402(b)(2)(iv): 1. Awards of restricted stock that 
are subject to performance-based conditions to vesting, in addition to 
lapse of time and/or continued service with the registrant or a 
subsidiary, may be reported as LTIP awards pursuant to paragraph (e) of 
this item instead of in column (f). If this approach is selected, once 
the restricted stock vests, it must be reported as an LTIP payout in 
column (h).
    2. The registrant shall, in a footnote to the Summary Compensation 
Table (appended to column (f), if included), disclose:
    a. The number and value of the aggregate restricted stock holdings 
at the end of the last completed fiscal year. The value shall be 
calculated in the manner specified in paragraph (b)(2)(iv)(A) of this 
item using the value of the registrant's shares at the end of the last 
completed fiscal year;
    b. For any restricted stock award reported in the Summary 
Compensation Table that will vest, in whole or in part, in under three 
years from the date of grant, the total number of shares awarded and the 
vesting schedule; and
    c. Whether dividends will be paid on the restricted stock reported 
in column (f).
    3. If at any time during the last completed fiscal year, the 
registrant has adjusted or amended the exercise price of stock options 
or freestanding SARs previously awarded to a named executive officer, 
whether through amendment, cancellation or replacement grants, or any 
other means (``repriced''), the registrant shall include the number of 
options or freestanding SARs so repriced as Stock Options/SARs granted 
and required to be reported in column (g).
    4. If any specified performance target, goal or condition to payout 
was waived with respect to any amount included in LTIP payouts reported 
in column (h), the registrant shall so state in a footnote to column 
(h).

    (v) All other compensation for the covered fiscal year that the 
registrant could not properly report in any other column of the Summary 
Compensation Table (column (i)). Any compensation reported in this 
column for the last completed fiscal year shall be identified and 
quantified in a footnote. Such compensation shall include, but not be 
limited to:
    (A) The amount paid, payable or accrued to any named executive 
officer pursuant to a plan or arrangement in connection with:
    (1) The resignation, retirement or any other termination of such 
executive officer's employment with the registrant and its subsidiaries; 
or
    (2) A change in control of the registrant or a change in the 
executive officer's responsibilities following such a change in control.
    (B) The dollar value of above-market or preferential amounts earned 
on restricted stock, options, SARs or deferred compensation during the 
fiscal year, or calculated with respect to that period, except that if 
such amounts are paid during the period, or payable during the period 
but deferred at the election of a named executive officer, this 
information shall be reported as Other Annual Compensation in column 
(e). See Instructions 3 and 4 to paragraph 402(b) (2) (iii) (C) of this 
item;
    (C) The dollar value of amounts earned on long-term incentive plan 
compensation during the fiscal year, or calculated with respect to that 
period, except that if such amounts are paid during that period, or 
payable during that period at the election of the named executive 
officer, this information shall be reported as Other Annual Compensation 
in column (e);

[[Page 355]]

    (D) Annual registrant contributions or other allocations to vested 
and unvested defined contribution plans; and
    (E) The dollar value of any insurance premiums paid by, or on behalf 
of, the registrant during the covered fiscal year with respect to term 
life insurance for the benefit of a named executive officer, and, if 
there is any arrangement or understanding, whether formal or informal, 
that such executive officer has or will receive or be allocated an 
interest in any cash surrender value under the insurance policy, either:
    (1) The full dollar value of the remainder of the premiums paid by, 
or on behalf of, the registrant; or
    (2) If the premiums will be refunded to the registrant on 
termination of the policy, the dollar value of the benefit to the 
executive officer of the remainder of the premium paid by, or on behalf 
of, the registrant during the fiscal year. The benefit shall be 
determined for the period, projected on an actuarial basis, between 
payment of the premium and the refund.

Instructions to Item 402(b)(2)(v): 1. LTIP awards and amounts received 
on exercise of options and SARs need not be reported as All Other 
Compensation in column (i).
    2. Information relating to defined benefit and actuarial plans need 
not be reported.
    3. Where alternative methods of reporting are available under 
paragraph (b) (2) (v) (E) of this item, the same method should be used 
for each of the named executive officers. If the registrant chooses to 
change methods from one year to the next, that fact, and the reason 
therefor, should be disclosed in a footnote to column (i).

Instruction to Item 402(b): Information with respect to fiscal years 
prior to the last completed fiscal year will not be required if the 
registrant was not a reporting company pursuant to Section 13(a) or 
15(d) of the Exchange Act at any time during that year, except that the 
registrant will be required to provide information for any such year if 
that information previously was required to be provided in response to a 
Commission filing requirement.

    (c) Option/SAR grants table. (1) The information specified in 
paragraph (c)(2) of this item, concerning individual grants of stock 
options (whether or not in tandem with SARs) and freestanding SARs 
(including options and SARs that subsequently have been transferred) 
made during the last completed fiscal year to each of the named 
executive officers shall be provided in the tabular format specified as 
follows:

                                      Option/SAR Grants in Last Fiscal Year
                                               [Individual Grants]
----------------------------------------------------------------------------------------------------------------
                    Number of securities      Percent of total
                     underlying options/    options/SARs granted   Exercise or base price
       Name         SARs granted ()                    year
----------------------------------------------------------------------------------------------------------------
(a)                (b)                     (c)                     (d)                     (e)
----------------------------------------------------------------------------------------------------------------
 
CEO..............  ......................  ......................  ......................  .....................
A................  ......................  ......................  ......................  .....................
B................  ......................  ......................  ......................  .....................
C................  ......................  ......................  ......................  .....................
D................  ......................  ......................  ......................  .....................

    (2) The Table shall include, with respect to each grant:
    (i) The name of the executive officer (column (a));
    (ii) number of securities underlying option/SARs granted (column 
(b)).
    (iii) The percent the grant represents of total options and SARs 
granted to employees during the fiscal year (column (c));
    (iv) The per-share exercise or base price of the options or SARs 
granted (column (d)). If such exercise or base price is less than the 
market price of the underlying security on the date of grant, a 
separate, adjoining column shall be added showing market price on the 
date of grant; and
    (v) The expiration date of the options or SARs (column (e)).

Instructions to Item 402(c): 1. If more than one grant of options and/or 
freestanding SARs was made to a named executive officer during the last 
completed fiscal year, a separate

[[Page 356]]

line should be used to provide disclosure of each such grant. However, 
multiple grants during a single fiscal year may be aggregated where each 
grant was made at the same exercise and/or base price and has the same 
expiration date, and the same performance vesting thresholds, if any. A 
single grant consisting of options and/or freestanding SARs shall be 
reported as separate grants with respect to each tranche with a 
different exercise and/or base price, performance vesting threshold, or 
expiration date.
    2. Options or freestanding SARs granted in connection with an option 
repricing transaction shall be reported in this table. See Instruction 3 
to paragraph (b)(2)(iv) of this item.
    3. Any material term of the grant, including but not limited to the 
date of exercisability, the number of SARs, performance units or other 
instruments granted in tandem with options, a performance-based 
condition to exercisability, a reload feature, or a tax-reimbursement 
feature, shall be footnoted.
    4. If the exercise or base price is adjustable over the term of any 
option or freestanding SAR in accordance with any prescribed standard or 
formula, including but not limited to an index or premium price 
provision, describe the following, either by footnote to column (c) or 
in narrative accompanying the Table:
    (a) The standard or formula; and
    (b) Any constant assumption made by the registrant regarding any 
adjustment to the exercise price in calculating the potential option or 
SAR value.
    5. If any provision of a grant (other than an antidilution 
provision) could cause the exercise price to be lowered, registrants 
must clearly and fully disclose these provisions and their potential 
consequences either by a footnote or accompanying textual narrative.
    6. In determining the grant-date market or base price of the 
security underlying options or freestanding SARs, the registrant may use 
either the closing market price per share of the security, or any other 
formula prescribed for the security.

    (d) Aggregated option/SAR exercises and fiscal year-end option/SAR 
Value Table. (1) The information specified in paragraph (d)(2) of this 
item, concerning each exercise of stock options (or tandem SARs) and 
freestanding SARs during the last completed fiscal year by each of the 
named executive officers and the fiscal year-end value of unexercised 
options and SARs, shall be provided on an aggregated basis in the 
tabular format specified below:

                Aggregated Option/SAR Exercises in Last Fiscal Year and FY-End Option/SAR Values
----------------------------------------------------------------------------------------------------------------
                                                                    Number of securities
                                                                   underlying unexercised   Value of unexercised
                     Shares acquired on                            options/SARs at FY-end  in-the-money options/
       Name         exercise ()     Value realized ($)          ()         SARs at FY-end ($)
                                                                        Exercisable/            Exercisable/
                                                                        Unexercisable          Unexercisable
----------------------------------------------------------------------------------------------------------------
(a)                (b)                     (c)                     (d)                     (e)
----------------------------------------------------------------------------------------------------------------
 
CEO..............  ......................  ......................  ......................  .....................
A................  ......................  ......................  ......................  .....................
B................  ......................  ......................  ......................  .....................
C................  ......................  ......................  ......................  .....................
D................  ......................  ......................  ......................  .....................

    (2) The table shall include:
    (i) The name of the executive officer (column (a));
    (ii) The number of shares received upon exercise, or, if no shares 
were received, the number of securities with respect to which the 
options or SARs were exercised (column (b));
    (iii) The aggregate dollar value realized upon exercise (column 
(c));
    (iv) The total number of securities underlying unexercised options 
and SARs held at the end of the last completed fiscal year, separately 
identifying the exercisable and unexercisable options and SARs (column 
(d)); and
    (v) The aggregate dollar value of in-the-money, unexercised options 
and SARs held at the end of the fiscal year, separately identifying the 
exercisable and unexercisable options and SARs (column (e)).

Instructions to Item 402(d)(2): 1. Options or freestanding SARs are in-
the-money if the fair market value of the underlying securities exceeds 
the exercise or base price of the option or SAR. The dollar values in 
columns (c) and (e) are calculated by determining the difference between 
the fair market value of the securities underlying the options or SARs 
and the exercise or base price of the options or SARs at exercise or 
fiscal year-end, respectively.

[[Page 357]]

    2. In calculating the dollar value realized upon exercise (column 
(c)), the value of any related payment or other consideration provided 
(or to be provided) by the registrant to or on behalf of a named 
executive officer, whether in payment of the exercise price or related 
taxes, shall not be included. Payments by the registrant in 
reimbursement of tax obligations incurred by a named executive officer 
are required to be disclosed in accordance with paragraph 
(b)(2)(iii)(C)(4) of this item.

    (e) Long-Term Incentive Plan (``LTIP'') awards table. (1) The 
information specified in paragraph (e)(2) of this item, regarding each 
award made to a named executive officer in the last completed fiscal 
year under any LTIP, shall be provided in the tabular format specified 
below:

                              Long-Term Incentive Plans--Awards in Last Fiscal Year
----------------------------------------------------------------------------------------------------------------
                                                           Estimated Future Payouts under Non-Stock Price-Based
                     (b) Number of     (c) Performance                            Plans
    (a) Name       shares, units or    or other period  --------------------------------------------------------
                     other rights      until maturation   (d) Threshold ($   (e) Target ($ or  (f) Maximum ($ or
                      ()         or payout        or )        )         )
----------------------------------------------------------------------------------------------------------------
CEO
A
B
C
D
----------------------------------------------------------------------------------------------------------------

    (2) The Table shall include: (i) The name of the executive officer 
(column (a));
    (ii) The number of shares, units or other rights awarded under any 
LTIP, and, if applicable, the number of shares underlying any such unit 
or right (column (b));
    (iii) The performance or other time period until payout or 
maturation of the award (column (c)); and
    (iv) For plans not based on stock price, the dollar value of the 
estimated payout, the number of shares to be awarded as the payout or a 
range of estimated payouts denominated in dollars or number of shares 
under the award (threshold, target and maximum amount) (columns (d) 
through (f)).

Instructions to Item 402(e): 1. For purposes of this paragraph, the term 
``long-term incentive plan'' or ``LTIP'' shall be defined in accordance 
with paragraph (a)(6)(iii) of this item.
    2. Describe in a footnote or in narrative text accompanying this 
table the material terms of any award, including a general description 
of the formula or criteria to be applied in determining the amounts 
payable. Registrants are not required to disclose any factor, criterion 
or performance-related or other condition to payout or maturation of a 
particular award that involves confidential commercial or business 
information, disclosure of which would adversely affect the registrant's 
competitive position.
    3. Separate disclosure shall be provided in the Table for each award 
made to a named executive officer, accompanied by the information 
specified in Instruction 2 to this paragraph. If awards are made to a 
named executive officer during the fiscal year under more than one plan, 
identify the particular plan under which each such award was made.
    4. For column (d), ``threshold'' refers to the minimum amount 
payable for a certain level of performance under the plan. For column 
(e), ``target'' refers to the amount payable if the specified 
performance target(s) are reached. For column (f), ``maximum'' refers to 
the maximum payout possible under the plan.
    5. In column (e), registrants must provide a representative amount 
based on the previous fiscal year's performance if the target award is 
not determinable.
    6. A tandem grant of two instruments, only one of which is pursuant 
to a LTIP, need be reported only in the table applicable to the other 
instrument. For example, an option granted in tandem with a performance 
share would be reported only as an option grant, with the tandem feature 
noted.

    (f) Compensation of directors--(1) Standard arrangements. Describe 
any standard arrangements, stating amounts, pursuant to which directors 
of the registrant are compensated for any services provided as a 
director, including any additional amounts payable for committee 
participation or special assignments.
    (2) Other arrangements. Describe any other arrangements pursuant to 
which any director of the registrant was compensated during the 
registrant's last completed fiscal year for any service

[[Page 358]]

provided as a director, stating the amount paid and the name of the 
director.

Instruction to Item 402(f)(2): The information required by paragraph 
(f)(2) of this item shall include any arrangement, including consulting 
contracts, entered into in consideration of the director's service on 
the board. The material terms of any such arrangement shall be included.

    (g) Employment contracts and termination of employment and change-
in-control arrangements. Describe the terms and conditions of each of 
the following contracts or arrangements:
    (1) Any employment contract between the registrant and a named 
executive officer; and
    (2) Any compensatory plan or arrangement, including payments to be 
received from the registrant, with respect to a named executive officer, 
if such plan or arrangement results or will result from the resignation, 
retirement or any other termination of such executive officer's 
employment with the registrant and its subsidiaries or from a change-in-
control of the registrant or a change in the named executive officer's 
responsibilities following a change-in-control and the amount involved, 
including all periodic payments or installments, exceeds $100,000.
    (h) Report on repricing of options/SARs. (1) If at any time during 
the last completed fiscal year, the registrant, while a reporting 
company pursuant to section 13(a) or 15(d) of the Exchange Act [15 
U.S.C. 78m(a), 78o(d)], has adjusted or amended the exercise price of 
stock options or SARs previously awarded to any of the named executive 
officers, whether through amendment, cancellation or replacement grants, 
or any other means (``repriced''), the registrant shall provide the 
information specified in paragraph (h)(2) of this item.
    (2) The compensation committee (or other board committee performing 
equivalent functions or, in the absence of any such committee, the 
entire board of directors) shall explain in reasonable detail any such 
repricing of options and or SARs held by a named executive officer in 
the last completed fiscal year, as well as the basis for each such 
repricing.

Instructions to Item 402(h): 1. A replacement grant is any grant of 
options or SARs reasonably related to any prior or potential option or 
SAR cancellation, whether by an exchange of existing options or SARs for 
options or SARs with new terms; the grant of new options or SARs in 
tandem with previously granted options or SARs that will operate to 
cancel the previously granted options or SARs upon exercise; repricing 
of previously granted options or SARs; or otherwise. If a corresponding 
original grant was canceled in a prior year, information about such 
grant nevertheless must be disclosed pursuant to this paragraph.
    2. If the replacement grant is not made at the current market price, 
describe the terms of the grant in a footnote or accompanying textual 
narrative.
    3. This paragraph shall not apply to any repricing occurring through 
the operation of:
    a. A plan formula or mechanism that results in the periodic 
adjustment of the option or SAR exercise or base price;
    b. A plan antidilution provision; or
    c. A recapitalization or similar transaction equally affecting all 
holders of the class of securities underlying the options or SARs.

[57 FR 48145, Oct. 21, 1992, as amended at 58 FR 63012, Nov. 29, 1993; 
64 FR 11115, Mar. 8, 1999]



Sec. 228.403  (Item 403) Security Ownership of Certain Beneficial Owners and Management.

    (a) Security ownership of certain beneficial owners. Complete the 
table below for any person (including any ``group'') who is known to the 
small business issuer to be the beneficial owner of more than five 
percent of any class of the small business issuer's voting securities.

----------------------------------------------------------------------------------------------------------------
                                         Name and address of      Amount and nature of
            Title of class                 beneficial owner         beneficial owner         Percent of class
(1)                                    (2)....................  (3)....................  (4)
 
----------------------------------------------------------------------------------------------------------------

    (b) Security ownership of management. Furnish the following 
information, as of the most recent practicable date, in substantially 
the tabular form indicated, as to each class of equity securities of the 
registrant or any of its parents or subsidiaries other than directors' 
qualifying shares, beneficially owned by all directors and nominees, 
naming them, each of the named executive officers as defined in Item 
402(a)(2) (Sec. 228.402(a)(2)), and directors and executive officers of 
the registrant

[[Page 359]]

as a group, without naming them. Show in column (3) the total number of 
shares beneficially owned and in column (4) the percent of class so 
owned. Of the number of shares shown in column (3), indicate, by 
footnote or otherwise, the amount of shares with respect to which such 
persons have the right to acquire beneficial ownership as specified in 
Sec. 240.13d--3(d)(1) of this chapter.

----------------------------------------------------------------------------------------------------------------
                                         Name and address of      Amount and nature of
            Title of class                 beneficial owner         beneficial owner         Percent of class
(1)                                    (2)....................  (3)....................  (4)
 
----------------------------------------------------------------------------------------------------------------

    (c) Changes in control. Describe any arrangements which may result 
in a change in control of the small business issuer.

Instructions to Item 403 1. Of the number of shares shown in column (3) 
of paragraphs (a) and (b) of this Item, state in a footnote the amount 
which the listed beneficial owner has the right to acquire within sixty 
days, from options, warrants, rights, conversion privilege or similar 
obligations.
    2. Where persons hold more than 5% of a class under a voting trust 
or similar agreement, provide the following:
    (a) the title of such securities;
    (b) the amount that they hold under the trust or agreement (if not 
clear from the table);
    (c) the duration of the agreement;
    (d) the names and addresses of the voting trustees; and
    (e) a brief outline of the voting rights and other powers of the 
voting trustees under the trust or agreement.
    3. Calculate the percentages on the basis of the amount of 
outstanding securities plus, for each person or group, any securities 
that person or group has the right to acquire within 60 days pursuant to 
options, warrants, conversion privileges or other rights.
    4. In this Item, a beneficial owner of a security means:
    (a) 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; 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 or effect of divesting such 
person of beneficial ownership of a security or preventing the vesting 
of such beneficial ownership.
    5. All securities of the same class beneficially owned by a person, 
regardless of the form that such beneficial ownership takes, shall be 
totaled in calculating the number of shares beneficially owned by such 
person.
    6. The small business issuer is responsible for knowing the contents 
of any statements filed with the Commission under section 13(d) or 13(g) 
of the Exchange Act concerning the beneficial ownership of securities 
and may rely upon the information in such statements unless it knows or 
has reason to believe that the information is not complete or accurate.
    7. The term ``group'' means two or more persons acting as a 
partnership, syndicate, or other group for the purpose of acquiring, 
holding or disposing of securities of an issuer.
    8. Where the small business issuer lists more than one beneficial 
owner for the same securities, adequate disclosure should be included to 
avoid confusion.

[57 FR 36449, Aug. 13, 1992, as amended at 57 FR 48150, Oct. 21, 1992]



Sec. 228.404  (Item 404) Certain Relationships and Related Transactions.

    (a) Describe any transaction during the last two years, or proposed 
transactions, to which the small business issuer was or is to be a 
party, in which any of the following persons had or is to have a direct 
or indirect material interest. Give the name of the person, the 
relationship to the issuer, nature of the person's interest in the 
transaction and, the amount of such interest:
    (1) Any director or executive officer of the small business issuer;
    (2) Any nominee for election as a director;
    (3) Any security holder named in response to Item 403 
(Sec. 228.403); and
    (4) Any member of the immediate family (including spouse, parents, 
children, siblings, and in-laws) of any of the persons in paragraphs (a) 
(1), (2) or (3) of this Item.
    (b) No information need be included for any transaction where:
    (1) Competitive bids determine the rates or charges involved in the 
transaction;
    (2) The transaction involves services at rates or charges fixed by 
law or governmental authority;
    (3) The transaction involves services as a bank depositary of funds, 
transfer

[[Page 360]]

agent, registrar, trustee under a trust indenture, or similar services;
    (4) The amount involved in the transaction or a series of similar 
transactions does not exceed $60,000; or
    (5) The interest of the person arises solely from the ownership of 
securities of the small business issuer and the person receives no extra 
or special benefit that was not shared equally (pro rata) by all holders 
of securities of the class.
    (c) List all parents of the small business issuer showing the basis 
of control and as to each parent, the percentage of voting securities 
owned or other basis of control by its immediate parent if any.
    (d) Transactions with promoters. Issuers organized within the past 
five years shall:
    (1) State the names of the promoters, the nature and amount of 
anything of value (including money, property, contracts, options or 
rights of any kind) received or to be received by each promoter, 
directly or indirectly, from the issuer and the nature and amount of any 
assets, services or other consideration therefore received or to be 
received by the registrant; and
    (2) As to any assets acquired or to be acquired from a promoter, 
state the amount at which the assets were acquired or are to be acquired 
and the principle followed or to be followed in determining such amount 
and identify the persons making the determination and their 
relationship, if any, with the registrant or any promoter. If the assets 
were acquired by the promoter within two years prior to their transfer 
to the issuer, also state the cost thereof to the promoter.

Instructions to Item 404: 1. A person does not have a material indirect 
interest in a transaction within the meaning of this Item where:
    (a) The interest arises only:
    (1) from such person's position as a director of another corporation 
or organization (other than a partnership) which is a party to the 
transaction and/or
    (2) from the total ownership (direct or indirect) by all specified 
persons of less than a 10% equity interest in another person (other than 
a partnership) which is a party to the transaction;
    (b) The interest arises only from such person's position as a 
limited partner in a partnership in which he and all other specified 
persons had an interest of less than 10 percent; or
    (c) The interest of such person arises solely from holding an equity 
interest (but not a general partnership interest) or a creditor interest 
in another person that is a party to the transaction and the transaction 
is not material to such other person.
    2. Include information for any material underwriting discounts and 
commissions upon the sale of securities by the small business issuer 
where any of the specified persons was or is to be a principal 
underwriter or is a controlling person or member of a firm that was or 
is to be a principle underwriter.
    3. As to any transaction involving the purchase or sale of assets by 
or to the small business issuer otherwise than in the ordinary course of 
business, state the cost of the assets to the purchase and if acquired 
by the seller within two years before the transaction, the cost thereof 
to the seller.



Sec. 228.405  (Item 405) Compliance With Section 16(a) of the Exchange Act.

    Every small business issuer that has a class of equity securities 
registered pursuant to Section 12 of the Exchange Act (15 U.S.C. 78l) 
shall:
    (a) Based solely upon a review of Forms 3 and 4 (17 CFR 249.103 and 
249.104 of this chapter) and amendments thereto furnished to the 
registrant under Rule 16a-3(e) (17 CFR 240.16a-3(e) of this chapter) 
during its most recent fiscal year and Forms 5 and amendments thereto 
(Sec. 249.105 of this chapter) furnished to the registrant with respect 
to its most recent fiscal year, and any written representation referred 
to in paragraph (b)(2)(i) of this Item:
    (1) Under the caption ``Section 16(a) Beneficial Ownership Reporting 
Compliance,'' identify each person who, at any time during the fiscal 
year, was a director, officer, beneficial owner of more than ten percent 
of any class of equity securities of the registrant registered pursuant 
to section 12 (``reporting person'') that failed to file on a timely 
basis, as disclosed in the above Forms, reports required by section 
16(a) of the Exchange Act during the most recent fiscal year or prior 
fiscal years.
    (2) For each such person, set forth the number of late reports, the 
number of transactions that were not reported on a timely basis, and any 
known failure to file a required Form. A known failure to file would 
include, but not be

[[Page 361]]

limited to, a failure to file a Form 3, which is required of all 
reporting persons, and a failure to file a Form 5 in the absence of the 
written representation referred to in paragraph (b)(2)(i) of this 
section, unless the registrant otherwise knows that no Form 5 is 
required.

    Note: The disclosure requirement is based on a review of the forms 
submitted to the registrant during and with respect to its most recent 
fiscal year, as specified above. Accordingly, a failure to file timely 
need only be disclosed once. For example, if in the most recently 
concluded fiscal year a reporting person filed a Form 4 disclosing a 
transaction that took place in the prior fiscal year, and should have 
been reported in that year, the registrant should disclose that late 
filing and transaction pursuant to this Item for the most recent fiscal 
year, but not in material filed with respect to subsequent years.

    (b) With respect to the disclosure required by paragraph (a) of this 
Item:
    (1) A form received by the registrant within three calendar days of 
the required filing date may be presumed to have been filed with the 
Commission by the required filing date.
    (2) If the registrant:
    (i) receives a written representation from the reporting person that 
no Form 5 is required; and
    (ii) maintains the representation for two years, making a copy 
available to the Commission or its staff upon request, the registrant 
need not identify such reporting person pursuant to paragraph (a) of 
this Item as having failed to file a Form 5 with respect to that fiscal 
year.

[57 FR 36449, Aug. 13, 1992, as amended at 61 FR 30391, June 14, 1996]



Sec. 228.406  (Item 406) Code of ethics.

    (a) Disclose whether the small business issuer has adopted a code of 
ethics that applies to the small business issuer's principal executive 
officer, principal financial officer, principal accounting officer or 
controller, or persons performing similar functions. If the small 
business issuer has not adopted such a code of ethics, explain why it 
has not done so.
    (b) For purposes of this Item 406, the term code of ethics means 
written standards that are reasonably designed to deter wrongdoing and 
to promote:
    (1) Honest and ethical conduct, including the ethical handling of 
actual or apparent conflicts of interest between personal and 
professional relationships;
    (2) Full, fair, accurate, timely, and understandable disclosure in 
reports and documents that a small business issuer files with, or 
submits to, the Commission and in other public communications made by 
the small business issuer;
    (3) Compliance with applicable governmental laws, rules and 
regulations;
    (4) The prompt internal reporting of violations of the code to an 
appropriate person or persons identified in the code; and
    (5) Accountability for adherence to the code.
    (c) The small business issuer must:
    (1) File with the Commission a copy of its code of ethics that 
applies to the small business issuer's principal executive officer, 
principal financial officer, principal accounting officer or controller, 
or persons performing similar functions, as an exhibit to its annual 
report;
    (2) Post the text of such code of ethics on its Internet website and 
disclose, in its annual report, its Internet address and the fact that 
it has posted such code of ethics on its Internet website; or
    (3) Undertake in its annual report filed with the Commission to 
provide to any person without charge, upon request, a copy of such code 
of ethics and explain the manner in which such request may be made.
    (d) If the small business issuer intends to satisfy the disclosure 
requirement under Item 10 of Form 8-K regarding an amendment to, or a 
waiver from, a provision of its code of ethics that applies to the small 
business issuer's principal executive officer, principal financial 
officer, principal accounting officer or controller, or persons 
performing similar functions and that relates to any element of the code 
of ethics definition enumerated in paragraph (b) of this Item by posting 
such information on its Internet website, disclose the small business

[[Page 362]]

issuer's Internet address and such intention.

    Instructions to Item 406. 1. A small business issuer may have 
separate codes of ethics for different types of officers. Furthermore, a 
code of ethics within the meaning of paragraph (b) of this Item may be a 
portion of a broader document that addresses additional topics or that 
applies to more persons than those specified in paragraph (a). In 
satisfying the requirements of paragraph (c), a small business issuer 
need only file, post or provide the portions of a broader document that 
constitutes a code of ethics as defined in paragraph (b) and that apply 
to the persons specified in paragraph (a).
    2. If a small business issuer elects to satisfy paragraph (c) of 
this Item by posting its code of ethics on its website pursuant to 
paragraph (c)(2), the code of ethics must remain accessible on its 
website for as long as the small business issuer remains subject to the 
requirements of this Item and chooses to comply with this Item by 
posting its code on its Web site pursuant to paragraph (c)(2).
    3. A small business issuer that is an Asset-Backed Issuer (as 
defined in Sec. 240.13a-14(g) and Sec. 240.15d-14(g) of this chapter) is 
not required to disclose the information required by this Item.

[68 FR 5127, Jan. 31, 2003]



Sec. 228.501  (Item 501) Front of registration statement and front cover of prospectus.

    The small business issuer must furnish the following information in 
plain English. See Sec. 230.421(d) of Regulation C of this chapter.
    (a) Limit the outside front cover page of the prospectus to one page 
and include the following information:
    (1) The registrant's name. A foreign registrant also must give the 
English translation of its name;
    (2) The title, amount, and description of securities offered. If the 
underwriter has any arrangement with the issuer, such as an over-
allotment option, under which the underwriter may purchase additional 
shares in connection with the offering, indicate that this arrangement 
exists and state the amount of additional shares that the underwriter 
may purchase under the arrangement;
    (3) If there are selling security holders, a statement to that 
effect;
    (4) Whether any national securities exchange or the Nasdaq Stock 
Market lists the securities offered, naming the particular market(s), 
and identifying the trading symbol(s) for those securities;
    (5) A cross-reference to the risk factors section, including the 
page number where it appears in the prospectus. Highlight this cross-
reference by prominent type or in another manner;
    (6) Any legend or statement required by the law of any state in 
which the securities are offered;
    (7) A legend that indicates that neither the Securities and Exchange 
Commission nor any state securities commission has approved or 
disapproved of the securities or passed on the adequacy or accuracy of 
the disclosures in the prospectus. Also make clear that any 
representation to the contrary is a criminal offense. You may use one of 
the following or other clear, plain language:

    Example A: Neither the Securities and Exchange Commission nor any 
state securities commission has approved or disapproved of these 
securities or passed upon the adequacy or accuracy of the prospectus. 
Any representation to the contrary is a criminal offense.
    Example B: Neither the Securities and Exchange Commission nor any 
state securities commission has approved or disapproved of these 
securities or determined if this prospectus is truthful or complete. Any 
representation to the contrary is a criminal offense.

    (8) If you are not a reporting company and the preliminary 
prospectus will be circulated, as applicable:
    (i) A bona fide estimate of the range of the maximum offering price 
and maximum number of shares or units offered; or
    (ii) A bona fide estimate of the principal amount of debt securities 
offered;
    (9)(i) Name(s) of the lead or managing underwriter(s) and an 
identification of the nature of the underwriting arrangements;
    (ii) If the offering is not made on a firm commitment basis, a brief 
description of the underwriting arrangements;
    (iii) If you offer the securities on a best efforts or best efforts 
minimum/maximum basis, the date the offering will end, any minimum 
purchase requirements, and whether or not there are any arrangements to 
place the funds in an escrow, trust, or similar account; and

[[Page 363]]

    (iv) If you offer the securities for cash, the price to the public 
for the securities, the underwriting discounts and commissions, and 
proceeds to the registrant or other persons. Show the information on 
both a per share or unit basis and for the total amount of the offering. 
If you make the offering on a minimum/maximum basis, show this 
information based on the total minimum and total maximum amount of the 
offering. You may present the information in a table, term sheet format, 
or other clear presentation. You may present the information in any 
format that fits the design of the cover page so long as the information 
can be easily read and is not misleading;
    (10) If the prospectus will be used before the effective date of the 
registration statement, a prominent statement that:
    (i) The information in the prospectus will be amended or completed;
    (ii) A registration statement relating to these securities has been 
filed with the Securities and Exchange Commission;
    (iii) The securities may not be sold until the registration 
statement becomes effective; and
    (iv) The prospectus is not an offer to sell the securities and it is 
not soliciting an offer to buy the securities in any state where offers 
or sales are not permitted. You may use the following or other clear, 
plain language:
    The information in this prospectus is not complete and may be 
changed. We may not sell these securities until the registration 
statement filed with the Securities and Exchange Commission is 
effective. This prospectus is not an offer to sell these securities and 
it is not soliciting an offer to buy these securities in any state where 
the offer or sale is not permitted.
    (11) If you use Sec. 230.430A of this chapter to omit pricing 
information and the prospectus is used before you determine the public 
offering price, the information in paragraph (a)(10) of this section; 
and
    (12) The date of the prospectus.
    (b) [Reserved]

[63 FR 6379, Feb. 6, 1998]



Sec. 228.502  (Item 502) Inside front and outside back cover pages of prospectus.

    The small business issuer must furnish the following information in 
plain English. See Sec. 230.421(d) of Regulation C of this chapter.
    (a) Table of contents. On either the inside front or outside back 
cover page of the prospectus, provide a reasonably detailed table of 
contents. It must show the page number of the various sections or 
subdivisions of the prospectus. Include a specific listing of the risk 
factors section required by Item 503 of this Regulation S-B (17 CFR 
228.503). You must include the table of contents immediately following 
the cover page in any prospectus you deliver electronically;
    (b) Dealer prospectus delivery obligation. If applicable to your 
offering, on the outside back cover page of the prospectus, advise 
dealers of their prospectus delivery obligation, including the 
expiration date specified by Section 4(3) of the Securities Act (15 
U.S.C. 77d(3)) and Sec. 230.174 of this chapter. You may use the 
following or other clear, plain language:

                  Dealer Prospectus Delivery Obligation

    Until (insert date), all dealers that effect transactions in these 
securities, whether or not participating in this offering, may be 
required to deliver a prospectus. This is in addition to the dealers' 
obligation to deliver a prospectus when acting as underwriters and with 
respect to their unsold allotments or subscriptions.

[63 FR 6380, Feb. 6, 1998]



Sec. 228.503  (Item 503) Summary information and risk factors.

    The small business issuer must furnish the following information in 
plain English. See Sec. 230.421(d) of Regulation C of this chapter.
    (a) Summary. Provide a summary of the information in the prospectus 
where the length or complexity of the prospectus makes a summary useful. 
The summary should be brief. The summary should not contain, and is not 
required to contain, all of the detailed information in the prospectus. 
If you provide summary business or financial information, even if you do 
not caption it as a summary, you still must provide that information in 
plain English.


[[Page 364]]


Instruction to paragraph 503(a): The summary should not merely repeat 
the text of the prospectus but should provide a brief overview of the 
key aspects of the offering. Carefully consider and identify those 
aspects of the offering that are the most significant and determine how 
best to highlight those points in clear, plain language.

    (b) Address and phone number. Include, either on the cover page or 
in the summary section of the prospectus, the complete mailing address 
and telephone number of your principal executive offices.
    (c) Risk factors. (1) Discuss in a section captioned ``Risk 
Factors'' any factors that make the offering speculative or risky. The 
factors may include, among other things, the following:
    (i) Your lack of an operating history;
    (ii) Your lack of recent profits from operations;
    (iii) Your poor financial position;
    (iv) Your business or proposed business; or
    (v) The lack of a market for your common equity securities.
    (2) The risk factor discussion must immediately follow the summary 
section. If you do not include a summary section, the risk factor 
discussion must immediately follow the cover page or the pricing 
information that immediately follows the cover page. Pricing information 
means price and price-related information that you may omit from the 
prospectus in an effective registration statement based on 
Sec. 230.430A(a) of this chapter.

[63 FR 6380, Feb. 6, 1998]



Sec. 228.504  (Item 504) Use of Proceeds.

    State how the net proceeds of the offering will be used, indicating 
the amount to be used for each purpose and the priority of each purpose, 
if all of the securities are not sold. If all or a substantial part of 
the proceeds are not allocated for a specific purpose, so state and 
discuss the principal reasons for the offering.

Instructions to Item 504: 1. If a material amount of proceeds will 
discharge debt, state the interest rate and maturity. If that debt was 
incurred within one year, describe the use of the proceeds of that debt 
other than short-term borrowings used for working capital.
    2. If any material amount of the proceeds is to be used to acquire 
assets or finance the acquisitions of other businesses, describe the 
assets or businesses and identify the persons from whom they will be 
bought. State the cost of the assets and, where such assets are to be 
acquired from affiliates of the small business issuer or their 
associates, give the names of the persons from whom they are to be 
acquired and set forth the principle followed in determining the cost to 
the small business issuer.



Sec. 228.505  (Item 505) Determination of Offering Price.

    (a) If there is no established public market for the common equity 
being registered or if there is a significant difference between the 
offering price and the market price of the stock, give the factors that 
were considered in determining the offering price.
    (b) If warrants, rights and convertible securities are being 
registered and there is no public market for the underlying securities, 
describe the factors considered in determining the exercise or 
conversion price.



Sec. 228.506  (Item 506) Dilution.

    (a) If the small business issuer is not a reporting company and is 
selling common equity at a price significantly more than the price paid 
by officers, directors, promoters and affiliated persons for common 
equity purchased by them during the past five years (or which they have 
rights to purchase), compare these prices.
    (b) If paragraph (a) of this Item applies and the issuer had losses 
in each of its last three fiscal years, or since its inception, 
whichever period is shorter, and there is a material dilution of the 
purchasers' equity interest, disclose the following:
    (1) The net tangible book value per share before and after the 
distribution;
    (2) The amount of the increase in such net tangible book value per 
share attributable to the cash payments made by purchasers of the shares 
being offered; and
    (3) The amount of the immediate dilution from the public offering 
price which will be absorbed by such purchasers.



Sec. 228.507  (Item 507) Selling Security Holders.

    If security holders of a small business issuer is offering 
securities, name each

[[Page 365]]

selling security holder, state any position, office, or other material 
relationship which the selling security holder has had within the past 
three years with the small business issuer or any of its predecessors or 
affiliates, and state the amount of securities of the class owned by 
such security holder before the offering, the amount to be offered for 
the security holder's account, the amount and (if one percent or more) 
the percentage of the class to be owned by such security holder after 
the offering is complete.

Instruction: Responses to this item may be combined with disclosure in 
response to Item 403.



Sec. 228.508  (Item 508) Plan of Distribution.

    (a) Underwriters and underwriting obligations. If the securities are 
to be offered through underwriters, name the principal underwriters, and 
state the respective amounts underwritten. Identify each such 
underwriter having a material relationship with the small business 
issuer and state the nature of the relationship. State the nature of the 
obligation of the underwriter(s) to take the securities, i.e., firm 
commitment, best efforts. The small business issuer must disclose the 
offering expenses specified in Item 511 of this Regulation S-B (17 CFR 
228.511). If there is an arrangement under which the underwriter may 
purchase additional shares in connection with the offering, such as an 
over-allotment option, describe that arrangement and disclose 
information on the total offering price, underwriting discounts and 
commissions, and total proceeds assuming the underwriter purchases all 
of the shares subject to that arrangement.
    (b) New underwriters. Describe the business experience of managing 
or principal underwriters that have been in business less than three 
years, state their principal business function and identify any material 
relationships between the promoters of the issuer and the 
underwriter(s). This information need not be given if:
    (1) The issuer is a reporting company; and
    (2) An offering has no material risks.
    (c) Other distributions. Outline briefly the plan of distribution of 
any securities to be registered that are to be offered otherwise than 
through underwriters.
    (d) Underwriter's representative on the board of directors. Describe 
any arrangement whereby the underwriter has the right to designate or 
nominate a member or members of the board of directors of the small 
business issuer. Identify any director so designated or nominated and 
indicate any relationship with the small business issuer.
    (e) Indemnification of underwriters. If the underwriting agreement 
provides for indemnification by the small business issuer of the 
underwriters or their controlling persons against any liability arising 
under the Securities Act, furnish a brief description of such 
indemnification provisions.
    (f) Dealers' compensation. State briefly the discounts and 
commissions to be allowed or paid to dealers, including all cash, 
securities, contracts or other considerations to be received by any 
dealer in connection with the sale of the securities.
    (g) Finders. Identify any finder and describe the nature of any 
material relationship between such finder and the small business issuer 
or associates or affiliates of the small business issuer.
    (h) Discretionary accounts. If the small business issuer is not a 
reporting company, identify any principal underwriter that intends to 
sell to any discretionary accounts and include an estimate of the amount 
of securities so intended to be sold. The response to this paragraph 
shall be contained in a pre-effective amendment which shall be 
circulated if the information is not available when the registration 
statement is filed.
    (i) Passive market making. If the underwriters or any selling group 
members intend to engage in passive market making transactions as 
permitted by Rule 103 of Regulation M (Sec. 242.103 of this chapter), 
indicate such intention and briefly describe passive market making.
    (j) Stabilization and other transactions. (1) Briefly describe any 
transaction that the underwriter intends to conduct during the offering 
that stabilizes, maintains, or otherwise affects the market price of the 
offered securities. Include information on stabilizing

[[Page 366]]

transactions, syndicate short covering transactions, penalty bids, or 
any other transaction that affects the offered security's price. 
Describe the nature of the transactions clearly and explain how the 
transactions affect the offered security's price. Identify the exchange 
or other market on which these transactions may occur. If true, disclose 
that the underwriter may discontinue these transactions at any time;
    (2) If the stabilizing began before the effective date of the 
registration statement, disclose the amount of securities bought, the 
prices at which they were bought, and the period within which they were 
bought. If you use Sec. 230.430A of this chapter, the final prospectus 
must contain information on the stabilizing transactions that took place 
before the public offering price was set; and
    (3) If you are making a warrant or rights offering of securities to 
existing security holders and the securities not purchased by existing 
security holders are to be reoffered to the public, disclose the 
following information in the reoffer prospectus:
    (i) The amount of securities bought in stabilization activities 
during the offering period and the price or range of prices at which the 
securities were bought;
    (ii) The amount of the offered securities subscribed for during the 
offering period;
    (iii) The amount of the offered securities purchased by the 
underwriter during the offering period;
    (iv) The amount of the offered securities sold by the underwriter 
during the offering period and the price or range of prices at which the 
securities were sold; and
    (v) The amount of the offered securities that will be reoffered to 
the public and the offering price.

[57 FR 36449, Aug. 13, 1992, as amended at 58 FR 19605, Apr. 15, 1993; 
62 FR 543, Jan. 3, 1997; 62 FR 11323, Mar. 12, 1997; 63 FR 6380, Feb. 6, 
1998]



Sec. 228.509  (Item 509) Interest of Named Experts and Counsel.

    If an ``expert'' or ``counsel'' was hired on a contingent basis, 
will receive a direct or indirect interest in the small business issuer 
or was a promoter, underwriter, voting trustee, director, officer, or 
employee, of the small business issuer, describe the contingent basis, 
interest, or connection.
    (a) Expert--is a person who is named as preparing or certifying all 
or part of the small business issuer's registration statement or a 
report or valuation for use in connection with the registration 
statement.
    (b) Counsel--is counsel named in the prospectus as having given an 
opinion on the validity of the securities being registered or upon other 
legal matters concerning the registration or offering of the securities.

Instruction to Item 509: 1. The small business issuer does not need to 
disclose the interest of an expert (other than an accountant) or counsel 
if their interest (including the fair market value of all securities of 
the small business issuer received and to be received, or subject to 
options, warrants or rights received or to be received) does not exceed 
$50,000.



Sec. 228.510  (Item 510) Disclosure of Commission Position on Indemnification for Securities Act Liabilities.

    Describe the indemnification provisions for directors, officers and 
controlling persons of the small business issuer against liability under 
the Securities Act. This includes any provision in the underwriting 
agreement which indemnifies the underwriter or its controlling persons 
against such liabilities where a director, officer or controlling person 
of the small business issuer is such an underwriter or controlling 
person or a member of any firm which is such an underwriter. In 
addition, provide the undertaking in the first sentence of Item 512(e).



Sec. 228.511  (Item 511) Other Expenses of Issuance and Distribution.

    (a) Give an itemized statement of all expenses of the offering, 
other than underwriting discounts and commissions. If any of the 
securities are registered for sale by security holders, state how much 
of the expenses the security holders will pay.
    (1) The itemized list should generally include registration fees, 
federal taxes, state taxes and fees, trustees' and transfer agents' 
fees, costs of printing

[[Page 367]]

and engraving, legal, accounting, and engineering fees and any listing 
fees.
    (2) Include as a separate item any premium paid by the small 
business issuer or any selling security holder on any policy to insure 
or indemnify directors or officers against any liabilities they may 
incur in the registration, offering, or sale of these securities.
    (b) [Reserved]

Instruction to Item 511: 1. If the amounts of any items are not known, 
give estimates but identify them as such.



Sec. 228.512  (Item 512) Undertakings.

    Include each of the following undertakings that apply to the 
offering.
    (a) Rule 415 Offering. If the small business issuer is registering 
securities under Rule 415 of the Securities Act (Sec. 230.415 of this 
chapter), that the small business issuer will:
    (1) File, during any period in which it offers or sells securities, 
a post-effective amendment to this registration statement to:
    (i) Include any prospectus required by section 10(a)(3) of the 
Securities Act;
    (ii) Reflect in the prospectus any facts or events which, 
individually or together, represent a fundamental change in the 
information in the registration statement. Notwithstanding the 
foregoing, any increase or decrease in volume of securities offered (if 
the total dollar value of securities offered would not exceed that which 
was registered) and any deviation from the low or high end of the 
estimated maximum offering range may be reflected in the form of 
prospectus filed with the Commission pursuant to Rule 424(b) 
(Sec. 230.424(b) of this chapter) if, in the aggregate, the changes in 
volume and price represent no more than a 20% change in the maximum 
aggregate offering price set forth in the ``Calculation of Registration 
Fee'' table in the effective registration statement; and
    (iii) Include any additional or changed material information on the 
plan of distribution.

    Note: Small business issuers do not need to give the statements in 
paragraphs (a)(1)(i) and (a)(1)(ii) of this Item if the registration 
statement is on Form S-3 or S-8 (Secs. 239.13 or 239.16b of this 
chapter), and the information required in a post-effective amendment is 
incorporated by reference from periodic reports filed by the small 
business issuer under the Exchange Act.

    (2) For determining liability under the Securities Act, treat each 
post-effective amendment as a new registration statement of the 
securities offered, and the offering of the securities at that time to 
be the initial bona fide offering.
    (3) File a post-effective amendment to remove from registration any 
of the securities that remain unsold at the end of the offering.
    (b) Warrants and rights offerings. If the small business issuer will 
offer the securities to existing security holders under warrants or 
rights and the small business issuer will reoffer to the public any 
securities not taken by security holders, with any modifications that 
suit the particular case--The small business issuer will supplement the 
prospectus, after the end of the subscription period, to include the 
results of the subscription offer, the transactions by the underwriters 
during the subscription period, the amount of unsubscribed securities 
that the underwriters will purchase and the terms of any later 
reoffering. If the underwriters make any public offering of the 
securities on terms different from those on the cover page of the 
prospectus, the small business issuer will file a post-effective 
amendment to state the terms of such offering.
    (c) Competitive bids. If the small business issuer is offering 
securities at competitive bidding, with modifications to suit the 
particular case, the small business issuer will:
    (1) Use its best efforts to distribute before the opening of bids, 
to prospective bidders, underwriters, and dealers, a reasonable number 
of copies of a prospectus that meet the requirements of section 10(a) of 
the Securities Act, and relating to the securities offered at 
competitive bidding, as contained in the registration statement, 
together with any supplements; and
    (2) File an amendment to the registration statement reflecting the 
results of bidding, the terms of the reoffering and related matters 
where required by the applicable form, not later than the first use, 
authorized by the

[[Page 368]]

issuer after the opening of bids, of a prospectus relating to the 
securities offered at competitive bidding, unless the issuer proposes no 
further public offering of such securities by the issuer or by the 
purchasers.
    (d) Equity offerings of nonreporting small business issuers. If a 
small business issuer that before the offering had no duty to file 
reports with the Commission under section 13(a) or 15(d) of the Exchange 
Act is registering equity securities for sale in an underwritten 
offering--The small business issuer will provide to the underwriter at 
the closing specified in the underwriting agreement certificates in such 
denominations and registered in such names as required by the 
underwriter to permit prompt delivery to each purchaser.
    (e) Request for acceleration of effective date. If the small 
business issuer will request acceleration of the effective date of the 
registration statement under Rule 461 under the Securities Act, include 
the following:

    Insofar as indemnification for liabilities arising under the 
Securities Act of 1933 (the ``Act'') may be permitted to directors, 
officers and controlling persons of the small business issuer pursuant 
to the foregoing provisions, or otherwise, the small business issuer has 
been advised that in the opinion of the Securities and Exchange 
Commission such indemnification is against public policy as expressed in 
the Act and is, therefore, unenforceable.


In the event that a claim for indemnification against such liabilities 
(other than the payment by the small business issuer of expenses 
incurred or paid by a director, officer or controlling person of the 
small business issuer in the successful defense of any action, suit or 
proceeding) is asserted by such director, officer or controlling person 
in connection with the securities being registered, the small business 
issuer will, unless in the opinion of its counsel the matter has been 
settled by controlling precedent, submit to a court of appropriate 
jurisdiction the question whether such indemnification by it is against 
public policy as expressed in the Securities Act and will be governed by 
the final adjudication of such issue.
    (f) If the issuer relies on Rule 430A under the Securities Act 
[Sec. 230.430A of this chapter], that the small business issuer will:
    (1) For determining any liability under the Securities Act, treat 
the information omitted from the form of prospectus filed as part of 
this registration statement in reliance upon Rule 430A and contained in 
a form of prospectus filed by the small business issuer under Rule 
424(b)(1), or (4) or 497(h) under the Securities Act 
(Secs. 230.424(b)(1), (4) or 230.497(h)) as part of this registration 
statement as of the time the Commission declared it effective.
    (2) For determining any liability under the Securities Act, treat 
each post-effective amendment that contains a form of prospectus as a 
new registration statement for the securities offered in the 
registration statement, and that offering of the securities at that time 
as the initial bona fide offering of those securities.

[57 FR 36449, Aug. 13, 1992, as amended at 60 FR 26614, May 17, 1995]



Sec. 228.601  (Item 601) Exhibits.

    (a) Exhibits and index of exhibits. (1) The exhibits required by the 
exhibit table generally must be filed or incorporated by reference. The 
Financial Data Schedule required by paragraph (b)(27) of this Item must 
be submitted to the Commission as provided in paragraph (c) of this 
Item.
    (2) Each filing must have an index of exhibits. The exhibit index 
must list exhibits in the same order as the exhibit table. If the 
exhibits are incorporated by reference, this fact should be noted in the 
exhibit index. In the manually signed registration statement or report, 
the exhibit index should give the page number of each exhibit.
    (3) If a material contract or plan of acquisition, reorganization, 
arrangement, liquidation or succession is executed or becomes effective 
during the reporting period covered by a Form 10-QSB or Form 10-KSB, it 
must be filed as an exhibit to the Form 10-QSB or Form 10-KSB filed for 
the same period. Any amendment or modification to a previously filed 
exhibit to a Form 10-SB, 10-KSB or 10-QSB document must be filed as an 
exhibit to a Form 10-QSB

[[Page 369]]

or 10-KSB. The amendment or modification does not need to be filed if 
the previously filed exhibit would not be currently required.

Instructions to Item 601(a): 1. If an exhibit (other than an opinion or 
consent) is filed in preliminary form and is later changed to include 
only interest, dividend or conversion rates, redemption or conversion 
prices, purchase or offering prices, underwriters' or dealers' 
commissions, names, addresses or participation of underwriters or 
similar matters and the information appears elsewhere in the 
registration statement or a prospectus, no amendment need be filed.
    2. Small business issuers may file copies of each exhibit, rather 
than originals, except as otherwise specifically noted.
    3. Electronic filings. Whenever an exhibit is filed in paper 
pursuant to a hardship exemption (Secs. 232.201 and 232.202 of this 
chapter), the letter ``P'' (paper) should be placed next to the exhibit 
in the list of exhibits required by Item 601(a)(2) of this Rule 
(Sec. 228.601(a)(2)). Whenever an electronic confirming copy of an 
exhibit is filed pursuant to a hardship exemption (Sec. 232.201 or 
Sec. 232.202(d) of this chapter), the exhibit index should specify where 
the confirming electronic copy can be located; in addition, the 
designation ``CE'' (confirming electronic) should be placed next to the 
listed exhibit in the exhibit index.

[[Page 370]]

[GRAPHIC] [TIFF OMITTED] TC05OC91.034

    (b) Description of exhibits. Below is a description of each document 
listed in the exhibit table.
    (1) Underwriting agreement. Each agreement with a principal 
underwriter for the distribution of the securities. If the terms have 
been determined and the securities are to be registered on Form S-3 
(Sec. 239.13), the agreement may be filed on Form 8-K (Sec. 249.308) 
after the effectiveness of the registration statement.
    (2) Plan of purchase, sale, reorganization, arrangement, liquidation 
or succession. Any such plan described in the filing. Schedules or 
attachments may be omitted if they are listed in the index and provided 
to the Commission upon request.

[[Page 371]]

    (3) Articles of incorporation and by-laws. (i) A complete copy of 
the articles of incorporation. Whenever amendments to articles of 
incorporation are filed, a complete copy of the articles as amended 
shall be filed.
    (ii) A complete copy of the by-laws. Whenever amendments to the by-
laws are filed, a complete copy of the by-laws as amended shall be 
filed.
    (4) Instruments defining the rights of security holders, including 
indentures. (i) All instruments that define the rights of holders of the 
equity or debt securities that the issuer is registering, including the 
pages from the articles of incorporation or by-laws that define those 
rights.
    (ii) All instruments defining the rights of holders of long term 
debt unless the total amount of debt covered by the instrument does not 
exceed 10% of the total assets of the small business issuer.
    (iii) Copies of indentures to be qualified under the Trust Indenture 
Act of 1939 shall include an itemized table of contents and a cross 
reference sheet showing the location of the provisions inserted in 
accordance with Sections 310 through 318(a) of that Act.

Instruction to Item 601(b)(4)(iii) for electronic filings. If the 
instrument defining the rights of security holders is in the form of a 
certificate, the text appearing on the certificate shall be reproduced 
in an electronic filing together with a description of any other graphic 
and image material appearing on the certificate, as provided in Rule 304 
of Regulation S-T (Sec. 232.304 of this chapter).

    (5) Opinion on legality. (i) An opinion of counsel on the legality 
of the securities being registered stating whether they will, when sold, 
be legally issued, fully paid and non-assessable, and, if debt 
securities, whether they will be binding obligations of the small 
business issuer.
    (ii) If the securities being registered are issued under a plan that 
is subject to the requirements of ERISA furnish either:
    (A) An opinion of counsel which confirms compliance with ERISA; or
    (B) A copy of the Internal Revenue Service determination letter that 
the plan is qualified under section 401 of the Internal Revenue Code.

If the plan is later amended, the small business issuer must have the 
opinion of counsel and the IRS determination letter updated to confirm 
compliance and qualification.
    (6) No Exhibit Required.
    (7) [Reserved]
    (8) Opinion on tax matters. If tax consequences of the transaction 
are material to an investor, an opinion of counsel, an independent 
public or certified public accountant or, a revenue ruling from the 
Internal Revenue Service, supporting the tax matters and consequences to 
the shareholders. The exhibit is required for filings to which 
Securities Act Industry Guide 5 applies.
    (9) Voting trust agreement and amendments.
    (10) Material contracts. (i) Every material contract, not made in 
the ordinary course of business, that will be performed after the filing 
of the registration statement or report or was entered into not more 
than two years before such filing. Also include the following contracts:
    (A) Any contract to which directors, officers, promoters, voting 
trustees, security holders named in the registration statement or 
report, or underwriters are parties other than contracts involving only 
the purchase or sale of current assets having a determinable market 
price, at such market price;
    (B) Any contract upon which the small business issuer's business is 
substantially dependent, such as contracts with principal customers, 
principal suppliers, franchise agreements, etc.;
    (C) Any contract for the purchase or sale of any property, plant or 
equipment for a consideration exceeding 15 percent of such assets of the 
small business issuer; or
    (D) Any material lease under which a part of the property described 
in the registration statement or report is held by the small business 
issuer.
    (ii)(A) Any management contract or any compensatory plan, contract 
or arrangement, including but not limited to plans relating to options, 
warrants or rights, pension, retirement or deferred compensation or 
bonus, incentive or profit sharing (or if not set forth in any formal 
document, a written description thereof) in which any

[[Page 372]]

director or any of the named executive officers of the registrant as 
defined by Item 402(a)(2) (Sec. 228.402(a)(2)) participates shall be 
deemed material and shall be filed; and any other management contract or 
any other compensatory plan, contract, or arrangement in which any other 
executive officer of the registrant participates shall be filed unless 
immaterial in amount or significance.
    (B) Any compensatory plan, contract or arrangement adopted without 
the approval of security holders pursuant to which equity may be 
awarded, including, but not limited to, options, warrants or rights (or 
if not set forth in any formal document, a written description thereof), 
in which any employee (whether or not an executive officer of the small 
business issuer) participates shall be filed unless immaterial in amount 
or significance. A compensation plan assumed by a small business issuer 
in connection with a merger, consolidation or other acquisition 
transaction pursuant to which the small business issuer may make further 
grants or awards of its equity securities shall be considered a 
compensation plan of the small business issuer for purposes of the 
preceding sentence.
    (C) The following management contracts or compensatory plans need 
not be filed:
    (1) Ordinary purchase and sales agency agreements;
    (2) Agreements with managers of stores in a chain organization or 
similar organization;
    (3) Contracts providing for labor or salesmen's bonuses or payments 
to a class of security holders, as such;
    (4) Any compensatory plan which is available to employees, officers 
or directors generally and provides for the same method of allocation of 
benefits between management and nonmanagement participants; and
    (5) Any compensatory plan if the issuer is a wholly owned subsidiary 
of a reporting company and is filing a report on Form 10-KSB 
(Sec. 249.310b), or registering debt or non-voting preferred stock on 
Form S-2 (Sec. 239.12).

Instruction 1 to Item 601(b)(10): Only copies of the various 
remunerative plans need be filed. Each individual director's or 
executive officer's personal agreement under the plans need not be 
filed, unless they contain material provisions.
Instruction 2 to Item 601(b)(10): If a material contract is executed or 
becomes effective during the reporting period reflected by a Form 10-QSB 
or Form 10-KSB, it shall be filed as an exhibit to the Form 10-QSB or 
Form 10-KSB filed for the corresponding period. See paragraph (a)(3) of 
this Item. With respect to quarterly reports on Form 10-QSB, only those 
contracts executed or becoming effective during the most recent period 
reflected in the report shall be filed.

    (11) Statement re computation of per share earnings. An explanation 
of the computation of per share earnings on both a primary and fully 
diluted basis unless the computation can be clearly determined from the 
registration statement or report.
    (12) No exhibit required.
    (13)(i) Annual report to security holders for the last fiscal year, 
Form 10-Q or 10-QSB or quarterly report to security holders, if 
incorporated by reference in the filing. Such reports, except for the 
parts which are expressly incorporated by reference in the filing are 
not deemed ``filed'' as part of the filing. If the financial statements 
in the report have been incorporated by reference in the filing, the 
accountant's certificate shall be manually signed in one copy. See Rule 
411(b) (Sec. 230.411(b) of this chapter).
    (ii) If the annual or quarterly report to security holders is 
incorporated by reference in whole or in part into an electronic filing, 
whatever is so incorporated must be filed in electronic format as an 
exhibit to the filing.
    (14) Code of ethics. Any code of ethics, or amendment thereto, that 
is the subject of the disclosure required by Item 406 of Regulation S-B 
(Sec. 228.406) or Item 10 of Form 8-K (Sec. 249.308 of this chapter), to 
the extent that the small business issuer intends to satisfy the Item 
406 or Item 10 requirements through filing of an exhibit.
    (15) Letter on unaudited interim financial information. A letter, 
where applicable, from the independent accountant which acknowledges 
awareness of the use in a registration statement of a report on 
unaudited interim financial information. The letter is not considered a 
part of a registration statement prepared or certified by an accountant

[[Page 373]]

or a report prepared or certified by an accountant within the meaning of 
sections 7 and 11 of the Securities Act. Such letter may be filed with 
the registration statement, an amendment thereto, or a report on Form 
10-QSB (Sec. 249.308b) which is incorporated by reference into the 
registration statement.
    (16) Letter on change in certifying accountant. File the letter 
required by Item 304(a)(3).
    (17) Letter on director resignation. Any letter from a former 
director which describes a disagreement with the small business issuer 
that led to the director's resignation or refusal to stand for re-
election and which requests that the matter be disclosed.
    (18) Letter on change in accounting principles. Unless previously 
filed, a letter from the issuer's accountant stating whether any change 
in accounting principles or practices followed by the issuer, or any 
change in the method of applying any such accounting principles or 
practices, which affected the financial statements being filed with the 
Commission in the report or which is expected to affect the financial 
statements of future fiscal years is to an alternative principle which 
in his judgment is preferable under the circumstances. No such letter 
need be filed when such change is made in response to a standard adopted 
by the Financial Accounting Standards Board that creates a new 
accounting principle, that expresses a preference for an accounting 
principle, or that rejects a specific accounting principle.
    (19) Report furnished to security holders. If the issuer makes 
available to its stockholders or otherwise publishes, within the period 
prescribed for filing the report, a document or statement containing 
information meeting some or all of the requirements of Part I of Form 
10-Q or 10-QSB, the information called for may be incorporated by 
reference to such published document or statement provided copies 
thereof are included as an exhibit to the registration statement or to 
Part I of the Form 10-Q or 10-QSB report.
    (20) Other documents or statements to security holders or any 
document incorporated by reference.
    (21) Subsidiaries of the small business issuer. A list of all 
subsidiaries, the state or other jurisdiction of incorporation or 
organization of each, and the names under which such subsidiaries do 
business.
    (22) Published report regarding matters submitted to vote of 
security holders. Published reports containing all of the information 
called for by Item 4 of Part II of Form 10-Q (or 10-QSB) or Item 4 of 
Part I of Form 10-K or 10-KSB which is referred to therein in lieu of 
providing disclosure in Form 10-Q (10-QSB) or 10-K (10-KSB), which are 
required to be filed as exhibits by Rule 12b-23(a)(3) under the Exchange 
Act.
    (23) Consents of experts and counsel. (i) Securities Act filings--
Dated and manually signed written consents or a reference in the index 
to the location of the consent.
    (ii) Exchange Act reports. If required to file a consent for 
material incorporated by reference in a previously filed registration 
statement under the Securities Act, the dated and manually signed 
consent to the material incorporated by reference. The consents shall be 
dated and manually signed.
    (24) Power of attorney. If a person signs a registration statement 
or report under a power of attorney, a manually signed copy of such 
power of attorney or if located elsewhere in the registration statement, 
a reference in the index to where it is located. In addition, if an 
officer signs a registration statement for the small business issuer by 
a power of attorney, a certified copy of a resolution of the board of 
directors authorizing such signature. A power of attorney that is filed 
with the Commission must relate to a specific filing or an amendment, 
provided, however, that a power of attorney relating to a registration 
statement under the Securities Act or an amendment thereto also may 
relate to any registration statement for the same offering that is to be 
effective upon filing pursuant to Rule 462(b) under the Securities Act 
(Sec. 230.462(b) of this chapter. A power of attorney that confers 
general authority must not be filed with the Commission.
    (25) Statement of eligibility of trustee. (i) Form T-1 (Sec. 269.1 
of this chapter) if an indenture is being qualified under the Trust 
Indenture Act, bound separately from the other exhibits.

[[Page 374]]

    (ii) The requirement to bind separately the statement of eligibility 
and qualification does not apply to statements submitted in electronic 
format.Rather, such statements must be submitted as exhibits in the same 
electronic submission as the registration statement to which they 
relate, or in an amendment thereto, except that electronic filers that 
rely on Trust Indenture Act Section 305(b)(2) for determining the 
eligibility of the trustee under indentures for securities to be issued, 
offered or sold on a delayed basis by or on behalf of the registrant 
shall file such statements separately in the manner prescribed by 
Sec. 260.5b-1 through Sec. 260.5b-3 of this chapter and by the EDGAR 
Filer Manual.
    (26) Invitations for competitive bids. If the registration statement 
covers securities that the small business issuer is offering at 
competitive bidding, any invitation for competitive bid that the small 
business issuer will send or give to any person shall be filed.
    (27) through (98) [Reserved]
    (99) Additional exhibits. (i) Any additional exhibits if listed and 
described in the exhibit index.
    (ii) If pursuant to Section 11(a) of the Securities Act (15 U.S.C. 
77k(a)) an issuer makes generally available to its security holders an 
earnings statement covering a period of at least 12 months beginning 
after the effective date of the registration statement, and if such 
earnings statement is made available by ``other methods'' than those 
specified in paragraphs (a) or (b) of Sec. 230.158 of this chapter, it 
must be filed as an exhibit to the Form 10-QSB or the Form 10-KSB, as 
appropriate, covering the period in which the earnings statement was 
released.

[57 FR 36449, Aug. 13, 1992, as amended at 57 FR 48150, Oct. 21, 1992; 
58 FR 14660, Mar. 18, 1993; 58 FR 21349, Apr. 21, 1993; 58 FR 26383, May 
3, 1993; 58 FR 27469, May 10, 1993; 59 FR 36260, July 15, 1994; 59 FR 
67759, Dec. 30, 1994; 60 FR 26614, May 17, 1995; 61 FR 24654, May 15, 
1996; 61 FR 30401, June 14, 1996; 62 FR 36455, July 8, 1997; 65 FR 
24799, Apr. 27, 2000; 67 FR 246, Jan. 2, 2002]

    Editorial Notes: 1. At 65 FR 24799, Apr. 27, 2000, in 
Sec. thnsp;228.601, paragraph (a), the table was amended by removing the 
entries for exhibits (27) and (28) and footnote *****. However, this is 
a photographed table; thus the entries could not be removed.

    2. At 68 FR 5126, Jan. 31, 2003, Sec. 268.601 was amended by emoving 
the ``reserved'' designation for exhibit (14) and adding ``Code of 
ethics'' in its place in the Exhibit Table, by removing ``N/A'' 
corresponding to exhibit (14) under all captions in the Exhibit Table, 
and bu adding an ``X'' corresponding to exhibit (14) under the caption 
``Exchange Act Forms'', ``8-K'' and ``10-KSB'' in the Exhibit Table. 
However, this is a photographed table; thus these amendments could not 
be incorporated



Sec. 228.701  (Item 701) Recent sales of unregistered securities; use of proceeds from registered securities.

    Give the following information for all securities that the small 
business issuer sold within the past three years without registering the 
securities under the Securities Act.
    (a) The date, title and amount of securities sold.
    (b) Give the names of the principal underwriters, if any. If the 
small business issuer did not publicly offer any securities, identify 
the persons or class of persons to whom the small business issuer sold 
the securities.
    (c) For securities sold for cash, the total offering price and the 
total underwriting discounts or commissions. For securities sold other 
than for cash, describe the transaction and the type and amount of 
consideration received by the small business issuer.
    (d) The section of the Securities Act or the rule of the Commission 
under which the small business issuer claimed exemption from 
registration and the facts relied upon to make the exemption available.
    (e) If the information called for by this paragraph (e) is being 
presented on Form 8-K, Form 10-QSB, Form 10-Q, Form 10-KSB or Form 10-K 
(Secs. 249.308, 249.308b, 249.308a, 249.310b or 249.310) under the 
Exchange Act, and where the securities sold by the registrant are 
convertible or exchangeable into equity securities, or are warrants or 
options representing equity securities, disclose the terms of conversion 
or exercise of the securities.
    (f) As required by Sec. 230.463 of this chapter, following the 
effective date of the first registration statement filed under the 
Securities Act by an issuer, the issuer or successor issuer shall report 
the use of proceeds on its first

[[Page 375]]

periodic report filed pursuant to sections 13(a) and 15(d) of the 
Exchange Act (15 U.S.C. 78m(a) and 78o(d)) after effectiveness of its 
Securities Act registration statement, and thereafter on each of its 
subsequent periodic reports filed pursuant to sections 13(a) and 15(d) 
of the Exchange Act through the later of disclosure of the application 
of all the offering proceeds, or disclosure of the termination of the 
offering. If a report of the use of proceeds is required with respect to 
the first effective registration statement of the predecessor issuer, 
the successor issuer shall provide such a report. The information 
provided pursuant to paragraphs (f)(2) through (f)(4) of this Item need 
only be provided with respect to the first periodic report filed 
pursuant to sections 13(a) and 15(d) of the Exchange Act after 
effectiveness of the registration statement filed under the Securities 
Act. Subsequent periodic reports filed pursuant to sections 13(a) and 
15(d) of the Exchange Act need only provide the information required in 
paragraphs (f)(2) through (f)(4) of this Item if any of such required 
information has changed since the last periodic report filed. In 
disclosing the use of proceeds in the first periodic report filed 
pursuant to the Exchange Act, the issuer or successor issuer should 
include the following information:
    (1) The effective date of the Securities Act registration statement 
for which the use of proceeds information is being disclosed and the 
Commission file number assigned to the registration statement;
    (2) If the offering has commenced, the offering date, and if the 
offering has not commenced, an explanation why it has not;
    (3) If the offering terminated before any securities were sold, an 
explanation for such termination; and
    (4) If the offering did not terminate before any securities were 
sold, disclose:
    (i) Whether the offering has terminated and, if so, whether it 
terminated before the sale of all securities registered;
    (ii) The name(s) of the managing underwriter(s), if any;
    (iii) The title of each class of securities registered and, where a 
class of convertible securities is being registered, the title of any 
class of securities into which such securities may be converted;
    (iv) For each class of securities (other than a class of securities 
into which a class of convertible securities registered may be converted 
without additional payment to the issuer) the following information, 
provided for both the account of the issuer and the account(s) of any 
selling security holder(s): the amount registered, the aggregate price 
of the offering amount registered, the amount sold and the aggregate 
offering price of the amount sold to date;
    (v) From the effective date of the Securities Act registration 
statement to the ending date of the reporting period, the amount of 
expenses incurred for the issuer's account in connection with the 
issuance and distribution of the securities registered for underwriting 
discounts and commissions, finders' fees, expenses paid to or for 
underwriters, other expenses and total expenses. Indicate if a 
reasonable estimate for the amount of expenses incurred is provided 
instead of the actual amount of expenses. Indicate whether such payments 
were:
    (A) Direct or indirect payments to directors, officers, general 
partners of the issuer or their associates; to persons owning ten (10) 
percent or more of any class of equity securities of the issuer; and to 
affiliates of the issuer; or
    (B) Direct or indirect payments to others;
    (vi) The net offering proceeds to the issuer after deducting the 
total expenses described in paragraph (f)(4)(v) of this Item;
    (vii) From the effective date of the Securities Act registration 
statement to the ending date of the reporting period, the amount of net 
offering proceeds to the issuer used for construction of plant, building 
and facilities; purchase and installation of machinery and equipment; 
purchases of real estate; acquisition of other business(es); repayment 
of indebtedness; working capital; temporary investments (which should be 
specified); and any other purposes for which at least five (5) percent 
of the issuer's total offering proceeds or $100,000 (whichever is less) 
has been

[[Page 376]]

used (which should be specified). Indicate if a reasonable estimate for 
the amount of net offering proceeds applied is provided instead of the 
actual amount of net offering proceeds used. Indicate whether such 
payments were:
    (A) Direct or indirect payments to directors, officers, general 
partners of the issuer or their associates; to persons owning ten (10) 
percent or more of any class of equity securities of the issuer; and to 
affiliates of the issuer; or
    (B) Direct or indirect payments to others; and
    (viii) If the use of proceeds in paragraph (f)(4)(vii) of this Item 
represents a material change in the use of proceeds described in the 
prospectus, the issuer should describe briefly the material change.

[57 FR 36449, Aug. 13, 1992, as amended at 61 FR 54508, Oct. 18, 1996; 
62 FR 39761, July 24, 1997]



Sec. 228.702  (Item 702) Indemnification of Directors and Officers.

    State whether any statute, charter provisions, by-laws, contract or 
other arrangements that insures or indemnifies a controlling person, 
director or officer of the small business issuer affects his or her 
liability in that capacity.



 PART 229--STANDARD INSTRUCTIONS FOR FILING FORMS UNDER SECURITIES ACT OF 1933, SECURITIES EXCHANGE ACT OF 1934 AND ENERGY POLICY AND CONSERVATION ACT OF 1975--
REGULATION S-K--Table of Contents




                         Subpart 229.1--General

Sec.
229.10  (Item 10) General.

                        Subpart 229.100--Business

229.101  (Item 101) Description of business.
229.102  (Item 102) Description of property.
229.103  (Item 103) Legal proceedings.

              Subpart 229.200--Securities of the Registrant

229.201  (Item 201) Market price of and dividends on the registrant's 
          common equity and related stockholder matters.
229.202  (Item 202) Description of registrant's securities.

                 Subpart 229.300--Financial Information

229.301  (Item 301) Selected financial data.
229.302  (Item 302) Supplementary financial information.
229.303  (Item 303) Management's discussion and analysis of financial 
          condition and results of operations.
229.304  (Item 304) Changes in and disagreements with accountants on 
          accounting and financial disclosure.
229.305  (Item 305) Quantitative and qualitative disclosures about 
          market risk.
229.306  (Item 306) Audit committee report.
229.307  (Item 307) Controls and procedures.

        Subpart 229.400--Management and Certain Security Holders

229.401  (Item 401) Directors, executive officers, promoters and control 
          persons.
229.402  (Item 402) Executive compensation.
229.403  (Item 403) Security ownership of certain beneficial owners and 
          management.
229.404  (Item 404) Certain relationships and related transactions.
229.405  (Item 405) Compliance with section 16(a) of the Exchange Act.
229.406  (Item 406) Code of ethics.

    Subpart 229.500--Registration Statement and Prospectus Provisions

229.501  (Item 501) Forepart of registration statement and outside front 
          cover page of prospectus.
229.502  (Item 502) Inside front and outside back cover pages of 
          prospectus.
229.503  (Item 503) Prospectus summary, risk factors, and ratio of 
          earnings to fixed charges.
229.504  (Item 504) Use of proceeds.
229.505  (Item 505) Determination of offering price.
229.506  (Item 506) Dilution.
229.507  (Item 507) Selling security holders.
229.508  (Item 508) Plan of distribution.
229.509  (Item 509) Interests of named experts and counsel.
229.510  (Item 510) Disclosure of Commission position on indemnification 
          for Securities Act liabilities.
229.511  (Item 511) Other expenses of issuance and distribution.
229.512  (Item 512) Undertakings.

                        Subpart 229.600--Exhibits

229.601  (Item 601) Exhibits.

                     Subpart 229.700--Miscellaneous

229.701  (Item 701) Recent sales of unregistered securities; use of 
          proceeds from registered securities.
229.702  (Item 702) Indemnification of directors and officers.

[[Page 377]]

                Subpart 229.800--List of Industry Guides

229.801  Securities Act industry guides.
229.802  Exchange Act industry guides.

                  Subpart 229.900--Roll-Up Transactions

229.901  (Item 901) Definitions.
229.902  (Item 902) Individual partnership supplements.
229.903  (Item 903) Summary.
229.904  (Item 904) Risk factors and other considerations.
229.905  (Item 905) Comparative information.
229.906  (Item 906) Allocation of roll-up consideration.
229.907  (Item 907) Background of the roll-up transaction.
229.908  (Item 908) Reasons for and alternatives to the roll-up 
          transaction.
229.909  (Item 909) Conflicts of interest.
229.910  (Item 910) Fairness of the transaction.
229.911  (Item 911) Reports, opinions and appraisals.
229.912  (Item 912) Source and amount of funds and transactional 
          expenses.
229.913  (Item 913) Other provisions of the transaction.
229.914  (Item 914) Pro forma financial statements; selected financial 
          data.
229.915  (Item 915) Federal income tax consequences.

       Subpart 229.1000--Mergers and Acquisitions (Regulation M-A)

229.1000  (Item 1000) Definitions.
229.1001  (Item 1001) Summary term sheet.
229.1002  (Item 1002) Subject company information.
229.1003  (Item 1003) Identity and background of filing person.
229.1004  (Item 1004) Terms of the transaction.
229.1005  (Item 1005) Past contacts, transactions, negotiations and 
          agreements.
229.1006  (Item 1006) Purposes of the transaction and plans or 
          proposals.
229.1007  (Item 1007) Source and amount of funds or other consideration.
229.1008  (Item 1008) Interest in securities of the subject company.
229.1009  (Item 1009) Persons/assets, retained, employed, compensated or 
          used.
229.1010  (Item 1010) Financial statements.
229.1011  (Item 1011) Additional information.
229.1012  (Item 1012) The solicitation or recommendation.
229.1013  (Item 1013) Purposes, alternatives, reasons and effects in a 
          going-private transaction.
229.1014  (Item 1014) Fairness of the going-private transaction.
229.1015  (Item 1015) Reports, opinions, appraisals and negotiations.
229.1016  (Item 1016) Exhibits.

    Authority: 15 U.S.C. 7261, 77e, 77f, 77g, 77h, 77j, 77k, 77s, 77z-2, 
77z-3, 77aa(25), 77aa(26), 77ddd, 77eee, 77ggg, 77hhh, 77iii, 77jjj, 
77nnn, 77sss, 78c, 78i, 78j, 78l, 78m, 78n, 78o, 78u-5, 78w, 78ll(d), 
78mm, 79e, 79n, 79t, 80a-8, 80a-29, 80a-30, 80a-31(c), 80a-37, 80a-38(a) 
and 80b-11, unless otherwise noted.
    Section 229.307 is also issued under secs. 3(a) and 302, Pub.L.No. 
107-204, 116 Stat. 745.
    Section 229.401 is also issued under secs. 3(a) and 407, Pub. L. 
107-204, 116 Stat. 745.
    Section 229.406 is also issued under secs. 3(a) and 406, Pub. L. 
107-204, 116 Stat. 745.
    Section 229.601 is also issued under secs. 3(a) and 406, Pub. L. 
107-204, 116 Stat. 745.

    Effective Date Note: At 68 FR 5999, Feb. 5, 2003, the authority 
citaion for part 229 was amended by adding an entry for Sec. 229.303, 
effective April 7, 2003. For the convenience of the user, the added text 
is set forth as follows:

      

    Section 229.303 is also issued under secs. 3(a) and 401(a), Pub. L. 
No. 107-204, 116 Stat. 745.

    Source: 47 FR 11401, Mar. 16, 1982, unless otherwise noted.

    Editorial Note: Nomenclature changes to part 229 appear at 57 FR 
36501, Aug. 13, 1992, and 57 FR 47409, Oct. 16, 1992.

                       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 229.1--General



Sec. 229.10  (Item 10) General.

    (a) Application of Regulation S-K. This part (together with the 
General Rules and Regulations under the Securities Act of 1933, 15 
U.S.C. 77a et seq., as amended (Securities Act), and the Securities 
Exchange Act of 1934, 15 U.S.C. 78a et seq., as amended (Exchange Act) 
(parts 230 and 240 of this chapter), the Interpretative Releases under 
these Acts (parts 231 and 241 of this chapter) and the forms under these 
Acts (parts 239 and 249 of this chapter)) states the requirements 
applicable to the content

[[Page 378]]

of the non-financial statement portions of:
    (1) Registration statements under the Securities Act (part 239 of 
this chapter) to the extent provided in the forms to be used for 
registration under such Act; and
    (2) Registration statements under section 12 (subpart C of part 249 
of this chapter), annual or other reports under sections 13 and 15(d) 
(subparts D and E of part 249 of this chapter), going-private 
transaction statements under section 13 (part 240 of this chapter), 
tender offer statements under sections 13 and 14 (part 240 of this 
chapter), annual reports to security holders and proxy and information 
statements under section 14 (part 240 of this chapter), and any other 
documents required to be filed under the Exchange Act, to the extent 
provided in the forms and rules under that Act.
    (b) Commission policy on projections. The Commission encourages the 
use in documents specified in Rule 175 under the Securities Act 
(Sec. 230.175 of this chapter) and Rule 3b-6 under the Exchange Act 
(Sec. 240.3b-6 of this chapter) of management's projections of future 
economic performance that have a reasonable basis and are presented in 
an appropriate format. The guidelines set forth herein represent the 
Commission's views on important factors to be considered in formulating 
and disclosing such projections.
    (1) Basis for projections. The Commission believes that management 
must have the option to present in Commission filings its good faith 
assessment of a registrant's future performance. Management, however, 
must have a reasonable basis for such an assessment. Although a history 
of operations or experience in projecting may be among the factors 
providing a basis for management's assessment, the Commission does not 
believe that a registrant always must have had such a history or 
experience in order to formulate projections with a reasonable basis. An 
outside review of management's projections may furnish additional 
support for having a reasonable basis for a projection. If management 
decides to include a report of such a review in a Commission filing, 
there also should be disclosure of the qualifications of the reviewer, 
the extent of the review, the relationship between the reviewer and the 
registrant, and other material factors concerning the process by which 
any outside review was sought or obtained. Moreover, in the case of a 
registration statement under the Securities Act, the reviewer would be 
deemed an expert and an appropriate consent must be filed with the 
registration statement.
    (2) Format for projections. In determining the appropriate format 
for projections included in Commission filings, consideration must be 
given to, among other things, the financial items to be projected, the 
period to be covered, and the manner of presentation to be used. 
Although traditionally projections have been given for three financial 
items generally considered to be of primary importance to investors 
(revenues, net income (loss) and earnings (loss) per share), projection 
information need not necessarily be limited to these three items. 
However, management should take care to assure that the choice of items 
projected is not susceptible of misleading inferences through selective 
projection of only favorable items. Revenues, net income (loss) and 
earnings (loss) per share usually are presented together in order to 
avoid any misleading inferences that may arise when the individual items 
reflect contradictory trends. There may be instances, however, when it 
is appropriate to present earnings (loss) from continuing operations, or 
income (loss) before extraordinary items in addition to or in lieu of 
net income (loss). It generally would be misleading to present sales or 
revenue projections without one of the foregoing measures of income. The 
period that appropriately may be covered by a projection depends to a 
large extent on the particular circumstances of the company involved. 
For certain companies in certain industries, a projection covering a two 
or three year period may be entirely reasonable. Other companies may not 
have a reasonable basis for projections beyond the current year. 
Accordingly, management should select the period most appropriate in the 
circumstances. In addition, management, in making a projection, should 
disclose what, in its opinion, is

[[Page 379]]

the most probable specific amount or the most reasonable range for each 
financial item projected based on the selected assumptions. Ranges, 
however, should not be so wide as to make the disclosures meaningless. 
Moreover, several projections based on varying assumptions may be judged 
by management to be more meaningful than a single number or range and 
would be permitted.
    (3) Investor understanding. (i) When management chooses to include 
its projections in a Commission filing, the disclosures accompanying the 
projections should facilitate investor understanding of the basis for 
and limitations of projections. In this regard investors should be 
cautioned against attributing undue certainty to management's 
assessment, and the Commission believes that investors would be aided by 
a statement indicating management's intention regarding the furnishing 
of updated projections. The Commission also believes that investor 
understanding would be enhanced by disclosure of the assumptions which 
in management's opinion are most significant to the projections or are 
the key factors upon which the financial results of the enterprise 
depend and encourages disclosure of assumptions in a manner that will 
provide a framework for analysis of the projection.
    (ii) Management also should consider whether disclosure of the 
accuracy or inaccuracy of previous projections would provide investors 
with important insights into the limitations of projections. In this 
regard, consideration should be given to presenting the projections in a 
format that will facilitate subsequent analysis of the reasons for 
differences between actual and forecast results. An important benefit 
may arise from the systematic analysis of variances between projected 
and actual results on a continuing basis, since such disclosure may 
highlight for investors the most significant risk and profit-sensitive 
areas in a business operation.
    (iii) With respect to previously issued projections, registrants are 
reminded of their responsibility to make full and prompt disclosure of 
material facts, both favorable and unfavorable, regarding their 
financial condition. This responsibility may extend to situations where 
management knows or has reason to know that its previously disclosed 
projections no longer have a reasonable basis.
    (iv) Since a registrant's ability to make projections with relative 
confidence may vary with all the facts and circumstances, the 
responsibility for determining whether to discontinue or to resume 
making projections is best left to management. However, the Commission 
encourages registrants not to discontinue or to resume projections in 
Commission filings without a reasonable basis.
    (c) Commission policy on security ratings. In view of the importance 
of security ratings (ratings) to investors and the marketplace, the 
Commission permits registrants to disclose, on a voluntary basis, 
ratings assigned by rating organizations to classes of debt securities, 
convertible debt securities and preferred stock in registration 
statements and periodic reports. In addition, the Commission permits, 
pursuant to Rule 134(a)(14) under the Securities Act 
(Sec. 230.134(a)(14) of this chapter), voluntary disclosure of ratings 
assigned by any nationally recognized statistical rating organizations 
(NRSROs) in certain communications deemed not to be a prospectus 
(tombstone advertisements). Set forth herein are the Commission's views 
on important matters to be considered in disclosing security ratings.
    (1) Securities Act filings. (i) If a registrant includes in a 
registration statement filed under the Securities Act any rating(s) 
assigned to a class of securities, it should consider including: (A) Any 
other rating intended for public dissemination assigned to such class by 
a NRSRO (additional NRSRO rating) that is available on the date of the 
initial filing of the document and that is materially different from any 
rating disclosed; and (B) the name of each rating organization whose 
rating is disclosed; each such rating organization's definition or 
description of the category in which it rated the class of securities; 
the relative rank of each rating within the assigning rating 
organization's overall classification system; and a statement informing 
investors

[[Page 380]]

that a security rating is not a recommendation to buy, sell or hold 
securities, that it may be subject to revision or withdrawal at any time 
by the assigning rating organization, and that each rating should be 
evaluated independently of any other rating. The registrant also should 
include the written consent of any rating organization that is not a 
NRSRO whose rating is included. With respect to the written consent of 
any NRSRO whose rating is included, see Rule 436(g) under the Securities 
Act (Sec. 230.436(g) of this chapter). When the registrant has filed a 
registration statement on Form F-9 (Sec. 239.39 of this chapter), see 
Rule 436(g) (Sec. 230.436(g) of this chapter) under the Securities Act 
with respect to the written consent of any rating organization specified 
in the Instruction to paragraph (a)(2) of General Instruction I of Form 
F-9.
    (ii) If a change in a rating already included is available 
subsequent to the filing of the registration statement, but prior to its 
effectiveness, the registrant should consider including such rating 
change in the final prospectus. If the rating change is material or if a 
materially different rating from any disclosed becomes available during 
this period, the registrant should consider amending the registration 
statement to include the rating change or additional rating and 
recirculating the preliminary prospectus.
    (iii) If a materially different additional NRSRO rating or a 
material change in a rating already included becomes available during 
any period in which offers or sales are being made, the registrant 
should consider disclosing such additional rating or rating change by 
means of post-effective amendment or sticker to the prospectus pursuant 
to Rule 424(b) under the Securities Act (Sec. 230.424(b) of this 
chapter), unless, in the case of a registration statement on Form S-3 
(Sec. 239.13 of this chapter), it has been disclosed in a document 
incorporated by reference into the registration statement subsequent to 
its effectiveness and prior to the termination of the offering.
    (2) Exchange Act filings. (i) If a registrant includes in a 
registration statement or periodic report filed under the Exchange Act 
any rating(s) assigned to a class of securities, it should consider 
including the information specified in paragraphs (c)(1)(i)(A) and (B) 
of this section.
    (ii) If there is a material change in the rating(s) assigned by any 
NRSRO(s) to any outstanding class(es) of securities of a registrant 
subject to the reporting requirements of section 13(a) or 15(d) of the 
Exchange Act, the registrant should consider filing a report on Form 8-K 
(Sec. 249.308 of this chapter) or other appropriate report under the 
Exchange Act disclosing such rating change.
    (d) Incorporation by Reference. Where rules, regulations, or 
instructions to forms of the Commission permit incorporation by 
reference, a document may be so incorporated by reference to the 
specific document and to the prior filing or submission in which such 
document was physically filed or submitted. Except where a registrant or 
issuer is expressly required to incorporate a document or documents by 
reference, reference may not be made to any document which incorporates 
another document by reference if the pertinent portion of the document 
containing the information or financial statements to be incorporated by 
reference includes an incorporation by reference to another document. No 
document on file with the Commission for more than five years may be 
incorporated by reference except:
    (1) Documents contained in registration statements, which may be 
incorporated by reference as long as the registrant has a reporting 
requirement with the Commission; or
    (2) Documents that the registrant specifically identifies by 
physical location by SEC file number reference, provided such materials 
have not been disposed of by the Commission pursuant to its Records 
Control Schedule (17 CFR 200.80f).
    (e) Use of non-GAAP financial measures in Commission filings. (1) 
Whenever one or more non-GAAP financial measures are included in a 
filing with the Commission:
    (i) The registrant must include the following in the filing:

[[Page 381]]

    (A) A presentation, with equal or greater prominence, of the most 
directly comparable financial measure or measures calculated and 
presented in accordance with Generally Accepted Accounting Principles 
(GAAP);
    (B) A reconciliation (by schedule or other clearly understandable 
method), which shall be quantitative for historical non-GAAP measures 
presented, and quantitative, to the extent available without 
unreasonable efforts, for forward-looking information, of the 
differences between the non-GAAP financial measure disclosed or released 
with the most directly comparable financial measure or measures 
calculated and presented in accordance with GAAP identified in paragraph 
(e)(1)(i)(A) of this section;
    (C) A statement disclosing the reasons why the registrant's 
management believes that presentation of the non-GAAP financial measure 
provides useful information to investors regarding the registrant's 
financial condition and results of operations; and
    (D) To the extent material, a statement disclosing the additional 
purposes, if any, for which the registrant's management uses the non-
GAAP financial measure that are not disclosed pursuant to paragraph 
(e)(1)(i)(C) of this section; and
    (ii) A registrant must not:
    (A) Exclude charges or liabilities that required, or will require, 
cash settlement, or would have required cash settlement absent an 
ability to settle in another manner, from non-GAAP liquidity measures, 
other than the measures earnings before interest and taxes (EBIT) and 
earnings before interest, taxes, depreciation, and amortization 
(EBITDA);
    (B) Adjust a non-GAAP performance measure to eliminate or smooth 
items identified as non-recurring, infrequent or unusual, when the 
nature of the charge or gain is such that it is reasonably likely to 
recur within two years or there was a similar charge or gain within the 
prior two years;
    (C) Present non-GAAP financial measures on the face of the 
registrant's financial statements prepared in accordance with GAAP or in 
the accompanying notes;
    (D) Present non-GAAP financial measures on the face of any pro forma 
financial information required to be disclosed by Article 11 of 
Regulation S-X (17 CFR 210.11-01 through 210.11-03); or
    (E) Use titles or descriptions of non-GAAP financial measures that 
are the same as, or confusingly similar to, titles or descriptions used 
for GAAP financial measures; and
    (iii) If the filing is not an annual report on Form 10-K or Form 20-
F (17 CFR 249.220f), a registrant need not include the information 
required by paragraphs (e)(1)(i)(C) and (e)(1)(i)(D) of this section if 
that information was included in its most recent annual report on Form 
10-K or Form 20-F or a more recent filing, provided that the required 
information is updated to the extent necessary to meet the requirements 
of paragraphs (e)(1)(i)(C) and (e)(1)(i)(D) of this section at the time 
of the registrant's current filing.
    (2) For purposes of this paragraph (e), a non-GAAP financial measure 
is a numerical measure of a registrant's historical or future financial 
performance, financial position or cash flows that:
    (i) Excludes amounts, or is subject to adjustments that have the 
effect of excluding amounts, that are included in the most directly 
comparable measure calculated and presented in accordance with GAAP in 
the statement of income, balance sheet or statement of cash flows (or 
equivalent statements) of the issuer; or
    (ii) Includes amounts, or is subject to adjustments that have the 
effect of including amounts, that are excluded from the most directly 
comparable measure so calculated and presented.
    (3) For purposes of this paragraph (e), GAAP refers to generally 
accepted accounting principles in the United States, except that:
    (i) In the case of foreign private issuers whose primary financial 
statements are prepared in accordance with non-U.S. generally accepted 
accounting principles, GAAP refers to the principles under which those 
primary financial statements are prepared; and
    (ii) In the case of foreign private issuers that include a non-GAAP 
financial measure derived from or based on a measure calculated in 
accordance

[[Page 382]]

with U.S. generally accepted accounting principles, GAAP refers to U.S. 
generally accepted accounting principles for purposes of the application 
of the requirements of this paragraph (e) to the disclosure of that 
measure.
    (4) For purposes of this paragraph (e), non-GAAP financial measures 
exclude:
    (i) Operating and other statistical measures; and
    (ii) Ratios or statistical measures calculated using exclusively one 
or both of:
    (A) Financial measures calculated in accordance with GAAP; and
    (B) Operating measures or other measures that are not non-GAAP 
financial measures.
    (5) For purposes of this paragraph (e), non-GAAP financial measures 
exclude financial measures required to be disclosed by GAAP, Commission 
rules, or a system of regulation of a government or governmental 
authority or self-regulatory organization that is applicable to the 
registrant. However, the financial measure should be presented outside 
of the financial statements unless the financial measure is required or 
expressly permitted by the standard-setter that is responsible for 
establishing the GAAP used in such financial statements.
    (6) The requirements of paragraph (e) of this section shall not 
apply to a non-GAAP financial measure included in disclosure relating to 
a proposed business combination, the entity resulting therefrom or an 
entity that is a party thereto, if the disclosure is contained in a 
communication that is subject to Sec. 230.425 of this chapter, 
Sec. 240.14a-12 or Sec. 240.14d-2(b)(2) of this chapter or Sec. 229.1015 
of this chapter.
    (7) The requirements of paragraph (e) of this section shall not 
apply to investment companies registered under section 8 of the 
Investment Company Act of 1940 (15 U.S.C. 80a-8).
    Note to paragraph (e). A non-GAAP financial measure that would 
otherwise be prohibited by paragraph (e)(1)(ii) of this section is 
permitted in a filing of a foreign private issuer if:
    1. The non-GAAP financial measure relates to the GAAP used in the 
registrant's primary financial statements included in its filing with 
the Commission;
    2. The non-GAAP financial measure is required or expressly permitted 
by the standard-setter that is responsible for establishing the GAAP 
used in such financial statements; and
    3. The non-GAAP financial measure is included in the annual report 
prepared by the registrant for use in the jurisdiction in which it is 
domiciled, incorporated or organized or for distribution to its security 
holders.

[47 FR 11401, Mar. 16, 1982, as amended at 52 FR 21260, June 5, 1987; 58 
FR 14665, Mar. 18, 1993; 58 FR 62029, Nov. 23, 1993; 60 FR 32824, June 
23, 1995; 64 FR 61443, Nov. 10, 1999; 68 FR 4831, Jan. 30, 2003]



                        Subpart 229.100--Business



Sec. 229.101  (Item 101) Description of business.

    (a) General development of business. Describe the general 
development of the business of the registrant, its subsidiaries and any 
predecessor(s) during the past five years, or such shorter period as the 
registrant may have been engaged in business. Information shall be 
disclosed for earlier periods if material to an understanding of the 
general development of the business.
    (1) In describing developments, information shall be given as to 
matters such as the following: the year in which the registrant was 
organized and its form of organization; the nature and results of any 
bankruptcy, receivership or similar proceedings with respect to the 
registrant or any of its significant subsidiaries; the nature and 
results of any other material reclassification, merger or consolidation 
of the registrant or any of its significant subsidiaries; the 
acquisition or disposition of any material amount of assets otherwise 
than in the ordinary course of business; and any material changes in the 
mode of conducting the business.
    (2) Registrants, (i) filing a registration statement on Form S-1 
(Sec. 239.11 of this chapter) under the Securities Act or on Form 10 and 
Form 10-SB (Sec. 249.210 of this chapter) under the Exchange Act, (ii) 
not subject to the reporting requirements of section 13(a) or 15(d) of 
the Exchange Act immediately prior to the filing of such registration 
statement, and (iii) that (including predecessors) have not received 
revenue from operations during each of the 3 fiscal years immediately 
prior to the filing of registration statement, shall provide the 
following information:

[[Page 383]]

    (A) If the registration statement is filed prior to the end of the 
registrant's second fiscal quarter, a description of the registrant's 
plan of operation for the remainder of the fiscal year; or
    (B) If the registration statement is filed subsequent to the end of 
the registrant's second fiscal quarter, a descripition of the 
registrant's plan of operation for the remainder of the fiscal year and 
for the first six months of the next fiscal year. If such information is 
not available, the reasons for its not being available shall be stated. 
Disclosure relating to any plan shall include such matters as:
    (1) In the case of a registration statement on Form S-1, a statement 
in narrative form indicating the registrant's opinion as to the period 
of time that the proceeds from the offering will satisfy cash 
requirements and whether in the next six months it will be necessary to 
raise additional funds to meet the expenditures required for operating 
the business of the registrant; the specific reasons for such opinion 
shall be set forth and categories of expenditures and sources of cash 
resources shall be identified; however, amounts of expenditures and cash 
resources need not be provided; in addition, if the narrative statement 
is based on a cash budget, such budget shall be furnished to the 
Commission as supplemental information, but not as part of the 
registration statement;
    (2) An explanation of material product research and development to 
be performed during the period covered in the plan;
    (3) Any anticipated material acquisition of plant and equipment and 
the capacity thereof;
    (4) Any anticipated material changes in number of employees in the 
various departments such as research and development, production, sales 
or administration; and
    (5) Other material areas which may be peculiar to the registrant's 
business.
    (b) Financial information about segments. Report for each segment, 
as defined by generally accepted accounting principles, revenues from 
external customers, a measure of profit or loss and total assets. A 
registrant must report this information for each of the last three 
fiscal years or for as long as it has been in business, whichever period 
is shorter. If the information provided in response to this paragraph 
(b) conforms with generally accepted accounting principles, a registrant 
may include in its financial statements a cross reference to this data 
in lieu of presenting duplicative information in the financial 
statements; conversely, a registrant may cross reference to the 
financial statements.
    (1) If a registrant changes the structure of its internal 
organization in a manner that causes the composition of its reportable 
segments to change, the registrant must restate the corresponding 
information for earlier periods, including interim periods, unless it is 
impracticable to do so. Following a change in the composition of its 
reportable segments, a registrant shall disclose whether it has restated 
the corresponding items of segment information for earlier periods. If 
it has not restated the items from earlier periods, the registrant shall 
disclose in the year in which the change occurs segment information for 
the current period under both the old basis and the new basis of 
segmentation, unless it is impracticable to do so.
    (2) If the registrant includes, or is required by Article 3 of 
Regulation S-X (17 CFR 210) to include, interim financial statements, 
discuss any facts relating to the performance of any of the segments 
during the period which, in the opinion of management, indicate that the 
three year segment financial data may not be indicative of current or 
future operations of the segment. Comparative financial information 
shall be included to the extent necessary to the discussion.
    (c) Narrative description of business. (1) Describe the business 
done and intended to be done by the registrant and its subsidiaries, 
focusing upon the registrant's dominant segment or each reportable 
segment about which financial information is presented in the financial 
statements. To the extent material to an understanding of the 
registrant's business taken as a whole, the description of each such 
segment shall include the information specified in paragraphs (c)(1) (i) 
through (x) of this section. The matters specified in paragraphs (c)(1) 
(xi) through (xiii) of this section shall

[[Page 384]]

be discussed with respect to the registrant's business in general; where 
material, the segments to which these matters are significant shall be 
identified.
    (i) The principal products produced and services rendered by the 
registrant in the segment and the principal markets for, and methods of 
distribution of, the segment's principal products and services. In 
addition, state for each of the last three fiscal years the amount or 
percentage of total revenue contributed by any class of similar products 
or services which accounted for 10 percent or more of consolidated 
revenue in any of the last three fiscal years or 15 percent or more of 
consolidated revenue, if total revenue did not exceed $50,000,000 during 
any of such fiscal years.
    (ii) A description of the status of a product or segment (e.g. 
whether in the planning stage, whether prototypes exist, the degree to 
which product design has progressed or whether further engineering is 
necessary), if there has been a public announcement of, or if the 
registrant otherwise has made public information about, a new product or 
segment that would require the investment of a material amount of the 
assets of the registrant or that otherwise is material. This paragraph 
is not intended to require disclosure of otherwise nonpublic corporate 
information the disclosure of which would affect adversely the 
registrant's competitive position.
    (iii) The sources and availability of raw materials.
    (iv) The importance to the segment and the duration and effect of 
all patents, trademarks, licenses, franchises and concessions held.
    (v) The extent to which the business of the segment is or may be 
seasonal.
    (vi) The practices of the registrant and the industry (respective 
industries) relating to working capital items (e.g., where the 
registrant is required to carry significant amounts of inventory to meet 
rapid delivery requirements of customers or to assure itself of a 
continuous allotment of goods from suppliers; where the registrant 
provides rights to return merchandise; or where the registrant has 
provided extended payment terms to customers).
    (vii) The dependence of the segment upon a single customer, or a few 
customers, the loss of any one or more of which would have a material 
adverse effect on the segment. The name of any customer and its 
relationship, if any, with the registrant or its subsidiaries shall be 
disclosed if sales to the customer by one or more segments are made in 
an aggregate amount equal to 10 percent or more of the registrant's 
consolidated revenues and the loss of such customer would have a 
material adverse effect on the registrant and its subsidiaries taken as 
a whole. The names of other customers may be included, unless in the 
particular case the effect of including the names would be misleading. 
For purposes of this paragraph, a group of customers under common 
control or customers that are affiliates of each other shall be regarded 
as a single customer.
    (viii) The dollar amount of backlog orders believed to be firm, as 
of a recent date and as of a comparable date in the preceding fiscal 
year, together with an indication of the portion thereof not reasonably 
expected to be filled within the current fiscal year, and seasonal or 
other material aspects of the backlog. (There may be included as firm 
orders government orders that are firm but not yet funded and contracts 
awarded but not yet signed, provided an appropriate statement is added 
to explain the nature of such orders and the amount thereof. The portion 
of orders already included in sales or operating revenues on the basis 
of percentage of completion or program accounting shall be excluded.)
    (ix) A description of any material portion of the business that may 
be subject to renegotiation of profits or termination of contracts or 
subcontracts at the election of the Government.
    (x) Competitive conditions in the business involved including, where 
material, the identity of the particular markets in which the registrant 
competes, an estimate of the number of competitors and the registrant's 
competitive position, if known or reasonably available to the 
registrant. Separate consideration shall be given to the

[[Page 385]]

principal products or services or classes of products or services of the 
segment, if any. Generally, the names of competitors need not be 
disclosed. The registrant may include such names, unless in the 
particular case the effect of including the names would be misleading. 
Where, however, the registrant knows or has reason to know that one or a 
small number of competitors is dominant in the industry it shall be 
identified. The principal methods of competition (e.g., price, service, 
warranty or product performance) shall be identified, and positive and 
negative factors pertaining to the competitive position of the 
registrant, to the extent that they exist, shall be explained if known 
or reasonably available to the registrant.
    (xi) If material, the estimated amount spent during each of the last 
three fiscal years on company-sponsored research and development 
activities determined in accordance with generally accepted accounting 
principles. In addition, state, if material, the estimated dollar amount 
spent during each of such years on customer-sponsored research 
activities relating to the development of new products, services or 
techniques or the improvement of existing products, services or 
techniques.
    (xii) Appropriate disclosure also shall be made as to the material 
effects that compliance with Federal, State and local provisions which 
have been enacted or adopted regulating the discharge of materials into 
the environment, or otherwise relating to the protection of the 
environment, may have upon the capital expenditures, earnings and 
competitive position of the registrant and its subsidiaries. The 
registrant shall disclose any material estimated capital expenditures 
for environmental control facilities for the remainder of its current 
fiscal year and its succeeding fiscal year and for such further periods 
as the registrant may deem materials.
    (xiii) The number of persons employed by the registrant.
    (d) Financial information about geographic areas. (1) State for each 
of the registrant's last three fiscal years, or for each fiscal year the 
registrant has been engaged in business, whichever period is shorter:
    (i) Revenues from external customers attributed to:
    (A) The registrant's country of domicile;
    (B) All foreign countries, in total, from which the registrant 
derives revenues; and
    (C) Any individual foreign country, if material. Disclose the basis 
for attributing revenues from external customers to individual 
countries.
    (ii) Long-lived assets, other than financial instruments, long-term 
customer relationships of a financial institution, mortgage and other 
servicing rights, deferred policy acquisition costs, and deferred tax 
assets, located in:
    (A) The registrant's country of domicile;
    (B) All foreign countries, in total, in which the registrant holds 
assets; and
    (C) Any individual foreign country, if material.
    (2) A registrant shall report the amounts based on the financial 
information that it uses to produce the general-purpose financial 
statements. If providing the geographic information is impracticable, 
the registrant shall disclose that fact. A registrant may wish to 
provide, in addition to the information required by paragraph (d)(1) of 
this section, subtotals of geographic information about groups of 
countries. To the extent that the disclosed information conforms with 
generally accepted accounting principles, the registrant may include in 
its financial statements a cross reference to this data in lieu of 
presenting duplicative data in its financial statements; conversely, a 
registrant may cross-reference to the financial statements.
    (3) A registrant shall describe any risks attendant to the foreign 
operations and any dependence on one or more of the registrant's 
segments upon such foreign operations, unless it would be more 
appropriate to discuss this information in connection with the 
description of one or more of the registrant's segments under paragraph 
(c) of this item.
    (4) If the registrant includes, or is required by Article 3 of 
Regulation S-X

[[Page 386]]

(17 CFR 210), to include, interim financial statements, discuss any 
facts relating to the information furnished under this paragraph (d) 
that, in the opinion of management, indicate that the three year 
financial data for geographic areas may not be indicative of current or 
future operations. To the extent necessary to the discussion, include 
comparative information.
    (e) Available information. Disclose the information in paragraphs 
(e)(1), (e)(2) and (e)(3) of this section in any registration statement 
you file under the Securities Act (15 U.S.C. 77a et seq.), and disclose 
the information in paragraphs (e)(3) and (e)(4) of this section if you 
are an accelerated filer (as defined in Sec. 240.12b-2 of this chapter) 
filing an annual report on Form 10-K (Sec. 249.310 of this chapter):
    (1) Whether you file reports with the Securities and Exchange 
Commission. If you are a reporting company, identify the reports and 
other information you file with the SEC.
    (2) That the public may read and copy any materials you file with 
the SEC at the SEC's Public Reference Room at 450 Fifth Street, NW., 
Washington, DC 20549. State that the public may obtain information on 
the operation of the Public Reference Room by calling the SEC at 1-800-
SEC-0330. If you are an electronic filer, state that the SEC maintains 
an Internet site that contains reports, proxy and information 
statements, and other information regarding issuers that file 
electronically with the SEC and state the address of that site (http://
www.sec.gov).
    (3) You are encouraged to give your Internet address, if available, 
except that if you are an accelerated filer filing your annual report on 
Form 10-K, you must disclose your Internet address, if you have one.
    (4)(i) Whether you make available free of charge on or through your 
Internet website, if you have one, your annual report on Form 10-K, 
quarterly reports on Form 10-Q (Sec. 249.308a of this chapter), current 
reports on Form 8-K (Sec. 249.308 of this chapter), and amendments to 
those reports filed or furnished pursuant to Section 13(a) or 15(d) of 
the Exchange Act (15 U.S.C. 78m(a) or 78o(d)) as soon as reasonably 
practicable after you electronically file such material with, or furnish 
it to, the SEC;
    (ii) If you do not make your filings available in this manner, the 
reasons you do not do so (including, where applicable, that you do not 
have an Internet website); and
    (iii) If you do not make your filings available in this manner, 
whether you voluntarily will provide electronic or paper copies of your 
filings free of charge upon request.
    (f) Reports to security holders. Disclose the following information 
in any registration statement you file under the Securities Act:
    (1) If the SEC's proxy rules or regulations, or stock exchange 
requirements, do not require you to send an annual report to security 
holders or to holders of American depository receipts, describe briefly 
the nature and frequency of reports that you will give to security 
holders. Specify whether the reports that you give will contain 
financial information that has been examined and reported on, with an 
opinion expressed ``by'' an independent public or certified public 
accountant.
    (2) For a foreign private issuer, if the report will not contain 
financial information prepared in accordance with U.S. generally 
accepted accounting principles, you must state whether the report will 
include a reconciliation of this information with U.S. generally 
accepted accounting principles.
    (g) Enforceability of civil liabilities against foreign persons. 
Disclose the following if you are a foreign private issuer filing a 
registration statement under the Securities Act:
    (1) Whether or not investors may bring actions under the civil 
liability provisions of the U.S. Federal securities laws against the 
foreign private issuer, any of its officers and directors who are 
residents of a foreign country, any underwriters or experts named in the 
registration statement that are residents of a foreign country, and 
whether investors may enforce these civil liability provisions when the 
assets of the issuer or these other persons are located outside of the 
United States. The disclosure must address the following matters:
    (i) The investor's ability to effect service of process within the 
United

[[Page 387]]

States on the foreign private issuer or any person;
    (ii) The investor's ability to enforce judgments obtained in U.S. 
courts against foreign persons based upon the civil liability provisions 
of the U.S. Federal securities laws;
    (iii) The investor's ability to enforce, in an appropriate foreign 
court, judgments of U.S. courts based upon the civil liability 
provisions of the U.S. Federal securities laws; and
    (iv) The investor's ability to bring an original action in an 
appropriate foreign court to enforce liabilities against the foreign 
private issuer or any person based upon the U.S. Federal securities 
laws.
    (2) If you provide this disclosure based on an opinion of counsel, 
name counsel in the prospectus and file as an exhibit to the 
registration statement a signed consent of counsel to the use of its 
name and opinion.

Instructions to Item 101: 1. In determining what information about the 
segments is material to an understanding of the registrant's business 
taken as a whole and therefore required to be disclosed, pursuant to 
paragraph (c) of this Item, the registrant should take into account both 
quantitative and qualitative factors such as the significance of the 
matter to the registrant (e.g., whether a matter with a relatively minor 
impact on the registrant's business is represented by management to be 
important to its future profitability), the pervasiveness of the matter 
(e.g., whether it affects or may affect numerous items in the segment 
information), and the impact of the matter (e.g., whether it distorts 
the trends reflected in the segment information). Situations may arise 
when information should be disclosed about a segment, althought the 
information in quantitative terms may not appear significant to the 
registrant's business taken as a whole.
    2. Base the determination of whether information about segments is 
required for a particular year upon an evaluation of interperiod 
comparability. For instance, interperiod comparability would require a 
registrant to report segment information in the current period even if 
not material under the criteria for reportability of SFAS No. 131 if a 
segment has been significant in the immediately preceding period and the 
registrant expects it to be significant in the future.
    3. The Commission, upon written request of the registrant and where 
consistent with the protection of investors, may permit the omission of 
any of the information required by this Item or the furnishing in 
substitution thereof of appropriate information of comparable character.

[47 FR 11401, Mar. 16, 1982, as amended at 63 FR 6381, Feb. 6, 1998; 64 
FR 1734, Jan. 12, 1999; 67 FR 58504, Sept. 16, 2002]



Sec. 229.102  (Item 102) Description of property.

    State briefly the location and general character of the principal 
plants, mines and other materially important physical properties of the 
registrant and its subsidiaries. In addition, identify the segment(s), 
as reported in the financial statements, that use the properties 
described. If any such property is not held in fee or is held subject to 
any major encumbrance, so state and describe briefly how held.

Instructions to Item 102: 1. What is required is such information as 
reasonably will inform investors as to the suitability, adequacy, 
productive capacity and extent of utilization of the facilities by the 
registrant. Detailed descriptions of the physical characteristics of 
individual properties or legal descriptions by metes and bounds are not 
required and shall not be given.
    2. In determining whether properties should be described, the 
registrant should take into account both quantitative and qualitative 
factors. See Instruction 1 to Item 101 of Regulation S-K (Sec. 229.101).
    3. In the case of an extractive enterprise, material information 
shall be given as to production, reserves, locations, development and 
the nature of the registrant's interest. If individual properties are of 
major significance to an industry segment:
    A. More detailed information concerning these matters shall be 
furnished; and
    B. Appropriate maps shall be used to disclose location data of 
significant properties except in cases for which numerous maps would be 
required.
    4. A. If reserve estimates are referred to in the document, the 
staff of the Office of Engineering, Division of Corporation Finance of 
the Commission, shall be consulted. That Office may request that a copy 
of the full report of the engineer or other expert who estimated the 
reserves be furnished as supplemental information and not as part of the 
filing. See Rule 418 of Regulation C (Sec. 230.418 of this chapter) and 
Rule 12b-4 of Regulation 12B (Sec. 240.12b-4 of this chapter) with 
respect to the submission to, and return by, the Commission of 
supplemental information.
    B. If the estimates of reserves, or any estimated valuation thereof, 
are represented as being based on estimates prepared or reviewed by 
independent consultants, those independent consultants shall be named in 
the document.

[[Page 388]]

    5. Estimates of oil or gas reserves other than proved or, in the 
case of other extractive reserves, estimates other than proved or 
probable reserves, and any estimated values of such reserves shall not 
be disclosed in any document publicly filed with the Commission, unless 
such information is required to be disclosed in the document by foreign 
or state law; provided, however, that where such estimates previously 
have been provided to a person (or any of its affiliates) that is 
offering to acquire, merge or consolidate with the registrant or 
otherwise to acquire the registrant's securities, such estimates may be 
included in documents relating to such acquisition.
    6. The definitions in Sec. 210.4-10(a) of Regulation S-X [17 CFR 
210] shall apply to this Item with respect to oil and gas operations.

[47 FR 11401, Mar. 16, 1982, as amended at 64 FR 1735, Jan. 12, 1999]



Sec. 229.103  (Item 103) Legal proceedings.

    Describe briefly any material pending legal proceedings, other than 
ordinary routine litigation incidental to the business, to which the 
registrant or any of its subsidiaries is a party or of which any of 
their property is the subject. Include the name of the court or agency 
in which the proceedings are pending, the date instituted, the principal 
parties thereto, a description of the factual basis alleged to underlie 
the proceeding and the relief sought. Include similar information as to 
any such proceedings known to be contemplated by governmental 
authorities.

Instructions to Item 103: 1. If the business ordinarily results in 
actions for negligence or other claims, no such action or claim need be 
described unless it departs from the normal kind of such actions.
    2. No information need be given with respect to any proceeding that 
involves primarily a claim for damages if the amount involved, exclusive 
of interest and costs, does not exceed 10 percent of the current assets 
of the registrant and its subsidiaries on a consolidated basis. However, 
if any proceeding presents in large degree the same legal and factual 
issues as other proceedings pending or known to be contemplated, the 
amount involved in such other proceedings shall be included in computing 
such percentage.
    3. Notwithstanding Instructions 1 and 2, any material bankruptcy, 
receivership, or similar proceeding with respect to the registrant or 
any of its significant subsidiaries shall be described.
    4. Any material proceedings to which any director, officer or 
affiliate of the registrant, any owner of record or beneficially of more 
than five percent of any class of voting securities of the registrant, 
or any associate of any such director, officer, affiliate of the 
registrant, or security holder is a party adverse to the registrant or 
any of its subsidiaries or has a material interest adverse to the 
registrant or any of its subsidiaries also shall be described.
    5. Notwithstanding the foregoing, an administrative or judicial 
proceeding (including, for purposes of A and B of this Instruction, 
proceedings which present in large degree the same issues) arising under 
any Federal, State or local provisions that have been enacted or adopted 
regulating the discharge of materials into the environment or primary 
for the purpose of protecting the environment shall not be deemed 
``ordinary routine litigation incidental to the business'' and shall be 
described if:
    A. Such proceeding is material to the business or financial 
condition of the registrant;
    B. Such proceeding involves primarily a claim for damages, or 
involves potential monetary sanctions, capital expenditures, deferred 
charges or charges to income and the amount involved, exclusive of 
interest and costs, exceeds 10 percent of the current assets of the 
registrant and its subsidiaries on a consolidated basis; or
    C. A governmental authority is a party to such proceeding and such 
proceeding involves potential monetary sanctions, unless the registrant 
reasonably believes that such proceeding will result in no monetary 
sanctions, or in monetary sanctions, exclusive of interest and costs, of 
less than $100,000; provided, however, that such proceedings which are 
similar in nature may be grouped and described generically.



              Subpart 229.200--Securities of the Registrant



Sec. 229.201  (Item 201) Market price of and dividends on the registrant's common equity and related stockholder matters.

    (a) Market information. (1)(i) Identify the principal United States 
market or markets in which each class of the registrant's common equity 
is being traded. Where there is no established public trading market for 
a class of common equity, furnish a statement to that effect. For 
purposes of this Item the existence of limited or sporadic quotations 
should not of itself be deemed to constitute an ``established public 
trading market.'' In the case of foreign registrants, also identify the 
principal established foreign public

[[Page 389]]

trading market, if any, for each class of the registrant's common 
equity.
    (ii) If the principal United States market for such common equity is 
an exchange, state the high and low sales prices for the equity for each 
full quarterly period within the two most recent fiscal years and any 
subsequent interim period for which financial statements are included, 
or are required to be included by Article 3 of Regulation S-X [17 CFR 
210], as reported in the consolidated transaction reporting system or, 
if not so reported, as reported on the principal exchange market for 
such equity.
    (iii) If the principal United States market for such common equity 
is not an exchange, state the range of high and low bid information for 
the equity for each full quarterly period within the two most recent 
fiscal years and any subsequent interim period for which financial 
statements are included, or are required to be included by Article 3 of 
Regulation S-X, as regularly quoted in the automated quotation system of 
a registered securities association, or where the equity is not quoted 
in such a system, the range of reported high and low bid quotations, 
indicating the source of such quotations. Indicate, as applicable, that 
such over-the-counter market quotations reflect inter-dealer prices, 
without retail mark-up, mark-down or commission and may not necessarily 
represent actual transactions. Where there is an absence of an 
established public trading market, reference to quotations shall be 
qualified by appropriate explanation.
    (iv) Where a foreign registrant has identified a principal 
established foreign trading market for its common equity pursuant to 
paragraph (a)(1) of this Item, also provide market price information 
comparable, to the extent practicable, to that required for the 
principal United States market, including the source of such 
information. Such prices shall be stated in the currency in which they 
are quoted. The registrant may translate such prices into United States 
currency at the currency exchange rate in effect on the date the price 
disclosed was reported on the foreign exchange. If the primary United 
States market for the registrant's common equity trades using American 
Depositary Receipts, the United States prices disclosed shall be on that 
basis.
    (v) If the information called for by this Item is being presented in 
a registration statement filed pursuant to the Securities Act or a proxy 
or information statement filed pursuant to the Exchange Act, the 
document also shall include price information as of the latest 
practicable date, and, in the case of securities to be issued in 
connection with an acquisition, business combination or other 
reorganization, as of the date immediately prior to the public 
announcement of such transaction.
    (2) If the information called for by this paragraph (a) is being 
presented in a registration statement on Form S-1 (Sec. 239.11 of this 
chapter) or Form SB-2 (Sec. 239.28 of this chapter) under the Securities 
Act or on Form 10 and Form 10-SB (Sec. 249.210 of this chapter) under 
the Exchange Act relating to a class of common equity for which at the 
time of filing there is no established United States public trading 
market, indicate the amount(s) of common equity (i) that is subject to 
outstanding options or warrants to purchase, or securities convertible 
into, common equity of the registrant; (ii) that could be sold pursuant 
to Rule 144 under the Securities Act [Sec. 230.144 of this chapter] or 
that the registrant has agreed to register under the Securities Act for 
sale by security holders; or (iii) that is being, or has been publicly 
proposed to be, publicly offered by the registrant (unless such common 
equity is being offered pursuant to an employee benefit plan or dividend 
reinvestment plan), the offering of which could have a material effect 
on the market price of the registrant's common equity.
    (b) Holders. (1) Set forth the approximate number of holders of each 
class of common equity of the registrant as of the latest practicable 
date.
    (2) If the information called for by this paragraph (b) is being 
presented in a registration statement filed pursuant to the Securities 
Act or a proxy statement or information statement filed pursuant to the 
Exchange Act that relates to an acquisition, business combination or 
other reorganization, indicate the effect of such transaction on

[[Page 390]]

the amount and percentage of present holdings of the registrant's common 
equity owned beneficially by (i) any person (including any group as that 
term is used in section 13(d)(3) of the Exchange Act) who is known to 
the registrant to be the beneficial owner of more than five percent of 
any class of the registrant's common equity and (ii) each director and 
nominee and (iii) all directors and officers as a group, and the 
registrant's present commitments to such persons with respect to the 
issuance of shares of any class of its common equity.
    (c) Dividends. (1) State the frequency and amount of any cash 
dividends declared on each class of its common equity by the registrant 
for the two most recent fiscal years and any subsequent interim period 
for which financial statements are required to be presented by 
Sec. 210.3 of Regulation S-X. Where there are restrictions (including, 
where appropriate, restrictions on the ability of registrant's 
subsidiaries to transfer funds to the registrant in the form of cash 
dividends, loans or advances) that currently materially limit the 
registrant's ability to pay such dividends or that the registrant 
reasonably believes are likely to limit materially the future payment of 
dividends on the common equity so state and either (i) describe briefly 
(where appropriate quantify) such restrictions, or (ii) cross reference 
to the specific discussion of such restrictions in the Management's 
Discussion and Analysis of financial condition and operating results 
prescribed by Item 303 of Regulation S-K (Sec. 229.303) and the 
description of such restrictions required by Regulation S-X in the 
registrant's financial statements.
    (2) Where registrants have a record of paying no cash dividends 
although earnings indicate an ability to do so, they are encouraged to 
consider the question of their intention to pay cash dividends in the 
foreseeable future and, if no such intention exists, to make a statement 
of that fact in the filing. Registrants which have a history of paying 
cash dividends also are encouraged to indicate whether they currently 
expect that comparable cash dividends will continue to be paid in the 
future and, if not, the nature of the change in the amount or rate of 
cash dividend payments.
    (d) Securities authorized for issuance under equity compensation 
plans. (1) In the following tabular format, provide the information 
specified in paragraph (d)(2) of this Item as of the end of the most 
recently completed fiscal year with respect to compensation plans 
(including individual compensation arrangements) under which equity 
securities of the registrant are authorized for issuance, aggregated as 
follows:
    (i) All compensation plans previously approved by security holders; 
and
    (ii) All compensation plans not previously approved by security 
holders.

                                      Equity Compensation Plan Information
----------------------------------------------------------------------------------------------------------------
                                                                                           Number of securities
                                                                                         remaining available for
                                       Number of securities to      Weighted-average      future issuance under
            Plan category              be issued upon exercise     exercise price of       equity compensation
                                       of outstanding options,    outstanding options,       plans (excluding
                                         warrants and rights      warrants and rights    securities reflected in
                                                                                               column (a))
----------------------------------------------------------------------------------------------------------------
                                       (a)....................  (b)....................  (c)
----------------------------------------------------------------------------------------------------------------
Equity compensation plans approved by
 security holders
Equity compensation plans not
 approved by security holders
    Total............................
----------------------------------------------------------------------------------------------------------------

    (2) The table shall include the following information as of the end 
of the most recently completed fiscal year for each category of equity 
compensation plan described in paragraph (d)(1) of this Item:
    (i) The number of securities to be issued upon the exercise of 
outstanding options, warrants and rights (column (a));

[[Page 391]]

    (ii) The weighted-average exercise price of the outstanding options, 
warrants and rights disclosed pursuant to paragraph (d)(2)(i) of this 
Item (column (b)); and
    (iii) Other than securities to be issued upon the exercise of the 
outstanding options, warrants and rights disclosed in paragraph 
(d)(2)(i) of this Item, the number of securities remaining available for 
future issuance under the plan (column (c)).
    (3) For each compensation plan under which equity securities of the 
registrant are authorized for issuance that was adopted without the 
approval of security holders, describe briefly, in narrative form, the 
material features of the plan.

    Instructions to Paragraph (d).
    1. Disclosure shall be provided with respect to any compensation 
plan and individual compensation arrangement of the registrant (or 
parent, subsidiary or affiliate of the registrant) under which equity 
securities of the registrant are authorized for issuance to employees or 
non-employees (such as directors, consultants, advisors, vendors, 
customers, suppliers or lenders) in exchange for consideration in the 
form of goods or services as described in Statement of Financial 
Accounting Standards No. 123, Accounting for Stock-Based Compensation, 
or any successor standard. No disclosure is required with respect to:
    a. Any plan, contract or arrangement for the issuance of warrants or 
rights to all security holders of the registrant as such on a pro rata 
basis (such as a stock rights offering) or
    b. Any employee benefit plan that is intended to meet the 
qualification requirements of Section 401(a) of the Internal Revenue 
Code (26 U.S.C. 401(a)).
    2. For purposes of this paragraph, an ``individual compensation 
arrangement'' includes, but is not limited to, the following: a written 
compensation contract within the meaning of ``employee benefit plan'' 
under Sec. 230.405 of this chapter and a plan (whether or not set forth 
in any formal document) applicable to one person as provided under Item 
402(a)(7)(ii) of Regulation S-K (Sec. 229.402(a)(7)(ii)).
    3. If more than one class of equity security is issued under its 
equity compensation plans, a registrant should aggregate plan 
information for each class of security.
    4. A registrant may aggregate information regarding individual 
compensation arrangements with the plan information required under 
paragraph (d)(1)(i) and (ii) of this Item, as applicable.
    5. A registrant may aggregate information regarding a compensation 
plan assumed in connection with a merger, consolidation or other 
acquisition transaction pursuant to which the registrant may make 
subsequent grants or awards of its equity securities with the plan 
information required under paragraph (d)(1)(i) and (ii) of this Item, as 
applicable. A registrant shall disclose on an aggregated basis in a 
footnote to the table the information required under paragraph (d)(2)(i) 
and (ii) of this Item with respect to any individual options, warrants 
or rights assumed in connection with a merger, consolidation or other 
acquisition transaction.
    6. To the extent that the number of securities remaining available 
for future issuance disclosed in column (c) includes securities 
available for future issuance under any compensation plan or individual 
compensation arrangement other than upon the exercise of an option, 
warrant or right, disclose the number of securities and type of plan 
separately for each such plan in a footnote to the table.
    7. If the description of an equity compensation plan set forth in a 
registrant's financial statements contains the disclosure required by 
paragraph (d)(3) of this Item, a cross-reference to such description 
will satisfy the requirements of paragraph (d)(3) of this Item.
    8. If an equity compensation plan contains a formula for calculating 
the number of securities available for issuance under the plan, 
including, without limitation, a formula that automatically increases 
the number of securities available for issuance by a percentage of the 
number of outstanding securities of the registrant, a description of 
this formula shall be disclosed in a footnote to the table.
    9. Except where it is part of a document that is incorporated by 
reference into a prospectus, the information required by this paragraph 
need not be provided in any registration statement filed under the 
Securities Act.

                                * * * * *

Instructions to Item 201: 1. Registrants, the common equity of which is 
listed for trading on more than one securities exchange registered under 
the Exchange Act, are required to indicate each such exchange pursuant 
to paragraph (a)(1)(i) of this Item; such registrants, however, need 
only report one set of price quotations pursuant to paragraph (a)(1)(ii) 
of this Item; where available, these shall be the prices as reported in 
the consolidated transaction reporting system and, where the prices are 
not so reported, the prices on the most significant (in terms of volume) 
securities exchange for such shares.
    2. Market prices and dividends reported pursuant to this Item shall 
be adjusted to

[[Page 392]]

give retroactive effect to material changes resulting from stock 
dividends, stock splits and reverse stock splits.
    3. The computation of the approximate number of holders of 
registrant's common equity may be based upon the number of record 
holders or also may include individual participants in security position 
listings. See Rule 17Ad-8 under the Exchange Act. The method of 
computation that is chosen shall be indicated.
    4. If the registrant is a foreign issuer, describe briefly:
    A. Any governmental laws, decrees or regulations in the country in 
which the registrant is organized that restrict the export or import of 
capital, including, but not limited to, foreign exchange controls, or 
that affect the remittance of dividends or other payments to nonresident 
holders of the registrant's common equity; and
    B. All taxes, including withholding provisions, to which United 
States common equity holders are subject under existing laws and 
regulations of the foreign country in which the registrant is organized. 
Include a brief description of pertinent provisions of any reciprocal 
tax treaty between such foreign country and the United States regarding 
withholding. If there is no such treaty, so state.
    5. If the registrant is a foreign private issuer whose common equity 
of the class being registered is wholly or partially in bearer form, the 
response to this Item shall so indicate together with as much 
information as the registrant is able to provide with respect to 
security holdings in the United States. If the securities being 
registered trade in the United States in the form of American Depositary 
Receipts or similar certificates, the response to this Item shall so 
indicate together with the name of the depositary issuing such receipts 
and the number of shares or other units of the underlying security 
representing the trading units in such receipts.

[47 FR 11401, Mar. 16, 1982, as amended at 47 FR 25127, June 10, 1982; 
47 FR 54768, Dec. 6, 1982; 67 FR 246, Jan. 2, 2002]



Sec. 229.202  (Item 202) Description of registrant's securities.

    Note: If the securities being described have been accepted for 
listing on an exchange, the exchange may be identified. The document 
should not however, convey the impression that the registrant may apply 
successfully for listing of the securities on an exchange or that, in 
the case of an underwritten offering, the underwriters may request the 
registrant to apply for such listing, unless there is reasonable 
assurance that the securities to be offered will be acceptable to a 
securities exchange for listing.

    (a) Capital stock. If capital stock is to be registered, state the 
title of the class and describe such of the matters listed in paragraphs 
(a) (1) through (5) as are relevant. A complete legal description of the 
securities need not be given.
    (1) Outline briefly: (i) dividend rights; (ii) terms of conversion; 
(iii) sinking fund provisions; (iv) redemption provisions; (v) voting 
rights, including any provisions specifying the vote required by 
security holders to take action; (vi) any classification of the Board of 
Directors, and the impact of such classification where cumulative voting 
is permitted or required; (vii) liquidation rights; (viii) preemption 
rights; and (ix) liability to further calls or to assessment by the 
registrant and for liabilities of the registrant imposed on its 
stockholders under state statutes (e.g., to laborers, servants or 
employees of the registrant), unless such disclosure would be immaterial 
because the financial resources of the registrant or other factors make 
it improbable that liability under such state statues would be imposed; 
(x) any restriction on alienability of the securities to be registered; 
and (xi) any provision discriminating against any existing or 
prospective holder of such securities as a result of such security 
holder owning a substantial amount of securities.
    (2) If the rights of holders of such stock may be modified otherwise 
than by a vote of a majority or more of the shares outstanding, voting 
as a class, so state and explain briefly.
    (3) If preferred stock is to be registered, describe briefly any 
restriction on the repurchase or redemption of shares by the registrant 
while there is any arrearage in the payment of dividends or sinking fund 
installments. If there is no such restriction, so state.
    (4) If the rights evidenced by, or amounts payable with respect to, 
the shares to be registered are, or may be, materially limited or 
qualified by the rights of any other authorized class of securities, 
include the information regarding such other securities as will enable 
investors to understand such limitations or qualifications. No 
information need be given, however, as to any class of securities all of 
which will be retired, provided appropriate steps

[[Page 393]]

to ensure such retirement will be completed prior to or upon delivery by 
the registrant of the shares.
    (5) Describe briefly or cross-reference to a description in another 
part of the document, any provision of the registrant's charter or by-
laws that would have an effect of delaying, deferring or preventing a 
change in control of the registrant and that would operate only with 
respect to an extraordinary corporate transaction involving the 
registrant (or any of its subsidiaries), such as a merger, 
reorganization, tender offer, sale or transfer of substantially all of 
its assets, or liquidation. Provisions and arrangements required by law 
or imposed by governmental or judicial authority need not be described 
or discussed pursuant to this paragraph (a)(5). Provisions or 
arrangements adopted by the registrant to effect, or further, compliance 
with laws or governmental or judicial mandate are not subject to the 
immediately preceding sentence where such compliance did not require the 
specific provisions or arrangements adopted.
    (b) Debt securities. If debt securities are to be registered, state 
the title of such securities, the principal amount being offered, and, 
if a series, the total amount authorized and the total amount 
outstanding as of the most recent practicable date; and describe such of 
the matter listed in paragraphs (b) (1) through (10) as are relevant. A 
complete legal description of the securities need not be given. For 
purposes solely of this Item, debt securities that differ from one 
another only as to the interest rate or maturity shall be regarded as 
securities of the same class. Outline briefly:
    (1) Provisions with respect to maturity, interest, conversion, 
redemption, amortization, sinking fund, or retirement;
    (2) Provisions with respect to the kind and priority of any lien 
securing the securities, together with a brief identification of the 
principal properties subject to such lien;
    (3) Provisions with respect to the subordination of the rights of 
holders of the securities to other security holders or creditors of the 
registrant; where debt securities are designated as subordinated in 
accordance with Instruction 1 to this Item, set forth the aggregate 
amount of outstanding indebtedness as of the most recent practicable 
date that by the terms of such debt securities would be senior to such 
subordinated debt and describe briefly any limitation on the issuance of 
such additional senior indebtedness or state that there is no such 
limitation;
    (4) Provisions restricting the declaration of dividends or requiring 
the maintenance of any asset ratio or the creation or maintenance of 
reserves;
    (5) Provisions restricting the incurrence of additional debt or the 
issuance of additional securities; in the case of secured debt, whether 
the securities being registered are to be issued on the basis of 
unbonded bondable property, the deposit of cash or otherwise; as of the 
most recent practicable date, the approximate amount of unbonded 
bondable property available as a basis for the issuance of bonds; 
provisions permitting the withdrawal of cash deposited as a basis for 
the issuance of bonds; and provisions permitting the release or 
substitution of assets securing the issue; Provided, however, That 
provisions permitting the release of assets upon the deposit of 
equivalent funds or the pledge of equivalent property, the release of 
property no longer required in the business, obsolete property, or 
property taken by eminent domain or the application of insurance moneys, 
and other similar provisions need not be described;
    (6) The general type of event that constitutes a default and whether 
or not any periodic evidence is required to be furnished as to the 
absence of default or as to compliance with the terms of the indenture;
    (7) Provisions relating to modification of the terms of the security 
or the rights of security holders;
    (8) If the rights evidenced by the securities to be registered are, 
or may be, materially limited or qualified by the rights of any other 
authorized class of securities, the information regarding such other 
securities as will enable investors to understand the rights evidenced 
by the securities; to the extent not otherwise disclosed pursuant to 
this Item; no information need be

[[Page 394]]

given, however, as to any class of securities all of which will be 
retired, provided appropriate steps to ensure such retirement will be 
completed prior to or upon delivery by the registrant of the securities;
    (9) If debt securities are to be offered at a price such that they 
will be deemed to be offered at an ``original issue discount'' as 
defined in paragraph (a) of section 1273 of the Internal Revenue Code 
(26 U.S.C. 1273), or if a debt security is sold in a package with 
another security and the allocation of the offering price between the 
two securities may have the effect of offering the debt security at such 
an original issue discount, the tax effects thereof pursuant to sections 
1271-1278;
    (10) The name of the trustee(s) and the nature of any material 
relationship with the registrant or with any of its affiliates; the 
percentage of securities of the class necessary to require the trustee 
to take action; and what indemnification the trustee may require before 
proceeding to enforce the lien.
    (c) Warrants and rights. If the securities described are to be 
offered pursuant to warrants or rights state:
    (1) The amount of securities called for by such warrants or rights;
    (2) The period during which and the price at which the warrants or 
rights are exercisable;
    (3) The amount of warrants or rights outstanding;
    (4) Provisions for changes to or adjustments in the exercise price; 
and
    (5) Any other material terms of such rights on warrants.
    (d) Other securities. If securities other than capital stock, debt, 
warrants or rights are to be registered, include a brief description 
(comparable to that required in paragraphs (a), (b) and (c) of Item 202) 
of the rights evidenced thereby.
    (e) Market information for securities other than common equity. If 
securities other than common equity are to be registered and there is an 
established public trading market for such securities (as that term is 
used in Item 201 of Regulation S-K (Sec. 229.201 of this chapter)) 
provide market information with respect to such securities comparable to 
that required by paragraph (a) of Item 201 of Regulation S-K 
(Sec. 229.201).
    (f) American Depositary Receipts. If Depositary Shares represented 
by American Depositary Receipts are being registered, furnish the 
following information:
    (1) The name of the depositary and the address of its principal 
executive office.
    (2) State the title of the American Depositary Receipts and identify 
the deposited security. Describe briefly the terms of deposit, including 
the provisions, if any, with respect to:
    (i) The amount of deposited securities represented by one unit of 
American Depositary Receipts;
    (ii) The procedure for voting, if any, the deposited securities;
    (iii) The collection and distribution of dividends;
    (iv) The transmission of notices, reports and proxy soliciting 
material;
    (v) The sale or exercise of rights;
    (vi) The deposit or sale of securities resulting from dividends, 
splits or plans of reorganization;
    (vii) Amendment, extension or termination of the deposit;
    (viii) Rights of holders of receipts to inspect the transfer books 
of the depositary and the list of holders of receipts;
    (ix) Restrictions upon the right to deposit or withdraw the 
underlying securities;
    (x) Limitation upon the liability of the depositary.
    (3) Describe all fees and charges which may be imposed directly or 
indirectly against the holder of the American Depositary Receipts, 
indicating the type of service, the amount of fee or charges and to whom 
paid.

Instructions to Item 202: 1. 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 non-cumulative; a 
brief indication of the preference, if any; and if convertible or 
redeemable, a statement to that effect;
    B. In the case of debt, the rate of interest; the date of maturity 
or, if the issue matures serially, a brief indication of the serial 
maturities, such as ``maturing serially from 1955 to 1960''; if the 
payment of principal or interest is contingent, an appropriate 
indication of such contingency; a brief indication

[[Page 395]]

of the priority of the issue; and, if convertible or callable, a 
statement to that effect; or
    C. In the case of any other kind of security, appropriate 
information of comparable character.
    2. If the registrant is a foreign registrant, include (to the extent 
not disclosed in the document pursuant to Item 201 of Regulation S-K 
(Sec. 229.201) or otherwise) in the description of the securities:
    A. A brief description of any limitations on the right of 
nonresident or foreign owners to hold or vote such securities imposed by 
foreign law or by the charter or other constituent document of the 
registrant, or if no such limitations are applicable, so state;
    B. A brief description of any governmental laws, decrees or 
regulations in the country in which the registrant is organized 
affecting the remittance of dividends, interest and other payments to 
nonresident holders of the securities being registered;
    C. A brief outline of all taxes, including withholding provisions, 
to which United States security holders are subject under existing laws 
and regulations of the foreign country in which the registrant is 
organized; and
    D. A brief description of pertinent provisions of any reciprocal tax 
treaty between such foreign country and the United States regarding 
withholding or, if there is no such treaty, so state.
    3. Section 305(a)(2) of the Trust Indenture Act of 1939, 15 U.S.C. 
77aaa et seq., as amended (``Trust Indenture Act''), shall not be deemed 
to require the inclusion in a registration statement or in a prospectus 
of any information not required by this Item.
    4. Where convertible securities or stock purchase warrants are being 
registered that are subject to redemption or call, the description of 
the conversion terms of the securities or material terms of the warrants 
shall disclose:
    A. Whether the right to convert or purchase the securities will be 
forfeited unless it is exercised before the date specified in a notice 
of the redemption or call;
    B. The expiration or termination date of the warrants;
    C. The kinds, frequency and timing of notice of the redemption or 
call, including the cities or newspapers in which notice will be 
published (where the securities provide for a class of newspapers or 
group of cities in which the publication may be made at the discretion 
of the registrant, the registrant should describe such provision); and
    D. In the case of bearer securities, that investors are responsible 
for making arrangements to prevent loss of the right to convert or 
purchase in the event of redemption of call, for example, by reading the 
newspapers in which the notice of redemption or call may be published.
    5. The response to paragraph (f) shall include information with 
respect to fees and charges in connection with (A) the deposit or 
substitution of the underlying securities; (B) receipt and distribution 
of dividends; (C) the sale or exercise of rights; (D) the withdrawal of 
the underlying security; and (E) the transferring, splitting or grouping 
of receipts. Information with respect to the right to collect the fees 
and charges against dividends received and deposited securities shall be 
included in response to this item.

(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. 
565-568, 569, 570-574; 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, 1499, 1500; secs. 8 30, 31(c), 
38(a), 54 Stat. 803, 836, 838, 841; 74 Stat. 201; 84 Stat. 1415; 15 
U.S.C. 77f, 77g, 77h, 77j, 77s(a), 78l, 78m, 78o(d), 78w(a), 80a-8, 80a-
29, 80a-30(c), 80a-37(a))

[47 FR 11401, Mar. 16, 1982, as amended at 47 FR 54768, Dec. 6, 1982; 51 
FR 42056, Nov. 20, 1986]



                 Subpart 229.300--Financial Information



Sec. 229.301  (Item 301) Selected financial data.

    Furnish in comparative columnar form the selected financial data for 
the registrant referred to below, for
    (a) Each of the last five fiscal years of the registrant (or for the 
life of the registrant and its predecessors, if less), and
    (b) Any additional fiscal years necessary to keep the information 
from being misleading.

Instructions to Item 301: 1. The purpose of the selected financial data 
shall be to supply in a convenient and readable format selected 
financial data which highlight certain significant trends in the 
registrant's financial condition and results of operations.
    2. Subject to appropriate variation to conform to the nature of the 
registrant's business, the following items shall be included in the 
table of financial data: net sales or operating revenues; income (loss) 
from continuing operations; income (loss) from continuing operations per 
common share; total assets; long-term obligations and redeemable 
preferred stock (including long-term debt, capital leases, and 
redeemable preferred

[[Page 396]]

stock as defined in Sec. 210.5-02.28(a) of Regulation S-X [17 CFR 210]; 
and cash dividends declared per common share. Registrants may include 
additional items which they believe would enhance an understanding of 
and would highlight other trends in their financial condition and 
results of operations.

Briefly describe, or cross-reference to a discussion thereof, factors 
such as accounting changes, business combinations or dispositions of 
business operations, that materially affect the comparability of the 
information reflected in selected financial data. Discussion of, or 
reference to, any material uncertainties should also be included where 
such matters might cause the data reflected herein not to be indicative 
of the registrant's future financial condition or results of operations.
    3. All references to the registrant in the table of selected 
financial data and in this Item shall mean the registrant and its 
subsidiaries consolidated.
    4. If interim period financial statements are included, or are 
required to be included, by Article 3 of Regulation S-X, registrants 
should consider whether any or all of the selected financial data need 
to be updated for such interim periods to reflect a material change in 
the trends indicated; where such updating information is necessary, 
registrants shall provide the information on a comparative basis unless 
not necessary to an understanding of such updating information.
    5. A foreign private issuer shall disclose also the following 
information in all filings containing financial statements:
    A. In the forepart of the document and as of the latest practicable 
date, the exchange rate into U.S. currency of the foreign currency in 
which the financial statements are denominated;
    B. A history of exchange rates for the five most recent years and 
any subsequent interim period for which financial statements are 
presented setting forth the rates for period end, the average rates, and 
the range of high and low rates for each year; and
    C. If equity securities are being registered, a five year summary of 
dividends per share stated in both the currency in which the financial 
statements are denominated and United States currency based on the 
exchange rates at each respective payment date.
    6. A foreign private issuer shall present the selected financial 
data in the same currency as its financial statements. The issuer may 
present the selected financial data on the basis of the accounting 
principles used in its primary financial statements but in such case 
shall present this data also on the basis of any reconciliations of such 
data to United States generally accepted accounting principles and 
Regulation S-X made pursuant to Rule 4-01 of Regulation S-X (Sec. 210.4-
01 of this chapter).
    7. For purposes of this rule, the rate of exchange means the noon 
buying rate in New York City for cable transfers in foreign currencies 
as certified for customs purposes by the Federal Reserve Bank of New 
York. The average rate means the average of the exchange rates on the 
last day of each month during a year.

(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. 
565-568, 569, 570-574; 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, 1499, 1500; secs. 8, 30, 31(c), 
38(a), 54 Stat. 803, 836, 838, 841; 74 Stat. 201; 84 Stat. 1415; 15 
U.S.C. 77f, 77g, 77h, 77j, 77s(a), 78l, 78m, 78o(d), 78w(a), 80a-8, 80a-
29, 80a-30(c), 80a-37(a))

[47 FR 11401, Mar. 16, 1982, as amended at 47 FR 54768, Dec. 6, 1982; 52 
FR 30919, Aug. 18, 1987]



Sec. 229.302  (Item 302) Supplementary financial information.

    (a) Selected quarterly financial data. Registrants specified in 
paragraph (a)(5) of this Item shall provide the information specified 
below.
    (1) Disclosure shall be made of net sales, gross profit (net sales 
less costs and expenses associated directly with or allocated to 
products sold or services rendered), income (loss) before extraordinary 
items and cumulative effect of a change in accounting, per share data 
based upon such income (loss), and net income (loss), for each full 
quarter within the two most recent fiscal years and any subsequent 
interim period for which financial statements are included or are 
required to be included by Article 3 of Regulation S-X [17 CFR 210].
    (2) When the data supplied pursuant to this paragraph (a) vary from 
the amounts previously reported on the Form 10-Q and Form 10-QSB 
(Sec. 249.308a of this chapter) filed for any quarter, such as would be 
the case when a pooling of interests occurs or where an error is 
corrected, reconcile the amounts given with those previously reported 
and describe the reason for the difference.

[[Page 397]]

    (3) Describe the effect of any disposals of segments of a business, 
and extraordinary, unusual or infrequently occurring items recognized in 
each full quarter within the two most recent fiscal years and any 
subsequent interim period for which financial statements are included or 
are required to be included by Article 3 of Regulation S-X, as well as 
the aggregate effect and the nature of year-end or other adjustments 
which are material to the results of that quarter.
    (4) If the financial statements to which this information relates 
have been reported on by an accountant, appropriate professional 
standards and procedures, as enumerated in the Statements of Auditing 
Standards issued by the Auditing Standards Board of the American 
Institute of Certified Public Accountants, shall be followed by the 
reporting accountant with regard to the data required by this paragraph 
(a).
    (5) This paragraph (a) applies to any registrant, except a foreign 
private issuer, that has securities registered pursuant to sections 
12(b) (15 U.S.C. Sec. 78l(b)) (other than mutual life insurance 
companies) or 12(g) of the Exchange Act (15 U.S.C. Sec. 78l(g)).
    (b) Information about oil and gas producing activities. Registrants 
engaged in oil and gas producing activities shall present the 
information about oil and gas producing activities (as those activities 
are defined in Regulation S-X, Sec. 210.4-10(a)) specified in paragraphs 
9-34 of Statement of Financial Accounting Standards (``SFAS'') No. 69, 
``Disclosures about Oil and Gas Producing Activities.'' If such oil and 
gas producing activities are regarded as significant under one or more 
of the tests set forth in paragraph 8 of SFAS No. 69.

Instructions to Paragraph (b): 1. (a) SFAS No. 69 disclosures that 
relate to annual periods shall be presented for each annual period for 
which an income statement is required. (b) SFAS No. 69 disclosures 
required as of the end of an annual period shall be presented as of the 
date of each audited balance sheet required, and (c) SFAS No. 69 
disclosures required as of the beginning of an annual period shall be 
presented as of the beginning of each annual period for which an income 
statement is required.
    2. This paragraph, together with Sec. 210.4-10 of Regulation S-X, 
prescribes financial reporting standards for the preparation of accounts 
by persons engaged, in whole or in part, in the production of crude oil 
or natural gas in the United States, pursuant to Section 503 of the 
Energy Policy and Conservation Act of 1975 (42 U.S.C. 8383) (``EPCA'') 
and Section 11(c) of the Energy Supply and Environmental Coordination 
Act of 1974 (15 U.S.C. 796) (``ESECA'') as amended by Section 506 of 
EPCA. The application of the paragraph to those oil and gas producing 
operations of companies regulated for ratemaking purposes on an 
individual-company-cost-of-service basis may, however, give appropriate 
recognition to differences arising because of the effect of the 
ratemaking process.
    3. Any person exempted by the Department of Energy from any record-
keeping or reporting requirements pursuant to Section 11(c) of ESECA, as 
amended, is similarly exempted from the related provisions of this 
paragraph in the preparation of accounts pursuant to EPCA. This 
exemption does not affect the applicability of this paragraph to filings 
pursuant to the federal securities laws.

[47 FR 11401, Mar. 16, 1982, as amended at 47 FR 57914, Dec. 29, 1982; 
52 FR 30919, Aug. 18, 1987; 56 FR 30053, July 1, 1991; 64 FR 73402, Dec. 
30, 1999]



Sec. 229.303, Note  (Item 303) Management's discussion and analysis of financial condition and results of operations.

    (a) Full fiscal years. Discuss registrant's financial condition, 
changes in financial condition and results of operations. The discussion 
shall provide information as specified in paragraphs (a) (1), (2) and 
(3) with respect to liquidity, capital resources and results of 
operations and also shall provide such other information that the 
registrant believes to be necessary to an understanding of its financial 
condition, changes in financial condition and results of operations. 
Discussions of liquidity and capital resources may be combined whenever 
the two topics are interrelated. Where in the registrant's judgment a 
discussion of segment information or of other subdivisions of the 
registrant's business would be appropriate to an understanding of such 
business, the discussion shall focus on each relevant, reportable 
segment or other subdivision of the business and on the registrant as a 
whole.
    (1) Liquidity. Identify any known trends or any known demands, 
commitments, events or uncertainties that

[[Page 398]]

will result in or that are reasonably likely to result in the 
registrant's liquidity increasing or decreasing in any material way. If 
a material deficiency is identified, indicate the course of action that 
the registrant has taken or proposes to take to remedy the deficiency. 
Also identify and separately describe internal and external sources of 
liquidity, and briefly discuss any material unused sources of liquid 
assets.
    (2) Capital resources. (i) Describe the registrant's material 
commitments for capital expenditures as of the end of the latest fiscal 
period, and indicate the general purpose of such commitments and the 
anticipated source of funds needed to fulfill such commitments.
    (ii) Describe any known material trends, favorable or unfavorable, 
in the registrant's capital resources. Indicate any expected material 
changes in the mix and relative cost of such resources. The discussion 
shall consider changes between equity, debt and any off-balance sheet 
financing arrangements.
    (3) Results of operations. (i) Describe any unusual or infrequent 
events or transactions or any significant economic changes that 
materially affected the amount of reported income from continuing 
operations and, in each case, indicate the extent to which income was so 
affected. In addition, describe any other significant components of 
revenues or expenses that, in the registrant's judgment, should be 
described in order to understand the registrant's results of operations.
    (ii) Describe any known trends or uncertainties that have had or 
that the registrant reasonably expects will have a material favorable or 
unfavorable impact on net sales or revenues or income from continuing 
operations. If the registrant knows of events that will cause a material 
change in the relationship between costs and revenues (such as known 
future increases in costs of labor or materials or price increases or 
inventory adjustments), the change in the relationship shall be 
disclosed.
    (iii) To the extent that the financial statements disclose material 
increases in net sales or revenues, provide a narrative discussion of 
the extent to which such increases are attributable to increases in 
prices or to increases in the volume or amount of goods or services 
being sold or to the introduction of new products or services.
    (iv) For the three most recent fiscal years of the registrant, or 
for those fiscal years beginning after December 25, 1979, or for those 
fiscal years in which the registrant has been engaged in business, 
whichever period is shortest, discuss the impact of inflation and 
changing prices on the registrant's net sales and revenues and on income 
from continuing operations.

Instructions to Paragraph 303(a): 1. The registrant's discussion and 
analysis shall be of the financial statements and of other statistical 
data that the registrant believes will enhance a reader's understanding 
of its financial condition, changes in financial condition and results 
of operations. Generally, the discussion shall cover the three year 
period covered by the financial statements and shall use year-to-year 
comparisons or any other formats that in the registrant's judgment 
enhance a reader's understanding. However, where trend information is 
relevant, reference to the five year selected financial data appearing 
pursuant to Item 301 of Regulation S-K (Sec. 229.301) may be necessary.
    2. The purpose of the discussion and analysis shall be to provide to 
investors and other users information relevant to an assessment of the 
financial condition and results of operations of the registrant as 
determined by evaluating the amounts and certainty of cash flows from 
operations and from outside sources. The information provided pursuant 
to this Item need only include that which is available to the registrant 
without undue effort or expense and which does not clearly appear in the 
registrant's financial statements.
    3. The discussion and analysis shall focus specifically on material 
events and uncertainties known to management that would cause reported 
financial information not to be necessarily indicative of future 
operating results or of future financial condition. This would include 
descriptions and amounts of (A) matters that would have an impact on 
future operations and have not had an impact in the past, and (B) 
matters that have had an impact on reported operations and are not 
expected to have an impact upon future operations.
    4. Where the consolidated financial statements reveal material 
changes from year to year in one or more line items, the causes for the 
changes shall be described to the extent necesary to an understanding of 
the registrant's businesses as a whole; Provided, however, That if the 
causes for a change in one line item also relate to other line items,

[[Page 399]]

no repetition is required and a line-by-line analysis of the financial 
statements as a whole is not required or generally appropriate. 
Registrants need not recite the amounts of changes from year to year 
which are readily computable from the financial statements. The 
discussion shall not merely repeat numerical data contained in the 
consolidated financial statements.
    5. The term ``liquidity'' as used in this Item refers to the ability 
of an enterprise to generate adequate amounts of cash to meet the 
enterprise's needs for cash. Except where it is otherwise clear from the 
discussion, the registrant shall indicate those balance sheet conditions 
or income or cash flow items which the registrant believes may be 
indicators of its liquidity condition. Liquidity generally shall be 
discussed on both a long-term and short-term basis. The issue of 
liquidity shall be discussed in the context of the registrant's own 
business or businesses. For example a discussion of working capital may 
be appropriate for certain manufacturing, industrial or related 
operations but might be inappropriate for a bank or public utility.
    6. Where financial statements presented or incorporated by reference 
in the registration statement are required by Sec. 210.4-08(e)(3) of 
Regulation S-X [17 CFR part 210] to include disclosure of restrictions 
on the ability of both consolidated and unconsolidated subsidiaries to 
transfer funds to the registrant in the form of cash dividends, loans or 
advances, the discussion of liquidity shall include a discussion of the 
nature and extent of such restrictions and the impact such restrictions 
have had and are expected to have on the ability of the parent company 
to meet its cash obligations.
    7. Registrants are encouraged, but not required, to supply forward-
looking information. This is to be distinguished from presently known 
data which will impact upon future operating results, such as known 
future increases in costs of labor or materials. This latter data may be 
required to be disclosed. Any forward-looking information supplied is 
expressly covered by the safe harbor rule for projections. See Rule 175 
under the Securities Act [17 CFR 230.175], Rule 3b-6 under the Exchange 
Act [17 CFR 240.3b-6] and Securities Act Release No. 6084 (June 25, 
1979) (44 FR 38810).
    8. Registrants are only required to discuss the effects of inflation 
and other changes in prices when considered material. This discussion 
may be made in whatever manner appears appropriate under the 
circumstances. All that is required is a brief textual presentation of 
management's views. No specific numerical financial data need be 
presented except as Rule 3-20(c) of Regulation S-X (Sec. 210.3-20(c) of 
this chapter) otherwise requires. However, registrants may elect to 
voluntarily disclose supplemental information on the effects of changing 
prices as provided for in Statement of Financial Accounting Standards 
No. 89, ``Financial Reporting and Changing Prices'' or through other 
supplemental disclosures. The Commission encourages experimentation with 
these disclosures in order to provide the most meaningful presentation 
of the impact of price changes on the registrant's financial statements.
    9. Registrants that elect to disclose supplementary information on 
the effects of changing prices as specified by SFAS No. 89, ``Financial 
Reporting and Changing Prices,'' may combine such explanations with the 
discussion and analysis required pursuant to this Item or may supply 
such information separately with appropriate cross reference.
    10. All references to the registrant in the discussion and in this 
Item shall mean the registrant and its subsidiaries consolidated.
    11. Foreign private registrants also shall discuss briefly any 
pertinent governmental economic, fiscal, monetary, or political policies 
or factors that have materially affected or could materially affect, 
directly or indirectly, their operations or investments by United States 
nationals.
    12. If the registrant is a foreign private issuer, the discussion 
shall focus on the primary financial statements presented in the 
registration statement or report. There shall be a reference to the 
reconciliation to United States generally accepted accounting 
principles, and a discussion of any aspects of the difference between 
foreign and United States generally accepted accounting principles, not 
discussed in the reconciliation, that the registrant believes is 
necessary for an understanding of the financial statements as a whole.

    (b) Interim periods. If interim period financial statements are 
included or are required to be included by Article 3 of Regulation S-X 
(17 CFR 210), a management's discussion and analysis of the financial 
condition and results of operations shall be provided so as to enable 
the reader to assess material changes in financial condition and results 
of operations between the periods specified in paragraphs (b) (1) and 
(2) of this Item. The discussion and analysis shall include a discussion 
of material changes in those items specifically listed in paragraph (a) 
of this Item, except that the impact of inflation and changing prices on 
operations for interim periods need not be addressed.
    (1) Material changes in financial condition. Discuss any material 
changes in financial condition from the end of the preceding fiscal year 
to the date of the

[[Page 400]]

most recent interim balance sheet provided. If the interim financial 
statements include an interim balance sheet as of the corresponding 
interim date of the preceding fiscal year, any material changes in 
financial condition from that date to the date of the most recent 
interim balance sheet provided also shall be discussed. If discussions 
of changes from both the end and the corresponding interim date of the 
preceding fiscal year are required, the discussions may be combined at 
the discretion of the registrant.
    (2) Material changes in results of operations. Discuss any material 
changes in the registrant's results of operations with respect to the 
most recent fiscal year-to-date period for which an income statement is 
provided and the corresponding year-to-date period of the preceding 
fiscal year. If the registrant is required to or has elected to provide 
an income statement for the most recent fiscal quarter, such discussion 
also shall cover material changes with respect to that fiscal quarter 
and the corresponding fiscal quarter in the preceding fiscal year. In 
addition, if the registrant has elected to provide an income statement 
for the twelve-month period ended as of the date of the most recent 
interim balance sheet provided, the discussion also shall cover material 
changes with respect to that twelve-month period and the twelve-month 
period ended as of the corresponding interim balance sheet date of the 
preceding fiscal year. Notwithstanding the above, if for purposes of a 
registration statement a registrant subject to paragraph (b) of 
Sec. 210.3-03 of Regulation S-X provides a statement of income for the 
twelve-month period ended as of the date of the most recent interim 
balance sheet provided in lieu of the interim income statements 
otherwise required, the discussion of material changes in that twelve-
month period will be in respect to the preceding fiscal year rather than 
the corresponding preceding period.

Instructions to Paragraph (b) of Item 303: 1. If interim financial 
statements are presented together with financial statements for full 
fiscal years, the discussion of the interim financial information shall 
be prepared pursuant to this paragraph (b) and the discussion of the 
full fiscal year's information shall be prepared pursuant to paragraph 
(a) of this Item. Such discussions may be combined.
    2. In preparing the discussion and analysis required by this 
paragraph (b), the registrant may presume that users of the interim 
financial information have read or have access to the discussion and 
analysis required by paragraph (a) for the preceding fiscal year.
    3. The discussion and analysis required by this paragraph (b) is 
required to focus only on material changes. Where the interim financial 
statements reveal material changes from period to period in one or more 
significant line items, the causes for the changes shall be described if 
they have not already been disclosed: Provided, however, That if the 
causes for a change in one line item also relate to other line items, no 
repetition is required. Registrants need not recite the amounts of 
changes from period to period which are readily computable from the 
financial statements. The discussion shall not merely repeat numerical 
data contained in the financial statements. The information provided 
shall include that which is available to the registrant without undue 
effort or expense and which does not clearly appear in the registrant's 
condensed interim financial statements.
    4. The registrant's discussion of material changes in results of 
operations shall identify any significant elements of the registrant's 
income or loss from continuing operations which do not arise from or are 
not necessarily representative of the registrant's ongoing business.
    5. The registrant shall discuss any seasonal aspects of its business 
which have had a material effect upon its financial condition or results 
of operation.
    6. Registrants are encouraged but are not required to discuss 
forward-looking information. Any forward-looking information supplied is 
expressly covered by the safe harbor rule for projections. See Rule 175 
under the Securities Act [17 CFR 230. 175], Rule 3b-6 under the Exchange 
Act [17 CFR 249.3b-6] and

[[Page 401]]

Securities Act Release No. 6084 (June 25, 1979) (44 FR 38810).

(Secs. 7 and 19a of the Securities Act, 15 U.S.C. 77g, 77s(a), 
77aa(25)(26); secs. 12, 13, 14, 15(d), and 23(a) of the Securities 
Exchange Act of 1934, 15 U.S.C. 78l, 78m, 78n, 78o(d), 78w(a), secs. 
5(b), 10(a), 14, 20(a) of the Public Utility Holding Company Act, 15 
U.S.C. 79e(a), 79n, 79t(a); secs. 8, 20, 30, 31(c), 38(a) of the 
Investment Company Act of 1940, 15 U.S.C. 80a-8, 80a-20, 80a-29, 80a-
30(c), 80a-37(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, 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. 565-568, 569, 570-574; 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, 1499, 
1500; secs. 8 30, 31(c), 38(a), 54 Stat. 803, 836, 838, 841; 74 Stat. 
201; 84 Stat. 1415; 15 U.S.C. 77f, 77g, 77h, 77j, 77s(a), 78l, 78m, 
78o(d), 78w(a), 80a-8, 80a-29, 80a-30(c), 80a-37(a))

[47 FR 11401, Mar. 16, 1982, as amended at 47 FR 29839, July 9, 1982; 47 
FR 54768, Dec. 6, 1982; 52 FR 30919, Aug. 18, 1987]

    Effective Date Note: At 68 FR 5999, Feb. 5, 2003, Sec. 229.303 was 
amended by removing the authority citation, the second sentence of 
Instruction 2 and the first three sentences of Instruction 7 of 
``Instructions to Paragraph 303(a)''; removing the phrase ``paragraphs 
(a)(1), (2) and (3) with respect to liquidity, capital resources and 
results of operations'' and adding, in its place, the phrase 
``paragraphs (a)(1) through (5) of this Item'' in the second sentence of 
the introductory text of paragraph (a); removing the phrase ``or for 
those fiscal years beginning after December 25, 1979,'' in paragraph 
(a)(3)(iv); removing the first sentence of Instruction 6 of 
``Instructions to Paragraph (b) of Item 303''; and by adding paragraphs 
(a)(4), (5), and (c), Instructions 1 through 5 to paragraph 303(a)(4) at 
the end of ``Instructions to Paragraph 303(a)'', and Instruction 7 to 
``Instructions to Paragraph (b) of Item 303'', effective April 7, 2003. 
For the convenience of the user, the added text is set forth as follows:

Sec. 229.303 (Item 303)  Management's discussion and analysis of 
          financial condition and results of operations.

    (a) * * *
    (4) Off-balance sheet arrangements. (i) In a separately-captioned 
section, discuss the registrant's off-balance sheet arrangements that 
have or are reasonably likely to have a current or future effect on the 
registrant's financial condition, changes in financial condition, 
revenues or expenses, results of operations, liquidity, capital 
expenditures or capital resources that is material to investors. The 
disclosure shall include the items specified in paragraphs (a)(4)(i)(A), 
(B), (C) and (D) of this Item to the extent necessary to an 
understanding of such arrangements and effect and shall also include 
such other information that the registrant believes is necessary for 
such an understanding.
    (A) The nature and business purpose to the registrant of such off-
balance sheet arrangements;
    (B) The importance to the registrant of such off-balance sheet 
arrangements in respect of its liquidity, capital resources, market risk 
support, credit risk support or other benefits;
    (C) The amounts of revenues, expenses and cash flows of the 
registrant arising from such arrangements; the nature and amounts of any 
interests retained, securities issued and other indebtedness incurred by 
the registrant in connection with such arrangements; and the nature and 
amounts of any other obligations or liabilities (including contingent 
obligations or liabilities) of the registrant arising from such 
arrangements that are or are reasonably likely to become material and 
the triggering events or circumstances that could cause them to arise; 
and
    (D) Any known event, demand, commitment, trend or uncertainty that 
will result in or is reasonably likely to result in the termination, or 
material reduction in availability to the registrant, of its off-balance 
sheet arrangements that provide material benefits to it, and the course 
of action that the registrant has taken or proposes to take in response 
to any such circumstances.
    (ii) As used in this paragraph (a)(4), the term off-balance sheet 
arrangement means any transaction, agreement or other contractual 
arrangement to which an entity unconsolidated with the registrant is a 
party, under which the registrant has:
    (A) Any obligation under a guarantee contract that has any of the 
characteristics identified in paragraph 3 of FASB Interpretation No. 45, 
Guarantor's Accounting and Disclosure Requirements for Guarantees, 
Including Indirect Guarantees of Indebtedness of Others (November 2002) 
(``FIN 45''), as may be modified or supplemented, and that is not 
excluded from the initial recognition and measurement provisions of FIN 
45 pursuant to paragraphs 6 or 7 of that Interpretation;
    (B) A retained or contingent interest in assets transferred to an 
unconsolidated entity or similar arrangement that serves as credit, 
liquidity or market risk support to such entity for such assets;
    (C) Any obligation, including a contingent obligation, under a 
contract that would be accounted for as a derivative instrument, except 
that it is both indexed to the registrant's own stock and classified in 
stockholders' equity in the registrant's statement

[[Page 402]]

of financial position, and therefore excluded from the scope of FASB 
Statement of Financial Accounting Standards No. 133, Accounting for 
Derivative Instruments and Hedging Activities (June 1998), pursuant to 
paragraph 11(a) of that Statement, as may be modified or supplemented; 
or
    (D) Any obligation, including a contingent obligation, arising out 
of a variable interest (as referenced in FASB Interpretation No. 46, 
Consolidation of Variable Interest Entities (January 2003), as may be 
modified or supplemented) in an unconsolidated entity that is held by, 
and material to, the registrant, where such entity provides financing, 
liquidity, market risk or credit risk support to, or engages in leasing, 
hedging or research and development services with, the registrant.
    (5) Tabular disclosure of contractual obligations. (i) In a tabular 
format, provide the information specified in this paragraph (a)(5) as of 
the latest fiscal year end balance sheet date with respect to the 
registrant's known contractual obligations specified in the table that 
follows this paragraph (a)(5)(i). The registrant shall provide amounts, 
aggregated by type of contractual obligation. The registrant may 
disaggregate the specified categories of contractual obligations using 
other categories suitable to its business, but the presentation must 
include all of the obligations of the registrant that fall within the 
specified categories. A presentation covering at least the periods 
specified shall be included. The tabular presentation may be accompanied 
by footnotes to describe provisions that create, increase or accelerate 
obligations, or other pertinent data to the extent necessary for an 
understanding of the timing and amount of the registrant's specified 
contractual obligations.

----------------------------------------------------------------------------------------------------------------
                                                         Payments due by period
                                                ---------------------------------------              More than 5
            Contractual obligations                           Less than 1                3-5 years      years
                                                    Total         year      1-3 years
----------------------------------------------------------------------------------------------------------------
[Long-Term Debt Obligations]...................  ...........  ...........  ...........  ...........  ...........
[Capital Lease Obligations]....................  ...........  ...........  ...........  ...........  ...........
[Operating Lease Obligations]..................  ...........  ...........  ...........  ...........  ...........
[Purchase Obligations].........................  ...........  ...........  ...........  ...........  ...........
[Other Long-Term Liabilities Reflected on the    ...........  ...........  ...........  ...........  ...........
 Registrant's Balance Sheet under GAAP]........
                                                ----------------------------------------------------------------
      Total....................................  ...........  ...........  ...........  ...........  ...........
----------------------------------------------------------------------------------------------------------------

    (ii) Definitions: The following definitions apply to this paragraph 
(a)(5):
    (A) Long-Term Debt Obligation means a payment obligation under long-
term borrowings referenced in FASB Statement of Financial Accounting 
Standards No. 47 Disclosure of Long-Term Obligations (March 1981), as 
may be modified or supplemented.
    (B) Capital Lease Obligation means a payment obligation under a 
lease classified as a capital lease pursuant to FASB Statement of 
Financial Accounting Standards No. 13 Accounting for Leases (November 
1976), as may be modified or supplemented.
    (C) Operating Lease Obligation means a payment obligation under a 
lease classified as an operating lease and disclosed pursuant to FASB 
Statement of Financial Accounting Standards No. 13 Accounting for Leases 
(November 1976), as may be modified or supplemented.
    (D) Purchase Obligation means an agreement to purchase goods or 
services that is enforceable and legally binding on the registrant that 
specifies all significant terms, including: fixed or minimum quantities 
to be purchased; fixed, minimum or variable price provisions; and the 
approximate timing of the transaction.
    Instructions to Paragraph 303(a):

                                * * * * *

    Instructions to Paragraph 303(a)(4):
    1. No obligation to make disclosure under paragraph (a)(4) of this 
Item shall arise in respect of an off-balance sheet arrangement until a 
definitive agreement that is unconditionally binding or subject only to 
customary closing conditions exists or, if there is no such agreement, 
when settlement of the transaction occurs.
    2. Registrants should aggregate off-balance sheet arrangements in 
groups or categories that provide material information in an efficient 
and understandable manner and should avoid repetition and disclosure of 
immaterial information. Effects that are common or similar with respect 
to a number of off-balance sheet arrangements must be analyzed in the 
aggregate to the extent the aggregation increases understanding. 
Distinctions in arrangements and their effects must be discussed to the 
extent the information is material, but the discussion should avoid 
repetition and disclosure of immaterial information.
    3. For purposes of paragraph (a)(4) of this Item only, contingent 
liabilities arising out

[[Page 403]]

of litigation, arbitration or regulatory actions are not considered to 
be off-balance sheet arrangements.
    4. Generally, the disclosure required by paragraph (a)(4) shall 
cover the most recent fiscal year. However, the discussion should 
address changes from the previous year where such discussion is 
necessary to an understanding of the disclosure.
    5. In satisfying the requirements of paragraph (a)(4) of this Item, 
the discussion of off-balance sheet arrangements need not repeat 
information provided in the footnotes to the financial statements, 
provided that such discussion clearly cross-references to specific 
information in the relevant footnotes and integrates the substance of 
the footnotes into such discussion in a manner designed to inform 
readers of the significance of the information that is not included 
within the body of such discussion.
    (b) * * *
    Instructions to Paragraph (b) of Item 303:

                                * * * * *

    7. The registrant is not required to include the table required by 
paragraph (a)(5) of this Item for interim periods. Instead, the 
registrant should disclose material changes outside the ordinary course 
of the registrant's business in the specified contractual obligations 
during the interim period.
    (c) Safe harbor. (1) The safe harbor provided in section 27A of the 
Securities Act of 1933 (15 U.S.C. 77z-2) and section 21E of the 
Securities Exchange Act of 1934 (15 U.S.C. 78u-5) (``statutory safe 
harbors'') shall apply to forward-looking information provided pursuant 
to paragraphs (a)(4) and (5) of this Item, provided that the disclosure 
is made by: an issuer; a person acting on behalf of the issuer; an 
outside reviewer retained by the issuer making a statement on behalf of 
the issuer; or an underwriter, with respect to information provided by 
the issuer or information derived from information provided by the 
issuer.
    (2) For purposes of paragraph (c) of this Item only:
    (i) All information required by paragraphs (a)(4) and (5) of this 
Item is deemed to be a forward looking statement as that term is defined 
in the statutory safe harbors, except for historical facts.
    (ii) With respect to paragraph (a)(4) of this Item, the meaningful 
cautionary statements element of the statutory safe harbors will be 
satisfied if a registrant satisfies all requirements of that same 
paragraph (a)(4) of this Item.



Sec. 229.304  (Item 304) Changes in and disagreements with accountants on accounting and financial disclosure.

    (a)(1) If during the registrant's two most recent fiscal years or 
any subsequent interim period, an independent accountant who was 
previously engaged as the principal accountant to audit the registrant's 
financial statements, or an independent accountant who was previously 
engaged to audit a significant subsidiary and on whom the principal 
accountant expressed reliance in its report, has resigned (or indicated 
it has declined to stand for re-election after the completion of the 
current audit) or was dismissed, then the registrant shall:
    (i) State whether the former accountant resigned, declined to stand 
for re-election or was dismissed and the date thereof.
    (ii) State whether the principal accountant's report on the 
financial statements for either of the past two years contained an 
adverse opinion or a disclaimer of opinion, or was qualified or modified 
as to uncertainty, audit scope, or accounting principles; and also 
describe the nature of each such adverse opinion, disclaimer of opinion, 
modification, or qualification.
    (iii) State whether the decision to change accountants was 
recommended or approved by:
    (A) Any audit or similar committee of the board of directors, if the 
issuer has such a committee; or
    (B) The board of directors, if the issuer has no such committee.
    (iv) State whether during the registrant's two most recent fiscal 
years and any subsequent interim period preceding such resignation, 
declination or dismissal there were any disagreements with the former 
accountant on any matter of accounting principles or practices, 
financial statement disclosure, or auditing scope or procedure, which 
disagreement(s), if not resolved to the satisfaction of the former 
accountant, would have caused it to make reference to the subject matter 
of the disagreement(s) in connection with its report. Also, (A) describe 
each such disagreement; (B) state whether any audit or similar committee 
of the

[[Page 404]]

board of directors, or the board of directors, discussed the subject 
matter of each of such disagreements with the former accountant; and (C) 
state whether the registrant has authorized the former accountant to 
respond fully to the inquiries of the successor accountant concerning 
the subject matter of each of such disagreements and, if not, describe 
the nature of any limitation thereon and the reason therefore. The 
disagreements required to be reported in response to this Item include 
both those resolved to the former accountant's satisfaction and those 
not resolved to the former accountant's satisfaction. Disagreements 
contemplated by this Item are those that occur at the decision-making 
level, i.e., between personnel of the registrant responsible for 
presentation of its financial statements and personnel of the accounting 
firm responsible for rendering its report.
    (v) Provide the information required by paragraph (a)(1)(iv) of this 
Item for each of the kinds of events (even though the registrant and the 
former accountant did not express a difference of opinion regarding the 
event) listed in paragraphs (a)(1)(v) (A) through (D) of this section, 
that occurred within the registrant's two most recent fiscal years and 
any subsequent interim period preceding the former accountant's 
resignation, declination to stand for re-election, or dismissal 
(``reportable events''). If the event led to a disagreement or 
difference of opinion, then the event should be reported as a 
disagreement under paragraph (a)(1)(iv) and need not be repeated under 
this paragraph.
    (A) The accountant's having advised the registrant that the internal 
controls necessary for the registrant to develop reliable financial 
statements do not exist;
    (B) The accountant's having advised the registrant that information 
has come to the accountant's attention that has led it to no longer be 
able to rely on management's representations, or that has made it 
unwilling to be associated with the financial statements prepared by 
management;
    (C) (1) The accountant's having advised the registrant of the need 
to expand significantly the scope of its audit, or that information has 
come to the accountant's attention during the time period covered by 
Item 304(a)(1)(iv), that if further investigated may:
    (i) Materially impact the fairness or reliability of either: a 
previously issued audit report or the underlying financial statements; 
or the financial statements issued or to be issued covering the fiscal 
period(s) subsequent to the date of the most recent financial statements 
covered by an audit report (including information that may prevent it 
from rendering an unqualified audit report on those financial 
statements), or
    (ii) Cause it to be unwilling to rely on management's 
representations or be associated with the registrant's financial 
statements, and
    (2) Due to the accountant's resignation (due to audit scope 
limitations or otherwise) or dismissal, or for any other reason, the 
accountant did not so expand the scope of its audit or conduct such 
further investigation; or
    (D)(1) The accountant's having advised the registrant that 
information has come to the accountant's attention that it has concluded 
materially impacts the fairness or reliability of either (i) a 
previously issued audit report or the underlying financial statements, 
or (ii) the financial statements issued or to be issued covering the 
fiscal period(s) subsequent to the date of the most recent financial 
statements covered by an audit report (including information that, 
unless resolved to the accountant's satisfaction, would prevent it from 
rendering an unqualified audit report on those financial statements), 
and
    (2) Due to the accountant's resignation, dismissal or declination to 
stand for re-election, or for any other reason, the issue has not been 
resolved to the accountant's satisfaction prior to its resignation, 
dismissal or declination to stand for re-election.
    (2) If during the registrant's two most recent fiscal years or any 
subsequent interim period, a new independent accountant has been engaged 
as either the principal accountant to audit the registrant's financial 
statements, or as an independent accountant to audit a significant 
subsidiary

[[Page 405]]

and on whom the principal accountant is expected to express reliance in 
its report, then the registrant shall identify the newly engaged 
accountant and indicate the date of such accountant's engagement. In 
addition, if during the registrant's two most recent fiscal years, and 
any subsequent interim period prior to engaging that accountant, the 
registrant (or someone on its behalf) consulted the newly engaged 
accountant regarding:
    (i) Either: The application of accounting principles to a specified 
transaction, either completed or proposed; or the type of audit opinion 
that might be rendered on the registrant's financial statements, and 
either a written report was provided to the registrant or oral advice 
was provided that the new accountant concluded was an important factor 
considered by the registrant in reaching a decision as to the 
accounting, auditing or financial reporting issue; or
    (ii) Any matter that was either the subject of a disagreement (as 
defined in paragraph 304(a)(1)(iv) and the related instructions to this 
item) or a reportable event (as described in paragraph 304(a)(1)(v)), 
then the registrant shall:
    (A) So state and identify the issues that were the subjects of those 
consultations;
    (B) Briefly describe the views of the newly engaged accountant as 
expressed orally or in writing to the registrant on each such issue and, 
if written views were received by the registrant, file them as an 
exhibit to the report or registration statement requiring compliance 
with this Item 304(a);
    (C) State whether the former accountant was consulted by the 
registrant regarding any such issues, and if so, provide a summary of 
the former accountant's views; and
    (D) Request the newly engaged accountant to review the disclosure 
required by this Item 304(a) before it is filed with the Commission and 
provide the new accountant the opportunity to furnish the registrant 
with a letter addressed to the Commission containing any new 
information, clarification of the registrant's expression of its views, 
or the respects in which it does not agree with the statements made by 
the registrant in response to Item 304(a). The registrant shall file any 
such letter as an exhibit to the report or registration statement 
containing the disclosure required by this Item.
    (3) The registrant shall provide the former accountant with a copy 
of the disclosures it is making in response to this Item 304(a) that the 
former accountant shall receive no later than the day that the 
disclosures are filed with the Commission. The registrant shall request 
the former accountant to furnish the registrant with a letter addressed 
to the Commission stating whether it agrees with the statements made by 
the registrant in response to this Item 304(a) and, if not, stating the 
respects in which it does not agree. The registrant shall file the 
former accountant's letter as an exhibit to the report on registration 
statement containing this disclosure. If the former accountant's letter 
is unavailable at the time of filing such report or registration 
statement, then the registrant shall request the former accountant to 
provide the letter as promptly as possible so that the registrant can 
file the letter with the Commission within ten business days after the 
filing of the report or registration statement. Notwithstanding the ten 
business day period, the registrant shall file the letter by amendment 
within two business days of receipt; if the letter is received on a 
Saturday, Sunday or holiday on which the Commission is not open for 
business, then the two business day period shall begin to run on and 
shall include the first business day thereafter. The former accountant 
may provide the registrant with an interim letter highlighting specific 
areas of concern and indicating that a more detailed letter will be 
forthcoming within the ten business day period noted above. If not filed 
with the report or registration statement containing the registrant's 
disclosure under this Item 304(a), then the interim letter, if any, 
shall be filed by the registrant by amendment within two business days 
of receipt.
    (b) If: (1) In connection with a change in accountants subject to 
paragraph (a) of this Item 304, there was any disagreement of the type 
described in paragraph (a)(1)(iv) or any reportable

[[Page 406]]

event as described in paragraph (a)(1)(v) of this Item;
    (2) During the fiscal year in which the change in accountants took 
place or during the subsequent fiscal year, there have been any 
transactions or events similar to those which involved such disagreement 
or reportable event; and
    (3) Such transactions or events were material and were accounted for 
or disclosed in a manner different from that which the former 
accountants apparently would have concluded was required, the registrant 
shall state the existence and nature of the disagreement or reportable 
event and also state the effect on the financial statements if the 
method had been followed which the former accountants apparently would 
have concluded was required.

These disclosures need not be made if the method asserted by the former 
accountants ceases to be generally accepted because of authoritative 
standards or interpretations subsequently issued.

Instructions to Item 304: 1. The disclosure called for by paragraph (a) 
of this Item need not be provided if it has been previously reported as 
that term is defined in Rule 12b-2 under the Exchange Act (Sec. 240.12b-
2 of this chapter); the disclosure called for by paragraph (a) must be 
provided, however, notwithstanding prior disclosure, if required 
pursuant to Item 9 of Schedule 14A (Sec. 240.14a-101 of this chapter). 
The disclosure called for by paragraph (b) of this section must be 
furnished, where required, notwithstanding any prior disclosure about 
accountant changes or disagreements.
    2. When disclosure is required by paragraph (a) of this section in 
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), or in a proxy or information statement filed pursuant to the 
requirements of Schedule 14A or 14C (Sec. 240.14a-101 or Sec. 240.14c-
101 of this chapter), in lieu of a letter pursuant to paragraph 
(a)(2)(D) or (a)(3), prior to filing such materials with or furnishing 
such materials to the Commission, the registrant shall furnish the 
disclosure required by paragraph (a) of this section to any former 
accountant engaged by the registrant during the period set forth in 
paragraph (a) of this section and to the newly engaged accountant. If 
any such accountant believes that the statements made in response to 
paragraph (a) of this section are incorrect or incomplete, it may 
present its views in a brief statement, ordinarily expected not to 
exceed 200 words, to be included in the annual report or proxy or 
information statement. This statement shall be submitted to the 
registrant within ten business days of the date the accountant receives 
the registrant's disclosure. Further, unless the written views of the 
newly engaged accountant required to be filed as an exhibit by paragraph 
(a)(2)(B) of this Item 304 have been previously filed with the 
Commission the registrant shall file a Form 8-K concurrently with the 
annual report or proxy or information statement for the purpose of 
filing the written views as exhibits thereto.
    3. The information required by Item 304(a) need not be provided for 
a company being acquired by the registrant that is not subject to the 
filing 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 or Rule 14c-
3 for its latest fiscal year.
    4. The term ``disagreements'' as used in this Item shall be 
interpreted broadly, to include any difference of opinion concerning any 
matter of accounting principles or practices, financial statement 
disclosure, or auditing scope or procedure which (if not resolved to the 
satisfaction of the former accountant) would have caused it to make 
reference to the subject matter of the disagreement in connection with 
its report. It is not necessary for there to have been an argument to 
have had a disagreement, merely a difference of opinion. For purposes of 
this Item, however, the term disagreements does not include initial 
differences of opinion based on incomplete facts or preliminary 
information that were later resolved to the former accountant's 
satisfaction by, and providing the registrant and the accountant do not 
continue to have a difference of opinion upon, obtaining additional 
relevant facts or information.
    5. In determining whether any disagreement or reportable event has 
occurred, an oral communication from the engagement partner or another 
person responsible for rendering the accounting firm's opinion (or their 
designee) will generally suffice as the accountant advising the 
registrant of a reportable event or as a statement of a disagreement at 
the ``decision-making level'' within the accounting firm and require 
disclosure under this Item.

[53 FR 12929, Apr. 20, 1988, as amended at 54 FR 9774, Mar. 8, 1989]



Sec. 229.305  (Item 305) Quantitative and qualitative disclosures about market risk.

    (a) Quantitative information about market risk. (1) Registrants 
shall provide,

[[Page 407]]

in their reporting currency, quantitative information about market risk 
as of the end of the latest fiscal year, in accordance with one of the 
following three disclosure alternatives. In preparing this quantitative 
information, registrants shall categorize market risk sensitive 
instruments into instruments entered into for trading purposes and 
instruments entered into for purposes other than trading purposes. 
Within both the trading and other than trading portfolios, separate 
quantitative information shall be presented, to the extent material, for 
each market risk exposure category (i.e., interest rate risk, foreign 
currency exchange rate risk, commodity price risk, and other relevant 
market risks, such as equity price risk). A registrant may use one of 
the three alternatives set forth in this section for all of the required 
quantitative disclosures about market risk. A registrant also may 
choose, from among the three alternatives, one disclosure alternative 
for market risk sensitive instruments entered into for trading purposes 
and another disclosure alternative for market risk sensitive instruments 
entered into for other than trading purposes. Alternatively, a 
registrant may choose any disclosure alternative, from among the three 
alternatives, for each risk exposure category within the trading and 
other than trading portfolios. The three disclosure alternatives are:
    (i)(A)(1) Tabular presentation of information related to market risk 
sensitive instruments; such information shall include fair values of the 
market risk sensitive instruments and contract terms sufficient to 
determine future cash flows from those instruments, categorized by 
expected maturity dates.
    (2) Tabular information relating to contract terms shall allow 
readers of the table to determine expected cash flows from the market 
risk sensitive instruments for each of the next five years. Comparable 
tabular information for any remaining years shall be displayed as an 
aggregate amount.
    (3) Within each risk exposure category, the market risk sensitive 
instruments shall be grouped based on common characteristics. Within the 
foreign currency exchange rate risk category, the market risk sensitive 
instruments shall be grouped by functional currency and within the 
commodity price risk category, the market risk sensitive instruments 
shall be grouped by type of commodity.
    (4) See the Appendix to this Item for a suggested format for 
presentation of this information; and
    (B) Registrants shall provide a description of the contents of the 
table and any related assumptions necessary to understand the 
disclosures required under paragraph (a)(1)(i)(A) of this Item 305; or
    (ii)(A) Sensitivity analysis disclosures that express the potential 
loss in future earnings, fair values, or cash flows of market risk 
sensitive instruments resulting from one or more selected hypothetical 
changes in interest rates, foreign currency exchange rates, commodity 
prices, and other relevant market rates or prices over a selected period 
of time. The magnitude of selected hypothetical changes in rates or 
prices may differ among and within market risk exposure categories; and
    (B) Registrants shall provide a description of the model, 
assumptions, and parameters, which are necessary to understand the 
disclosures required under paragraph (a)(1)(ii)(A) of this Item 305; or
    (iii)(A) Value at risk disclosures that express the potential loss 
in future earnings, fair values, or cash flows of market risk sensitive 
instruments over a selected period of time, with a selected likelihood 
of occurrence, from changes in interest rates, foreign currency exchange 
rates, commodity prices, and other relevant market rates or prices;
    (B)(1) For each category for which value at risk disclosures are 
required under paragraph (a)(1)(iii)(A) of this Item 305, provide 
either:
    (i) The average, high and low amounts, or the distribution of the 
value at risk amounts for the reporting period; or
    (ii) The average, high and low amounts, or the distribution of 
actual changes in fair values, earnings, or cash flows from the market 
risk sensitive instruments occurring during the reporting period; or

[[Page 408]]

    (iii) The percentage or number of times the actual changes in fair 
values, earnings, or cash flows from the market risk sensitive 
instruments exceeded the value at risk amounts during the reporting 
period;
    (2) Information required under paragraph (a)(1)(iii)(B)(1) of this 
Item 305 is not required for the first fiscal year end in which a 
registrant must present Item 305 information; and
    (C) Registrants shall provide a description of the model, 
assumptions, and parameters, which are necessary to understand the 
disclosures required under paragraphs (a)(1)(iii)(A) and (B) of this 
Item 305.
    (2) Registrants shall discuss material limitations that cause the 
information required under paragraph (a)(1) of this Item 305 not to 
reflect fully the net market risk exposures of the entity. This 
discussion shall include summarized descriptions of instruments, 
positions, and transactions omitted from the quantitative market risk 
disclosure information or the features of instruments, positions, and 
transactions that are included, but not reflected fully in the 
quantitative market risk disclosure information.
    (3) Registrants shall present summarized market risk information for 
the preceding fiscal year. In addition, registrants shall discuss the 
reasons for material quantitative changes in market risk exposures 
between the current and preceding fiscal years. Information required by 
this paragraph (a)(3), however, is not required if disclosure is not 
required under paragraph (a)(1) of this Item 305 for the current fiscal 
year. Information required by this paragraph (a)(3) is not required for 
the first fiscal year end in which a registrant must present Item 305 
information.
    (4) If registrants change disclosure alternatives or key model 
characteristics, assumptions, and parameters used in providing 
quantitative information about market risk (e.g., changing from tabular 
presentation to value at risk, changing the scope of instruments 
included in the model, or changing the definition of loss from fair 
values to earnings), and if the effects of any such change is material, 
the registrant shall:
    (i) Explain the reasons for the change; and
    (ii) Either provide summarized comparable information, under the new 
disclosure method, for the year preceding the current year or, in 
addition to providing disclosure for the current year under the new 
method, provide disclosures for the current year and preceding fiscal 
year under the method used in the preceding year.

Instructions to Paragraph 305(a): 1. Under paragraph 305(a)(1):
    A. For each market risk exposure category within the trading and 
other than trading portfolios, registrants may report the average, high, 
and low sensitivity analysis or value at risk amounts for the reporting 
period, as an alternative to reporting year-end amounts.
    B. In determining the average, high, and low amounts for the fiscal 
year under instruction 1.A. of the Instructions to Paragraph 305(a), 
registrants should use sensitivity analysis or value at risk amounts 
relating to at least four equal time periods throughout the reporting 
period (e.g., four quarter-end amounts, 12 month-end amounts, or 52 
week-end amounts).
    C. Functional currency means functional currency as defined by 
generally accepted accounting principles (see, e.g., FASB, Statement of 
Financial Accounting Standards No. 52, ``Foreign Currency Translation'', 
(``FAS 52'') paragraph 20 (December 1981)).
    D. Registrants using the sensitivity analysis and value at risk 
disclosure alternatives are encouraged, but not required, to provide 
quantitative amounts that reflect the aggregate market risk inherent in 
the trading and other than trading portfolios.
    2. Under paragraph 305(a)(1)(i):
    A. Examples of contract terms sufficient to determine future cash 
flows from market risk sensitive instruments include, but are not 
limited to:
    i. Debt instruments--principal amounts and weighted average 
effective interest rates;
    ii. Forwards and futures--contract amounts and weighted average 
settlement prices;
    iii. Options--contract amounts and weighted average strike prices;
    iv. Swaps--notional amounts, weighted average pay rates or prices, 
and weighted average receive rates or prices; and
    v. Complex instruments--likely to be a combination of the contract 
terms presented in 2.A.i. through iv. of this Instruction;
    B. When grouping based on common characteristics, instruments should 
be categorized, at a minimum, by the following characteristics, when 
material:

[[Page 409]]

    i. Fixed rate or variable rate assets or liabilities;
    ii. Long or short forwards and futures;
    iii. Written or purchased put or call options with similar strike 
prices;
    iv. Receive fixed and pay variable swaps, receive variable and pay 
fixed swaps, and receive variable and pay variable swaps;
    v. The currency in which the instruments' cash flows are 
denominated;
    vi. Financial instruments for which foreign currency transaction 
gains and losses are reported in the same manner as translation 
adjustments under generally accepted accounting principles (see, e.g., 
FAS 52 paragraph 20 (December 1981)); and
    vii. Derivatives used to manage risks inherent in anticipated 
transactions;
    C. Registrants may aggregate information regarding functional 
currencies that are economically related, managed together for internal 
risk management purposes, and have statistical correlations of greater 
than 75% over each of the past three years;
    D. Market risk sensitive instruments that are exposed to rate or 
price changes in more than one market risk exposure category should be 
presented within the tabular information for each of the risk exposure 
categories to which those instruments are exposed;
    E. If a currency swap (see, e.g., FAS 52 Appendix E for a definition 
of currency swap) eliminates all foreign currency exposures in the cash 
flows of a foreign currency denominated debt instrument, neither the 
currency swap nor the foreign currency denominated debt instrument are 
required to be disclosed in the foreign currency risk exposure category. 
However, both the currency swap and the foreign currency denominated 
debt instrument should be disclosed in the interest rate risk exposure 
category; and
    F. The contents of the table and related assumptions that should be 
described include, but are not limited to:
    i. The different amounts reported in the table for various 
categories of the market risk sensitive instruments (e.g., principal 
amounts for debt, notional amounts for swaps, and contract amounts for 
options and futures);
    ii. The different types of reported market rates or prices (e.g., 
contractual rates or prices, spot rates or prices, forward rates or 
prices); and
    iii. Key prepayment or reinvestment assumptions relating to the 
timing of reported amounts.
    3. Under paragraph 305(a)(1)(ii):
    A. Registrants should select hypothetical changes in market rates or 
prices that are expected to reflect reasonably possible near-term 
changes in those rates and prices. In this regard, absent economic 
justification for the selection of a different amount, registrants 
should use changes that are not less than 10 percent of end of period 
market rates or prices;
    B. For purposes of instruction 3.A. of the Instructions to Paragraph 
305(a), the term reasonably possible has the same meaning as defined by 
generally accepted accounting principles (see, e.g., FASB, Statement of 
Financial Accounting Standards No. 5, ``Accounting for Contingencies,'' 
(``FAS 5'') paragraph 3 (March 1975));
    C. For purposes of instruction 3.A. of the Instructions to Paragraph 
305(a), the term near term means a period of time going forward up to 
one year from the date of the financial statements (see generally AICPA, 
Statement of Position 94-6, ``Disclosure of Certain Significant Risks 
and Uncertainties,'' (``SOP 94-6'') at paragraph 7 (December 30, 1994));
    D. Market risk sensitive instruments that are exposed to rate or 
price changes in more than one market risk exposure category should be 
included in the sensitivity analysis disclosures for each market risk 
category to which those instruments are exposed;
    E. Registrants with multiple foreign currency exchange rate 
exposures should prepare foreign currency sensitivity analysis 
disclosures that measure the aggregate sensitivity to changes in all 
foreign currency exchange rate exposures, including the effects of 
changes in both transactional currency/functional currency exchange rate 
exposures and functional currency/reporting currency exchange rate 
exposures. For example, assume a French division of a registrant 
presenting its financial statements in U.S. dollars ($US) invests in a 
deutschmark(DM)-denominated debt security. In these circumstances, the 
$US is the reporting currency and the DM is the transactional currency. 
In addition, assume this division determines that the French franc (FF) 
is its functional currency according to FAS 52. In preparing the foreign 
currency sensitivity analysis disclosures, this registrant should report 
the aggregate potential loss from hypothetical changes in both the DM/FF 
exchange rate exposure and the FF/$US exchange rate exposure; and
    F. Model, assumptions, and parameters that should be described 
include, but are not limited to, how loss is defined by the model (e.g., 
loss in earnings, fair values, or cash flows), a general description of 
the modeling technique (e.g., duration modeling, modeling that measures 
the change in net present values arising from selected hypothetical 
changes in market rates or prices, and a description as to how 
optionality is addressed by the model), the types of instruments covered 
by the model (e.g., derivative financial instruments, other financial 
instruments, derivative commodity instruments, and

[[Page 410]]

whether other instruments are included voluntarily, such as certain 
commodity instruments and positions, cash flows from anticipated 
transactions, and certain financial instruments excluded under 
instruction 3.C.ii. of the General Instructions to Paragraphs 305(a) and 
305(b)), and other relevant information about the model's assumptions 
and parameters, (e.g., the magnitude and timing of selected hypothetical 
changes in market rates or prices used, the method by which discount 
rates are determined, and key prepayment or reinvestment assumptions).
    4. Under paragraph 305(a)(1)(iii):
    A. The confidence intervals selected should reflect reasonably 
possible near-term changes in market rates and prices. In this regard, 
absent economic justification for the selection of different confidence 
intervals, registrants should use intervals that are 95 percent or 
higher;
    B. For purposes of instruction 4.A. of the Instructions to Paragraph 
305(a), the term reasonably possible has the same meaning as defined by 
generally accepted accounting principles (see, e.g., FAS 5, paragraph 3 
(March 1975));
    C. For purposes of instruction 4.A. of the Instructions to 
Paragraphs 305(a), the term near term means a period of time going 
forward up to one year from the date of the financial statements (see 
generally SOP 94-6, at paragraph 7 (December 30, 1994));
    D. Registrants with multiple foreign currency exchange rate 
exposures should prepare foreign currency value at risk analysis 
disclosures that measure the aggregate sensitivity to changes in all 
foreign currency exchange rate exposures, including the aggregate 
effects of changes in both transactional currency/functional currency 
exchange rate exposures and functional currency/reporting currency 
exchange rate exposures. For example, assume a French division of a 
registrant presenting its financial statements in U.S. dollars ($US) 
invests in a deutschmark(DM)-denominated debt security. In these 
circumstances, the $US is the reporting currency and the DM is the 
transactional currency. In addition, assume this division determines 
that the French franc (FF) is its functional currency according to FAS 
52. In preparing the foreign currency value at risk disclosures, this 
registrant should report the aggregate potential loss from hypothetical 
changes in both the DM/FF exchange rate exposure and the FF/$US exchange 
rate exposure; and
    E. Model, assumptions, and parameters that should be described 
include, but are not limited to, how loss is defined by the model (e.g., 
loss in earnings, fair values, or cash flows), the type of model used 
(e.g., variance/covariance, historical simulation, or Monte Carlo 
simulation and a description as to how optionality is addressed by the 
model), the types of instruments covered by the model (e.g., derivative 
financial instruments, other financial instruments, derivative commodity 
instruments, and whether other instruments are included voluntarily, 
such as certain commodity instruments and positions, cash flows from 
anticipated transactions, and certain financial instruments excluded 
under instruction 3.C.ii. of the General Instructions to Paragraphs 
305(a) and 305(b)), and other relevant information about the model's 
assumptions and parameters, (e.g., holding periods, confidence 
intervals, and, when appropriate, the methods used for aggregating value 
at risk amounts across market risk exposure categories, such as by 
assuming perfect positive correlation, independence, or actual observed 
correlation).
    5. Under paragraph 305(a)(2), limitations that should be considered 
include, but are not limited to:
    A. The exclusion of certain market risk sensitive instruments, 
positions, and transactions from the disclosures required under 
paragraph 305(a)(1) (e.g., derivative commodity instruments not 
permitted by contract or business custom to be settled in cash or with 
another financial instrument, commodity positions, cash flows from 
anticipated transactions, and certain financial instruments excluded 
under instruction 3.C.ii. of the General Instructions to Paragraphs 
305(a) and 305(b)). Failure to include such instruments, positions, and 
transactions in preparing the disclosures under paragraph 305(a)(1) may 
be a limitation because the resulting disclosures may not fully reflect 
the net market risk of a registrant; and
    B. The ability of disclosures required under paragraph 305(a)(1) to 
reflect fully the market risk that may be inherent in instruments with 
leverage, option, or prepayment features (e.g., options, including 
written options, structured notes, collateralized mortgage obligations, 
leveraged swaps, and options embedded in swaps).

    (b) Qualitative information about market risk. (1) To the extent 
material, describe:
    (i) The registrant's primary market risk exposures;
    (ii) How those exposures are managed. Such descriptions shall 
include, but not be limited to, a discussion of the objectives, general 
strategies, and instruments, if any, used to manage those exposures; and
    (iii) Changes in either the registrant's primary market risk 
exposures or how those exposures are managed, when compared to what was 
in effect during the most recently completed fiscal year and what is 
known or expected to be in effect in future reporting periods.

[[Page 411]]

    (2) Qualitative information about market risk shall be presented 
separately for market risk sensitive instruments entered into for 
trading purposes and those entered into for purposes other than trading.

Instructions to Paragraph 305(b): 1. For purposes of disclosure under 
paragraph 305(b), primary market risk exposures means:
    A. The following categories of market risk: interest rate risk, 
foreign currency exchange rate risk, commodity price risk, and other 
relevant market rate or price risks (e.g., equity price risk); and
    B. Within each of these categories, the particular markets that 
present the primary risk of loss to the registrant. For example, if a 
registrant has a material exposure to foreign currency exchange rate 
risk and, within this category of market risk, is most vulnerable to 
changes in dollar/yen, dollar/pound, and dollar/peso exchange rates, the 
registrant should disclose those exposures. Similarly, if a registrant 
has a material exposure to interest rate risk and, within this category 
of market risk, is most vulnerable to changes in short-term U.S. prime 
interest rates, it should disclose the existence of that exposure.
    2. For purposes of disclosure under paragraph 305(b), registrants 
should describe primary market risk exposures that exist as of the end 
of the latest fiscal year, and how those exposures are managed.

    General Instructions to Paragraphs 305(a) and 305(b): 1. The 
disclosures called for by paragraphs 305(a) and 305(b) are intended to 
clarify the registrant's exposures to market risk associated with 
activities in derivative financial instruments, other financial 
instruments, and derivative commodity instruments.
    2. In preparing the disclosures under paragraphs 305(a) and 305(b), 
registrants are required to include derivative financial instruments, 
other financial instruments, and derivative commodity instruments.
    3. For purposes of paragraphs 305(a) and 305(b), derivative 
financial instruments, other financial instruments, and derivative 
commodity instruments (collectively referred to as ``market risk 
sensitive instruments'') are defined as follows:
    A. Derivative financial instruments has the same meaning as defined 
by generally accepted accounting principles (see, e.g., FASB, Statement 
of Financial Accounting Standards No. 119, ``Disclosure about Derivative 
Financial Instruments and Fair Value of Financial Instruments,'' (``FAS 
119'') paragraphs 5-7 (October 1994)), and includes futures, forwards, 
swaps, options, and other financial instruments with similar 
characteristics;
    B. Other financial instruments means all financial instruments as 
defined by generally accepted accounting principles for which fair value 
disclosures are required (see, e.g., FASB, Statement of Financial 
Accounting Standards No. 107, ``Disclosures about Fair Value of 
Financial Instruments,'' (``FAS 107'') paragraphs 3 and 8 (December 
1991)), except for derivative financial instruments, as defined above;
    C.i. Other financial instruments include, but are not limited to, 
trade accounts receivable, investments, loans, structured notes, 
mortgage-backed securities, trade accounts payable, indexed debt 
instruments, interest-only and principal-only obligations, deposits, and 
other debt obligations;
    ii. Other financial instruments exclude employers' and plans' 
obligations for pension and other post-retirement benefits, 
substantively extinguished debt, insurance contracts, lease contracts, 
warranty obligations and rights, unconditional purchase obligations, 
investments accounted for under the equity method, minority interests in 
consolidated enterprises, and equity instruments issued by the 
registrant and classified in stockholders' equity in the statement of 
financial position (see, e.g., FAS 107, paragraph 8 (December 1991)). 
For purposes of this item, trade accounts receivable and trade accounts 
payable need not be considered other financial instruments when their 
carrying amounts approximate fair value; and
    D. Derivative commodity instruments include, to the extent such 
instruments are not derivative financial instruments, commodity futures, 
commodity forwards, commodity swaps, commodity options, and other 
commodity instruments with similar characteristics that are permitted by 
contract or business custom to be settled in cash or with another 
financial instrument. For purposes of this paragraph, settlement in cash 
includes settlement in cash of the net change in value of the derivative 
commodity instrument (e.g., net cash settlement based on changes in the 
price of the underlying commodity).
    4.A. In addition to providing required disclosures for the market 
risk sensitive instruments defined in instruction 2. of the General 
Instructions to Paragraphs 305(a) and 305(b), registrants are encouraged 
to include other market risk sensitive instruments, positions, and 
transactions within the disclosures required under paragraphs 305(a) and 
305(b). Such instruments, positions, and transactions might include 
commodity positions, derivative commodity instruments that are not 
permitted by contract or business custom to be settled in cash or with 
another financial instrument, cash flows from anticipated transactions, 
and certain financial instruments excluded under instruction 3.C.ii. of 
the General Instructions to Paragraphs 305(a) and 305(b).

[[Page 412]]

    B. Registrants that voluntarily include other market risk sensitive 
instruments, positions and transactions within their quantitative 
disclosures about market risk under the sensitivity analysis or value at 
risk disclosure alternatives are not required to provide separate market 
risk disclosures for any voluntarily selected instruments, positions, or 
transactions. Instead, registrants selecting the sensitivity analysis 
and value at risk disclosure alternatives are permitted to present 
comprehensive market risk disclosures, which reflect the combined market 
risk exposures inherent in both the required and any voluntarily 
selected instruments, position, or transactions. Registrants that choose 
the tabular presentation disclosure alternative should present 
voluntarily selected instruments, positions, or transactions in a manner 
consistent with the requirements in Item 305(a) for market risk 
sensitive instruments.
    C. If a registrant elects to include voluntarily a particular type 
of instrument, position, or transaction in their quantitative 
disclosures about market risk, that registrant should include all, 
rather than some, of those instruments, positions, or transactions 
within those disclosures. For example, if a registrant holds in 
inventory a particular type of commodity position and elects to include 
that commodity position within their market risk disclosures, the 
registrant should include the entire commodity position, rather than 
only a portion thereof, in their quantitative disclosures about market 
risk.
    5.A. Under paragraphs 305(a) and 305(b), a materiality assessment 
should be made for each market risk exposure category within the trading 
and other than trading portfolios.
    B. For purposes of making the materiality assessment under 
instruction 5.A. of the General Instructions to Paragraphs 305(a) and 
305(b), registrants should evaluate both:
    i. The materiality of the fair values of derivative financial 
instruments, other financial instruments, and derivative commodity 
instruments outstanding as of the end of the latest fiscal year; and
    ii. The materiality of potential, near-term losses in future 
earnings, fair values, and/or cash flows from reasonably possible near-
term changes in market rates or prices.
    iii. If either paragraphs B.i. or B.ii. in this instruction of the 
General Instructions to Paragraphs 305(a) and 305(b) are material, the 
registrant should disclose quantitative and qualitative information 
about market risk, if such market risk for the particular market risk 
exposure category is material.
    C. For purposes of instruction 5.B.i. of the General Instructions to 
Paragraphs 305(a) and 305(b), registrants generally should not net fair 
values, except to the extent allowed under generally accepted accounting 
principles (see, e.g., FASB Interpretation No. 39, ``Offsetting of 
Amounts Related to Certain Contracts'' (March 1992)). For example, under 
this instruction, the fair value of assets generally should not be 
netted with the fair value of liabilities.
    D. For purposes of instruction 5.B.ii. of the General Instructions 
to Paragraphs 305(a) and 305(b), registrants should consider, among 
other things, the magnitude of:
    i. Past market movements;
    ii. Reasonably possible, near-term market movements; and
    iii. Potential losses that may arise from leverage, option, and 
multiplier features.
    E. For purposes of instructions 5.B.ii and 5.D.ii of the General 
Instructions to Paragraphs 305(a) and 305(b), the term near term means a 
period of time going forward up to one year from the date of the 
financial statements (see generally SOP 94-6, at paragraph 7 (December 
30, 1994)).
    F. For the purpose of instructions 5.B.ii. and 5.D.ii. of the 
General Instructions to Paragraphs 305(a) and 305(b), the term 
reasonably possible has the same meaning as defined by generally 
accepted accounting principles (see, e.g., FAS 5, paragraph 3 (March 
1975)).
    6. For purposes of paragraphs 305(a) and 305(b), registrants should 
present the information outside of, and not incorporate the information 
into, the financial statements (including the footnotes to the financial 
statements). In addition, registrants are encouraged to provide the 
required information in one location. However, alternative presentation, 
such as inclusion of all or part of the information in Management's 
Discussion and Analysis, may be used at the discretion of the 
registrant. If information is disclosed in more than one location, 
registrants should provide cross-references to the locations of the 
related disclosures.
    7. For purposes of the instructions to paragraphs 305(a) and 305(b), 
trading purposes has the same meaning as defined by generally accepted 
accounting principles (see, e.g., FAS 119, paragraph 9a (October 1994)). 
In addition, anticipated transactions means transactions (other than 
transactions involving existing assets or liabilities or transactions 
necessitated by existing firm commitments) an enterprise expects, but is 
not obligated, to carry out in the normal course of business (see, e.g., 
FASB, Statement of Financial Accounting Standards No. 80, ``Accounting 
for Futures Contracts,'' paragraph 9, (August 1984)).

    (c) Interim periods. If interim period financial statements are 
included or are required to be included by Article 3 of Regulation S-X 
(17 CFR 210), discussion and analysis shall be provided so as to enable 
the reader to assess the sources and effects of material changes in 
information that would be provided

[[Page 413]]

under Item 305 of Regulation S-K from the end of the preceding fiscal 
year to the date of the most recent interim balance sheet.

Instructions to Paragraph 305(c): 1. Information required under 
paragraph (c) of this Item 305 is not required until after the first 
fiscal year end in which this Item 305 is applicable.

    (d) Safe Harbor. (1) The safe harbor provided in Section 27A of the 
Securities Act of 1933 (15 U.S.C. 77z-2) and Section 21E of the 
Securities Exchange Act of 1934 (15 U.S.C. 78u-5) (``statutory safe 
harbors'') shall apply, with respect to all types of issuers and 
transactions, to information provided pursuant to paragraphs (a), (b), 
and (c) of this Item 305, provided that the disclosure is made by: an 
issuer; a person acting on behalf of the issuer; an outside reviewer 
retained by the issuer making a statement on behalf of the issuer; or an 
underwriter, with respect to information provided by the issuer or 
information derived from information provided by the issuer.
    (2) For purposes of paragraph (d) of this Item 305 only:
    (i) All information required by paragraphs (a), (b)(1)(i), 
(b)(1)(iii), and (c) of this Item 305 is considered forward looking 
statements for purposes of the statutory safe harbors, except for 
historical facts such as the terms of particular contracts and the 
number of market risk sensitive instruments held during or at the end of 
the reporting period; and
    (ii) With respect to paragraph (a) of this Item 305, the meaningful 
cautionary statements prong of the statutory safe harbors will be 
satisfied if a registrant satisfies all requirements of that same 
paragraph (a) of this Item 305.
    (e) Small business issuers. Small business issuers, as defined in 
Sec. 230.405 of this chapter and Sec. 230.12b-2 of this chapter, need 
not provide the information required by this Item 305, whether or not 
they file on forms specially designated as small business issuer forms.

General Instructions to Paragraphs 305(a), 305(b), 305(c), 305(d), and 
305(e): 1. Bank registrants, thrift registrants, and non-bank and non-
thrift registrants with market capitalizations on January 28, 1997 in 
excess of $2.5 billion should provide Item 305 disclosures in filings 
with the Commission that include annual financial statements for fiscal 
years ending after June 15, 1997. Non-bank and non-thrift registrants 
with market capitalizations on January 28, 1997 of $2.5 billion or less 
should provide Item 305 disclosures in filings with the Commission that 
include financial statements for fiscal years ending after June 15, 
1998.
    2.A. For purposes of instruction 1. of the General Instructions to 
Paragraphs 305(a), 305(b), 305(c), 305(d), and 305(e), bank registrants 
and thrift registrants include any registrant which has control over a 
depository institution.
    B. For purposes of instruction 2.A. of the General Instructions to 
Paragraphs 305(a), 305(b), 305(c), 305(d), and 305(e), a registrant has 
control over a depository institution if:
    i. The registrant directly or indirectly or acting through one or 
more other persons owns, controls, or has power to vote 25% or more of 
any class of voting securities of the depository institution;
    ii. The registrant controls in any manner the election of a majority 
of the directors or trustees of the depository institution; or
    iii. The Federal Reserve Board or Office of Thrift Supervision 
determines, after notice and opportunity for hearing, that the 
registrant directly or indirectly exercises a controlling influence over 
the management or policies of the depository institution.
    C. For purposes of instruction 2.B. of the General Instructions to 
Paragraphs 305(a), 305(b), 305(c), 305(d), and 305(e), a depository 
institution means any of the following:
    i. An insured depository institution as defined in section 3(c)(2) 
of the Federal Deposit Insurance Act (12 U.S.C.A. Sec. 1813 (c));
    ii. An institution organized under the laws of the United States, 
any State of the United States, the District of Columbia, any territory 
of the United States, Puerto Rico, Guam, American Somoa, or the Virgin 
Islands, which both accepts demand deposits or deposits that the 
depositor may withdraw by check or similar means for payment to third 
parties or others and is engaged in the business of making commercial 
loans.
    D. For purposes of instruction 1. of the General Instructions to 
Paragraphs 305(a), 305(b), 305(c), 305(d) and 305(e), market 
capitalization is the aggregate market value of common equity as set 
forth in General Instruction I.B.1. of Form S-3; provided however, that 
common equity held by affiliates is included in the calculation of 
market capitalization; and provided further that instead of using the 60 
day period prior to filing referenced in General Instruction I.B.1. of 
Form S-3, the measurement date is January 28, 1997.

[[Page 414]]

                Appendix to Item 305--Tabular Disclosures

    The tables set forth below are illustrative of the format that might 
be used when a registrant elects to present the information required by 
paragraph (a)(1)(i)(A) of Item 305 regarding terms and information about 
derivative financial instruments, other financial instruments, and 
derivative commodity instruments. These examples are for illustrative 
purposes only. Registrants are not required to display the information 
in the specific format illustrated below. Alternative methods of display 
are permissible as long as the disclosure requirements of the section 
are satisfied. Furthermore, these examples were designed primarily to 
illustrate possible formats for presentation of the information required 
by the disclosure item and do not purport to illustrate the broad range 
of derivative financial instruments, other financial instruments, and 
derivative commodity instruments utilized by registrants.

                        Interest Rate Sensitivity

    The table below provides information about the Company's derivative 
financial instruments and other financial instruments that are sensitive 
to changes in interest rates, including interest rate swaps and debt 
obligations. For debt obligations, the table presents principal cash 
flows and related weighted average interest rates by expected maturity 
dates. For interest rate swaps, the table presents notional amounts and 
weighted average interest rates by expected (contractual) maturity 
dates. Notional amounts are used to calculate the contractual payments 
to be exchanged under the contract. Weighted average variable rates are 
based on implied forward rates in the yield curve at the reporting date. 
The information is presented in U.S. dollar equivalents, which is the 
Company's reporting currency. The instrument's actual cash flows are 
denominated in both U.S. dollars ($US) and German deutschmarks (DM), as 
indicated in parentheses.

                                                                    December 31, 19X1
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                  Expected maturity date
                                                                ----------------------------------------------------------------------------------------
                                                                                                                                                  Fair
                                                                    19X2       19X3       19X4       19X5       19X6    Thereafter    Total      value
--------------------------------------------------------------------------------------------------------------------------------------------------------
                          Liabilities                                                          (US$ Equivalent in millions)
                                                                ----------------------------------------------------------------------------------------
Long-term Debt:
    Fixed Rate ($US)...........................................       $XXX       $XXX       $XXX       $XXX       $XXX        $XXX       $XXX       $XXX
        Average interest rate..................................       X.X%       X.X%       X.X%       X.X%       X.X%        X.X%       X.X%
    Fixed Rate (DM)............................................        XXX        XXX        XXX        XXX        XXX         XXX        XXX        XXX
        Average interest rate..................................       X.X%       X.X%       X.X%       X.X%       X.X%        X.X%       X.X%
    Variable Rate ($US)........................................        XXX        XXX        XXX        XXX        XXX         XXX        XXX        XXX
        Average interest rate..................................       X.X%       X.X%       X.X%       X.X%       X.X%        X.X%       X.X%
                                                                ----------------------------------------------------------------------------------------
                   Interest Rate Derivatives                                                          (In millions)
                                                                ----------------------------------------------------------------------------------------
Interest Rate Swaps:
    Variable to Fixed ($US)....................................       $XXX       $XXX       $XXX       $XXX       $XXX        $XXX       $XXX       $XXX
        Average pay rate.......................................       X.X%       X.X%       X.X%       X.X%       X.X%        X.X%       X.X%
        Average receive rate...................................       X.X%       X.X%       X.X%       X.X%       X.X%        X.X%       X.X%
    Fixed to Variable ($US)....................................        XXX        XXX        XXX        XXX        XXX         XXX        XXX        XXX
        Average pay rate.......................................       X.X%       X.X%       X.X%       X.X%       X.X%        X.X%       X.X%
        Average receive rate...................................       X.X%       X.X%       X.X%       X.X%       X.X%        X.X%       X.X%
--------------------------------------------------------------------------------------------------------------------------------------------------------

                        Exchange Rate Sensitivity

    The table below provides information about the Company's derivative 
financial instruments, other financial instruments, and firmly committed 
sales transactions by functional currency and presents such information 
in U.S. dollar equivalents.\1\ The table summarizes information on 
instruments and transactions that are sensitive to foreign currency 
exchange rates, including foreign currency forward exchange agreements, 
deutschmark (DM)-denominated debt obligations, and firmly committed DM 
sales transactions. For debt obligations, the table presents principal 
cash flows and related weighted average interest rates by expected 
maturity dates. For firmly committed DM-sales transactions, sales 
amounts are presented by the expected transaction date,

[[Page 415]]

which are not expected to exceed two years. For foreign currency forward 
exchange agreements, the table presents the notional amounts and 
weighted average exchange rates by expected (contractual) maturity 
dates. These notional amounts generally are used to calculate the 
contractual payments to be exchanged under the contract.
---------------------------------------------------------------------------

    \1\ The information is presented in U.S. dollars because that is the 
registrant's reporting currency.

                                                                    December 31, 19X1
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                  Expected maturity date
                                                                ----------------------------------------------------------------------------------------
                                                                                                                                                  Fair
                                                                    19X2       19X3       19X4       19X5       19X6    Thereafter    Total      value
--------------------------------------------------------------------------------------------------------------------------------------------------------
             On-Balance Sheet Financial Instruments                                            (US$ Equivalent in millions)
                                                                ----------------------------------------------------------------------------------------
       Anticipated Transactions and Related Derivatives 3
                                                                ----------------------------------------------------------------------------------------
$US Functional Currency 2:
                                                                ----------------------------------------------------------------------------------------
    Liabilities
    Long-Term Debt:
        Fixed Rate (DM)........................................       $XXX       $XXX       $XXX       $XXX       $XXX        $XXX       $XXX       $XXX
        Average interest rate..................................        X.X        X.X        X.X        X.X        X.X         X.X        X.X  .........
                                                                ----------------------------------------------------------------------------------------
                  Anticipated Transcations and                                            Expected maturity or transaction date
                     Related Derivatives\3\                                                    (US$ Equivalent in millions)
                                                                ----------------------------------------------------------------------------------------
$US Functional Currency:
    Firmly committed Sales Contracts (DM)......................       $XXX       $XXX  .........  .........  .........  ..........       $XXX       $XXX
        Forward Exchange Agreements
        (Receive $US/Pay DM):..................................
            Contract Amount....................................        XXX        XXX  .........  .........  .........  ..........        XXX        XXX
            Average Contractual Exchange Rate..................        X.X        X.X  .........  .........  .........  ..........        X.X  .........
--------------------------------------------------------------------------------------------------------------------------------------------------------
\2\ Similar tabular information would be provided for other functional currencies.
\3\ Pursuant to General Instruction 4. to Items 305(a) and 305(b) of Regulation S-K, registrants may include cash flows from anticipated transactions
  and operating cash flows resulting from non-financial and non-commodity instruments.

                       Commodity Price Sensitivity

    The table below provides information about the Company's corn 
inventory and futures contracts that are sensitive to changes in 
commodity prices, specifically corn prices. For inventory, the table 
presents the carrying amount and fair value at December 31, 19x1. For 
the futures contracts the table presents the notional amounts in 
bushels, the weighted average contract prices, and the total dollar 
contract amount by expected maturity dates, the latest of which occurs 
one year from the reporting date. Contract amounts are used to calculate 
the contractual payments and quantity of corn to be exchanged under the 
futures contracts.

                            December 31, 19X1
------------------------------------------------------------------------
                                                  Carrying
                                                   amount    Fair  value
------------------------------------------------------------------------
                                                      (In millions)
    On Balance Sheet Commodity Position and
              Related Derivatives
    Corn Inventory \4\........................         $XXX         $XXX
------------------------------------------------------------------------
                                                  Expected
                                                  maturity       Fair
                                                    1992        value
------------------------------------------------------------------------
              Related Derivatives
Futures Contracts (Short):
    Contract Volumes (100,000 bushels)........          XXX  ...........
    Weighted Average Price (Per 100,000               $X.XX  ...........
     bushels).................................

[[Page 416]]

 
    Contract Amount ($US in millions).........         $XXX         $XXX
------------------------------------------------------------------------
\4\ Pursuant to General Instruction 4. to Items 305(a) and 305(b) of
  Regulation S-K, registrants may include information on commodity
  positions, such as corn inventory.


[62 FR 6064, Feb. 10, 1997]



Sec. 229.306  (Item 306) Audit committee report.

    (a) The audit committee must state whether:
    (1) The audit committee has reviewed and discussed the audited 
financial statements with management;
    (2) The audit committee has discussed with the independent auditors 
the matters required to be discussed by SAS 61 (Codification of 
Statements on Auditing Standards, AU Sec. 380), as may be modified or 
supplemented;
    (3) The audit committee has received the written disclosures and the 
letter from the independent accountants required by Independence 
Standards Board Standard No. 1 (Independence Standards Board Standard 
No. 1, Independence Discussions with Audit Committees), as may be 
modified or supplemented, and has discussed with the independent 
accountant the independent accountant's independence; and
    (4) Based on the review and discussions referred to in paragraphs 
(a)(1) through (a)(3) of this Item, the audit committee recommended to 
the Board of Directors that the audited financial statements be included 
in the company's Annual Report on Form 10-K (17 CFR 249.310) (or, for 
closed-end investment companies registered under the Investment Company 
Act of 1940 (15 U.S.C. 80a-1 et seq.), the annual report to shareholders 
required by Section 30(e) of the Investment Company Act of 1940 (15 
U.S.C. 80a-29(e)) and Rule 30d-1 (17 CFR 270.30d-1) thereunder) for the 
last fiscal year for filing with the Commission.
    (b) The name of each member of the company's audit committee (or, in 
the absence of an audit committee, the board committee performing 
equivalent functions or the entire board of directors) must appear below 
the disclosure required by this Item.
    (c) The information required by paragraphs (a) and (b) of this Item 
shall not be deemed to be ``soliciting material,'' or to be ``filed'' 
with the Commission or subject to Regulation 14A or 14C (17 CFR 240.14a-
1 et seq. or 240.14c-1 et seq.), other than as provided in this Item, or 
to the liabilities of section 18 of the Exchange Act (15 U.S.C. 78r), 
except to the extent that the company specifically requests that the 
information be treated as soliciting material or specifically 
incorporates it by reference into a document filed under the Securities 
Act or the Exchange Act.
    (d) The information required by paragraphs (a) and (b) of this Item 
need not be provided in any filings other than a company proxy or 
information statement relating to an annual meeting of security holders 
at which directors are to be elected (or special meeting or written 
consents in lieu of such meeting). Such information will not be deemed 
to be incorporated by reference into any filing under the Securities Act 
or the Exchange Act, except to the extent that the company specifically 
incorporates it by reference.

[64 FR 73402, Dec. 30, 1999]



Sec. 229.307  (Item 307) Controls and procedures.

    (a) Evaluation of disclosure controls and procedures. Disclose the 
conclusions of the registrant's principal executive officer or officers 
and principal financial officer or officers, or persons performing 
similar functions, about the effectiveness of the registrant's 
disclosure controls and procedures (as defined in Secs. 240.13a-14(c) 
and 240.15d-14(c) of this chapter) based on their evaluation of these 
controls and procedures as of a date within 90 days of the filing date 
of the quarterly or annual report that includes the disclosure required 
by this paragraph.

[[Page 417]]

    (b) Changes in internal controls. Disclose whether or not there were 
significant changes in the registrant's internal controls or in other 
factors that could significantly affect these controls subsequent to the 
date of their evaluation, including any corrective actions with regard 
to significant deficiencies and material weaknesses.
    (c) Asset-Backed Issuers. A registrant that is an Asset-Backed 
Issuer (as defined in Sec. 240.13a- 14(g) and Sec. 240.15d-14(g) of this 
chapter) is not required to disclose the information required by this 
Item.

[67 FR 57287, Sept. 9, 2002]



        Subpart 229.400--Management and Certain Security Holders



Sec. 229.401  (Item 401) Directors, executive officers, promoters and control persons.

    (a) Identification of directors. List the names and ages of all 
directors of the registrant and all persons nominated or chosen to 
become directors; indicate all positions and offices with the registrant 
held by each such person; state his term of office as director and any 
period(s) during which he has served as such; describe briefly any 
arrangement or understanding between him and any other person(s) (naming 
such person(s)) pursuant to which he was or is to be selected as a 
director or nominee.

Instructions to Paragraph (a) of Item 401: 1. Do not include 
arrangements or understandings with directors or officers of the 
registrant acting solely in their capacities as such.
    2. No nominee or person chosen to become a director who has not 
consented to act as such shall be named in response to this Item. In 
this regard, with respect to proxy statements, see Rule 14a-4(d) under 
the Exchange Act (Sec. 240.14a-4(d) of this chapter).
    3. If the information called for by this paragraph (a) is being 
presented in a proxy or information statement, no information need be 
given respecting any director whose term of office as a director will 
not continue after the meeting to which the statement relates.
    4. With regard to proxy statements in connection with action to be 
taken concerning the election of directors, if fewer nominees are named 
than the number fixed by or pursuant to the governing instruments, state 
the reasons for this procedure and that the proxies cannot be voted for 
a greater number of persons than the number of nominees named.
    5. With regard to proxy statements in connection with action to be 
taken concerning the election of directors, if the solicitation is made 
by persons other than management, information shall be given as to 
nominees of the persons making the solicitation. In all other instances, 
information shall be given as to directors and persons nominated for 
election or chosen by management to become directors.

    (b) Identification of executive officers. List the names and ages of 
all executive officers of the registrant and all persons chosen to 
become executive officers; indicate all positions and offices with the 
registrant held by each such person; state his term of office as officer 
and the period during which he has served as such and describe briefly 
any arrangement or understanding between him and any other person(s) 
(naming such person) pursuant to which he was or is to be selected as an 
officer.

Instructions to Paragraph (b) of Item 401: 1. Do not include 
arrangements or understandings with directors or officers of the 
registrant acting solely in their capacities as such.
    2. No person chosen to become an executive officer who has not 
consented to act as such shall be named in response to this Item.
    3. The information regarding executive officers called for by this 
Item need not be furnished in proxy or information statements prepared 
in accordance with Schedule 14A under the Exchange Act (Sec. 240.14a-101 
of this chapter) by those registrants relying on General Instruction G 
of Form 10-K and Form 10-KSB under the Exchange Act (Sec. 249.310 of 
this chapter), Provided, That such information is furnished in a 
separate item captioned ``Executive officers of the registrant'' and 
included in Part I of the registrant's annual report on Form 10-K and 
Form 10-KSB.

    (c) Identification of certain significant employees. Where the 
registrant employs persons such as production managers, sales managers, 
or research scientists who are not executive officers but who make or 
are expected to make significant contributions to the business of the 
registrant, such persons shall be identified and their background 
disclosed to the same extent as in the case of executive officers. Such 
disclosure need not be made if the registrant was subject to section 
13(a) or 15(d) of the Exchange Act or was exempt from section 13(a) by 
section 12(g)(2)(G) of such Act immediately

[[Page 418]]

prior to the filing of the registration statement, report, or statement 
to which this Item is applicable.
    (d) Family relationships. State the nature of any family 
relationship between any director, executive officer, or person 
nominated or chosen by the registrant to become a director or executive 
officer.

Instruction to Paragraph 401(d): The term ``family relationship'' means 
any relationship by blood, marriage, or adoption, not more remote than 
first cousin.

    (e) Business experience--(1) Background. Briefly describe the 
business experience during the past five years of each director, 
executive officer, person nominated or chosen to become a director or 
executive officer, and each person named in answer to paragraph (c) of 
Item 401, including: Each person's principal occupations and employment 
during the past five years; the name and principal business of any 
corporation or other organization in which such occupations and 
employment were carried on; and whether such corporation or organization 
is a parent, subsidiary or other affiliate of the registrant. When an 
executive officer or person named in response to paragraph (c) of Item 
401 has been employed by the registrant or a subsidiary of the 
registrant for less than five years, a brief explanation shall be 
included as to the nature of the responsibility undertaken by the 
individual in prior positions to provide adequate disclosure of his 
prior business experience. What is required is information relating to 
the level of his professional competence, which may include, depending 
upon the circumstances, such specific information as the size of the 
operation supervised.
    (2) Directorships. Indicate any other directorships held by each 
director or person nominated or chosen to become a director in any 
company with a class of securities registered pursuant to section 12 of 
the Exchange Act or subject to the requirements of section 15(d) of such 
Act or any company registered as an investment company under the 
Investment Company Act of 1940, 15 U.S.C. 80a-1, et seq., as amended, 
naming such company.

Instruction to Paragraph (e) of Item 401: For the purposes of paragraph 
(e)(2), where the other directorships of each director or person 
nominated or chosen to become a director include directorships of two or 
more registered investment companies that are part of a ``fund complex'' 
as that term is defined in Item 22(a) of Schedule 14A under the Exchange 
Act (Sec. 240.14a-101 of this chapter), the registrant may, rather than 
listing each such investment company, identify the fund complex and 
provide the number of investment company directorships held by the 
director or nominee in such fund complex.

    (f) Involvement in certain legal proceedings. Describe any of the 
following events that occurred during the past five years and that are 
material to an evaluation of the ability or integrity of any director, 
person nominated to become a director or executive officer of the 
registrant:
    (1) A petition under the Federal bankruptcy laws or any state 
insolvency law was filed by or against, or a receiver, fiscal agent or 
similar officer was appointed by a court for the business or property of 
such person, or any partnership in which he was a general partner at or 
within two years before the time of such filing, or any corporation or 
business association of which he was an executive officer at or within 
two years before the time of such filing;
    (2) Such person was convicted in a criminal proceeding or is a named 
subject of a pending criminal proceeding (excluding traffic violations 
and other minor offenses);
    (3) Such person was the subject of any order, judgment, or decree, 
not subsequently reversed, suspended or vacated, of any court of 
competent jurisdiction, permanently or temporarily enjoining him from, 
or otherwise limiting, the following activities:
    (i) Acting as a futures commission merchant, introducing broker, 
commodity trading advisor, commodity pool operator, floor broker, 
leverage transaction merchant, any other person regulated by the 
Commodity Futures Trading Commission, or an associated person of any of 
the foregoing, or as an investment adviser, underwriter, broker or 
dealer in securities, or as an affiliated person, director or employee 
of any investment company, bank, savings and loan association or

[[Page 419]]

insurance company, or engaging in or continuing any conduct or practice 
in connection with such activity;
    (ii) Engaging in any type of business practice; or
    (iii) Engaging in any activity in connection with the purchase or 
sale of any security or commodity or in connection with any violation of 
Federal or State securities laws or Federal commodities laws;
    (4) Such person was the subject of any order, judgment or decree, 
not subsequently reversed, suspended or vacated, of any Federal or State 
authority barring, suspending or otherwise limiting for more than 60 
days the right of such person to engage in any activity described in 
paragraph (f)(3)(i) of this section, or to be associated with persons 
engaged in any such activity; or
    (5) Such person was found by a court of competent jurisdiction in a 
civil action or by the Commission to have violated any Federal or State 
securities law, and the judgment in such civil action or finding by the 
Commission has not been subsequently reversed, suspended, or vacated.
    (6) Such person was found by a court of competent jurisdiction in a 
civil action or by the Commodity Futures Trading Commission to have 
violated any Federal commodities law, and the judgment in such civil 
action or finding by the Commodity Futures Trading Commission has not 
been subsequently reversed, suspended or vacated.

Instructions to Paragraph (f) of Item 401: 1. For purposes of computing 
the five year period referred to in this paragraph, the date of a 
reportable event shall be deemed the date on which the final order, 
judgment or decree was entered, or the date on which any rights of 
appeal from preliminary orders, judgments, or decrees have lapsed. With 
respect to bankruptcy petitions, the computation date shall be the date 
of filing for uncontested petitions or the date upon which approval of a 
contested petition became final.
    2. If any event specified in this paragraph (f) has occurred and 
information in regard thereto is omitted on the grounds that it is not 
material, the registrant may furnish to the Commission, at time of 
filing (or at the time preliminary materials are filed, or ten days 
before definitive materials are filed in preliminary filing is not 
required, pursuant to Rule 14a-6 or 14c-5 under the Exchange Act 
(Secs. 240.14a-6 and 240-14c-5 of this chapter)), as supplemental 
information and not as part of the registration statement, report, or 
proxy or information statement, materials to which the omission relates, 
a description of the event and a statement of the reasons for the 
omission of information in regard thereto.
    3. The registrant is permitted to explain any mitigating 
circumstances associated with events reported pursuant to this 
paragraph.
    4. If the information called for by this paragraph (f) is being 
presented in a proxy or information statement, no information need be 
given respecting any director whose term of office as a director will 
not continue after the meeting to which the statement relates.

    (g) Promoters and control persons. (1) Registrants, which have not 
been subject to the reporting requirements of section 13(a) or 15(d) of 
the Exchange Act for the twelve months immediately prior to the filing 
of the registration statement, report, or statement to which this Item 
is applicable, and which were organized within the last five years, 
shall describe with respect to any promoter, any of the events 
enumerated in paragraphs (f)(1) through (f)(6) of this section that 
occurred during the past five years and that are material to a voting or 
investment decision.
    (2) Registrants, which have not been subject to the reporting 
requirements of section 13(a) or 15(d) of the Exchange Act for the 
twelve months immediately prior to the filing of the registration 
statement, report, or statement to which this Item is applicable, shall 
describe with respect to any control person, any of the events 
enumerated in paragraphs (f)(1) through (f)(6) of this section that 
occurred during the past five years and that are material to a voting or 
investment decision.

Instructions to Paragraph (g) of Item 401: 1. Instructions 1. through 3. 
to paragraph (f) shall apply to this paragraph (g).
    2. Paragraph (g) shall not apply to any subsidiary of a registrant 
which has been reporting pursuant to Section 13(a) or 15(d) of the 
Exchange Act for the twelve months immediately prior to the filing of 
the registration statement, report or statement.
    (h) Audit committee financial expert. (1)(i) Disclose that the 
registrant's board of directors has determined that the registrant 
either:

[[Page 420]]

    (A) Has at least one audit committee financial expert serving on its 
audit committee; or
    (B) Does not have an audit committee financial expert serving on its 
audit committee.
    (ii) If the registrant provides the disclosure required by paragraph 
(h)(1)(i)(A) of this Item, it must disclose the name of the audit 
committee financial expert and whether that person is independent, as 
that term is used in Item 7(d)(3)(iv) of Schedule 14A (240.14a-101 of 
this chapter) under the Exchange Act.
    (iii) If the registrant provides the disclosure required by 
paragraph (h)(1)(i)(B) of this Item, it must explain why it does not 
have an audit committee financial expert.

    Instruction to paragraph (h)(1) of Item 401. If the registrant's 
board of directors has determined that the registrant has more than one 
audit committee financial expert serving on its audit committee, the 
registrant may, but is not required to, disclose the names of those 
additional persons. A registrant choosing to identify such persons must 
indicate whether they are independent pursuant to Item 401(h)(1)(ii).

    (2) For purposes of this Item, an audit committee financial expert 
means a person who has the following attributes:
    (i) An understanding of generally accepted accounting principles and 
financial statements;
    (ii) The ability to assess the general application of such 
principles in connection with the accounting for estimates, accruals and 
reserves;
    (iii) Experience preparing, auditing, analyzing or evaluating 
financial statements that present a breadth and level of complexity of 
accounting issues that are generally comparable to the breadth and 
complexity of issues that can reasonably be expected to be raised by the 
registrant's financial statements, or experience actively supervising 
one or more persons engaged in such activities;
    (iv) An understanding of internal controls and procedures for 
financial reporting; and
    (v) An understanding of audit committee functions.
    (3) A person shall have acquired such attributes through:
    (i) Education and experience as a principal financial officer, 
principal accounting officer, controller, public accountant or auditor 
or experience in one or more positions that involve the performance of 
similar functions;
    (ii) Experience actively supervising a principal financial officer, 
principal accounting officer, controller, public accountant, auditor or 
person performing similar functions;
    (iii) Experience overseeing or assessing the performance of 
companies or public accountants with respect to the preparation, 
auditing or evaluation of financial statements; or
    (iv) Other relevant experience.
    (4) Safe Harbor. (i) A person who is determined to be an audit 
committee financial expert will not be deemed an expert for any purpose, 
including without limitation for purposes of section 11 of the 
Securities Act of 1933 (15 U.S.C. 77k), as a result of being designated 
or identified as an audit committee financial expert pursuant to this 
Item 401.
    (ii) The designation or identification of a person as an audit 
committee financial expert pursuant to this Item 401 does not impose on 
such person any duties, obligations or liability that are greater than 
the duties, obligations and liability imposed on such person as a member 
of the audit committee and board of directors in the absence of such 
designation or identification.
    (iii) The designation or identification of a person as an audit 
committee financial expert pursuant to this Item 401 does not affect the 
duties, obligations or liability of any other member of the audit 
committee or board of directors.

    Instructions to Item 401(h). 1. The disclosure under Item 401(h) is 
required only in a registrant's annual report. The registrant need not 
provide the disclosure required by this Item 401(h) in a proxy or 
information statement unless that registrant is electing to incorporate 
this information by reference from the proxy or information statement 
into its annual report pursuant to general instruction G(3) to Form 10-
K.
    2. If a person qualifies as an audit committee financial expert by 
means of having held a position described in paragraph (h)(3)(iv) of 
this Item, the registrant shall provide a brief listing of that person's 
relevant experience. Such disclosure may be made by reference to 
disclosures required

[[Page 421]]

under paragraph (e) of this Item 401 (Sec. 229.401(e) or this chapter).
    3. In the case of a foreign private issuer with a two-tier board of 
directors, for purposes of this Item 401(h), the term board of directors 
means the supervisory or non-management board. Also, in the case of a 
foreign private issuer, the term generally accepted accounting 
principles in paragraph (h)(2)(i) of this Item means the body of 
generally accepted accounting principles used by that issuer in its 
primary financial statements filed with the Commission.
    4. A registrant that is an Asset-Backed Issuer (as defined in 
Sec. 240.13a-14(g) and Sec. 240.15d-14(g) of this chapter) is not 
required to disclose the information required by this Item 401(h).

[47 FR 11401, Mar. 16, 1982, as amended at 47 FR 55665, Dec. 13, 1982; 
48 FR 19874, May 3, 1983; 49 FR 32763, Aug. 16, 1984; 52 FR 48982, Dec. 
29, 1987; 59 FR 52695, Oct. 19, 1994; 68 FR 5127, Jan. 31, 2003; 68 FR 
15354, Mar. 31, 2003]



Sec. 229.402  (Item 402)  Executive compensation.

    (a) General--(1) Treatment of specific types of issuers--(i) Small 
business issuers. A registrant that qualifies as ``small business 
issuer,'' as defined by Item 10(a)(1) of Regulation S-B [17 CFR 
228.10(a)(1)], will be deemed to comply with this item if it provides 
the information required by paragraph (b) (Summary Compensation Table), 
paragraphs (c)(1) and (c)(2)(i)-(v) (Option/SAR Grants Table), paragraph 
(d) (Aggregated Option/SAR Exercise and Fiscal Year-End Option/SAR Value 
Table), paragraph (e) (Long-Term Incentive Plan Awards Table), paragraph 
(g) (Compensation of Directors), paragraph (h) (Employment Contracts, 
Termination of Employment and Change in Control Arrangements) and 
paragraph (i) (1) and (2) (Report on Repricing of Options/SARs) of this 
item.
    (ii) Foreign private issuers. A foreign private issuer will be 
deemed to comply with this item if it provides the information required 
by Items 6.B. and 6.E.2. of Form 20-F (17 CFR 249.220f), with more 
detailed information provided if otherwise made publicly available.
    (2) All compensation covered. This item requires clear, concise and 
understandable disclosure of all plan and non-plan compensation awarded 
to, earned by, or paid to the named executive officers designated under 
paragraph (a)(3) of this item, and directors covered by paragraph (g) of 
this item by any person for all services rendered in all capacities to 
the registrant and its subsidiaries, unless otherwise specified in this 
item. Except as provided by paragraph (a)(5) of this item, all such 
compensation shall be reported pursuant to this item, even if also 
called for by another requirement, including transactions between the 
registrant and a third party where the primary purpose of the 
transaction is to furnish compensation to any such named executive 
officer or director. No item reported as compensation for one fiscal 
year need be reported as compensation for a subsequent fiscal year.
    (3) Persons covered. Disclosure shall be provided pursuant to this 
item for each of the following (the ``named executive officers''):
    (i) All individuals serving as the registrant's chief executive 
officer or acting in a similar capacity during the last completed fiscal 
year (``CEO''), regardless of compensation level;
    (ii) The registrant's four most highly compensated executive 
officers other than the CEO who were serving as executive officers at 
the end of the last completed fiscal year; and
    (iii) Up to two additional individuals for whom disclosure would 
have been provided pursuant to paragraph (a)(3)(ii) of this item but for 
the fact that the individual was not serving as an executive officer of 
the registrant at the end of the last completed fiscal year.

Instructions to Item 402(a)(3): 1. Determination of Most Highly 
Compensated Executive Officers. The determination as to which executive 
officers are most highly compensated shall be made by reference to total 
annual salary and bonus for the last completed fiscal year (as required 
to be disclosed pursuant to paragraph (b)(2)(iii) (A) and (B) of this 
item), but including the dollar value of salary or bonus amounts forgone 
pursuant to Instruction 3 to paragraph (b)(2)(iii) (A) and (B) of this 
item: Provided, however, That no disclosure need be provided for any 
executive officer, other than the CEO, whose total annual salary and 
bonus, as so determined, does not exceed $100,000.

[[Page 422]]

    2. Inclusion of Executive Officer of Subsidiary. It may be 
appropriate in certain circumstances for a registrant to include an 
executive officer of a subsidiary in the disclosure required by this 
item. See Rule 3b-7 under the Exchange Act [17 CFR 240.3b-7].
    3. Exclusion of Executive Officer due to Unusual or Overseas 
Compensation. It may be appropriate in limited circumstances for a 
registrant not to include in the disclosure required by this item an 
individual, other than its CEO, who is one of the registrant's most 
highly compensated executive officers. Among the factors that should be 
considered in determining not to name an individual are: (a) the 
distribution or accrual of an unusually large amount of cash 
compensation (such as a bonus or commission) that is not part of a 
recurring arrangement and is unlikely to continue; and (b) the payment 
of amounts of cash compensation relating to overseas assignments that 
may be attributed predominantly to such assignments.

    (4) Information for full fiscal year. If the CEO served in that 
capacity during any part of a fiscal year with respect to which 
information is required, information should be provided as to all of his 
or her compensation for the full fiscal year. If a named executive 
officer (other than the CEO) served as an executive officer of the 
registrant (whether or not in the same position) during any part of a 
fiscal year with respect to which information is required, information 
shall be provided as to all compensation of that individual for the full 
fiscal year.
    (5) Transactions with third parties reported under item 404. This 
item includes transactions between the registrant and a third party 
where the primary purpose of the transaction is to furnish compensation 
to a named executive officer. No information need be given in response 
to any paragraph of this item, other than paragraph (j), as to any such 
third-party transaction if the transaction has been reported in response 
to Item 404 of Regulation S-K (Sec. 229.404).
    (6) Omission of table or column. A table or column may be omitted, 
if there has been no compensation awarded to, earned by or paid to any 
of the named executives required to be reported in that table or column 
in any fiscal year covered by that table.
    (7) Definitions. For purposes of this item:
    (i) The term stock appreciation rights (SARs) refers to SARs payable 
in cash or stock, including SARs payable in cash or stock at the 
election of the registrant or a named executive officer.
    (ii) The term plan includes, but is not limited to, the following: 
Any plan, contract, authorization or arrangement, whether or not set 
forth in any formal documents, pursuant to which the following may be 
received: cash, stock, restricted stock or restricted stock units, 
phantom stock, stock options, SARs, stock options in tandem with SARs, 
warrants, convertible securities, performance units and performance 
shares, and similar instruments. A plan may be applicable to one person. 
Registrants may omit information regarding group life, health, 
hospitalization, medical reimbursement or relocation plans that do not 
discriminate in scope, terms or operation, in favor of executive 
officers or directors of the registrant and that are available generally 
to all salaried employees.
    (iii) The term long-term incentive plan means any plan providing 
compensation intended to serve as incentive for performance to occur 
over a period longer than one fiscal year, whether such performance is 
measured by reference to financial performance of the registrant or an 
affiliate, the registrant's stock price, or any other measure, but 
excluding restricted stock, stock option and SAR plans.
    (8) Location of specified information. The information required by 
paragraphs (i), (k) and (l) of this item need not be provided in any 
filings other than a registrant proxy or information statement relating 
to an annual meeting of security holders at which directors are to be 
elected (or special meeting or written consents in lieu of such 
meeting). Such information will not be deemed to be incorporated by 
reference into any filing under the Securities Act or the Exchange Act, 
except to the extent that the registrant specifically incorporates it by 
reference.
    (9) Liability for specified information. The information required by 
paragraphs (k) and (l) of this item shall not be deemed to be 
``soliciting material'' or to be ``filed'' with the Commission or 
subject to Regulations 14A or 14C [17 CFR 240.14a-1 et seq. or 240.14c-1 
et seq.],

[[Page 423]]

other than as provided in this item, or to the liabilities of section 18 
of the Exchange Act [15 U.S.C. 78r], except to the extent that the 
registrant specifically requests that such information be treated as 
soliciting material or specifically incorporates it by reference into a 
filing under the Securities Act or the Exchange Act.
    (b) Summary Compensation Table. (1) General. The information 
specified in paragraph (b)(2) of this item, concerning the compensation 
of the named executive officers for each of the registrant's last three 
completed fiscal years, shall be provided in a Summary Compensation 
Table, in the tabular format specified below.

                                           Summary Compensation Table
----------------------------------------------------------------------------------------------------------------
                            Annual compensation                          Long term compensation
                     -------------------------------------------------------------------------------------------
                                                                  Awards                Payouts
  Name and                                            ---------------------------------------------
  principal    Year    Salary   Bonus    Other annual                   Securities                    All other
  position              ($)      ($)     compensation    Restricted    under-lying    LTIP payouts  compensation
                                             ($)           stock       options/SARs       ($)            ($)
                                                          award(s)     ()
----------------------------------------------------------------------------------------------------------------
(a)           (b)     (c)      (d)      (e)            (f)            (g)            (h)            (i)
----------------------------------------------------------------------------------------------------------------
 
CEO.........  --      .......  .......  .............  .............  .............  .............  ............
              --      .......  .......  .............  .............  .............  .............  ............
              --      .......  .......  .............  .............  .............  .............  ............
A...........  --      .......  .......  .............  .............  .............  .............  ............
              --      .......  .......  .............  .............  .............  .............  ............
              --      .......  .......  .............  .............  .............  .............  ............
B...........  --      .......  .......  .............  .............  .............  .............  ............
              --      .......  .......  .............  .............  .............  .............  ............
              --      .......  .......  .............  .............  .............  .............  ............
C...........  --      .......  .......  .............  .............  .............  .............  ............
              --      .......  .......  .............  .............  .............  .............  ............
              --      .......  .......  .............  .............  .............  .............  ............
D...........  --      .......  .......  .............  .............  .............  .............  ............
              --      .......  .......  .............  .............  .............  .............  ............
              --      .......  .......  .............  .............  .............  .............  ............

    (2) The Table shall include:
    (i) The name and principal position of the executive officer (column 
(a));
    (ii) Fiscal year covered (column (b));
    (iii) Annual compensation (columns (c), (d) and (e)), including:
    (A) The dollar value of base salary (cash and non-cash) earned by 
the named executive officer during the fiscal year covered (column (c));
    (B) The dollar value of bonus (cash and non-cash) earned by the 
named executive officer during the fiscal year covered (column (d)); and

Instructions to Item 402(b)(2)(iii) (A) and (B): 1. Amounts deferred at 
the election of a named executive officer, whether pursuant to a plan 
established under Section 401(k) of the Internal Revenue Code [26 U.S.C. 
401(k)], or otherwise, shall be included in the salary column (column 
(c)) or bonus column (column (d)), as appropriate, for the fiscal year 
in which earned. If the amount of salary or bonus earned in a given 
fiscal year is not calculable through the latest practicable date, that 
fact must be disclosed in a footnote and such amount must be disclosed 
in the subsequent fiscal year in the appropriate column for the fiscal 
year in which earned.
    2. For stock or any other form of non-cash compensation, disclose 
the fair market value at the time the compensation is awarded, earned or 
paid.
    3. Registrants need not include in the salary column (column (c)) or 
bonus column (column (d)) any amount of salary or bonus forgone at the 
election of a named executive officer pursuant to a registrant program 
under which stock, stock-based or other forms of non-cash compensation 
may be received by a named executive in lieu of a portion of annual 
compensation earned in a covered fiscal year. However, the receipt of 
any such form of non-cash compensation in lieu of salary or bonus earned 
for a covered fiscal year must be disclosed in the appropriate column of 
the Table corresponding to that fiscal year (i.e., restricted stock 
awards (column (f)); options or SARs (column (g)); all other 
compensation (column (i)), or, if made pursuant to a long-term incentive 
plan and therefore not reportable at grant in the Summary Compensation 
Table, a footnote must be added to the salary or bonus column so 
disclosing and referring to the Long-Term

[[Page 424]]

Incentive Plan Table (required by paragraph (e) of this item) where the 
award is reported.

    (C) The dollar value of other annual compensation not properly 
categorized as salary or bonus, as follows (column (e)):
    (1) Perquisites and other personal benefits, securities or property, 
unless the aggregate amount of such compensation is the lesser of either 
$50,000 or 10% of the total of annual salary and bonus reported for the 
named executive officer in columns (c) and (d);
    (2) Above-market or preferential earnings on restricted stock, 
options, SARs or deferred compensation paid during the fiscal year or 
payable during that period but deferred at the election of the named 
executive officer;
    (3) Earnings on long-term incentive plan compensation paid during 
the fiscal year or payable during that period but deferred at the 
election of the named executive officer;
    (4) Amounts reimbursed during the fiscal year for the payment of 
taxes; and
    (5) The dollar value of the difference between the price paid by a 
named executive officer for any security of the registrant or its 
subsidiaries purchased from the registrant or its subsidiaries (through 
deferral of salary or bonus, or otherwise), and the fair market value of 
such security at the date of purchase, unless that discount is available 
generally, either to all security holders or to all salaried employees 
of the registrant.

Instructions to Item 402(b)(2)(iii)(C): 1. Each perquisite or other 
personal benefit exceeding 25% of the total perquisites and other 
personal benefits reported for a named executive officer must be 
identified by type and amount in a footnote or accompanying narrative 
discussion to column (e).
    2. Perquisites and other personal benefits shall be valued on the 
basis of the aggregate incremental cost to the registrant and its 
subsidiaries.
    3. Interest on deferred or long-term compensation is above-market 
only if the rate of interest exceeds 120% of the applicable federal 
long-term rate, with compounding (as prescribed under section 1274(d) of 
the Internal Revenue Code, [26 U.S.C. 1274(d)]) at the rate that 
corresponds most closely to the rate under the registrant's plan at the 
time the interest rate or formula is set. In the event of a 
discretionary reset of the interest rate, the requisite calculation must 
be made on the basis of the interest rate at the time of such reset, 
rather than when originally established. Only the above-market portion 
of the interest must be included. If the applicable interest rates vary 
depending upon conditions such as a minimum period of continued service, 
the reported amount should be calculated assuming satisfaction of all 
conditions to receiving interest at the highest rate.
    4. Dividends (and dividend equivalents) on restricted stock, 
options, SARs or deferred compensation denominated in stock (``deferred 
stock'') are preferential only if earned at a rate higher than dividends 
on the registrant's common stock. Only the preferential portion of the 
dividends or equivalents must be included.

    (iv) Long-term compensation (columns (f), (g) and (h)), including:
    (A) The dollar value (net of any consideration paid by the named 
executive officer) of any award of restricted stock, including share 
units (calculated by multiplying the closing market price of the 
registrant's unrestricted stock on the date of grant by the number of 
shares awarded) (column (f));
    (B) The sum of the number of securities underlying stock options 
granted (including options that subsequently have been transferred), 
with or without tandem SARs, and the number of freestanding SARs (column 
(g)); and
    (C) The dollar value of all payouts pursuant to long-term incentive 
plans (``LTIPs'') as defined in paragraph (a)(7)(iii) of this item 
(column (h)).

Instructions to Item 402(b)(2)(iv): 1. Awards of restricted stock that 
are subject to performance-based conditions on vesting, in addition to 
lapse of time and/or continued service with the registrant or a 
subsidiary, may be reported as LTIP awards pursuant to paragraph (e) of 
this item instead of in column (f). If this approach is selected, once 
the restricted stock vests, it must be reported as an LTIP payout in 
column (h).
    2. The registrant shall, in a footnote to the Summary Compensation 
Table (appended to column (f), if included), disclose:
    a. The number and value of the aggregate restricted stock holdings 
at the end of the last completed fiscal year. The value shall be 
calculated in the manner specified in paragraph (b)(2)(iv)(A) of this 
item using the value of the registrant's shares at the end of the last 
completed fiscal year;
    b. For any restricted stock award reported in the Summary 
Compensation Table that will vest, in whole or in part, in under three

[[Page 425]]

years from the date of grant, the total number of shares awarded and the 
vesting schedule; and
    c. Whether dividends will be paid on the restricted stock reported 
in column (f).
    3. If at any time during the last completed fiscal year, the 
registrant has adjusted or amended the exercise price of stock options 
or freestanding SARs previously awarded to a named executive officer, 
whether through amendment, cancellation or replacement grants, or any 
other means (``repriced''), the registrant shall include the number of 
options or freestanding SARs so repriced as Stock Options/SARs granted 
and required to be reported in column (g).
    4. If any specified performance target, goal or condition to payout 
was waived with respect to any amount included in LTIP payouts reported 
in column (h), the registrant shall so state in a footnote to column 
(h).

    (v) All other compensation for the covered fiscal year that the 
registrant could not properly report in any other column of the Summary 
Compensation Table (column (i)). Any compensation reported in this 
column for the last completed fiscal year shall be identified and 
quantified in a footnote. Such compensation shall include, but not be 
limited to:
    (A) The amount paid, payable or accrued to any named executive 
officer pursuant to a plan or arrangement in connection with:
    (1) The resignation, retirement or any other termination of such 
executive officer's employment with the registrant and its subsidiaries; 
or
    (2) A change in control of the registrant or a change in the 
executive officer's responsibilities following such a change in control;
    (B) The dollar value of above-market or preferential amounts earned 
on restricted stock, options, SARs or deferred compensation during the 
fiscal year, or calculated with respect to that period, except that if 
such amounts are paid during the period, or payable during the period 
but deferred at the election of a named executive officer, this 
information shall be reported as Other Annual Compensation in column 
(e). See Instructions 3 and 4 to paragraph 402(b)(2)(iii)(C) of this 
item;
    (C) The dollar value of amounts earned on long-term incentive plan 
compensation during the fiscal year, or calculated with respect to that 
period, except that if such amounts are paid during that period, or 
payable during that period at the election of the named executive 
officer, this information shall be reported as Other Annual Compensation 
in column (e);
    (D) Annual registrant contributions or other allocations to vested 
and unvested defined contribution plans; and
    (E) The dollar value of any insurance premiums paid by, or on behalf 
of, the registrant during the covered fiscal year with respect to term 
life insurance for the benefit of a named executive officer, and, if 
there is any arrangement or understanding, whether formal or informal, 
that such executive officer has or will receive or be allocated an 
interest in any cash surrender value under the insurance policy, either:
    (1) The full dollar value of the remainder of the premiums paid by, 
or on behalf of, the registrant; or
    (2) If the premiums will be refunded to the registrant on 
termination of the policy, the dollar value of the benefit to the 
executive officer of the remainder of the premium paid by, or on behalf 
of, the registrant during the fiscal year. The benefit shall be 
determined for the period, projected on an actuarial basis, between 
payment of the premium and the refund.

Instructions to Item 402(b)(2)(v): 1. LTIP awards and amounts received 
on exercise of options and SARs need not be reported as All Other 
Compensation in column (i).
    2. Information relating to defined benefit and actuarial plans 
should not be reported pursuant to paragraph (b) of this item, but 
instead should be reported pursuant to paragraph (f) of this item.
    3. Where alternative methods of reporting are available under 
paragraph (b)(2)(v)(E) of this item, the same method should be used for 
each of the named executive officers. If the registrant chooses to 
change methods from one year to the next, that fact, and the reason 
therefor, should be disclosed in a footnote to column (i).

    Instruction to Item 402(b): Information with respect to fiscal years 
prior to the last completed fiscal year will not be required if the 
registrant was not a reporting company pursuant to Section 13(a) or 
15(d) of the Exchange Act at any time during that year, except that the 
registrant will be required to provide information for any such year if 
that information previously was required to be

[[Page 426]]

provided in response to a Commission filing requirement.

    (c) Option/SAR Grants Table. (1) The information specified in 
paragraph (c)(2) of this item, concerning individual grants of stock 
options (whether or not in tandem with SARs) and freestanding SARs 
(including options and SARs that subsequently have been transferred) 
made during the last completed fiscal year to each of the named 
executive officers shall be provided in the tabular format specified as 
follows:

                                      Option/SAR Grants in Last Fiscal Year
----------------------------------------------------------------------------------------------------------------
                           Individual grants                            Potential realizable value   Alternative
----------------------------------------------------------------------- at assumed annual rates of   to (f) and
                 Number of     Percent of                                stock price appreciation    (g): grant
                 securities       total                                       for option term        date value
                 underlying   options/SARs   Exercise of   Expiration  -----------------------------------------
     Name       options/SARs   granted to    base price       date                                   Grant date
                  granted     employees in     ($/Sh)                      5% ($)        10% ($)       present
                ()    fiscal year                                                             value $
----------------------------------------------------------------------------------------------------------------
(a)            (b)            (c)           (d)           (e)           (f)           (g)           (f)
----------------------------------------------------------------------------------------------------------------
 
CEO..........  .............  ............  ............  ............  ............  ............  ............
A............  .............  ............  ............  ............  ............  ............  ............
B............  .............  ............  ............  ............  ............  ............  ............
C............  .............  ............  ............  ............  ............  ............  ............
D............  .............  ............  ............  ............  ............  ............  ............

    (2) The Table shall include, with respect to each grant:
    (i) The name of the executive officer (column (a));
    (ii) Number of securities underlying option/SARs granted (column 
(b)).
    (iii) The percent the grant represents of total options and SARs 
granted to employees during the fiscal year (column (c));
    (iv) The per-share exercise or base price of the options or SARs 
granted (column (d)). If such exercise or base price is less than the 
market price of the underlying security on the date of grant, a 
separate, adjoining column shall be added showing market price on the 
date of grant;
    (v) The expiration date of the options or SARs (column (e)); and
    (vi) Either (A) the potential realizable value of each grant of 
options or freestanding SARs or (B) the present value of each grant, as 
follows:
    (A) The potential realizable value of each grant of options or 
freestanding SARs, assuming that the market price of the underlying 
security appreciates in value from the date of grant to the end of the 
option or SAR term, at the following annualized rates:
    (1) 5% (column (f));
    (2) 10% (column (g)); and
    (3) If the exercise or base price was below the market price of the 
underlying security at the date of grant, provide an additional column 
labeled 0%, to show the value at grant-date market price; or
    (B) The present value of the grant at the date of grant, under any 
option pricing model (alternative column (f)).

Instructions to Item 402(c): 1. If more than one grant of options and/or 
freestanding SARs was made to a named executive officer during the last 
completed fiscal year, a separate line should be used to provide 
disclosure of each such grant. However, multiple grants during a single 
fiscal year may be aggregated where each grant was made at the same 
exercise and/or base price and has the same expiration date, and the 
same performance vesting thresholds, if any. A single grant consisting 
of options and/or freestanding SARs shall be reported as separate grants 
with respect to each tranche with a different exercise and/or base 
price, performance vesting threshold, or expiration date.
    2. Options or freestanding SARs granted in connection with an option 
repricing transaction shall be reported in this table. See Instruction 3 
to paragraph (b)(2)(iv) of this item.
    3. Any material term of the grant, including but not limited to the 
date of exercisability, the number of SARs, performance units or other 
instruments granted in tandem with options, a performance-based 
condition to exercisability, a reload feature, or a tax-reimbursement 
feature, shall be footnoted.
    4. If the exercise or base price is adjustable over the term of any 
option or freestanding SAR in accordance with any prescribed

[[Page 427]]

standard or formula, including but not limited to an index or premium 
price provision, describe the following, either by footnote to column 
(c) or in narrative accompanying the Table: (a) the standard or formula; 
and (b) any constant assumption made by the registrant regarding any 
adjustment to the exercise price in calculating the potential option or 
SAR value.
    5. If any provision of a grant (other than an antidilution 
provision) could cause the exercise price to be lowered, registrants 
must clearly and fully disclose these provisions and their potential 
consequences either by a footnote or accompanying textual narrative.
    6. In determining the grant-date market or base price of the 
security underlying options or freestanding SARs, the registrant may use 
either the closing market price per share of the security, or any other 
formula prescribed for the security.
    7. The potential realizable dollar value of a grant (columns (f) and 
(g)) shall be the product of:
    (a) The difference between:
    (i) The product of the per-share market price at the time of the 
grant and the sum of 1 plus the adjusted stock price appreciation rate 
(the assumed rate of appreciation compounded annually over the term of 
the option or SAR); and
    (ii) The per-share exercise price of the option or SAR; and
    (b) The number of securities underlying the grant at fiscal year-
end.
    8. Registrants may add one or more separate columns using the 
formula prescribed in Instruction 7 to paragraph (c) of this item, to 
reflect the following:
    a. The registrant's historic rate of appreciation over a period 
equivalent to the term of such options and/or SARs;
    b. 0% appreciation, where the exercise or base price was equal to or 
greater than the market price of the underlying securities on the date 
of grant; and
    c. N% appreciation, the percentage appreciation by which the 
exercise or base price exceeded the market price at grant. Where the 
grant included multiple tranches with exercise or base prices exceeding 
the market price of the underlying security by varying degrees, include 
an additional column for each additional tranche.
    9. Where the registrant chooses to use the grant-date valuation 
alternative specified in paragraph (c)(2)(vi)(B) of this item, the 
valuation shall be footnoted to describe the valuation method used. 
Where the registrant has used a variation of the Black-Scholes or 
binomial option pricing model, the description shall identify the use of 
such pricing model and describe the assumptions used relating to the 
expected volatility, risk-free rate of return, dividend yield and time 
of exercise. Any adjustments for non-transferability or risk of 
forfeiture also shall be disclosed. In the event another valuation 
method is used, the registrant is required to describe the methodology 
as well as any material assumptions.

    (d) Aggregated option/SAR exercises and fiscal year-end option/SAR 
value table. (1) The information specified in paragraph (d)(2) of this 
item, concerning each exercise of stock options (or tandem SARs) and 
freestanding SARs during the last completed fiscal year by each of the 
named executive officers and the fiscal year-end value of unexercised 
options and SARs, shall be provided on an aggregated basis in the 
tabular format specified below:

                Aggregated Option/SAR Exercises in Last Fiscal Year and FY-End Option/SAR Values
----------------------------------------------------------------------------------------------------------------
                                                                    Number of securities
                                                                   underlying unexercised   Value of unexercised
                     Shares acquired on                            options/SARs at FY-end  in-the-money options/
       Name         exercise ()     Value realized ($)          ()         SARs at FY-end ($)
                                                                        Exercisable/            Exercisable/
                                                                        Unexercisable          Unexercisable
----------------------------------------------------------------------------------------------------------------
(a)                (b)                     (c)                     (d)                     (e)
----------------------------------------------------------------------------------------------------------------
 
CEO..............  ......................  ......................  ......................  .....................
A................  ......................  ......................  ......................  .....................
B................  ......................  ......................  ......................  .....................
C................  ......................  ......................  ......................  .....................
D................  ......................  ......................  ......................  .....................

    (2) The table shall include:
    (i) The name of the executive officer (column (a));
    (ii) The number of shares received upon exercise, or, if no shares 
were received, the number of securities with respect to which the 
options or SARs were exercised (column (b));
    (iii) The aggregate dollar value realized upon exercise (column 
(c));
    (iv) The total number of securities underlying unexercised options 
and

[[Page 428]]

SARs held at the end of the last completed fiscal year, separately 
identifying the exercisable and unexercisable options and SARs (column 
(d)); and
    (v) The aggregate dollar value of in-the-money, unexercised options 
and SARs held at the end of the fiscal year, separately identifying the 
exercisable and unexercisable options and SARs (column (e)).

Instructions to Item 402(d)(2): 1. Options or freestanding SARs are in-
the-money if the fair market value of the underlying securities exceeds 
the exercise or base price of the option or SAR. The dollar values in 
columns (c) and (e) are calculated by determining the difference between 
the fair market value of the securities underlying the options or SARs 
and the exercise or base price of the options or SARs at exercise or 
fiscal year-end, respectively.
    2. In calculating the dollar value realized upon exercise (column 
(c)), the value of any related payment or other consideration provided 
(or to be provided) by the registrant to or on behalf of a named 
executive officer, whether in payment of the exercise price or related 
taxes, shall not be included. Payments by the registrant in 
reimbursement of tax obligations incurred by a named executive officer 
are required to be disclosed in accordance with paragraph 
(b)(2)(iii)(C)(4) of this item.

    (e) Long-Term Incentive Plan (``LTIP'') awards table. (1) The 
information specified in paragraph (e)(2) of this item, regarding each 
award made to a named executive officer in the last completed fiscal 
year under any LTIP, shall be provided in the tabular format specified 
below:

                              Long-Term Incentive Plans--Awards in Last Fiscal Year
----------------------------------------------------------------------------------------------------------------
                                                           Estimated future payouts under non-stock price-based
                   Number of shares,    Performance or                            plans
      Name          units or other       other period   --------------------------------------------------------
                  rights ()   until maturation   Threshold ($ or      Target ($ or      Maximum ($ or
                                          or payout          )         )         )
(a)               (b)                 (c)                (d)                (e)                (f)
 
----------------------------------------------------------------------------------------------------------------
CEO.............  ..................  .................  .................  .................  .................
A...............  ..................  .................  .................  .................  .................
B...............  ..................  .................  .................  .................  .................
C...............  ..................  .................  .................  .................  .................
D...............  ..................  .................  .................  .................  .................
----------------------------------------------------------------------------------------------------------------

    (2) The Table shall include:
    (i) The name of the executive officer (column (a));
    (ii) The number of shares, units or other rights awarded under any 
LTIP, and, if applicable, the number of shares underlying any such unit 
or right (column (b));
    (iii) The performance or other time period until payout or 
maturation of the award (column (c)); and
    (iv) For plans not based on stock price, the dollar value of the 
estimated payout, the number of shares to be awarded as the payout or a 
range of estimated payouts denominated in dollars or number of shares 
under the award (threshold, target and maximum amount) (columns (d) 
through (f)).

Instructions to Item 402(e): 1. For purposes of this paragraph, the term 
``long-term incentive plan'' or ``LTIP'' shall be defined in accordance 
with paragraph (a)(7)(iii) of this item.
    2. Describe in a footnote or in narrative text accompanying this 
table the material terms of any award, including a general description 
of the formula or criteria to be applied in determining the amounts 
payable. Registrants are not required to disclose any factor, criterion 
or performance-related or other condition to payout or maturation of a 
particular award that involves confidential commercial or business 
information, disclosure of which would adversely affect the registrant's 
competitive position.
    3. Separate disclosure shall be provided in the Table for each award 
made to a named executive officer, accompanied by the information 
specified in Instruction 2 to this paragraph. If awards are made to a 
named executive officer during the fiscal year under more than one plan, 
identify the particular plan under which each such award was made.
    4. For column (d), ``threshold'' refers to the minimum amount 
payable for a certain level of performance under the plan. For column 
(e), ``target'' refers to the amount payable if the specified 
performance target(s) are reached. For column (f), ``maximum'' refers to 
the maximum payout possible under the plan.
    5. In column (e), registrants must provide a representative amount 
based on the previous

[[Page 429]]

fiscal year's performance if the target award is not determinable.
    6. A tandem grant of two instruments, only one of which is pursuant 
to a LTIP, need be reported only in the table applicable to the other 
instrument. For example, an option granted in tandem with a performance 
share would be reported only as an option grant, with the tandem feature 
noted.

    (f) Defined benefit or actuarial plan disclosure--(1) Pension plan 
table. (i) 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 a separate Pension 
Plan 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 in the format specified below.

                           Pension Plan Table
------------------------------------------------------------------------
                                             Years of service
          Remuneration           ---------------------------------------
                                    15      20      25      30      35
------------------------------------------------------------------------
125,000.........................  ......  ......  ......  ......  ......
150,000.........................  ......  ......  ......  ......  ......
175,000.........................  ......  ......  ......  ......  ......
200,000.........................  ......  ......  ......  ......  ......
225,000.........................  ......  ......  ......  ......  ......
250,000.........................  ......  ......  ......  ......  ......
300,000.........................  ......  ......  ......  ......  ......
400,000.........................  ......  ......  ......  ......  ......
450,000.........................  ......  ......  ......  ......  ......
500,000.........................  ......  ......  ......  ......  ......
------------------------------------------------------------------------

    (ii) Immediately following the Table, the registrant shall disclose:
    (A) The compensation covered by the plan(s), including the 
relationship of such covered compensation to the annual compensation 
reported in the Summary Compensation Table required by paragraph 
(b)(2)(iii) of this item, and state the current compensation covered by 
the plan for any named executive officer whose covered compensation 
differs substantially (by more than 10%) from that set forth in the 
annual compensation columns of the Summary Compensation Table;
    (B) The estimated credited years of service for each of the named 
executive officers; and
    (C) A statement as to the basis upon which benefits are computed 
(e.g., straight-life annuity amounts), and whether or not the benefits 
listed in the Pension Plan Table are subject to any deduction for Social 
Security or other offset amounts.
    (2) Alternative pension plan disclosure. For any defined benefit or 
actuarial plan under which benefits are not determined primarily by 
final compensation (or average final compensation) and years of service, 
the registrant shall state in narrative form:
    (i) The formula by which benefits are determined; and
    (ii) The estimated annual benefits payable upon retirement at normal 
retirement age for each of the named executive officers.

Instructions to Item 402(f): 1. Pension Levels. Compensation set forth 
in the Pension Plan Table pursuant to paragraph (f)(1)(i) of this item 
shall allow for reasonable increases in existing compensation levels; 
alternatively, registrants may present as the highest compensation level 
in the Pension Plan Table an amount equal to 120% of the amount of 
covered compensation of the most highly compensated individual named in 
the Summary Compensation Table required by paragraph (b)(2) of this 
item.
    2. Normal Retirement Age. The term ``normal retirement age'' means 
normal retirement age as defined in a pension or similar plan or, if not 
defined therein, the earliest time at which a participant may retire 
without any benefit reduction due to age.

    (g) Compensation of Directors--(1) Standard arrangements. Describe 
any standard arrangements, stating amounts, pursuant to which directors 
of the registrant are compensated for any services provided as a 
director, including any additional amounts payable for committee 
participation or special assignments.
    (2) Other arrangements. Describe any other arrangements pursuant to 
which any director of the registrant was compensated during the 
registrant's last completed fiscal year for any service provided as a 
director, stating the amount paid and the name of the director.

Instruction to Item 402(g)(2): The information required by paragraph 
(g)(2) of this item shall include any arrangement, including consulting 
contracts, entered into in consideration of the director's service on 
the board. The material terms of any such arrangement shall be included.


[[Page 430]]


    (h) Employment contracts and termination of employment and change-
in-control arrangements. Describe the terms and conditions of each of 
the following contracts or arrangements:
    (1) Any employment contract between the registrant and a named 
executive officer; and
    (2) Any compensatory plan or arrangement, including payments to be 
received from the registrant, with respect to a named executive officer, 
if such plan or arrangement results or will result from the resignation, 
retirement or any other termination of such executive officer's 
employment with the registrant and its subsidiaries or from a change-in-
control of the registrant or a change in the named executive officer's 
responsibilities following a change-in-control and the amount involved, 
including all periodic payments or installments, exceeds $100,000.
    (i) Report on repricing of options/SARs. (1) If at any time during 
the last completed fiscal year, the registrant, while a reporting 
company pursuant to section 13(a) or 15(d) of the Exchange Act [15 
U.S.C. 78m(a), 78o(d)], has adjusted or amended the exercise price of 
stock options or SARs previously awarded to any of the named executive 
officers, whether through amendment, cancellation or replacement grants, 
or any other means (``repriced''), the registrant shall provide the 
information specified in paragraphs (i)(2) and (i)(3) of this item.
    (2) The compensation committee (or other board committee performing 
equivalent functions or, in the absence of any such committee, the 
entire board of directors) shall explain in reasonable detail any such 
repricing of options and/or SARs held by a named executive officer in 
the last completed fiscal year, as well as the basis for each such 
repricing.
    (3)(i) The information specified in paragraph (i)(3)(ii) of this 
item, concerning all such repricings of options and SARs held by any 
executive officer during the last ten completed fiscal years, shall be 
provided in the tabular format specified below:

                                         Ten-Year Option/SAR Repricings
----------------------------------------------------------------------------------------------------------------
                                     Number of                                                       Length of
                                    securities     Market price                                      original
                                    underlying      of stock at   Exercise price                    option term
      Name             Date        options/SARs       time of       at time of     New exercise    remaining at
                                    repriced or    repricing or    repricing or      price ($)        date of
                                      amended      amendment ($)   amendment ($)                   repricing or
                                    ()                                                      amendment
----------------------------------------------------------------------------------------------------------------
(a)              (b)              (c)             (d)             (e)             (f)             (g)
----------------------------------------------------------------------------------------------------------------
 
 

    (ii) The Table shall include, with respect to each repricing:
    (A) The name and position of the executive officer (column (a));
    (B) The date of each repricing (column (b));
    (C) The number of securities underlying replacement or amended 
options or SARs (column (c));
    (D) The per-share market price of the underlying security at the 
time of repricing (column (d));
    (E) The original exercise price or base price of the cancelled or 
amended option or SAR (column (e));
    (F) The per-share exercise price or base price of the replacement 
option or SAR (column (f)); and
    (G) The amount of time remaining before the replaced or amended 
option or SAR would have expired (column (g)).

Instructions to Item 402(i): 1. The required report shall be made over 
the name of each member of the registrant's compensation committee, or 
other board committee performing equivalent functions or, in the absence 
of any such committee, the entire board of directors.
    2. A replacement grant is any grant of options or SARs reasonably 
related to any prior or potential option or SAR cancellation, whether by 
an exchange of existing options or SARs for options or SARs with new 
terms; the grant of new options or SARs in tandem with previously 
granted options or SARs that will operate to cancel the previously 
granted options or SARs upon exercise; repricing of previously granted 
options

[[Page 431]]

or SARs; or otherwise. If a corresponding original grant was canceled in 
a prior year, information about such grant nevertheless must be 
disclosed pursuant to this paragraph.
    3. If the replacement grant is not made at the current market price, 
describe the terms of the grant in a footnote or accompanying textual 
narrative.
    4. This paragraph shall not apply to any repricing occurring through 
the operation of:
    a. A plan formula or mechanism that results in the periodic 
adjustment of the option or SAR exercise or base price;
    b. A plan antidilution provision; or
    c. A recapitalization or similar transaction equally affecting all 
holders of the class of securities underlying the options or SARs.
    5. Information required by paragraph (i)(3) of this item shall not 
be provided for any repricings effected before the registrant became a 
reporting company pursuant to section 13(a) or 15(d) of the Exchange 
Act.

    (j) Additional information with respect to Compensation Committee 
Interlocks and Insider Participation in compensation decisions. Under 
the caption ``Compensation Committee Interlocks and Insider 
Participation,''
    (1) The registrant shall identify each person who served as a member 
of the compensation committee of the registrant's board of directors (or 
board committee performing equivalent functions) during the last 
completed fiscal year, indicating each committee member who:
    (i) Was, during the fiscal year, an officer or employee of the 
registrant or any of its subsidiaries;
    (ii) Was formerly an officer of the registrant or any of its 
subsidiaries; or
    (iii) Had any relationship requiring disclosure by the registrant 
under any paragraph of Item 404 of Regulation S-K (Sec. 229.404). In 
this event, the disclosure required by Item 404 shall accompany such 
identification.
    (2) If the registrant has no compensation committee (or other board 
committee performing equivalent functions), the registrant shall 
identify each officer and employee of the registrant or any of its 
subsidiaries, and any former officer of the registrant or any of its 
subsidiaries, who, during the last completed fiscal year, participated 
in deliberations of the registrant's board of directors concerning 
executive officer compensation.
    (3) The registrant shall describe any of the following relationships 
that existed during the last completed fiscal year:
    (i) An executive officer of the registrant served as a member of the 
compensation committee (or other board committee performing equivalent 
functions or, in the absence of any such committee, the entire board of 
directors) of another entity, one of whose executive officers served on 
the compensation committee (or other board committee performing 
equivalent functions or, in the absence of any such committee, the 
entire board of directors) of the registrant;
    (ii) An executive officer of the registrant served as a director of 
another entity, one of whose executive officers served on the 
compensation committee (or other board committee performing equivalent 
functions or, in the absence of any such committee, the entire board of 
directors) of the registrant; and
    (iii) An executive officer of the registrant served as a member of 
the compensation committee (or other board committee performing 
equivalent functions or, in the absence of any such committee, the 
entire board of directors) of another entity, one of whose executive 
officers served as a director of the registrant.
    (4) Disclosure required under paragraph (j)(3) of this item 
regarding any compensation committee member or other director of the 
registrant who also served as an executive officer of another entity 
shall be accompanied by the disclosure called for by Item 404 
(Sec. 229.404) with respect to that person.

Instruction to Item 402(j): For purposes of this paragraph, the term 
``entity'' shall not include an entity exempt from tax under section 
501(c)(3) of the Internal Revenue Code [26 U.S.C. 501(c)(3)].

    (k) Board compensation committee report on executive compensation. 
(1) Disclosure of the compensation committee's compensation policies 
applicable to the registrant's executive officers (including the named 
executive officers), including the specific relationship of corporate 
performance to executive compensation, is required with respect to 
compensation reported for the last completed fiscal year.

[[Page 432]]

    (2) Discussion is required of the compensation committee's bases for 
the CEO's compensation reported for the last completed fiscal year, 
including the factors and criteria upon which the CEO's compensation was 
based. The committee shall include a specific discussion of the 
relationship of the registrant's performance to the CEO's compensation 
for the last completed fiscal year, describing each measure of the 
registrant's performance, whether qualitative or quantitative, on which 
the CEO's compensation was based.
    (3) The required disclosure shall be made over the name of each 
member of the registrant's compensation committee (or other board 
committee performing equivalent functions or, in the absence of any such 
committee, entire board of directors). If the board of directors 
modified or rejected in any material way any action or recommendation by 
such committee with respect to such decisions in the last completed 
fiscal year, the disclosure must so indicate and explain the reasons for 
the board's actions, and be made over the names of all members of the 
board.

Instructions to Item 402(k): 1. Boilerplate language should be avoided 
in describing factors and criteria underlying awards or payments of 
executive compensation in the statement required.
    2. Registrants are not required to disclose target levels with 
respect to specific quantitative or qualitative performance-related 
factors considered by the committee (or board), or any factors or 
criteria involving confidential commercial or business information, the 
disclosure of which would have an adverse effect on the registrant.

    (l) Performance graph. (1) Provide a line graph comparing the yearly 
percentage change in the registrant's cumulative total shareholder 
return on a class of common stock registered under section 12 of the 
Exchange Act (as measured by dividing (i) the sum of (A) the cumulative 
amount of dividends for the measurement period, assuming dividend 
reinvestment, and (B) the difference between the registrant's share 
price at the end and the beginning of the measurement period; by (ii) 
the share price at the beginning of the measurement period) with
    (i) the cumulative total return of a broad equity market index 
assuming reinvestment of dividends, that includes companies whose equity 
securities are traded on the same exchange or NASDAQ market or are of 
comparable market capitalization; Provided, however, That if the 
registrant is a company within the Standard & Poor's 500 Stock Index, 
the registrant must use that index; and
    (ii) The cumulative total return, assuming reinvestment of 
dividends, of:
    (A) A published industry or line-of-business index;
    (B) Peer issuer(s) selected in good faith. If the registrant does 
not select its peer issuer(s) on an industry or line-of-business basis, 
the registrant shall disclose the basis for its selection; or
    (C) Issuer(s) with similar market capitalization(s), but only if the 
registrant does not use a published industry or line-of-business index 
and does not believe it can reasonably identify a peer group. If the 
registrant uses this alternative, the graph shall be accompanied by a 
statement of the reasons for this selection.
    (2) For purposes of paragraph (l)(1) of this item, the term 
``measurement period'' shall be the period beginning at the 
``measurement point'' established by the market close on the last 
trading day before the beginning of the registrant's fifth preceding 
fiscal year, through and including the end of the registrant's last 
completed fiscal year. If the class of securities has been registered 
under section 12 of the Exchange Act for a shorter period of time, the 
period covered by the comparison may correspond to that time period.
    (3) For purposes of paragraph (l)(1)(ii)(A) of this item, the term 
``published industry or line-of-business index'' means any index that is 
prepared by a party other than the registrant or an affiliate and is 
accessible to the registrant's security holders; provided, however, that 
registrants may use an index prepared by the registrant or affiliate if 
such index is widely recognized and used.
    (4) If the registrant selects a different index from an index used 
for the immediately preceding fiscal year, explain the reason(s) for 
this change and also compare the registrant's total return with that of 
both the newly selected index and the index used in the immediately 
preceding fiscal year.


[[Page 433]]


Instructions to Item 402(l): 1. In preparing the required graphic 
comparisons, the registrant should:
    a. Use, to the extent feasible, comparable methods of presentation 
and assumptions for the total return calculations required by paragraph 
(l)(1) of this item; Provided, however, That if the registrant 
constructs its own peer group index under paragraph (l)(1)(ii)(B), the 
same methodology must be used in calculating both the registrant's total 
return and that on the peer group index; and
    b. Assume the reinvestment of dividends into additional shares of 
the same class of equity securities at the frequency with which 
dividends are paid on such securities during the applicable fiscal year.
    2. In constructing the graph:
    (a) The closing price at the measurement point must be converted 
into a fixed investment, stated in dollars, in the registrant's stock 
(or in the stocks represented by a given index), with cumulative returns 
for each subsequent fiscal year measured as a change from that 
investment; and
    (b) Each fiscal year should be plotted with points showing the 
cumulative total return as of that point. The value of the investment as 
of each point plotted on a given return line is the number of shares 
held at that point multiplied by the then-prevailing share price.
    3. The registrant is required to present information for the 
registrant's last five fiscal years, and may choose to graph a longer 
period; but the measurement point, however, shall remain the same.
    4. Registrants may include comparisons using performance measures in 
addition to total return, such as return on average common shareholders' 
equity, so long as the registrant's compensation committee (or other 
board committee performing equivalent functions or in the absence of any 
such committee, the entire board of directors) describes the link 
between that measure and the level of executive compensation in the 
statement required by paragraph (k) of this Item.
    5. If the registrant uses a peer issuer(s) comparison or comparison 
with issuer(s) with similar market capitalizations, the identity of 
those issuers must be disclosed and the returns of each component issuer 
of the group must be weighted according to the respective issuer's stock 
market capitalization at the beginning of each period for which a return 
is indicated.

[57 FR 48150, Oct. 21, 1992, as amended at 57 FR 53985, Nov. 16, 1992; 
58 FR 63013, Nov. 29, 1993; 64 FR 11115, Mar. 8, 1999; 64 FR 53909, Oct. 
5, 1999]



Sec. 229.403  (Item 403) Security ownership of certain beneficial owners and management.

    (a) Security ownership of certain beneficial owners. Furnish the 
following information, as of the most recent practicable date, 
substantially in the tabular form indicated, with respect to any person 
(including any ``group'' as that term is used in section 13(d)(3) of the 
Exchange Act) who is known to the registrant to be the beneficial owner 
of more than five percent of any class of the registrant's voting 
securities. The address given in column (2) may be a business, mailing 
or residence address. Show in column (3) the total number of shares 
beneficially owned and in column (4) the percentage of class so owned. 
Of the number of shares shown in column (3), indicate by footnote or 
otherwise the amount known to be shares with respect to which such 
listed beneficial owner has the right to acquire beneficial ownership, 
as specified in Rule 13d-3(d)(1) under the Exchange Act (Sec. 240.13d-
3(d)(1) of this chapter).

----------------------------------------------------------------------------------------------------------------
                                       (2) Name and address of   (3) Amount and nature
          (1) Title of class               beneficial owner     of beneficial ownership    (4) Percent of class
----------------------------------------------------------------------------------------------------------------
 
----------------------------------------------------------------------------------------------------------------

    (b) Security ownership of management. Furnish the following 
information, as of the most recent practicable date, in substantially 
the tabular form indicated, as to each class of equity securities of the 
registrant or any of its parents or subsidiaries other than directors' 
qualifying shares, beneficially owned by all directors and nominees, 
naming them, each of the named executive officers as defined in Item 
402(a)(3) (Sec. 229.402(a)(3)), and directors and executive officers of 
the registrant as a group, without naming them. Show in column (3) the 
total number of shares beneficially owned and in column (4) the percent 
of class so owned. Of the number of shares shown in column (3), 
indicate, by footnote or otherwise, the amount of shares with respect to 
which such persons have the right to acquire beneficial ownership as 
specified in Sec. 240.13d-3(d)(1) of this chapter.

[[Page 434]]



----------------------------------------------------------------------------------------------------------------
                                        (2) Name of beneficial  (3) Amount of nature of
          (1) Title of class                    owner             beneficial ownership     (4) Percent of class
----------------------------------------------------------------------------------------------------------------
 
----------------------------------------------------------------------------------------------------------------

    (c) Changes in control. Describe any arrangements, known to the 
registrant, including any pledge by any person of securities of the 
registrant or any of its parents, the operation of which may at a 
subsequent date result in a change in control of the registrant.

Instructions to Item 403: 1. The percentages are to be calculated on the 
basis of the amount of outstanding securities, excluding securities held 
by or for the account of the registrant or its subsidiaries, plus 
securities deemed outstanding pursuant to Rule 13d-3(d)(1) under the 
Exchange Act 17 (CFR 240.13d-3(d)(1)). For purposes of paragraph (b), if 
the percentage of shares beneficially owned by any director or nominee, 
or by all directors and officers of the registrant as a group, does not 
exceed one percent of the class so owned, the registrant may, in lieu of 
furnishing a precise percentage, indicate this fact by means of an 
asterisk and explanatory footnote or other similar means.
    2. For the purposes of this Item, beneficial ownership shall be 
determined in accordance with Rule 13d-3 under the Exchange Act 
(Sec. 240.13d-3 of this chapter). Include such additional subcolumns or 
other appropriate explanation of column (3) necessary to reflect amounts 
as to which the beneficial owner has (A) sole voting power, (B) shared 
voting power, (C) sole investment power, or (D) shared investment power.
    3. The registrant shall be deemed to know the contents of any 
statements filed with the Commission pursuant to section 13(d) or 13(g) 
of the Exchange Act. When applicable, a registrant may rely upon 
information set forth in such statements unless the registrant knows or 
has reason to believe that such information is not complete or accurate 
or that a statement or amendment should have been filed and was not.
    4. For purposes of furnishing information pursuant to paragraph (a) 
of this Item, the registrant may indicate the source and date of such 
information.
    5. Where more than one beneficial owner is known to be listed for 
the same securities, appropriate disclosure should be made to avoid 
confusion. For purposes of paragraph (b), in computing the aggregate 
number of shares owned by directors and officers of the registrant as a 
group, the same shares shall not be counted more than once.
    6. Paragraph (c) of this Item does not require a description of 
ordinary default provisions contained in the charter, trust indentures 
or other governing instruments relating to securities of the registrant.
    7. Where the holder(s) of voting securities reported pursuant to 
paragraph (a) hold more than five percent of any class of voting 
securities of the registrant pursuant to any voting trust or similar 
agreement, state the title of such securities, the amount held or to be 
held pursuant to the trust or agreement (if not clear from the table) 
and the duration of the agreement. Give the names and addresses of the 
voting trustees and outline briefly their voting rights and other powers 
under the trust or agreement.

[47 FR 11401, Mar. 16, 1982, as amended at 47 FR 55665, Dec. 13, 1982; 
51 FR 42056, Nov. 20, 1986; 57 FR 48158, Oct. 21, 1992]



Sec. 229.404  (Item 404)  Certain relationships and related transactions.

    (a) Transactions with management and others. Describe briefly any 
transaction, or series of similar transactions, since the beginning of 
the registrant's last fiscal year, or any currently proposed 
transaction, or series of similar transactions, to which the registrant 
or any of its subsidiaries was or is to be a party, in which the amount 
involved exceeds $60,000 and in which any of the following persons had, 
or will have, a direct or indirect material interest, naming such person 
and indicating the person's relationship to the registrant, the nature 
of such person's interest in the transaction(s), the amount of such 
transaction(s) and, where practicable, the amount of such person's 
interest in the transaction(s):
    (1) Any director or executive officer of the registrant;
    (2) Any nominee for election as a director;
    (3) Any security holder who is known to the registrant to own of 
record or beneficially more than five percent of any class of the 
registrant's voting securities; and
    (4) Any member of the immediate family of any of the foregoing 
persons.

Instructions to Paragraph (a) of Item 404: 1. The materiality of any 
interest is to be determined on the basis of the significance of the 
information to investors in light of all the circumstances of the 
particular case. The importance of the interest to the person having the 
interest, the relationship of the parties to the transaction with each 
other and the amount involved in the transactions are

[[Page 435]]

among the factors to be considered in determining the significance of 
the information to investors.
    2. For purposes of paragraph (a), a person's immediate family shall 
include such person's spouse; parents; children; siblings; mothers and 
fathers-in-law; sons and daughters-in-law; and brothers and sisters-in-
law.
    3. In computing the amount involved in the transaction or series of 
similar transactions, include all periodic installments in the case of 
any lease or other agreement providing for periodic payments or 
installments.
    4. The amount of the interest of any person specified in paragraphs 
(a) (1) through (4) shall be computed without regard to the amount of 
the profit or loss involved in the transaction(s).
    5. In describing any transaction involving the purchase or sale of 
assets by or to the registrant or any of its subsidiaries, otherwise 
than in the ordinary course of business, state the cost of the assets to 
the purchaser and, if acquired by the seller within two years prior to 
the transaction, the cost thereof to the seller. Indicate the principle 
followed in determining the registrant's purchase or sale price and the 
name of the person making such determination.
    6. Information shall be furnished in answer to paragraph (a) with 
respect to transactions that involve remuneration from the registrant or 
its subsidiaries, directly or indirectly, to any of the persons 
specified in paragraphs (a) (1) through (4) for services in any capacity 
unless the interest of such person arises solely from the ownership 
individually and in the aggregate of less than ten percent of any class 
of equity securities of another corporation furnishing the services to 
the registrant or its subsidiaries.
    7. No information need be given in answer to paragraph (a) as to any 
transactions where:
    A. The rates or charges involved in the transaction are determined 
by competitive bids, or the transaction involves the rendering of 
services as a common or contract carrier, or public utility, at rates or 
charges fixed in conformity with law or governmental authority;
    B. The transaction involves services as a bank depositary of funds, 
transfer agent, registrar, trustee under a trust indenture, or similar 
services; or
    C. The interest of the person specified in paragraphs (a) (1) 
through (4) arises solely from the ownership of securities of the 
registrant and such person receives no extra or special benefit not 
shared on a pro rata basis.
    8. Paragraph (a) requires disclosure of indirect, as well as direct, 
material interests in transactions. A person who has a position or 
relationship with a firm, corporation, or other entity that engages in a 
transaction with the registrant or its subsidiaries may have an indirect 
interest in such transaction by reason of such position or relationship. 
Such an interest, however, shall not be deemed ``material'' within the 
meaning of paragraph (a) where:
    A. The interest arises only: (i) From such person's position as a 
director of another corporation or organization which is a party to the 
transaction; or (ii) from the direct or indirect ownership by such 
person and all other persons specified in paragraphs (a) (1) through 
(4), in the aggregate, of less than a ten percent equity interest in 
another person (other than a partnership) which is a party to the 
transaction; or (iii) from both such position and ownership;
    B. The interest arises only from such person's position as a limited 
partner in a partnership in which the person and all other persons 
specified in paragraphs (a) (1) through (4) have an interest of less 
than ten percent; or
    C. The interest of such person arises solely from the holding of an 
equity interest (including a limited partnership interest, but excluding 
a general partnership interest) or a creditor interest in another person 
that is a party to the transaction with the registrant or any of its 
subsidiaries, and the transaction is not material to such other person.
    9. There may be situations where, although these instrucions do not 
expressly authorize nondisclosure, the interest of a person specified in 
paragraphs (a) (1) through (4) in a particular transaction or series of 
transactions is not a direct or indirect material interest. In that 
case, information regarding such interest and transaction is not 
required to be disclosed in response to this paragraph.

    (b) Certain business relationships. Describe any of the following 
relationships regarding directors or nominees for director that exist, 
or have existed during the registrant's last fiscal year, indicating the 
identity of the entity with which the registrant has such a 
relationship, the name of the nominee or director affiliated with such 
entity and the nature of such nominee's or director's affiliation, the 
relationship between such entity and the registrant and the amount of 
the business done between the registrant and the entity during the 
registrant's last full fiscal year or proposed to be done during the 
registrant's current fiscal year:
    (1) If the nominee or director is, or during the last fiscal year 
has been, an executive officer of, or owns, or during the last fiscal 
year has owned, of record or beneficially in excess of ten percent 
equity interest in, any business

[[Page 436]]

or professional entity that has made during the registrant's last full 
fiscal year, or proposes to make during the registrant's current fiscal 
year, payments to the registrant or its subsidiaries for property or 
services in excess of five percent of (i) the registrant's consolidated 
gross revenues for its last full fiscal year, or (ii) the other entity's 
consolidated gross revenues for its last full fiscal year;
    (2) If the nominee or director is, or during the last fiscal year 
has been, an executive officer of, or owns, or during the last fiscal 
year has owned, of record or beneficially in excess of ten percent 
equity interest in, any business or professional entity to which the 
registrant or its subsidiaries has made during the registrant's last 
full fiscal year, or proposes to make during the registrant's current 
fiscal year, payments for property or services in excess of five percent 
of (i) the registrant's consolidated gross revenues for its last full 
fiscal year, or (ii) the other entity's consolidated gross revenues for 
its last full fiscal year;
    (3) If the nominee or director is, or during the last fiscal year 
has been, an executive officer of, or owns, or during the last fiscal 
year has owned, of record or beneficially in excess of ten percent 
equity interest in, any business or professional entity to which the 
registrant or its subsidiaries was indebted at the end of the 
registrant's last full fiscal year in an aggregate amount in excess of 
five percent of the registrant's total consolidated assets at the end of 
such fiscal year;
    (4) If the nominee or director is, or during the last fiscal year 
has been, a member of, or of counsel to, a law firm that the issuer has 
retained during the last fiscal year or proposes to retain during the 
current fiscal year; Provided, however, that the dollar amount of fees 
paid to a law firm by the registrant need not be disclosed if such 
amount does not exceed five percent of the law firm's gross revenues for 
that firm's last full fiscal year;
    (5) If the nominee or director is, or during the last fiscal year 
has been, a partner or executive officer of any investment banking firm 
that has performed services for the registrant, other than as a 
participating underwriter in a syndicate, during the last fiscal year or 
that the registrant proposes to have perform services during the current 
year; Provided, however, That the dollar amount of compensation received 
by an investment banking firm need not be disclosed if such amount does 
not exceed five percent of the investment banking firm's consolidated 
gross revenues for that firm's last full fiscal year; or
    (6) Any other relationships that the registrant is aware of between 
the nominee or director and the registrant that are substantially 
similar in nature and scope to those relationships listed in paragraphs 
(b) (1) through (5).

Instructions to Paragraph (b) of Item 404: 1. In order to determine 
whether payments or indebtedness exceed five percent of the consolidated 
gross revenues of any entity, other than the registrant, it is 
appropriate to rely on information provided by the nominee or director.
    2. In calculating payments for property and services the following 
may be excluded:
    A. Payments where the rates or charges involved in the transaction 
are determined by competitive bids, or the transaction involves the 
rendering of services as a common contract carrier, or public utility, 
at rates or charges fixed in conformity with law or governmental 
authority;
    B. Payments that arise solely from the ownership of securities of 
the registrant and no extra or special benefit not shared on a pro rata 
basis by all holders of the class of securities is received; or
    C. Payments made or received by subsidiaries other than significant 
subsidiaries as defined in Rule 1-02(w) of Regulation S-X [Sec. 210.1-
02(w) of this chapter], provided that all such subsidiaries making or 
receiving payments, when considered in the aggregate as a single 
subsidiary, would not constitute a significant subsidiary as defined in 
Rule 1-02(w).
    3. In calculating indebtedness the following may be excluded:
    A. Debt securities that have been publicly offered, admitted to 
trading on a national securities exchange, or quoted on the automated 
quotation system of a registered securities association;
    B. Amounts due for purchases subject to the usual trade terms; or
    C. Indebtedness incurred by subsidiaries other than significant 
subsidiaries as defined in Rule 1-02(w) of Regulation S-X [Sec. 210.1-
02(w) of this chapter], provided that all such subsidiaries incurring 
indebtedness, when considered in the aggregate as a single subsidiary, 
would not constitute a significant subsidiary as defined in Rule 1-
02(w).

[[Page 437]]

    4. No information called for by paragraph (b) need be given 
respecting any director who is no longer a director at the time of 
filing the registration statement or report containing such disclosure. 
If such information is being presented in a proxy or information 
statement, no information need be given respecting any director whose 
term of office as a director will not continue after the meeting to 
which the statement relates.

    (c) Indebtedness of management. If any of the following persons has 
been indebted to the registrant or its subsidiaries at any time since 
the beginning of the registrant's last fiscal year in an amount in 
excess of $60,000, indicate the name of such person, the nature of the 
person's relationship by reason of which such person's indebtedness is 
required to be described, the largest aggregate amount of indebtedness 
outstanding at any time during such period, the nature of the 
indebtedness and of the transaction in which it was incurred, the amount 
thereof outstanding as of the latest practicable date and the rate of 
interest paid or charged thereon:
    (1) Any director or executive officer of the registrant;
    (2) Any nominee for election as a director;
    (3) Any member of the immediate family of any of the persons 
specified in paragraph (c) (1) or (2);
    (4) Any corporation or organization (other than the registrant or a 
majority-owned subsidiary of the registrant) of which any of the persons 
specified in paragraph (c) (1) or (2) is an executive officer or partner 
or is, directly or indirectly, the beneficial owner of ten percent or 
more of any class of equity securities; and
    (5) Any trust or other estate in which any of the persons specified 
in paragraph (c) (1) or (2) has a substantial beneficial interest or as 
to which such person serves as a trustee or in a similar capacity.

Instructions to Paragraph (c), of Item 404: 1. For purposes of paragraph 
(c), the members of a person's immediate family are those persons 
specified in Instruction 2 to Item 404(a).
    2. Exclude from the determination of the amount of indebtedness all 
amounts due from the particular person for purchases subject to usual 
trade terms, for ordinary travel and expense payments and for other 
transactions in the ordinary course of business.
    3. If the lender is a bank, savings and loan association, or broker-
dealer extending credit under Federal Reserve Regulation T [12 CFR part 
220] and the loans are not disclosed as nonaccrual, past due, 
restructured or potential problems (see Item III.C. 1. and 2. of 
Industry Guide 3, Statistical Disclosure by Bank Holding Companies), 
disclosure may consist of a statement, if such is the case, that the 
loans to such persons (A) were made in the ordinary course of business, 
(B) were made on substantially the same terms, including interest rates 
and collateral, as those prevailing at the time for comparable 
transactions with other persons, and (C) did not involve more than the 
normal risk of collectibility or present other unfavorable features.
    4. If any indebtedness required to be described arose under section 
16(b) of the Exchange Act and has not been discharged by payment, state 
the amount of any profit realized, that such profit will inure to the 
benefit of the registrant or its subsidiaries and whether suit will be 
brought or other steps taken to recover such profit. If, in the opinion 
of counsel, a question reasonably exists as to the recoverability of 
such profit, it will suffice to state all facts necessary to describe 
the transactions, including the prices and number of shares involved.

    (d) Transactions with promoters. Registrants that have been 
organized within the past five years and that are filing a registration 
statement on Form S-1 under the Securities Act (Sec. 239.11 of this 
chapter) or on Form 10 and Form 10-SB under the Exchange Act 
(Sec. 239.210 of this chapter) shall:
    (1) State the names of the promoters, the nature and amount of 
anything of value (including money, property, contracts, options or 
rights of any kind) received or to be received by each promoter, 
directly or indirectly, from the registrant and the nature and amount of 
any assets, services or other consideration therefore received or to be 
received by the registrant; and
    (2) As to any assets acquired or to be acquired by the registrant 
from a promoter, state the amount at which the assets were acquired or 
are to be acquired and the principle followed or to be followed in 
determining such amount and identify the persons making the 
determination and their relationship, if any, with the registrant or any 
promoter. If the assets were acquired by the promoter within two

[[Page 438]]

years prior to their transfer to the registrant, also state the cost 
thereof to the promoter.

Instructions to Item 404: 1. No information need be given in response to 
any paragraph of Item 404 as to any compensation or other transaction 
reported in response to any other paragraph of Item 404 or to Item 402 
of Regulation S-K (Sec. 229.402 of this chapter) or as to any 
compensation with respect to which information may be omitted pursuant 
to Item 402.
    2. If the information called for by Item 404 is being presented in a 
registration statement filed pursuant to the Securities Act or the 
Exchange Act, information shall be given for the periods specified in 
the Item and, in addition, for the two fiscal years preceding the 
registrant's last fiscal year.
    3. A foreign private issuer will be deemed to comply with Item 404 
if it provides the information required by Item 7.B of Form 20-F (17 CFR 
249.220f).

[47 FR 55665, Dec. 13, 1982, as amended at 48 FR 37612, Aug. 19, 1983; 
48 FR 44475, Sept. 29, 1983; 56 FR 30053, 30054, July 1, 1991; 59 FR 
65637, Dec. 20, 1994; 64 FR 53909, Oct. 5, 1999]



Sec. 229.405  (Item 405) Compliance with section 16(a) of the Exchange Act.

    Every registrant having a class of equity securities registered 
pursuant to section 12 of the Exchange Act (15 U.S.C. 78l), every 
closed-end investment company registered under the Investment Company 
Act of 1940 (15 U.S.C. 80a-1 et seq.), and every holding company 
registered pursuant to the Public Utility Holding Company Act of 1935 
(15 U.S.C. 79a et seq.) shall:
    (a) Based solely upon a review of Forms 3 (Sec. 249.103) and 4 
(Sec. 249.104) and amendments thereto furnished to the registrant 
pursuant to Sec. 240.16a-3(e) during its most recent fiscal year and 
Forms 5 and amendments thereto (Sec. 249.105) furnished to the 
registrant with respect to its most recent fiscal year, and any written 
representation referred to in paragraph (b)(2)(i) of this Item.
    (1) Under the caption ``Section 16(a) Beneficial Ownership Reporting 
Compliance,'' identify each person who, at any time during the fiscal 
year, was a director, officer, beneficial owner of more than ten percent 
of any class of equity securities of the registrant registered pursuant 
to section 12 of the Exchange Act, or any other person subject to 
section 16 of the Exchange Act with respect to the registrant because of 
the requirements of section 30 of the Investment Company Act or section 
17 of the Public Utility Holding Company Act (``reporting person'') that 
failed to file on a timely basis, as disclosed in the above Forms, 
reports required by section 16(a) of the Exchange Act during the most 
recent fiscal year or prior fiscal years.
    (2) For each such person, set forth the number of late reports, the 
number of transactions that were not reported on a timely basis, and any 
known failure to file a required Form. A known failure to file would 
include, but not be limited to, a failure to file a Form 3, which is 
required of all reporting persons, and a failure to file a Form 5 in the 
absence of the written representation referred to in paragraph (b)(2)(i) 
of this section, unless the registrant otherwise knows that no Form 5 is 
required.
    Note: The disclosure requirement is based on a review of the forms 
submitted to the registrant during and with respect to its most recent 
fiscal year, as specified above. Accordingly, a failure to file timely 
need only be disclosed once. For example, if in the most recently 
concluded fiscal year a reporting person filed a Form 4 disclosing a 
transaction that took place in the prior fiscal year, and should have 
been reported in that year, the registrant should disclose that late 
filing and transaction pursuant to this Item 405 with respect to the 
most recently concluded fiscal year, but not in material filed with 
respect to subsequent years.

    (b) With respect to the disclosure required by paragraph (a) of this 
Item:
    (1) A form received by the registrant within three calendar days of 
the required filing date may be presumed to have been filed with the 
Commission by the required filing date.
    (2) If the registrant (i) receives a written representation from the 
reporting person that no Form 5 is required; and (ii) maintains the 
representation for two years, making a copy available to the Commission 
or its staff upon request, the registrant need not identify such 
reporting person pursuant to paragraph (a) of this Item as having failed 
to file a Form 5 with respect to that fiscal year.

[56 FR 7265, Feb. 21, 1991, as amended at 61 FR 30391, June 14, 1996]

[[Page 439]]



Sec. 229.406  (Item 406) Code of ethics.

    (a) Disclose whether the registrant has adopted a code of ethics 
that applies to the registrant's principal executive officer, principal 
financial officer, principal accounting officer or controller, or 
persons performing similar functions. If the registrant has not adopted 
such a code of ethics, explain why it has not done so.
    (b) For purposes of this Item 406, the term code of ethics means 
written standards that are reasonably designed to deter wrongdoing and 
to promote:
    (1) Honest and ethical conduct, including the ethical handling of 
actual or apparent conflicts of interest between personal and 
professional relationships;
    (2) Full, fair, accurate, timely, and understandable disclosure in 
reports and documents that a registrant files with, or submits to, the 
Commission and in other public communications made by the registrant;
    (3) Compliance with applicable governmental laws, rules and 
regulations;
    (4) The prompt internal reporting of violations of the code to an 
appropriate person or persons identified in the code; and
    (5) Accountability for adherence to the code.
    (c) The registrant must:
    (1) File with the Commission a copy of its code of ethics that 
applies to the registrant's principal executive officer, principal 
financial officer, principal accounting officer or controller, or 
persons performing similar functions, as an exhibit to its annual 
report;
    (2) Post the text of such code of ethics on its Internet website and 
disclose, in its annual report, its Internet address and the fact that 
it has posted such code of ethics on its Internet Web site; or
    (3) Undertake in its annual report filed with the Commission to 
provide to any person without charge, upon request, a copy of such code 
of ethics and explain the manner in which such request may be made.
    (d) If the registrant intends to satisfy the disclosure requirement 
under Item 10 of Form 8-K regarding an amendment to, or a waiver from, a 
provision of its code of ethics that applies to the registrant's 
principal executive officer, principal financial officer, principal 
accounting officer or controller, or persons performing similar 
functions and that relates to any element of the code of ethics 
definition enumerated in paragraph (b) of this Item by posting such 
information on its Internet website, disclose the registrant's Internet 
address and such intention.

    Instructions to Item 406. 1. A registrant may have separate codes of 
ethics for different types of officers. Furthermore, a code of ethics 
within the meaning of paragraph (b) of this Item may be a portion of a 
broader document that addresses additional topics or that applies to 
more persons than those specified in paragraph (a). In satisfying the 
requirements of paragraph (c), a registrant need only file, post or 
provide the portions of a broader document that constitutes a code of 
ethics as defined in paragraph (b) and that apply to the persons 
specified in paragraph (a).
    2. If a registrant elects to satisfy paragraph (c) of this Item by 
posting its code of ethics on its website pursuant to paragraph (c)(2), 
the code of ethics must remain accessible on its Web site for as long as 
the registrant remains subject to the requirements of this Item and 
chooses to comply with this Item by posting its code on its Web site 
pursuant to paragraph (c)(2).
    3. A registrant that is an Asset-Backed Issuer (as defined in 
Sec. 240.13a-14(g) and Sec. 240.15d-14(g) of this chapter) is not 
required to disclose the information required by this Item.


[68 FR 5127, Jan. 31, 2003]



    Subpart 229.500--Registration Statement and Prospectus Provisions



Sec. 229.501  (Item 501) Forepart of Registration Statement and Outside Front Cover Page of Prospectus.

    The registrant must furnish the following information in plain 
English. See Sec. 230.421(d) of Regulation C of this chapter.
    (a) Front cover page of the registration statement. Where 
appropriate, include the delaying amendment legend from

Sec. 230.473 of Regulation C of this chapter.
    (b) Outside front cover page of the prospectus. Limit the outside 
cover page to one page. If the following information applies to your 
offering, disclose it on the outside cover page of the prospectus.

[[Page 440]]

    (1) Name. The registrant's name. A foreign registrant must give the 
English translation of its name.

Instruction to paragraph 501(b)(1): If your name is the same as that of 
a company that is well known, include information to eliminate any 
possible confusion with the other company. If your name indicates a line 
of business in which you are not engaged or you are engaged only to a 
limited extent, include information to eliminate any misleading 
inference as to your business. In some circumstances, disclosure may not 
be sufficient and you may be required to change your name. You will not 
be required to change your name if you are an established company, the 
character of your business has changed, and the investing public is 
generally aware of the change and the character of your current 
business.

    (2) Title and amount of securities. The title and amount of 
securities offered. Separately state the amount of securities offered by 
selling security holders, if any. If the underwriter has any arrangement 
with the issuer, such as an over-allotment option, under which the 
underwriter may purchase additional shares in connection with the 
offering, indicate that this arrangement exists and state the amount of 
additional shares that the underwriter may purchase under the 
arrangement. Give a brief description of the securities except where the 
information is clear from the title of the security. For example, you 
are not required to describe common stock that has full voting, dividend 
and liquidation rights usually associated with common stock.
    (3) Offering price of the securities. Where you offer securities for 
cash, the price to the public of the securities, the underwriter's 
discounts and commissions, the net proceeds you receive, and any selling 
shareholder's net proceeds. Show this information on both a per share or 
unit basis and for the total amount of the offering. If you make the 
offering on a minimum/maximum basis, show this information based on the 
total minimum and total maximum amount of the offering. You may present 
the information in a table, term sheet format, or other clear 
presentation. You may present the information in any format that fits 
the design of the cover page so long as the information can be easily 
read and is not misleading:

Instructions to paragraph 501(b)(3): 1. If a preliminary prospectus is 
circulated and you are not subject to the reporting requirements of 
Section 13(a) or 15(d) of the Exchange Act, provide, as applicable:
    (A) A bona fide estimate of the range of the maximum offering price 
and the maximum number of securities offered; or
    (B) A bona fide estimate of the principal amount of the debt 
securities offered.
    2. If it is impracticable to state the price to the public, explain 
the method by which the price is to be determined. If the securities are 
to be offered at the market price, or if the offering price is to be 
determined by a formula related to the market price, indicate the market 
and market price of the securities as of the latest practicable date.
    3. If you file a registration statement on Form S-8, you are not 
required to comply with this paragraph (b)(3).

    (4) Market for the securities. Whether any national securities 
exchange or the Nasdaq Stock Market lists the securities offered, naming 
the particular market(s), and identifying the trading symbol(s) for 
those securities;
    (5) Risk factors. A cross-reference to the risk factors section, 
including the page number where it appears in the prospectus. Highlight 
this cross-reference by prominent type or in another manner;
    (6) State legend. Any legend or statement required by the law of any 
state in which the securities are to be offered. You may combine this 
with any legend required by the SEC, if appropriate;
    (7) Commission legend. A legend that indicates that neither the 
Securities and Exchange Commission nor any state securities commission 
has approved or disapproved of the securities or passed upon the 
accuracy or adequacy of the disclosures in the prospectus and that any 
contrary representation is a criminal offense. You may use one of the 
following or other clear, plain language:

    Example A: Neither the Securities and Exchange Commission nor any 
state securities commission has approved or disapproved of these 
securities or passed upon the adequacy or accuracy of this prospectus. 
Any representation to the contrary is a criminal offense.
    Example B: Neither the Securities and Exchange Commission nor any 
state securities commission has approved or disapproved of

[[Page 441]]

these securities or determined if this prospectus is truthful or 
complete. Any representation to the contrary is a criminal offense.

    (8) Underwriting. (i) Name(s) of the lead or managing underwriter(s) 
and an identification of the nature of the underwriting arrangements;
    (ii) If the offering is not made on a firm commitment basis, a brief 
description of the underwriting arrangements. You may use any clear, 
concise, and accurate description of the underwriting arrangements. You 
may use the following descriptions of underwriting arrangements where 
appropriate:

    Example A: Best efforts offering. The underwriters are not required 
to sell any specific number or dollar amount of securities but will use 
their best efforts to sell the securities offered.
    Example B: Best efforts, minimum-maximum offering. The underwriters 
must sell the minimum number of securities offered (insert number) if 
any are sold. The underwriters are required to use only their best 
efforts to sell the maximum number of securities offered (insert 
number).

    (iii) If you offer the securities on a best efforts or best efforts 
minimum/maximum basis, the date the offering will end, any minimum 
purchase requirements, and any arrangements to place the funds in an 
escrow, trust, or similar account. If you have not made any of these 
arrangements, state this fact and describe the effect on investors;
    (9) Date of prospectus. The date of the prospectus;
    (10) Prospectus ``Subject to Completion'' legend. If you use the 
prospectus before the effective date of the registration statement, a 
prominent statement that:
    (i) The information in the prospectus will be amended or completed;
    (ii) A registration statement relating to these securities has been 
filed with the Securities and Exchange Commission;
    (iii) The securities may not be sold until the registration 
statement becomes effective; and
    (iv) The prospectus is not an offer to sell the securities and it is 
not soliciting an offer to buy the securities in any state where offers 
or sales are not permitted. The legend may be in the following or other 
clear, plain language:

    The information in this prospectus is not complete and may be 
changed. We may not sell these securities until the registration 
statement filed with the Securities and Exchange Commission is 
effective. This prospectus is not an offer to sell these securities and 
it is not soliciting an offer to buy these securities in any state where 
the offer or sale is not permitted.

    (11) If you use Sec. 230.430A of this chapter to omit pricing 
information and the prospectus is used before you determine the public 
offering price, the information and legend in paragraph (b)(10) of this 
section.

[63 FR 6381, Feb. 6, 1998]



Sec. 229.502  (Item 502) Inside front and outside back cover pages of prospectus.

    The registrant must furnish this information in plain English. See 
Sec. 230.421(d) of Regulation C of this chapter.
    (a) Table of contents. On either the inside front or outside back 
cover page of the prospectus, provide a reasonably detailed table of 
contents. It must show the page number of the various sections or 
subdivisions of the prospectus. Include a specific listing of the risk 
factors section required by Item 503 of this Regulation S-K (17 CFR 
229.503). You must include the table of contents immediately following 
the cover page in any prospectus you deliver electronically.
    (b) Dealer prospectus delivery obligation. On the outside back cover 
page of the prospectus, advise dealers of their prospectus delivery 
obligation, including the expiration date specified by Section 4(3) of 
the Securities Act (15 U.S.C. 77d(3)) and Sec. 230.174 of this chapter. 
If you do not know the expiration date on the effective date of the 
registration statement, include the expiration date in the copy of the 
prospectus you file under Sec. 230.424(b) of this chapter. You do not 
have to include this information if dealers are not required to deliver 
a prospectus under Sec. 230.174 of this chapter or Section 24(d) of the 
Investment Company Act (15 U.S.C. 80a-24). You may use the following or 
other clear, plain language:

[[Page 442]]

                  Dealer Prospectus Delivery Obligation

    Until (insert date), all dealers that effect transactions in these 
securities, whether or not participating in this offering, may be 
required to deliver a prospectus. This is in addition to the dealers' 
obligation to deliver a prospectus when acting as underwriters and with 
respect to their unsold allotments or subscriptions.

[63 FR 6383, Feb. 6, 1998]



Sec. 229.503  (Item 503) Prospectus summary, risk factors, and ratio of earnings to fixed charges.

    The registrant must furnish this information in plain English. See 
Sec. 230.421(d) of Regulation C of this chapter.
    (a) Prospectus summary. Provide a summary of the information in the 
prospectus where the length or complexity of the prospectus makes a 
summary useful. The summary should be brief. The summary should not 
contain, and is not required to contain, all of the detailed information 
in the prospectus. If you provide summary business or financial 
information, even if you do not caption it as a summary, you still must 
provide that information in plain English.

Instruction to paragraph 503(a): The summary should not merely repeat 
the text of the prospectus but should provide a brief overview of the 
key aspects of the offering. Carefully consider and identify those 
aspects of the offering that are the most significant and determine how 
best to highlight those points in clear, plain language.

    (b) Address and telephone number. Include, either on the cover page 
or in the summary section of the prospectus, the complete mailing 
address and telephone number of your principal executive offices.
    (c) Risk factors. Where appropriate, provide under the caption 
``Risk Factors'' a discussion of the most significant factors that make 
the offering speculative or risky. This discussion must be concise and 
organized logically. Do not present risks that could apply to any issuer 
or any offering. Explain how the risk affects the issuer or the 
securities being offered. Set forth each risk factor under a subcaption 
that adequately describes the risk. The risk factor discussion must 
immediately follow the summary section. If you do not include a summary 
section, the risk factor section must immediately follow the cover page 
of the prospectus or the pricing information section that immediately 
follows the cover page. Pricing information means price and price-
related information that you may omit from the prospectus in an 
effective registration statement based on Sec. 230.430A(a) of this 
chapter. The risk factors may include, among other things, the 
following:
    (1) Your lack of an operating history;
    (2) Your lack of profitable operations in recent periods;
    (3) Your financial position;
    (4) Your business or proposed business; or
    (5) The lack of a market for your common equity securities or 
securities convertible into or exercisable for common equity securities.
    (d) Ratio of earnings to fixed charges. If you register debt 
securities, show a ratio of earnings to fixed charges. If you register 
preference equity securities, show the ratio of combined fixed charges 
and preference dividends to earnings. Present the ratio for each of the 
last five fiscal years and the latest interim period for which financial 
statements are presented in the document. If you will use the proceeds 
from the sale of debt or preference securities to repay any of your 
outstanding debt or to retire other securities and the change in the 
ratio would be ten percent or greater, you must include a ratio showing 
the application of the proceeds, commonly referred to as the pro forma 
ratio.

Instructions to paragraph 503(d): 1. Definitions. In calculating the 
ratio of earnings to fixed charges, you must use the following 
definitions:
    (A) Fixed charges. The term ``fixed charges'' means the sum of the 
following: (a) interest expensed and capitalized, (b) amortized 
premiums, discounts and capitalized expenses related to indebtedness, 
(c) an estimate of the interest within rental expense, and (d) 
preference security dividend requirements of consolidated subsidiaries.
    (B) Preference security dividend. The term ``preference security 
dividend'' is the amount of pre-tax earnings that is required to pay the 
dividends on outstanding preference securities. The dividend requirement 
must be computed as the amount of the dividend divided by (1 minus the 
effective income tax rate applicable to continuing operations).

[[Page 443]]

    (C) Earnings. The term ``earnings'' is the amount resulting from 
adding and subtracting the following items. Add the following: (a) Pre-
tax income from continuing operations before adjustment for minority 
interests in consolidated subsidiaries or income or loss from equity 
investees, (b) fixed charges, (c) amortization of capitalized interest, 
(d) distributed income of equity investees, and (e) your share of pre-
tax losses of equity investees for which charges arising from guarantees 
are included in fixed charges. From the total of the added items, 
subtract the following: (a) interest capitalized, (b) preference 
security dividend requirements of consolidated subsidiaries, and (c) the 
minority interest in pre-tax income of subsidiaries that have not 
incurred fixed charges. Equity investees are investments that you 
account for using the equity method of accounting. Public utilities 
following SFAS 71 should not add amortization of capitalized interest in 
determining earnings, nor reduce fixed charges by any allowance for 
funds used during construction.
    2. Disclosure. Disclose the following information when showing the 
ratio of earnings to fixed charges:
    (A) Deficiency. If a ratio indicates less than one-to-one coverage, 
disclose the dollar amount of the deficiency.
    (B) Pro forma ratio. You may show the pro forma ratio only for the 
most recent fiscal year and the latest interim period. Use the net 
change in interest or dividends from the refinancing to calculate the 
pro forma ratio.
    (C) Foreign private issuers. A foreign private issuer must show the 
ratio based on the figures in the primary financial statement. A foreign 
private issuer must show the ratio based on the figures resulting from 
the reconciliation to U.S. generally accepted accounting principles if 
this ratio is materially different.
    (D) Summary Section. If you provide a summary or similar section in 
the prospectus, show the ratios in that section.
    3. Exhibit. File an exhibit to the registration statement to show 
the figures used to calculate the ratios. See paragraph (b)(12) of Item 
601 of Regulation S-K (17 CFR 229.601(b)(12)).

[63 FR 6383, Feb. 6, 1998]



Sec. 229.504  (Item 504) Use of proceeds.

    State the principal purposes for which the net proceeds to the 
registrant from the securities to be offered are intended to be used and 
the approximate amount intended to be used for each such purpose. Where 
registrant has no current specific plan for the proceeds, or a 
significant portion thereof, the registrant shall so state and discuss 
the principal reasons for the offering.

Instructions to Item 504: 1. Where less than all the securities to be 
offered may be sold and more than one use is listed for the proceeds, 
indicate the order of priority of such purposes and discuss the 
registrant's plans if substantially less than the maximum proceeds are 
obtained. Such discussion need not be included if underwriting 
arrangements with respect to such securities are such that, if any 
securities are sold to the public, it reasonably can be expected that 
the actual proceeds will not be substantially less than the aggregate 
proceeds to the registrant shown pursuant to Item 501 of Regulation S-K 
(Sec. 229.501).
    2. Details of proposed expenditures need not be given; for example, 
there need be furnished only a brief outline of any program of 
construction or addition of equipment. Consideration should be given as 
to the need to include a discussion of certain matters addressed in the 
discussion and analysis of registrant's financial condition and results 
of operations, such as liquidity and capital expenditures.
    3. If any material amounts of other funds are necessary to 
accomplish the specified purposes for which the proceeds are to be 
obtained, state the amounts and sources of such other funds needed for 
each such specified purpose and the sources thereof.
    4. If any material part of the proceeds is to be used to discharge 
indebtedness, set forth the interest rate and maturity of such 
indebtedness. If the indebtedness to be discharged was incurred within 
one year, describe the use of the proceeds of such indebtedness other 
than short-term borrowings used for working capital.
    5. If any material amount of the proceeds is to be used to acquire 
assets, otherwise than in the ordinary course of business, describe 
briefly and state the cost of the assets and, where such assets are to 
be acquired from affiliates of the registrant or their associates, give 
the names of the persons from whom they are to be acquired and set forth 
the principle followed in determining the cost to the registrant.
    6. Where the registrant indicates that the proceeds may, or will, be 
used to finance acquisitions of other businesses, the identity of such 
businesses, if known, or, if not known, the nature of the businesses to 
be sought, the status of any negotiations with respect to the 
acquisition, and a brief description of such business shall be included. 
Where, however, pro forma financial statements reflecting such 
acquisition are not required by Regulation S-X to be included, in the 
registration statement, the possible terms of any transaction, the 
identification of the parties thereto or the nature of the business 
sought need not be disclosed, to the extent that the

[[Page 444]]

registrant reasonably determines that public disclosure of such 
information would jeopardize the acquisition. Where Regulation S-X (17 
CFR 210) would require financial statements of the business to be 
acquired to be included, the description of the business to be acquired 
shall be more detailed.
    7. The registrant may reserve the right to change the use of 
proceeds, provided that such reservation is due to certain contingencies 
that are discussed specifically and the alternatives to such use in that 
event are indicated.



Sec. 229.505  (Item 505) Determination of offering price.

    (a) Common equity. Where common equity is being registered for which 
there is no established public trading market for purposes of paragraph 
(a) of Item 201 of Regulation S-K (Sec. 229.201(a)) or where there is a 
material disparity between the offering price of the common equity being 
registered and the market price of outstanding shares of the same class, 
describe the various factors considered in determining such offering 
price.
    (b) Warrants, rights and convertible securities. Where warrants, 
rights or convertible securities exercisable for common equity for which 
there is no established public trading market for purposes of paragraph 
(a) of Item 201 of Regulation S-K (Sec. 229.201(a)) are being 
registered, describe the various factors considered in determining their 
exercise or conversion price.



Sec. 229.506  (Item 506) Dilution.

    Where common equity securities are being registered and there is 
substantial disparity between the public offering price and the 
effective cash cost to officers, directors, promoters and affiliated 
persons of common equity acquired by them in transactions during the 
past five years, or which they have the right to acquire, and the 
registrant is not subject to the reporting requirements of section 13(a) 
or 15(d) of the Exchange Act immediately prior to filing of the 
registration statement, there shall be included a comparison of the 
public contribution under the proposed public offering and the effective 
cash contribution of such persons. In such cases, and in other instances 
where common equity securities are being registered by a registrant that 
has had losses in each of its last three fiscal years and there is a 
material dilution of the purchasers' equity interest, the following 
shall be disclosed:
    (a) The net tangible book value per share before and after the 
distribution;
    (b) The amount of the increase in such net tangible book value per 
share attributable to the cash payments made by purchasers of the shares 
being offered; and
    (c) The amount of the immediate dilution from the public offering 
price which will be absorbed by such purchasers.



Sec. 229.507  (Item 507) Selling security holders.

    If any of the securities to be registered are to be offered for the 
account of security holders, name each such security holder, indicate 
the nature of any position, office, or other material relationship which 
the selling security holder has had within the past three years with the 
registrant or any of its predecessors or affiliates, and state the 
amount of securities of the class owned by such security holder prior to 
the offering, the amount to be offered for the security holder's 
account, the amount and (if one percent or more) the percentage of the 
class to be owned by such security holder after completion of the 
offering.



Sec. 229.508  (Item 508) Plan of distribution.

    (a) Underwriters and underwriting obligation. If the securities are 
to be offered through underwriters, name the principal underwriters, and 
state the respective amounts underwritten. Identify each such 
underwriter having a material relationship with the registrant and state 
the nature of the relationship. State briefly the nature of the 
obligation of the underwriter(s) to take the securities.

Instruction to Paragraph 508(a): All that is required as to the nature 
of the underwriters' obligation is whether the underwriters are or will 
be committed to take and to pay for all of the securities if any are 
taken, or whether it is merely an agency or the type of best efforts 
arrangement under which the underwriters are required to take and to pay 
for only such securities as they may sell to the

[[Page 445]]

public. Conditions precedent to the underwriters' taking the securities, 
including market-outs, need not be described except in the case of an 
agency or best efforts arrangement.

    (b) New underwriters. Where securities being registered are those of 
a registrant that has not previously been required to file reports 
pursuant to section 13(a) or 15(d) of the Exchange Act, or where a 
prospectus is required to include reference on its cover page to 
material risks pursuant to Item 501 of Regulation S-K (Sec. 229.501), 
and any one or more of the managing underwriter(s) (or where there are 
no managing underwriters, a majority of the principal underwriters) has 
been organized, reactivated, or first registered as a broker-dealer 
within the past three years, these facts concerning such underwriter(s) 
shall be disclosed in the prospectus together with, where applicable, 
the disclosures that the principal business function of such 
underwriter(s) will be to sell the securities to be registered, or that 
the promoters of the registrant have a material relationship with such 
underwriter(s). Sufficient details shall be given to allow full 
appreciation of such underwriter(s) experience and its relationship with 
the registrant, promoters and their controlling persons.
    (c) Other distributions. Outline briefly the plan of distribution of 
any securities to be registered that are to be offered otherwise than 
through underwriters.
    (1) If any securities are to be offered pursuant to a dividend or 
interest reinvestment plan the terms of which provide for the purchase 
of some securities on the market, state whether the registrant or the 
participant pays fees, commissions, and expenses incurred in connection 
with the plan. If the participant will pay such fees, commissions and 
expenses, state the anticipated cost to participants by transaction or 
other convenient reference.
    (2) If the securities are to be offered through the selling efforts 
of brokers or dealers, describe the plan of distribution and the terms 
of any agreement, arrangement, or understanding entered into with 
broker(s) or dealer(s) prior to the effective date of the registration 
statement, including volume limitations on sales, parties to the 
agreement and the conditions under which the agreement may be 
terminated. If known, identify the broker(s) or dealer(s) which will 
participate in the offering and state the amount to be offered through 
each.
    (3) If any of the securities being registered are to be offered 
otherwise than for cash, state briefly the general purposes of the 
distribution, the basis upon which the securities are to be offered, the 
amount of compensation and other expenses of distribution, and by whom 
they are to be borne. If the distribution is to be made pursuant to a 
plan of acquisition, reorganization, readjustment or succession, 
describe briefly the general effect of the plan and state when it became 
or is to become operative. As to any material amount of assets to be 
acquired under the plan, furnish information corresponding to that 
required by Instruction 5 of Item 504 of Regulation S-K (Sec. 229.504).
    (d) Offerings on exchange. If the securities are to be offered on an 
exchange, indicate the exchange. If the registered securities are to be 
offered in connection with the writing of exchange-traded call options, 
describe briefly such transactions.
    (e) Underwriter's compensation. Provide a table that sets out the 
nature of the compensation and the amount of discounts and commissions 
to be paid to the underwriter for each security and in total. The table 
must show the separate amounts to be paid by the company and the selling 
shareholders. In addition, include in the table all other items 
considered by the National Association of Securities Dealers to be 
underwriting compensation for purposes of that Association's Rules of 
Fair Practice.

Instructions to paragraph 508(e): 1. The term ``commissions'' is defined 
in paragraph (17) of Schedule A of the Securities Act. Show separately 
in the table the cash commissions paid by the registrant and selling 
security holders. Also show in the table commissions paid by other 
persons. Disclose any finder's fee or similar payments in the table.
    2. Disclose the offering expenses specified in Item 511 of 
Regulation S-K (17 CFR 229.511).
    3. If the underwriter has any arrangement with the issuer, such as 
an over-allotment option, under which the underwriter may

[[Page 446]]

purchase additional shares in connection with the offering, indicate 
that this arrangement exists and state the amount of additional shares 
that the underwriter may purchase under the arrangement. Where the 
underwriter has such an arrangement, present maximum-minimum information 
in a separate column to the table, based on the purchase of all or none 
of the shares subject to the arrangement. Describe the key terms of the 
arrangement in the narrative.

    (f) Underwriter's representative on board of directors. Describe any 
arrangement whereby the underwriter has the right to designate or 
nominate a member or members of the board of directors of the 
registrant. The registrant shall disclose the identity of any director 
so designated or nominated, and indicate whether or not a person so 
designated or nominated, or allowed to be designated or nominated by the 
underwriter is or may be a director, officer, partner, employee or 
affiliate of the underwriter.
    (g) Indemnification of underwriters. If the underwriting agreement 
provides for indemnification by the registrant of the underwriters or 
their controlling persons against any liability arising under the 
Securities Act, furnish a brief description of such indemnification 
provisions.
    (h) Dealers' compensation. State briefly the discounts and 
commissions to be allowed or paid to dealers, including all cash, 
securities, contracts or other considerations to be received by any 
dealer in connection with the sale of the securities. If any dealers are 
to act in the capacity of sub-underwriters and are to be allowed or paid 
any additional discounts or commissions for acting in such capacity, a 
general statement to that effect will suffice without giving the 
additional amounts to be sold.
    (i) Finders. Identify any finder and, if applicable, describe the 
nature of any material relationship between such finder and the 
registrant, its officers, directors, principal stockholders, finders or 
promoters or the principal underwriter(s), or if there is a managing 
underwriter(s), the managing underwriter(s), (including, in each case, 
affiliates or associates thereof).
    (j) Discretionary accounts. If the registrant was not, immediately 
prior to the filing of the registration statement, subject to the 
requirements of section 13(a) or 15(d) of the Exchange Act, identify any 
principal underwriter that intends to sell to any accounts over which it 
exercises discretionary authority and include an estimate of the amount 
of securities so intended to be sold. The response to this paragraph 
shall be contained in a pre-effective amendment which shall be 
circulated if the information is not available when the registration 
statement is filed.
    (k) Passive market making. If the underwriters or any selling group 
members intend to engage in passive market making transactions as 
permitted by Rule 103 of Regulation M (Sec. 242.103 of this chapter), 
indicate such intention and briefly describe passive market making.
    (l) Stabilization and other transactions. (1) Briefly describe any 
transaction that the underwriter intends to conduct during the offering 
that stabilizes, maintains, or otherwise affects the market price of the 
offered securities. Include information on stabilizing transactions, 
syndicate short covering transactions, penalty bids, or any other 
transaction that affects the offered security's price. Describe the 
nature of the transactions clearly and explain how the transactions 
affect the offered security's price. Identify the exchange or other 
market on which these transactions may occur. If true, disclose that the 
underwriter may discontinue these transactions at any time;
    (2) If the stabilizing began before the effective date of the 
registration statement, disclose the amount of securities bought, the 
prices at which they were bought and the period within which they were 
bought. If you use Sec. 230.430A of this chapter, the prospectus you 
file under Sec. 230.424(b) of this chapter or include in a post-
effective amendment must contain information on the stabilizing 
transactions that took place before the determination of the public 
offering price; and
    (3) If you are making a warrants or rights offering of securities to 
existing security holders and any securities not purchased by existing 
security holders are to be reoffered to the public, disclose in a 
supplement to the prospectus

[[Page 447]]

or in the prospectus used in connection with the reoffering:
    (i) The amount of securities bought in stabilization activities 
during the offering period and the price or range of prices at which the 
securities were bought;
    (ii) The amount of the offered securities subscribed for during the 
offering period;
    (iii) The amount of the offered securities subscribed for by the 
underwriter during the offering period;
    (iv) The amount of the offered securities sold during the offering 
period by the underwriter and the price or price ranges at which the 
securities were sold; and
    (v) The amount of the offered securities that will be reoffered to 
the public and the public offering price.

[47 FR 11401, Mar. 16, 1982, as amended at 58 FR 19606, Apr. 15, 1993; 
62 FR 543, Jan. 3, 1997; 62 FR 11323, Mar. 12, 1997; 63 FR 6384, Feb. 6, 
1998]



Sec. 229.509  (Item 509) Interests of named experts and counsel.

    If (a) any expert named in the registration statement as having 
prepared or certified any part thereof (or is named as having prepared 
or certified a report or valuation for use in connection with the 
registration statement), or (b) counsel for the registrant, underwriters 
or selling security holders named in the prospectus as having given an 
opinion upon the validity of the securities being registered or upon 
other legal matters in connection with the registration or offering of 
such securities, was employed for such purpose on a contingent basis, or 
at the time of such preparation, certification or opinion or at any time 
thereafter, through the date of effectiveness of the registration 
statement or that part of the registration statement to which such 
preparation, certification or opinion relates, had, or is to receive in 
connection with the offering, a substantial interest, direct or 
indirect, in the registrant or any of its parents or subsidiaries or was 
connected with the registrant or any of its parents or subsidiaries as a 
promoter, managing underwriter (or any principal underwriter, if there 
are no managing underwriters) voting trustee, director, officer, or 
employee, furnish a brief statement of the nature of such contingent 
basis, interest, or connection.

Instructions to Item 509: 1. The interest of an expert (other than an 
accountant) or counsel will not be deemed substantial and need not be 
disclosed if the interest, including the fair market value of all 
securities of the registrant owned, received and to be received, or 
subject to options, warrants or rights received or to be received by the 
expert or counsel does not exceed $50,000. For the purpose of this 
Instruction, the term expert or counsel includes the firm, corporation, 
partnership or other entity, if any, by which such expert or counsel is 
employed or of which he is a member or of counsel to and all attorneys 
in the case of counsel, and all nonclerical personnel in the case of 
named experts, participating in such matter on behalf of such firm, 
corporation, partnership or entity.
    2. Accountants, providing a report on the financial statements, 
presented or incorporated by reference in the registration statement, 
should note Sec. 210.2-01 of Regulation S-X (17 CFR 210) for the 
Commission's requirements regarding ``Qualification of Accountants'' 
which discusses disqualifying interests.



Sec. 229.510  (Item 510) Disclosure of Commission position on indemnification for Securities Act liabilities.

    In addition to the disclosure prescribed by Item 702 of Regulation 
S-K (Sec. 229.702), if the undertaking required by paragraph (h) of Item 
512 of Regulation S-K (Sec. 229.512) is not required to be included in 
the registration statement because acceleration of the effective date of 
the registration statement is not being requested, and if waivers have 
not been obtained comparable to those specified in paragraph (h), a 
brief description of the indemnification provisions relating to 
directors, officers and controlling persons of the registrant against 
liability arising under the Securities Act (including any provision of 
the underwriting agreement which relates to indemnification of the 
underwriter or its controlling persons by the registrant against such 
liabilities where a director, officer or controlling person of the 
registrant is such an underwriter or controlling person thereof or a 
member of any firm which is such an underwriter) shall be included in 
the prospectus, together with a statement in substantially the following 
form:


[[Page 448]]


Insofar as indemnification for liabilities arising under the Securities 
Act of 1933 may be permitted to directors, officers or persons 
controlling the registrant pursuant to the foregoing provisions, the 
registrant has been informed that in the opinion of the Securities and 
Exchange Commission such indemnification is against public policy as 
expressed in the Act and is therefore unenforceable.

[47 FR 11401, Mar. 16, 1982, as amended at 56 FR 48103, Sept. 24, 1991]



Sec. 229.511  (Item 511) Other expenses of issuance and distribution.

    Furnish a reasonably itemized statement of all expenses in 
connection with the issuance and distribution of the securities to be 
registered, other than underwriting discounts and commissions. If any of 
the securities to be registered are to be offered for the account of 
security holders, indicate the portion of such expenses to be borne by 
such security holder.

Instruction to Item 511: Insofar as practicable, registration fees, 
Federal taxes, States taxes and fees, trustees' and transfer agents' 
fees, costs of printing and engraving, and legal, accounting, and 
engineering fees shall be itemized separately. Include as a separate 
item any premium paid by the registrant or any selling security holder 
on any policy obtained in connection with the offering and sale of the 
securities being registered which insures or indemnifies directors or 
officers against any liabilities they may incur in connection with the 
registration, offering, or sale of such securities. The information may 
be given as subject to future contingencies. If the amounts of any items 
are not known, estimates, identified as such, shall be given.



Sec. 229.512  (Item 512) Undertakings.

    Include each of the following undertakings that is applicable to the 
offering being registered.
    (a) Rule 415 Offering. \1\ Include the following if the securities 
are registered pursuant to Rule 415 under the Securities Act 
(Sec. 230.415 of this chapter):
---------------------------------------------------------------------------

    \1\ Paragraph (a) reflects proposals made in Securities Act Release 
No. 6334 (Aug. 6, 1981).
---------------------------------------------------------------------------

    The undersigned registrant hereby undertakes:
    (1) To file, during any period in which offers or sales are being 
made, a post-effective amendment to this registration statement:
    (i) To include any propectus required by section 10(a)(3) of the 
Securities Act of 1933;
    (ii) To reflect in the prospectus any facts or events arising after 
the effective date of the registration statement (or the most recent 
post-effective amendment thereof) which, individually or in the 
aggregate, represent a fundamental change in the information set forth 
in the registration statement. Notwithstanding the foregoing, any 
increase or decrease in volume of securities offered (if the total 
dollar value of securities offered would not exceed that which was 
registered) and any deviation from the low or high end of the estimated 
maximum offering range may be reflected in the form of prospectus filed 
with the Commission pursuant to Rule 424(b) (Sec. 230.424(b) of this 
chapter) if, in the aggregate, the changes in volume and price represent 
no more than 20% change in the maximum aggregate offering price set 
forth in the ``Calculation of Registration Fee'' table in the effective 
registration statement.
    (iii) To include any material information with respect to the plan 
of distribution not previously disclosed in the registration statement 
or any material change to such information in the registration 
statement;

Provided, however, That paragraphs (a)(1)(i) and (a)(1)(ii) of this 
section do not apply if the registration statement is on Form S-3 
(Sec. 239.13 of this chapter), Form S-8 (Sec. 239.16b of this chapter) 
or Form F-3 (Sec. 239.33 of this chapter), and the information required 
to be included in a post-effective amendment by those paragraphs is 
contained in periodic reports filed with or furnished to the Commission 
by the registrant pursuant to section 13 or section 15(d) of the 
Securities Exchange Act of 1934 that are incorporated by reference in 
the registration statement.
    (2) That, for the purpose of determining any liability under the 
Securities Act of 1933, each such post-effective amendment shall be 
deemed to be a new registration statement relating to the securities 
offered therein, and the offering of such securities at that time shall 
be deemed to be the initial bona fide offering thereof.

[[Page 449]]

    (3) To remove from registration by means of a post-effective 
amendment any of the securities being registered which remain unsold at 
the termination of the offering.
    (4) If the registrant is a foreign private issuer, to file a post-
effective amendment to the registration statement to include any 
financial statements required by ``Item 8.A. of Form 20-F (17 CFR 
249.220f)'' at the start of any delayed offering or throughout a 
continuous offering. Financial statements and information otherwise 
required by Section 10(a)(3) of the Act need not be furnished, provided 
that the registrant includes in the prospectus, by means of a post-
effective amendment, financial statements required pursuant to this 
paragraph (a)(4) and other information necessary to ensure that all 
other information in the prospectus is at least as current as the date 
of those financial statements. Notwithstanding the foregoing, with 
respect to registration statements on Form F-3 (Sec. 239.33 of this 
chapter), a post-effective amendment need not be filed to include 
financial statements and information required by Section 10(a)(3) of the 
Act or Sec. 210.3-19 of this chapter if such financial statements and 
information are contained in periodic reports filed with or furnished to 
the Commission by the registrant pursuant to section 13 or section 15(d) 
of the Securities Exchange Act of 1934 that are incorporated by 
reference in the Form F-3.
    (b) Filings incorporating subsequent Exchange Act documents by 
reference. Include the following if the registration statement 
incorporates by reference any Exchange Act document filed subsequent to 
the effective date of the registration statement:

The undersigned registrant hereby undertakes that, for purposes of 
determining any liability under the Securities Act of 1933, each filing 
of the registrant's annual report pursuant to section 13(a) or section 
15(d) of the Securities Exchange Act of 1934 (and, where applicable, 
each filing of an employee benefit plan's annual report pursuant to 
section 15(d) of the Securities Exchange Act of 1934) that is 
incorporated by reference in the registration statement shall be deemed 
to be a new registration statement relating to the securities offered 
therein, and the offering of such securities at that time shall be 
deemed to be the initial bona fide offering thereof.

    (c) Warrants and rights offerings. Include the following, with 
appropriate modifications to suit the particular case, if the securities 
to be registered are to be offered to existing security holders pursuant 
to warrants or rights and any securities not taken by security holders 
are to be reoffered to the public:

The undersigned registrant hereby undertakes to supplement the 
prospectus, after the expiration of the subscription period, to set 
forth the results of the subscription offer, the transactions by the 
underwriters during the subscription period, the amount of unsubscribed 
securities to be purchased by the underwriters, and the terms of any 
subsequent reoffering thereof. If any public offering by the 
underwriters is to be made on terms differing from those set forth on 
the cover page of the prospectus, a post-effective amendment will be 
filed to set forth the terms of such offering.

    (d) Competitive bids. Include the following, with appropriate 
modifications to suit the particular case, if the securities to be 
registered are to be offered at competitive bidding:

The undersigned registrant hereby undertakes (1) to use its best efforts 
to distribute prior to the opening of bids, to prospective bidders, 
underwriters, and dealers, a reasonable number of copies of a prospectus 
which at that time meets the requirements of section 10(a) of the Act, 
and relating to the securities offered at competitive bidding, as 
contained in the registration statement, together with any supplements 
thereto, and (2) to file an amendment to the registration statement 
reflecting the results of bidding, the terms of the reoffering and 
related matters to the extent required by the applicable form, not later 
than the first use, authorized by the issuer after the opening of bids, 
of a prospectus relating to the securities offered at competitive 
bidding, unless no further public offering of such securities by the 
issuer and no reoffering of such securities by the purchasers is 
proposed to be made.

    (e) Incorporated annual and quarterly reports. Include the following 
if the registration statement specifically incorporates by reference 
(other than by indirect incorporation by reference through a Form 10-K 
and Form 10-KSB (Sec. 249.310 of this chapter) report) in the prospectus 
all or any part of the annual report to security holders meeting the 
requirements of Rule 14a-3 or Rule

[[Page 450]]

14c-3 under the Exchange Act) Secs. 240.14a-3 and 240.14c-3 of this 
chapter):

The undersigned registrant hereby undertakes to deliver or cause to be 
delivered with the prospectus, to each person to whom the prospectus is 
sent or given, the latest annual report to security holders that is 
incorporated by reference in the prospectus and furnished pursuant to 
and meeting the requirements of Rule 14a-3 or Rule 14c-3 under the 
Securities Exchange Act of 1934; and, where interim financial 
information required to be presented by Article 3 of Regulation S-X are 
not set forth in the prospectus, to deliver, or cause to be delivered to 
each person to whom the prospectus is sent or given, the latest 
quarterly report that is specifically incorporated by reference in the 
prospectus to provide such interim financial information.

    (f) Equity offerings of nonreporting registrants. Include the 
following if equity securities of a registrant that prior to the 
offering had no obligation to file reports with the Commission pursuant 
to section 13(a) or 15(d) of the Exchange Act are being registered for 
sale in an underwritten offering:

The undersigned registrant hereby undertakes to provide to the 
underwriter at the closing specified in the underwriting agreements 
certificates in such denominations and registered in such names as 
required by the underwriter to permit prompt delivery to each purchaser.

    (g) Registration on Form S-4 or F-4 of securities offered for 
resale. Include the following if the securities are being registered on 
Form S-4 or F-4 (Sec. 239.25, or 34 of this chapter) in connection with 
a transaction specified in paragraph (a) of Rule 145 (Sec. 230.145 of 
this chapter).
    (1) The undersigned registrant hereby undertakes as follows: That 
prior to any public reoffering of the securities registered hereunder 
through use of a prospectus which is a part of this registration 
statement, by any person or party who is deemed to be an underwriter 
within the meaning of Rule 145(c), the issuer undertakes that such 
reoffering prospectus will contain the information called for by the 
applicable registration form with respect to reofferings by persons who 
may be deemed underwriters, in addition to the information called for by 
the other Items of the applicable form.
    (2) The registrant undertakes that every prospectus (i) that is 
filed pursuant to paragraph (h)(1) immediately preceding, or (ii) that 
purports to meet the requirements of section 10(a)(3) of the Act and is 
used in connection with an offering of securities subject to Rule 415 
(Sec. 230.415 of this chapter), will be filed as a part of an amendment 
to the registration statement and will not be used until such amendment 
is effective, and that, for purposes of determining any liability under 
the Securities Act of 1933, each such post-effective amendment shall be 
deemed to be a new registration statement relating to the securities 
offered therein, and the offering of such securities at that time shall 
be deemed to be the initial bona fide offering thereof.
    (h) Request for acceleration of effective date or filing of 
registration statement on Form S-8. Include the following if 
acceleration is requested of the effective date of the registration 
statement pursuant to Rule 461 under the Securities Act (Sec. 230.461 of 
this chapter), or if the registration statement is filed on Form S-8, 
and:
    (1) Any provision or arrangement exists whereby the registrant may 
indemnify a director, officer or controlling person of the registrant 
against liabilities arising under the Securities Act, or
    (2) The underwriting agreement contains a provision whereby the 
registrant indemnifies the underwriter or controlling persons of the 
underwriter against such liabilities and a director, officer or 
controlling person of the registrant is such an underwriter or 
controlling person thereof or a member of any firm which is such an 
underwriter, and
    (3) The benefits of such indemnification are not waived by such 
persons:

Insofar as indemnification for liabilities arising under the Securities 
Act of 1933 may be permitted to directors, officers and controlling 
persons of the registrant pursuant to the foregoing provisions, or 
otherwise, the registrant has been advised that in the opinion of the 
Securities and Exchange Commission such indemnification is against 
public policy as expressed in the Act and is, therefore, unenforceable. 
In the event that a

[[Page 451]]

claim for indemnification against such liabilities (other than the 
payment by the registrant of expenses incurred or paid by a director, 
officer or controlling person of the registrant in the successful 
defense of any action, suit or proceeding) is asserted by such director, 
officer or controlling person in connection with the securities being 
registered, the registrant will, unless in the opinion of its counsel 
the matter has been settled by controlling precedent, submit to a court 
of appropriate jurisdiction the question whether such indemnification by 
it is against public policy as expressed in the Act and will be governed 
by the final adjudication of such issue.

    (i) Include the following in a registration statement permitted by 
Rule 430A under the Securities Act of 1933 (Sec. 230.430A of this 
chapter):

The undersigned registrant hereby undertakes that:
    (1) For purposes of determining any liability under the Securities 
Act of 1933, the information omitted from the form of prospectus filed 
as part of this registration statement in reliance upon Rule 430A and 
contained in a form of prospectus filed by the registrant pursuant to 
Rule 424(b) (1) or (4) or 497(h) under the Securities Act shall be 
deemed to be part of this registration statement as of the time it was 
declared effective.
    (2) For the purpose of determining any liability under the 
Securities Act of 1933, each post-effective amendment that contains a 
form of prospectus shall be deemed to be a new registration statement 
relating to the securities offered therein, and the offering of such 
securities at that time shall be deemed to be the initial bona fide 
offering thereof.

    (j) Qualification of trust indentures under the Trust Indenture Act 
of 1939 for delayed offerings. Include the following if the registrant 
intends to rely on section 305(b)(2) of the Trust Indenture Act of 1939 
for determining the eligibility of the trustee under indentures for 
securities to be issued, offered, or sold on a delayed basis by or on 
behalf of the registrant:

The undersigned registrant hereby undertakes to file an application for 
the purpose of determining the eligibility of the trustee to act under 
subsection (a) of section 310 of the Trust Indenture Act (``Act'') in 
accordance with the rules and regulations prescribed by the Commission 
under section 305(b)(2) of the Act.

[47 FR 11401, Mar. 16, 1982, as amended at 47 FR 39803, Sept. 10, 1982; 
47 FR 54769, Dec. 6, 1982; 50 FR 18999, May 6, 1985; 52 FR 21260, June 
5, 1987; 52 FR 21939, June 10, 1987; 52 FR 30145, Aug. 13, 1987; 55 FR 
23922, June 13, 1990; 56 FR 22319, May 15, 1991; 58 FR 60306, Nov. 15, 
1993; 59 FR 21649, Apr. 26, 1994; 60 FR 26615, May 17, 1995; 64 FR 
53909, Oct. 5, 1999]



                        Subpart 229.600--Exhibits



Sec. 229.601  (Item 601) Exhibits.

    (a) Exhibits and index required. (1) Subject to Rule 411(c) 
(Sec. 230.411(c) of this chapter) under the Securities Act and Rule 12b-
32 (Sec. 240.12b-32 of this chapter) under the Exchange Act regarding 
incorporation of exhibits by reference, the exhibits required in the 
exhibit table shall be filed as indicated, as part of the registration 
statement or report. Financial Data Schedules required by paragraph 
(b)(27) of this Item shall be submitted pursuant to the provisions of 
paragraph (c) of this Item. Notwithstanding the provisions of paragraphs 
(b)(27) and (c) of this Item, registered investment companies and 
business development companies filing on forms available solely to 
investment companies shall be subject to the provisions of rule 483 
under the Securities Act of 1933 (Sec. 230.483 of this chapter), and any 
provision or instruction therein shall be controlling with respect to 
registered investment companies and business development companies 
unless otherwise specifically provided in rules or instructions 
pertaining to the submission of a specific form.
    (2) Each registration statement or report shall contain an exhibit 
index, which shall precede immediately the exhibits filed with such 
registration statement. For convenient reference, each exhibit shall be 
listed in the exhibit index according to the number assigned to it in 
the exhibit table. The exhibit index shall indicate, by handwritten, 
typed, printed, or other legible form of notation in the manually signed 
original registration statement or report, the page number in the 
sequential numbering system where such

[[Page 452]]

exhibit can be found. Where exhibits are incorporated by reference, this 
fact shall be noted in the exhibit index referred to in the preceding 
sentence. Further, the first page of the manually signed registration 
statement shall list the page in the filing where the exhibit index is 
located. For a description of each of the exhibits included in the 
exhibit table, see paragraph (b) of this section.
    (3) This Item applies only to the forms specified in the exhibit 
table. With regard to forms not listed in that table, reference shall be 
made to the appropriate form for the specific exhibit filing 
requirements applicable thereto.
    (4) If a material contract or plan of acquisition, reorganization, 
arrangement, liquidation or succession is executed or becomes effective 
during the reporting period reflected by a Form 10-Q and Form 10-QSB or 
Form 10-K and Form 10-KSB, it shall be filed as an exhibit to the Form 
10-Q and Form 10-QSB or Form 10-K and Form 10-KSB filed for the 
corresponding period. Any amendment or modification to a previously 
filed exhibit to a Form 10 and Form 10-SB, 10-K or 10-Q document shall 
be filed as an exhibit to a Form 10-Q and Form 10-QSB or Form 10-K and 
Form 10-KSB. Such amendment or modification need not be filed where such 
previously filed exhibit would not be currently required.

Instructions to Item 601: 1. If an exhibit to a registration statement 
(other than an opinion or consent), filed in preliminary form, has been 
changed only (A) to insert information as to interest, dividend or 
conversion rates, redemption or conversion prices, purchase or offering 
prices, underwriters' or dealers' commissions, names, addresses or 
participation of underwriters or similar matters, which information 
appears elsewhere in an amendment to the registration statement or a 
prospectus filed pursuant to Rule 424(b) under the Securities Act 
(Sec. 230.424(b) of this chapter), or (B) to correct typographical 
errors, insert signatures or make other similar immaterial changes, 
then, notwithstanding any contrary requirement of any rule or form, the 
registrant need not refile such exhibit as so amended. Any such 
incomplete exhibit may not, however, be incorporated by reference in any 
subsequent filing under any Act administered by the Commission.
    2. 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 a copy of which is filed. The 
Commission may at any time in its discretion require filing of copies of 
any documents so omitted.
    3. Only copies, rather than originals, need be filed of each exhibit 
required except as otherwise specifically noted.
    4. Electronic filings. Whenever an exhibit is filed in paper 
pursuant to a hardship exemption (Secs. 232.201 and 232.202 of this 
chapter), the letter ``P'' (paper) shall be placed next to the exhibit 
in the list of exhibits required by Item 601(a)(2) of this Rule. 
Whenever an electronic confirming copy of an exhibit is filed pursuant 
to a hardship exemption (Sec. 232.201 or Sec. 232.202(d) of this 
chapter), the exhibit index should specify where the confirming 
electronic copy can be located; in addition, the designation ``CE'' 
(confirming electronic) should be placed next to the listed exhibit in 
the exhibit index.

                              Exhibit Table

                    Instructions to the Exhibit Table

    1. The exhibit table indicates those documents that must be filed as 
exhibits to the respective forms listed.
    2. The ``X'' designation indicates the documents which are required 
to be filed with each form even if filed previously with another 
document, Provided, However, that such previously filed documents may be 
incorporated by reference to satisfy the filing requirements.
    3. The number used in the far left column of the table refers to the 
appropriate subsection in paragraph (b) where a description of the 
exhibit can be found. Whenever necessary, alphabetical or numerical 
subparts may be used.

[[Page 453]]

[GRAPHIC] [TIFF OMITTED] TC05OC91.035

    (b) Description of exhibits. Set forth below is a description of 
each document listed in the exhibit tables.
    (1) Underwriting agreement. Each underwriting contract or agreement 
with a principal underwriter pursuant to which the securities being 
registered are to be distributed; if the terms of such documents have 
not been determined, the proposed forms thereof. Such agreement may be 
filed as an exhibit to a report on Form 8-K (Sec. 249.308 of this 
chapter) which is incorporated by reference into a registration 
statement subsequent to its effectiveness.

[[Page 454]]

    (2) Plan of acquisition, reorganization, arrangement, liquidation or 
succession. Any material plan of acquisition, disposition, 
reorganization, readjustment, succession, liquidation or arrangement and 
any amendments thereto described in the statement or report. Schedules 
(or similar attachments) to these exhibits shall not be filed unless 
such schedules contain information which is material to an investment 
decision and which is not otherwise disclosed in the agreement or the 
disclosure document. The plan filed shall contain a list briefly 
identifying the contents of all omitted schedules, together with an 
agreement to furnish supplementally a copy of any omitted schedule to 
the Commission upon request.
    (3)(i) Articles of incorporation. The articles of incorporation of 
the registrant or instruments corresponding thereto as currently in 
effect and any amendments thereto. Whenever amendments to articles of 
incorporation are filed, a complete copy of the articles as amended 
shall be filed. Where it is impracticable for the registrant to file a 
charter amendment authorizing new securities with the appropriate state 
authority prior to the effective date of the registration statement 
registering such securities, the registrant may file as an exhibit to 
the registration statement the form of amendment to be filed with the 
state authority; and in such a case, if material changes are made after 
the copy is filed, the registrant must also file the changed copy.
    (ii) By-laws. The by-laws of the registrant or instruments 
corresponding thereto as currently in effect and any amendments thereto. 
Whenever amendments to the by-laws are filed, a complete copy of the by-
laws as amended shall be filed.
    (4) Instruments defining the rights of security holders, including 
identures. (i) All instruments defining the rights of holders of the 
equity or debt securities being registered including, where applicable, 
the relevant portion of the articles of incorporation or by-laws of the 
registrant.
    (ii) Except as set forth in paragraph (b)(4)(iii) of this section 
for filings on Forms S-1, S-4, S-11, S-14 and F-4 under the Securities 
Act (Secs. 239.1, and 25, 18, 23 and 34 of this chapter) and Forms 10 
and Form 10-SB and 10-K and Form 10-KSB (Secs. 249.210 and 310 of this 
chapter) under the Exchange Act all instruments defining the rights of 
holders of long-term debt of the registrant and its consolidated 
subsidiaries and for any of its unconsolidated subsidiaries for which 
financial statements are required to be filed.
    (iii) Where the instrument defines the rights of holders of long-
term debt of the registrant and its consolidated subsidiaries and for 
any of its unconsolidated subsidiaries for which financial statements 
are required to be filed, there need not be filed:
    (A) Any instrument with respect to long-term debt not being 
registered if the total amount of securities authorized thereunder does 
not exceed 10 percent of the total assets of the registrant and its 
subsidiaries on a consolidated basis and if there is filed an agreement 
to furnish a copy of such agreement to the Commission upon request;
    (B) Any instrument with respect to any class of securities if 
appropriate steps to assure the redemption or retirement of such class 
will be taken prior to or upon delivery by the registrant of the 
securities being registered; or
    (C) Copies of instruments evidencing scrip certificates for 
fractions of shares.
    (iv) If any of the securities being registered are, or will be, 
issued under an indenture to be qualified under the Trust Indenture Act, 
the copy of such indenture which is filed as an exhibit shall include or 
be accompanied by:
    (A) A reasonably itemized and informative table of contents; and
    (B) A cross-reference sheet showing the location in the indenture of 
the provisions inserted pursuant to sections 310 through 318(a) 
inclusive of the Trust Indenture Act of 1939.
    (v) With respect to Forms 8-K and 10-Q and 10-QSB under the Exchange 
Act which are filed and which disclose, in the text of the Form 10-Q and 
Form 10-QSB, the interim financial statements, or the footnotes thereto 
the creation of a new class of securities or indebtedness or the 
modification of existing rights of security holders, file all 
instruments defining the rights of holders of these securities or 
indebtedness. However, there need not be filed any instrument with 
respect to long-term debt not being registered which meets the exclusion 
set forth above in paragraph (b)(4)(iii)(A).

Instruction 1 to paragraph (b)(4): There need not be filed any 
instrument which defines the rights of participants (not as security 
holders) pursuant to an employee benefit plan.
Instruction 2 to paragraph (b)(4) (for electronic filings): If the 
instrument defining the rights of security holders is in the form of a 
certificate, the text appearing on the certificate shall be reproduced 
in an electronic filing together with a description of any other graphic 
and image material appearing on the certificate, as provided in Rule 304 
of Regulation S-T (Sec. 232.304 of this chapter).

    (5) Opinion re legality. (i) An opinion of counsel as to the 
legality of the securities being registered, indicating whether they 
will, when sold, be legally issued, fully paid and non-assessable, and, 
if debt securities, whether they will be binding obligations of the 
registrant.
    (ii) If the securities being registered are issued under a plan and 
the plan is subject to the requirements of ERISA furnish either:

[[Page 455]]

    (A) An opinion of counsel which confirms compliance of the 
provisions of the written documents constituting the plan with the 
requirements of ERISA pertaining to such provisions; or
    (B) A copy of the Internal Revenue Service determination letter that 
the plan is qualified under section 401 of the Internal Revenue Code; or
    (iii) If the securities being registered are issued under a plan 
which is subject to the requirements of ERISA and the plan has been 
amended subsequent to the filing of paragraph (b)(5)(ii) (A) or (B) 
above, furnish either:
    (A) An opinion of counsel which confirms compliance of the amended 
provisions of the plan with the requirements of ERISA pertaining to such 
provisions; or
    (B) A copy of the Internal Revenue Service determination letter that 
the amended plan is qualified under section 401 of the Internal Revenue 
Code.

    Note: Attention is directed to Item 8 of Form S-8 for exemptions to 
this exhibit requirement applicable to that Form.

    (6)-(7) [Reserved]
    (8) Opinion re tax matters. For filings on Form S-11 under the 
Securities Act (Sec. 239.18) or those to which Securities Act Industry 
Guide 5 applies, an opinion of counsel or of an independent public or 
certified public accountant or, in lieu thereof, a revenue ruling from 
the Internal Revenue Service, supporting the tax matters and 
consequences to the shareholders as described in the filing when such 
tax matters are material to the transaction for which the registration 
statement is being filed. This exhibit otherwise need only be filed with 
the other applicable registration forms where the tax consequences are 
material to an investor and a representation as to tax consequences is 
set forth in the filing. If a tax opinion is set forth in full in the 
filing, an indication that such is the case may be made in lieu of 
filing the otherwise required exhibit. Such tax opinions may be 
conditioned or may be qualified, so long as such conditions and 
qualifications are adequately described in the filing.
    (9) Voting trust agreement. Any voting trust agreements and 
amendments thereto.
    (10) Material contracts. (i) Every contract not made in the ordinary 
course of business which is material to the registrant and is to be 
performed in whole or in part at or after the filing of the registration 
statement or report or was entered into not more than two years before 
such filing. Only contracts need be filed as to which the registrant or 
subsidiary of the registrant is a party or has succeeded to a party by 
assumption or assignment or in which the registrant or such subsidiary 
has a beneficial interest.
    (ii) If the contract is such as ordinarily accompanies the kind of 
business conducted by the registrant and its subsidiaries, it will be 
deemed to have been made in the ordinary course of business and need not 
be filed unless it falls within one or more of the following categories, 
in which case it shall be filed except where immaterial in amount or 
significance:
    (A) Any contract to which directors, officers, promoters, voting 
trustees, security holders named in the registration statement or 
report, or underwriters are parties other than contracts involving only 
the purchase or sale of current assets having a determinable market 
price, at such market price;
    (B) Any contract upon which the registrant's business is 
substantially dependent, as in the case of continuing contracts to sell 
the major part of registrant's products or services or to purchase the 
major part of registrant's requirements of goods, services or raw 
materials or any franchise or license or other agreement to use a 
patent, formula, trade secret, process or trade name upon which 
registrant's business depends to a material extent;
    (C) Any contract calling for the acquisition or sale of any 
property, plant or equipment for a consideration exceeding 15 percent of 
such fixed assets of the registrant on a consolidated basis; or
    (D) Any material lease under which a part of the property described 
in the registration statement or report is held by the registrant.
    (iii)(A) Any management contract or any compensatory plan, contract 
or arrangement, including but not limited to plans relating to options, 
warrants or rights, pension, retirement or deferred compensation or 
bonus, incentive or profit sharing (or if not set forth in any formal 
document, a written description thereof) in which any director or any of 
the named executive officers of the registrant, as defined by Item 
402(a)(3) (Sec. 229.402(a)(3)), participates shall be deemed material 
and shall be filed; and any other management contract or any other 
compensatory plan, contract, or arrangement in which any other executive 
officer of the registrant participates shall be filed unless immaterial 
in amount or significance.
    (B) Any compensatory plan, contract or arrangement adopted without 
the approval of security holders pursuant to which equity may be 
awarded, including, but not limited to, options, warrants or rights (or 
if not set forth in any formal document, a written description thereof), 
in which any employee (whether or not an executive officer of the 
registrant) participates shall be filed unless immaterial in amount or 
significance. A compensation plan assumed by a registrant in connection 
with a merger, consolidation or other acquisition transaction pursuant 
to which the registrant may make further grants or awards of its equity 
securities

[[Page 456]]

shall be considered a compensation plan of the registrant for purposes 
of the preceding sentence.
    (C) Notwithstanding paragraph (b)(10)(iii)(A) above, the following 
management contracts or compensatory plans, contracts or arrangements 
need not be filed:
    (1) Ordinary purchase and sales agency agreements.
    (2) Agreements with managers of stores in a chain organization or 
similar organization.
    (3) Contracts providing for labor or salesmen's bonuses or payments 
to a class of security holders, as such.
    (4) Any compensatory plan, contract or arrangement which pursuant to 
its terms is available to employees, officers or directors generally and 
which in operation provides for the same method of allocation of 
benefits between management and nonmanagement participants.
    (5) Any compensatory plan, contract or arrangement if the registrant 
is a foreign private issuer that furnishes compensatory information on 
an aggregate basis as permitted by General Instruction 1 to Item 402 
(Sec. 229.402) or by Item 6.B of Form 20-F (Sec. 249.220f of this 
chapter).
    (6) Any compensatory plan, contract, or arrangement if the 
registrant is a wholly owned subsidiary of a company that has a class of 
securities registered pursuant to section 12 or files reports pursuant 
to section 15(d) of the Exchange Act and is filing a report on Form 10-K 
and Form 10-KSB or registering debt instruments or preferred stock which 
are not voting securities on Form S-2.

Instruction 1 to paragraph (b)(10): With the exception of management 
contracts, in order to comply with paragraph (iii) above, registrants 
need only file copies of the various compensatory plans and need not 
file each individual director's or executive officer's personal 
agreement under the plans unless there are particular provisions in such 
personal agreements whose disclosure in an exhibit is necessary to an 
investor's understanding of that individual's compensation under the 
plan.
    Instruction 2 to paragraph (b)(10): If a material contract is 
executed or becomes effective during the reporting period reflected by a 
Form 10-Q or Form 10-K, it shall be filed as an exhibit to the Form 10-Q 
or Form 10-K filed for the corresponding period. See paragraph (a)(4) of 
this Item. With respect to quarterly reports on Form 10-Q, only those 
contracts executed or becoming effective during the most recent period 
reflected in the report shall be filed.

    (11) Statement re computation of per share earnings. A statement 
setting forth in reasonable detail the computation of per share 
earnings, unless the computation can be clearly determined from the 
material contained in the registration statement or report. The 
information with respect to the computation of per share earnings on 
both primary and fully diluted basis, presented by exhibit or otherwise, 
must be furnished even though the amounts of per share earnings on the 
fully diluted bases are not required to be presented in the income 
statement under the provisions of Accounting Principles Board Opinion 
No. 15. That Opinion provides that any reduction of less than 3% need 
not be considered as dilution (see footnote to paragraph 14 of the 
Opinion) and that a computation on the fully diluted basis which results 
in improvement of earnings per share not be taken into account (see 
paragraph 40 of the Opinion).
    (12) Statements re computation of ratios. A statement setting forth 
in reasonable detail the computation of any ratio of earnings to fixed 
charges, any ratio of earnings to combined fixed charges and preferred 
stock dividends or any other ratios which appear in the registration 
statement or report. See Item 503(d) of Regulation S-K 
(Sec. 229.503(d)).
    (13) Annual report to security holders, Form 10-Q and Form 10-QSB or 
quarterly report to security holders. (i) The registrant's annual report 
to security holders for its last fiscal year, its Form 10-Q and Form 10-
QSB (if specifically incorporated by reference in the prospectus) or its 
quarterly report to security holders, if all or a portion thereof is 
incorporated by reference in the filing. Such report, except for those 
portions thereof which are expressly incorporated by reference in the 
filing, is to be furnished for the information of the Commission and is 
not to be deemed ``filed'' as part of the filing. If the financial 
statements in the report have been incorporated by reference in the 
filing, the accountant's certificate shall be manually signed in one 
copy. See Rule 411(b) (Sec. 230.411(b) of this chapter).
    (ii) Electronic filings. If all, or any portion, of the annual or 
quarterly report to security holders is incorporated by reference into 
any electronic filing, all, or such portion of the annual or quarterly 
report to security holders so incorporated, shall be filed in electronic 
format as an exhibit to the filing.
    (14) Code of ethics. Any code of ethics, or amendment thereto, that 
is the subject of the disclosure required by Item 406 of Regulation S-K 
(Sec. 229.406) or Item 10 of Form 8-K (Sec. 249.308 of this chapter), to 
the extent that the registrant intends to satisfy the Item 406 or Item 
10 requirements through filing of an exhibit.
    (15) Letter re unaudited interim financial information. A letter, 
where applicable, from the independent accountant which acknowledges 
awareness of the use in a registration statement of a report on 
unaudited interim financial information which pursuant to Rule 436(c) 
under the Securities Act

[[Page 457]]

(Sec. 230.436(c) of this chapter) is not considered a part of a 
registration statement prepared or certified by an accountant or a 
report prepared or certified by an accountant within the meaning of 
sections 7 and 11 of that Act. Such letter may be filed with the 
registration statement, an amendment thereto, or a report on Form 10-Q 
and Form 10-QSB which is incorporated by reference into the registration 
statement.
    (16) Letter re change in certifying accountant. A letter from the 
registrant's former independent accountant regarding its concurrence or 
disagreement with the statements made by the registrant in the current 
report concerning the resignation or dismissal as the registrant's 
principal accountant.
    (17) Letter re director resignation. Any letter from a former 
director which sets forth a description of a disagreement with the 
registrant that led to the director's resignation or refusal to stand 
for re-election and which requests that the matter be disclosed.
    (18) Letter re change in accounting principles. Unless previously 
filed, a letter from the registrant's independent accountant indicating 
whether any change in accounting principles or practices followed by the 
registrant, or any change in the method of applying any such accounting 
principles or practices, which affected the financial statements being 
filed with the Commission in the report or which is reasonably certain 
to affect the financial statements of future fiscal years is to an 
alternative principle which in his judgment is preferable under the 
circumstances. No such letter need be filed when such change is made in 
response to a standard adopted by the Financial Accounting Standards 
Board that creates a new accounting principle, that expresses a 
preference for an accounting principle, or that rejects a specific 
accounting principle.
    (19) Report furnished to security holders. If the registrant makes 
available to its stockholders or otherwise publishes, within the period 
prescribed for filing the report, a document or statement containing 
information meeting some or all of the requirements of Part I of Form 
10-Q and Form 10-QSB, the information called for may be incorporated by 
reference to such published document or statement provided copies 
thereof are included as an exhibit to the registration statement or to 
Part I of the Form 10-Q and Form 10-QSB report.
    (20) Other documents or statements to security holders. If the 
registrant makes available to its stockholders or otherwise publishes, 
within the period prescribed for filing the report, a document or 
statement containing information meeting some or all of the requirements 
of this form the information called for may be incorporated by reference 
to such published document or statement provided copies thereof are 
filed as an exhibit to the report on this form.
    (21) Subsidiaries of the registrant. (i) List all subsidiaries of 
the registrant, the state or other jurisdiction of incorporation or 
organization of each, and the names under which such subsidiaries do 
business. This list may be incorporated by reference from a document 
which includes a complete and accurate list.
    (ii) The names of particular subsidiaries may be omitted if the 
unnamed subsidiaries, considered in the aggregate as a single 
subsidiary, would not constitute a significant subsidiary as of the end 
of the year covered by this report. (See the definition of ``significant 
subsidiary'' in Rule 1-02(w) (17 CFR 210.1-02(w)) of Regulation S-X.) 
The names of consolidated wholly-owned multiple subsidiaries carrying on 
the same line of business, such as chain stores or small loan companies, 
may be omitted, provided the name of the immediate parent, the line of 
business, the number of omitted subsidiaries operating in the United 
States and the number operating in foreign countries are given. This 
instruction shall not apply, however, to banks, insurance companies, 
savings and loan associations or to any subsidiary subject to regulation 
by another Federal agency.
    (22) Published report regarding matters submitted to vote of 
security holders. Published reports containing all of the information 
called for by Item 4 of Part II of Form 10-Q and Form 10-QSB or Item 4 
of Part I of Form 10-K and Form 10-KSB which is referred to therein in 
lieu of providing disclosure in Form 10-Q and Form 10-QSB or 10-K and 
Form 10-KSB, which are required to be filed as exhibits by Rule 12b-
23(a)(3) under the Exchange Act (Sec. 240.12b-23(a)(3) of this chapter).
    (23) Consents of experts and counsel--(i) Securities Act filings. 
All written consents required to be filed shall be dated and manually 
signed. Where the consent of an expert or counsel is contained in his 
report or opinion or elsewhere in the registration statement or document 
filed therewith, a reference shall be made in the index to the report, 
the part of the registration statement or document or opinion, 
containing the consent.
    (ii) Exchange Act reports. Where the filing of a written consent is 
required with respect to material incorporated by reference in a 
previously filed registration statement under the Securities Act, such 
consent may be filed as exhibit to the material incorporated by 
reference. Such consents shall be dated and manually signed.
    (24) Power of attorney. If any name is signed to the registration 
statement or report pursuant to a power of attorney, manually signed 
copies of such power of attorney shall be filed. Where the power of 
attorney is contained elsewhere in the registration statement or 
documents filed therewith a reference shall be made in the index to the 
part of the registration statement or document

[[Page 458]]

containing such power of attorney. In addition, if the name of any 
officer signing on behalf of the registrant is signed pursuant to a 
power of attorney, certified copies of a resolution of the registrant's 
board of directors authorizing such signature shall also be filed. A 
power of attorney that is filed with the Commission shall relate to a 
specific filing or an amendment thereto, provided, however, that a power 
of attorney relating to a registration statement under the Securities 
Act or an amendment thereto also may relate to any registration 
statement for the same offering that is to be effective upon filing 
pursuant to Rule 462(b) under the Securities Act (Sec. 230.462(b) of 
this chapter). A power of attorney that confers general authority shall 
not be filed with the Commission.
    (25) Statement of eligibility of trustee. (i) A statement of 
eligibility and qualification of each person designated to act as 
trustee under an indenture to be qualified under the Trust Indenture Act 
of 1939. Such statement of eligibility shall be bound separately from 
the other exhibits.
    (ii) Electronic filings. The requirement to bind separately the 
statement of eligibility and qualification of each person designated to 
act as a trustee under the Trust Indenture Act of 1939 from other 
exhibits shall not apply to statements submitted in electronic format. 
Rather, such statements must be submitted as exhibits in the same 
electronic submission as the registration statement to which they 
relate, or in an amendment thereto, except that electronic filers that 
rely on Trust Indenture Act Section 305(b)(2) for determining the 
eligibility of the trustee under indentures for securities to be issued, 
offered or sold on a delayed basis by or on behalf of the registrant 
shall file such statements separately in the manner prescribed by 
Sec. 260.5b-1 through Sec. 260.5b-3 of this chapter and by the EDGAR 
Filer Manual.
    (26) Invitations for competitive bids. If the registration statement 
covers securities to be offered at competitive bidding, any form of 
communication which is an invitation for competitive bid which will be 
sent or given to any person shall be filed.
    (27) through (98) [Reserved]
    (99) Additional exhibits. (i) Any additional exhibits which the 
registrant may wish to file shall be so marked as to indicate clearly 
the subject matters to which they refer.
    (ii) Any document (except for an exhibit) or part thereof which is 
incorporated by reference in the filing and is not otherwise required to 
be filed by this Item or is not a Commission filed document incorporated 
by reference in a Securities Act registration statement.
    (iii) If pursuant to Section 11(a) of the Securities Act (15 U.S.C. 
77k(a)) an issuer makes generally available to its security holders an 
earnings statement covering a period of at least 12 months beginning 
after the effective date of the registration statement, and if such 
earnings statement is made available by ``other methods'' than those 
specified in paragraphs (a) or (b) of Sec. 230.158 of this chapter, it 
must be filed as an exhibit to the Form 10-Q or the Form 10-K, as 
appropriate, covering the period in which the earnings statement was 
released.

[47 FR 11401, Mar. 16, 1982]

    Editorial Notes: 1. For Federal Register citations affecting 
Sec. 229.601, see the List of CFR Sections Affected, which appears in 
the Finding Aids section of the printed volume and on GPO Access.

    2. At 65 FR 24799, Apr. 27, 2000, in Sec. thnsp;229.601, paragraph 
(a), the table was amended by removing the entries for exhibits (27) and 
(28) and footnote 5, however, this is a photographed table, thus the 
entries could not be removed.

    3. At 68 FR 5128, Jan. 31, 2003, Sec. 229.601 was amended by 
removing the ``reserved'' designation for exhibit (14) and adding ``Code 
of ethics'' in its place in the Exhibit Table, removing ``N/A'' 
corresponding to exhibit (14) under all captions in the Exhibit Table 
and adding an ``X'' corresponding to exhibit (14) under the caption 
``Exchange Act Forms'', ``8-K'' and ``10-K'' in the Exhibit Table, 
however, this is a photographed table, thus the amendments could not be 
incorporated.



                     Subpart 229.700--Miscellaneous



Sec. 229.701  (Item 701) Recent sales of unregistered securities; use of proceeds from registered securities.

    Furnish the following information as to all securities of the 
registrant sold by the registrant within the past three years which were 
not registered under the Securities Act. Include sales of reacquired 
securities, as well as new issues, securities issued in exchange for 
property, services, or other securities, and new securities resulting 
from the modification of outstanding securities.
    (a) Securities sold. Give the date of sale and the title and amount 
of securities sold.
    (b) Underwriters and other purchasers. Give the names of the 
principal underwriters, if any. As to any such securities not publicly 
offered, name the persons or identify the class of persons to whom the 
securities were sold.
    (c) Consideration. As to securities sold for cash, state the 
aggregate offering price and the aggregate underwriting discounts or 
commissions. As to any securities sold otherwise than for cash,

[[Page 459]]

state the nature of the transaction and the nature and aggregate amount 
of consideration received by the registrant.
    (d) Exemption from registration claimed. Indicate the section of the 
Securities Act or the rule of the Commission under which exemption from 
registration was claimed and state briefly the facts relied upon to make 
the exemption available.
    (e) Terms of conversion or exercise. If the information called for 
by this paragraph (e) is being presented on Form 8-K, Form 10-QSB, Form 
10-Q, Form 10-KSB or Form 10-K (Secs. 249.308, 249.308b, 249.308a, 
249.310b or 249.310) under the Exchange Act, and where the securities 
sold by the registrant are convertible or exchangeable into equity 
securities, or are warrants or options representing equity securities, 
disclose the terms of conversion or exercise of the securities.
    (f) Use of proceeds. As required by Sec. 230.463 of this chapter, 
following the effective date of the first registration statement filed 
under the Securities Act by an issuer, the issuer or successor issuer 
shall report the use of proceeds on its first periodic report filed 
pursuant to sections 13(a) and 15(d) of the Exchange Act (15 U.S.C. 
78m(a) and 78o(d)) after effectiveness of its Securities Act 
registration statement, and thereafter on each of its subsequent 
periodic reports filed pursuant to sections 13(a) and 15(d) of the 
Exchange Act through the later of disclosure of the application of all 
the offering proceeds, or disclosure of the termination of the offering. 
If a report of the use of proceeds is required with respect to the first 
effective registration statement of the predecessor issuer, the 
successor issuer shall provide such a report. The information provided 
pursuant to paragraphs (f)(2) through (f)(4) of this Item need only be 
provided with respect to the first periodic report filed pursuant to 
sections 13(a) and 15(d) of the Exchange Act after effectiveness of the 
registration statement filed under the Securities Act. Subsequent 
periodic reports filed pursuant to sections 13(a) and 15(d) of the 
Exchange Act need only provide the information required in paragraphs 
(f)(2) through (f)(4) of this Item if any of such required information 
has changed since the last periodic report filed. In disclosing the use 
of proceeds in the first periodic report filed pursuant to the Exchange 
Act, the issuer or successor issuer should include the following 
information:
    (1) The effective date of the Securities Act registration statement 
for which the use of proceeds information is being disclosed and the 
Commission file number assigned to the registration statement;
    (2) If the offering has commenced, the offering date, and if the 
offering has not commenced, an explanation why it has not;
    (3) If the offering terminated before any securities were sold, an 
explanation for such termination; and
    (4) If the offering did not terminate before any securities were 
sold, disclose:
    (i) Whether the offering has terminated and, if so, whether it 
terminated before the sale of all securities registered;
    (ii) The name(s) of the managing underwriter(s), if any;
    (iii) The title of each class of securities registered and, where a 
class of convertible securities is being registered, the title of any 
class of securities into which such securities may be converted;
    (iv) For each class of securities (other than a class of securities 
into which a class of convertible securities registered may be converted 
without additional payment to the issuer) the following information, 
provided for both the account of the issuer and the account(s) of any 
selling security holder(s): the amount registered, the aggregate price 
of the offering amount registered, the amount sold and the aggregate 
offering price of the amount sold to date;
    (v) From the effective date of the Securities Act registration 
statement to the ending date of the reporting period, the amount of 
expenses incurred for the issuer's account in connection with the 
issuance and distribution of the securities registered for underwriting 
discounts and commissions, finders' fees, expenses paid to or for 
underwriters, other expenses and total expenses. Indicate if a 
reasonable estimate for the amount of expenses incurred is provided 
instead of the actual

[[Page 460]]

amount of expense. Indicate whether such payments were:
    (A) Direct or indirect payments to directors, officers, general 
partners of the issuer or their associates; to persons owning ten (10) 
percent or more of any class of equity securities of the issuer; and to 
affiliates of the issuer; or
    (B) Direct or indirect payments to others;
    (vi) The net offering proceeds to the issuer after deducting the 
total expenses described in paragraph (f)(4)(v) of this Item;
    (vii) From the effective date of the Securities Act registration 
statement to the ending date of the reporting period, the amount of net 
offering proceeds to the issuer used for construction of plant, building 
and facilities; purchase and installation of machinery and equipment; 
purchases of real estate; acquisition of other business(es); repayment 
of indebtedness; working capital; temporary investments (which should be 
specified); and any other purposes for which at least five (5) percent 
of the issuer's total offering proceeds or $100,000 (whichever is less) 
has been used (which should be specified). Indicate if a reasonable 
estimate for the amount of net offering proceeds applied is provided 
instead of the actual amount of net offering proceeds used. Indicate 
whether such payments were:
    (A) Direct or indirect payments to directors, officers, general 
partners of the issuer or their associates; to persons owning ten (10) 
percent or more of any class of equity securities of the issuer; and to 
affiliates of the issuer; or
    (B) Direct or indirect payments to others; and
    (viii) If the use of proceeds in paragraph (f)(4)(vii) of this Item 
represents a material change in the use of proceeds described in the 
prospectus, the issuer should describe briefly the material change.
Instructions. 1. Information required by this Item 701 need not be set 
forth as to notes, drafts, bills of exchange, or bankers' acceptances 
which mature not later than one year from the date of issuance.
    2. If the sales were made in a series of transactions, the 
information may be given by such totals and periods as will reasonably 
convey the information required.

[47 FR 11401, Mar. 16, 1982, as amended at 61 FR 54508, Oct. 18, 1996; 
62 FR 39762, July 24, 1997]



Sec. 229.702  (Item 702) Indemnification of directors and officers.

    State the general effect of any statute, charter provisions, by-
laws, contract or other arrangements under which any controlling 
persons, director or officer of the registrant is insured or indemnified 
in any manner against liability which he may incur in his capacity as 
such.



                Subpart 229.800--List of Industry Guides



Sec. 229.801  Securities Act industry guides.

    (a) [Reserved]
    (b) Guide 2. Disclosure of oil and gas operations.
    (c) Guide 3. Statistical disclosure by bank holding companies.
    (d) Guide 4. Prospectuses relating to interests in oil and gas 
programs.
    (e) Guide 5. Preparation of registration statements relating to 
interests in real estate limited partnerships.
    (f) Guide 6. Disclosures concerning unpaid claims and claim 
adjustment expenses of property-casualty insurance underwriters.
    (g) Guide 7. Description of Property by Issuers Engaged or To Be 
Engaged in Significant Mining Operations.

(Secs. 6, 7, 8, 10, 19(a) and Schedule A (25) and (26) (15 U.S.C. 77f, 
77g, 77h, 77j, 77s(a), 77aa (25) and (26), Securities Act of 1933; secs. 
12, 13, 14, 15(d) and 23(a) (15 U.S.C. 78(l), 78m, 78n, 78o(d), 78w, 
Securities Exchange Act of 1934)

[47 FR 11401, Mar. 16, 1982, and 49 FR 47600, Dec. 6, 1984, as amended 
at 57 FR 36466, Aug. 13, 1992; 61 FR 30401, June 14, 1996]



Sec. 229.802  Exchange Act industry guides.

    (a) [Reserved]
    (b) Guide 2. Disclosure of oil and gas operations.
    (c) Guide 3. Statistical disclosure by bank holding companies.
    (d) Guide 4. Disclosures concerning unpaid claims and claim 
adjustment expenses of property-casualty underwriters.

[[Page 461]]

    (e)-(f) [Reserved]
    (g) Guide 7. Description of Property by Issuers Engaged or To Be 
Engaged in Significant Mining Operations.

(Secs. 6, 7, 8, 10, 19(a) and Schedule A (25) and (26) (15 U.S.C. 77f, 
77g, 77h, 77j, 77s(a), 77aa (25) and (26), Securities Act of 1933; secs. 
12, 13, 14, 15(d) and 23(a) (15 U.S.C. 78(l), 78m, 78n, 78o(d), 78w, 
Securities Exchange Act of 1934)

[47 FR 11401, Mar. 16, 1982, as amended at 49 FR 47600, Dec. 6, 1984; 57 
FR 36468, Aug. 13, 1992; 61 FR 30401, June 14, 1996]



                  Subpart 229.900--Roll-Up Transactions

    Source: 56 FR 57247, Nov. 8, 1991, unless otherwise noted.



Sec. 229.901  (Item 901) Definitions.

    For the purposes of this subpart 229.900:
    (a) General partner means the person or persons responsible under 
state law for managing or directing the management of the business and 
affairs of a partnership that is the subject of a roll-up transaction 
including, but not limited to, the general partner(s), board of 
directors, board of trustees, or other person(s) having a fiduciary duty 
to such partnership.
    (b)(1) Partnership means any:
    (i) Finite-life limited partnership; or
    (ii) Other finite-life entity.
    (2)(i) Except as provided in paragraph (b)(2)(ii) of this Item 
(Sec. 229.901(b)(2)(ii)), a limited partnership or other entity is 
``finite-life'' if:
    (A) It operates as a conduit vehicle for investors to participate in 
the ownership of assets for a limited period of time; and
    (B) It has as a policy or purpose distributing to investors proceeds 
from the sale, financing or refinancing of assets or cash from 
operations, rather than reinvesting such proceeds or cash in the 
business (whether for the term of the entity or after an initial period 
of time following commencement of operations).
    (ii) A real estate investment trust as defined in I.R.C. section 856 
is not finite-life solely because of the distribution to investors of 
net income as provided by the I.R.C. if its policies or purposes do not 
include the distribution to investors of proceeds from the sale, 
financing or refinancing of assets, rather than the reinvestment of such 
proceeds in the business.
    (3) Partnership does not include any entity 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)(1) Except as provided in paragraph (c)(2) or (c)(3) of this 
Item, (Sec. 229.901(c)(2) or (c)(3)) roll-up transaction means a 
transaction involving the combination or reorganization of one or more 
partnerships, directly or indirectly, in which some or all of the 
investors in any of such partnerships will receive new securities, or 
securities in another entity.
    (2) Notwithstanding paragraph (c)(1) of this Item, 
(Sec. 229.901(c)(1)) roll-up transaction shall not include:
    (i) A transaction wherein the interests of all of the investors in 
each of the partnerships are repurchased, recalled, or exchanged in 
accordance with the terms of the preexisting partnership agreement for 
securities in an operating company specifically identified at the time 
of the formation of the original partnership;
    (ii) A transaction in which the securities to be issued or exchanged 
are not required to be and are not registered under the Securities Act 
of 1933 (15 U.S.C. 77a et seq.);
    (iii) A transaction that involves only issuers that are not required 
to register or report under Section 12 of the Securities Exchange Act of 
1934 (15 U.S.C. 78l), both before and after the transaction;
    (iv) A transaction that involves the combination or reorganization 
of one or more partnerships in which a non-affiliated party succeeds to 
the interests of a general partner or sponsor, if:
    (A) Such action is approved by not less than 66\2/3\% of the 
outstanding units of each of the participating partnerships; and
    (B) As a result of the transaction, the existing general partners 
will receive only compensation to which they are entitled as expressly 
provided for in the preexisting partnership agreements;
    (v) A transaction in which the securities offered to investors are 
securities

[[Page 462]]

of another entity that are reported under a transaction reporting plan 
declared effective before December 17, 1993 by the Commission under 
Section 11A of the Securities Exchange Act of 1934 (15 U.S.C. 78k-1), 
if:
    (A) Such other entity was formed, and such class of securities was 
reported and regularly traded, not less than 12 months before the date 
on which soliciting material is mailed to investors; and
    (B) The securities of that entity issued to investors in the 
transaction do not exceed 20% of the total outstanding securities of the 
entity, exclusive of any securities of such class held by or for the 
account of the entity or a subsidiary of the entity; and
    (C) For purposes of paragraph (c)(2)(v) of this Item 
(Sec. 229.901(c)(2)(v)), a regularly traded security means any security 
with a minimum closing price of $2.00 or more for a majority of the 
business days during the preceding three-month period and a six-month 
minimum average daily trading volume of 1,000 shares;
    (vi) A transaction in which all of the investors' partnership 
securities are reported under a transaction reporting plan declared 
effective before December 17, 1993 by the Commission under Section 11A 
of the Securities Exchange Act of 1934 (15 U.S.C. 78k-1) and such 
investors receive new securities or securities in another entity that 
are reported under a transaction reporting plan declared effective 
before December 17, 1993 by the Commission under Section 11A of the 
Securities Exchange Act of 1934 (15 U.S.C. 78k-1), except that, for 
purposes of this paragraph, securities that are reported under a 
transaction reporting plan declared effective before December 17, 1993 
by the Commission under Section 11A of the Securities Exchange Act of 
1934 shall not include securities listed on the American Stock 
Exchange's Emerging Company Marketplace;
    (vii) A transaction in which the investors in any of the 
partnerships involved in the transaction are not subject to a 
significant adverse change with respect to voting rights, the terms of 
existence of the entity, management compensation or investment 
objectives; or
    (viii) A transaction in which all investors are provided an option 
to receive or retain a security under substantially the same terms and 
conditions as the original issue.
    (3) The Commission, upon written request or upon its own motion, may 
exempt by rule or order any security or class of securities, any 
transaction or class of transactions, or any person or class of persons, 
in whole or in part, conditionally or unconditionally, from the 
definition of roll-up transaction or the requirements imposed on roll-up 
transactions by Items 902-915 of Regulation S-K (Secs. 229.902-229.915), 
if it finds such action to be consistent with the public interest and 
the protection of investors.
    (d) Sponsor means the person proposing the roll-up transaction.
    (e) Successor means the surviving entity after completion of the 
roll-up transaction or the entity whose securities are being offered or 
sold to, or acquired by, limited partners of the partnerships or the 
limited partnerships to be combined or reorganized.

Instruction to Item 901. If a transaction is a roll-up transaction as 
defined in Item 901(c) of this subpart (Sec. 229.901(c)), the 
requirements of this subpart apply to each entity proposed to be 
included in the roll-up transaction, whether or not the entity is a 
``partnership'' as defined in Item 901(b) of this subpart 
(Sec. 229.901(b)).

[56 FR 57247, Nov. 8, 1991, as amended at 59 FR 63682, Dec. 8, 1994]



Sec. 229.902  (Item 902) Individual partnership supplements.

    (a) If two or more entities are proposed to be included in the roll-
up transaction, provide the information specified in this Item 
(Sec. 229.902) in a separate supplement to the disclosure document for 
each entity.
    (b) The separate supplement required by paragraph (a) of this Item 
(Sec. 229.902) shall be filed as part of the registration statement, 
shall be delivered with the prospectus to investors in the partnership 
covered thereby, and shall include:
    (1) A statement in the forepart of the supplement to the effect 
that:
    (i) Supplements have been prepared for each partnership;

[[Page 463]]

    (ii) The effects of the roll-up transaction may be different for 
investors in the various partnerships; and
    (iii) Upon receipt of a written request by an investor or his 
representative who has been so designated in writing, a copy of any 
supplement will be transmitted promptly, without charge, by the general 
partner or sponsor.

This statement must include the name and address of the person to whom 
investors should make their request.
    (2) A brief description of each material risk and effect of the 
roll-up transaction, including, but not limited to, federal income tax 
consequences, for investors in the partnership, with appropriate cross 
references to the discussions of the risks, effects and tax consequences 
of the roll-up transaction required in the principal disclosure document 
pursuant to Items 904 and 915 of this subpart (Sec. 229.904 and 
Sec. 229.915). Such discussion shall address the effect of the roll-up 
transaction on the partnership's financial condition and results of 
operations.
    (3) A statement concerning whether the general partner reasonably 
believes that the roll-up transaction is fair or unfair to investors in 
the partnership, together with a brief discussion of the bases for such 
belief, with appropriate cross references to the discussion of the 
fairness of the roll-up transaction required in the principal disclosure 
document pursuant to Item 910 of this subpart (Sec. 229.910). If there 
are material differences between the fairness analysis for the 
partnership and for the other partnerships, such differences shall be 
described briefly in the supplement.
    (4) A brief, narrative description of the method of calculating the 
value of the partnership and allocating interests in the successor to 
the partnership, and a table showing such calculation and allocation. 
Such table shall include the following information (or other information 
of a comparable character necessary to a thorough understanding of the 
calculation and allocation):
    (i) The appraised value of each separately appraised significant 
asset (as defined in Item 911(c)(5) of this subpart (Sec. 229.911(c)(5)) 
held by the partnership, or, if appraisals have not been obtained for 
each significant asset, the value assigned for purposes of the valuation 
of the partnership to each significant asset for which an appraisal has 
not been obtained;
    (ii) The dollar amount of any mortgages or other similar liabilities 
to which each of such assets is subject;
    (iii) Cash and cash equivalent assets held by the partnership;
    (iv) Other assets held by the partnership;
    (v) Other liabilities of the partnership;
    (vi) The value assigned to the partnership;
    (vii) The value assigned to the partnership per interest held by 
investors in the partnership (on an equivalent interest basis, such as 
per $1,000 original investment);
    (viii) The aggregate number of interests in the successor to be 
allocated to the partnership and the percentage of the total interests 
of the successor;
    (ix) The number of interests in the successor to be allocated to 
investors in the partnership for each interest held by such investors 
(on an equivalent interest basis, such as per $1,000 original 
investment); and
    (x) The value assigned to the general partner's interest in the 
partnership, and the number of interests in the successor or other 
consideration to be allocated in the roll-up transaction to the general 
partner for such general partnership interest or otherwise as 
compensation or reimbursement for claims against or interests in the 
partnership, such as foregone fees, unearned fees and for fees to be 
earned on the sale or refinancing of an asset.
    (5) The amounts of compensation paid, and cash distributions made, 
to the general partner and its affiliates by the partnership for the 
last three fiscal years and the most recently completed interim period 
and the amounts that would have been paid if the compensation and 
distributions structure to be in effect after the roll-up transaction 
had been in effect during such period. If any proposed change(s) in the 
business or operations of the successor after the roll-up transaction 
would change materially the compensation and distributions that would 
have been paid by the successor (e.g., if properties will be sold

[[Page 464]]

or purchased after the roll-up transaction and no properties were sold 
or purchased during the period covered by the table), describe such 
changes and the effects thereof on the compensation and distributions to 
be paid by the successor.
    (6) Cash distributions made to investors during each of the last 
five fiscal years and most recently completed interim period, 
identifying any such distributions which represent a return of capital.
    (7) An appropriate cross reference to selected financial information 
concerning the partnership and the pro forma financial statements 
included in the principal disclosure document in response to Item 
914(b)(2) of this subpart (Sec. 229.914(b)(2)).



Sec. 229.903  (Item 903) Summary.

    (a) Provide in the forepart of the disclosure document a clear, 
concise and comprehensible summary of the roll-up transaction.
    (b) The summary required by paragraph (a) of this Item 
(Sec. 229.903) shall include a summary description of each of the 
following items, as well as any other material terms or consequences of 
the roll-up transaction necessary to an understanding of such 
transaction:
    (1) Each material risk and effect on investors, including, but not 
limited to:
    (i) Changes in the business plan, voting rights, cash distribution 
policies, form of ownership interest or management compensation;
    (ii) The general partner's conflicts of interest in connection with 
the roll-up transaction and in connection with the successor's future 
operations; and
    (iii) The likelihood that securities received by investors in the 
roll-up transaction will trade at prices substantially below the value 
assigned to such securities in the roll-up transaction and/or the value 
of the successor's assets;
    (2) The material terms of the roll-up transaction, including the 
valuation method used to allocate securities in the successor to 
investors in the partnerships;
    (3) Whether the general partner reasonably believes that the roll-up 
transaction is fair or unfair to investors in each partnership, 
including a brief discussion of the bases for such belief;
    (4) Any opinion from an outside party concerning the fairness of the 
roll-up transaction, including whether the opinion addresses the 
fairness of all possible combinations of partnerships or portions of 
partnerships, and contacts with any outside party concerning fairness 
opinions, valuations or reports in connection with the roll-up 
transaction required to be disclosed pursuant to Item 911(a)(5) of this 
subpart (Sec. 229.911(a)(5));
    (5) The background of and reasons for the roll-up transaction, as 
well as alternatives to the roll-up transaction described in response to 
Item 908(b) of this subpart (Sec. 229.908(b));
    (6) Rights of investors to exercise dissenters' or appraisal rights 
or similar rights and to obtain a list of investors in the partnership 
in which the investor holds an interest; and
    (7) If any affiliates of the general partner or the sponsor may 
participate in the business of the successor or receive compensation 
from the successor, an organizational chart showing the relationships 
between the general partner, the sponsor and their affiliates.

Instruction to Item 903. The description of the material risks and 
effects of the roll-up transaction required by paragraph (b)(1) of this 
Item (Sec. 229.903) must be presented prominently in the forepart of the 
summary.



Sec. 229.904  (Item 904) Risk factors and other considerations.

    (a) Immediately following the summary required by Item 903 of this 
subpart (Sec. 229.903), describe in reasonable detail each material risk 
and effect of the roll-up transaction on investors in each partnership, 
including, but not limited to:
    (1) The potential risks, adverse effects and benefits of the roll-up 
transaction for investors and for the general partner, including those 
which result from each matter described in response to Item 905 of this 
subpart (Sec. 229.905), with appropriate cross references to the 
comparative information required by Item 905;
    (2) The material risks arising from an investment in the successor; 
and
    (3) The likelihood that securities of the successor received by 
investors in

[[Page 465]]

the roll-up transaction will trade in the securities markets at a price 
substantially below the value assigned to such securities in the roll-up 
transaction and/or the value of the assets of the successor, and the 
effects on investors of such a trading market discount.
    (b) Quantify each risk or effect to the extent practicable.
    (c) State whether any of such risks or effects may be different for 
investors in any partnership and, if so, identify such partnership(s) 
and describe such difference(s).

Instruction to Item 904. The requirement to quantify the effects of the 
roll-up transaction shall include, but not be limited to:
    (i) If cost savings resulting from combined administration of the 
partnerships is identified as a potential benefit of the roll-up 
transaction, the amount of cost savings and a comparison of such amount 
to the costs of the roll-up transaction; and
    (ii) If there may be a material conflict of interest of the sponsor 
or general partner arising from its receipt of payments or other 
consideration as a result of the roll-up transaction, the amount of such 
payments and other consideration to be obtained in the roll-up 
transaction and a comparison of such amounts to the amounts to which the 
sponsor or general partner would be entitled without the roll-up 
transaction.



Sec. 229.905  (Item 905) comparative information.

    (a)(1) Describe the voting and other rights of investors in the 
successor under the successor's governing instruments and under 
applicable law. Compare such rights to the voting and other rights of 
investors in each partnership subject to the transaction under the 
partnerships' governing instruments and under applicable law. Describe 
the effects of the change(s) in such rights.
    (2) Describe the duties owed by the general partner of the successor 
to investors in the successor under the successor's governing 
instruments and under applicable law. Compare such duties to the duties 
owed by the general partner of each partnership to investors in the 
partnership under the partnership's governing instruments and under 
applicable law. Describe the effects of the change(s) in such duties.
    (b)(1) Describe each item of compensation (including reimbursement 
of expenses) payable by the successor after the roll-up transaction to 
the general partner and its affiliates or to any affiliate of the 
successor. Compare such compensation to the compensation currently 
payable to the general partner and its affiliates by each partnership. 
Describe the effects of the change(s) in compensation arrangements.
    (2) Describe each instance in which cash or other distributions may 
be made by the successor to the general partner and its affiliates or to 
any affiliate of the successor. Compare such distributions to the 
distributions currently paid or payable to the general partner and its 
affiliates by each partnership. Describe the effects of the change(s) in 
distribution arrangements. If distributions similar to those currently 
paid or payable by any partnership to the general partner or its 
affiliates will not be made by the successor, state whether or not other 
compensation arrangements with the successor described in response to 
paragraph (b)(1) of this Item (Sec. 229.905) (e.g., incentive fees 
payable upon sale of a property) will, in effect, replace such 
distributions.
    (3) Provide a table demonstrating the changes in such compensation 
and distributions setting forth among other things:
    (i) The actual amounts of compensation and distributions, separately 
identified, paid by the partnerships on a combined basis to the general 
partner and its affiliates for the partnerships' last three fiscal years 
and most recently ended interim periods; and
    (ii) The amounts of compensation and distributions that would have 
been paid if the compensation and distributions structure to be in 
effect after the roll-up transaction had been in effect during such 
period.
    (4) If any proposed change(s) in the business or operations of the 
successor after the roll-up transaction would change materially the 
compensation and distributions that would have been paid by the 
successor from that shown in the table provided in response to paragraph 
(b)(3)(ii) of this Item (Sec. 229.905) (e.g., if properties will be sold 
or purchased after the roll-up transaction and no properties were sold 
or purchased during the period covered by

[[Page 466]]

the table), describe such changes and the effects thereof on the 
compensation and distributions to be paid by the successor.
    (5) Describe the material conflicts that may arise between the 
interests of the sponsor or general partner and the interests of 
investors in the successor as a result of the compensation and 
distribution arrangements described in response to paragraphs (b)(1) and 
(2) of this Item (Sec. 229.905) and describe any steps that will be 
taken to resolve any such conflicts.
    (c) Describe any provisions in the governing instruments of the 
successor and any policies of the general partner of the successor 
relating to distributions to investors of cash from operations, proceeds 
from the sale, financing or refinancing of assets, and any other 
distributions. Compare such provisions and policies to those of each of 
the partnerships. Describe the effects of any change(s) in such 
provisions or policies.
    (d)(1) Describe each material investment policy of the successor, 
including, without limitation, policies with respect to borrowings by 
the successor. Compare such investment policies to the investment 
policies of each of the partnerships. Describe the effects of any 
change(s) in such policies.
    (2) Describe any plans of the general partner, sponsor or of any 
person who will be an affiliate of the successor with respect to:
    (i) A sale of any material assets of the partnerships;
    (ii) A purchase of any material assets; and
    (iii) Borrowings.
    (3)(i) State whether or not specific assets have been identified for 
sale, financing, refinancing or purchase following the roll-up 
transaction.
    (ii) If specific assets have been so identified, describe the assets 
and the proposed transaction.
    (e) Describe any other similar terms or policies of the successor 
that are material to an investment in the successor. Compare any such 
terms or policies to those of each of the partnerships. Describe the 
effects of any change(s) in any such terms or policies.

Instructions to Item 905: (1) The information provided in response to 
this Item (Sec. 229.905) should be illustrated in tables or other 
readily understandable formats, which should be included together with 
the disclosures required by this Item.
    (2) The information required by this Item (Sec. 229.905) shall be 
set forth in appropriate separate sections of the principal disclosure 
document.



Sec. 229.906  (Item 906) Allocation of roll-up consideration.

    (a) Describe in reasonable detail the method used to allocate 
interests in the successor to investors in the partnerships and the 
reasons why such method was used.
    (b) Provide a table showing the calculation of the valuation of each 
partnership and the allocation of interests in the successor to 
investors. Such table shall include for each partnership the following 
information (or other information of a comparable character necessary to 
an understanding of the calculation and allocation):
    (1) The value assigned to each significant category of assets of the 
partnership and the total value assigned to the partnership;
    (2) The total value assigned to all partnerships;
    (3) The aggregate amount of interests in the successor to be 
allocated to each partnership and the percentage of the total amount of 
all such interests represented thereby; and
    (4) The amount of interests of the successor to be issued to 
investors per interest held in each partnership (on an equivalent 
interest basis, such as per $1,000 invested).
    (c) If interests in the successor will be allocated to the general 
partner in exchange for its general partner interest or otherwise or if 
the general partner will receive other consideration in connection with 
the roll-up transaction:
    (1) Describe in reasonable detail the method used to allocate 
interests in the successor to the general partner or to determine the 
amount of consideration payable to the general partner and the reasons 
such method(s) was used; and
    (2) Identify the consideration paid by the general partner for 
interests in the partnerships that will be exchanged in the roll-up 
transaction.

[[Page 467]]



Sec. 229.907  (Item 907) Background of the roll-up transaction.

    (a)(1) Furnish a summary of the background of the transaction. Such 
summary shall include, but not be limited to, a description of any 
contacts, negotiations or transactions concerning any of the following 
matters:
    (i) A merger, consolidation, or combination of any of the 
partnerships;
    (ii) An acquisition of any of the partnerships or a material amount 
of any of their assets;
    (iii) A tender offer for or other acquisition of securities of any 
class issued by any of the partnerships; or
    (iv) A change in control of any of the partnerships.
    (2) The summary required by paragraph (a)(1) of this Item shall:
    (i) Cover the period beginning with each partnership's second full 
fiscal year preceding the date of the filing of the roll-up transaction;
    (ii) Include contacts, negotiations or transactions between the 
general partner or its affiliates and any person who would have a direct 
interest in the matters listed in paragraphs (a)(1)(i)-(iv) of this 
Item; and
    (iii) Identify the person who initiated such contacts, negotiations 
or transactions.
    (b) Briefly describe the background of each partnership, including, 
but not limited to:
    (1) The amount of capital raised from investors, the extent to which 
net proceeds from the original offering of interests have been invested, 
the extent to which funds have been invested as planned and the amount 
not yet invested; and
    (2) The partnership's investment objectives and the extent to which 
the partnership has achieved its investment objectives.
    (c) Discuss whether the general partner (including any affiliated 
person materially dependent on the general partner's compensation 
arrangement with the partnership) or any partnership has experienced 
since the commencement of the most recently completed fiscal year or is 
likely to experience any material adverse financial developments. If so, 
describe such developments and the effect of the transaction on such 
matters.



Sec. 229.908  (Item 908) Reasons for and alternatives to the roll-up transaction.

    (a) Describe the reason(s) for the roll-up transaction.
    (b)(1) If the general partner or sponsor considered alternatives to 
the roll-up transaction being proposed, describe such alternative(s) and 
state the reason(s) for their rejection.
    (2) Whether or not described in response to paragraph (b)(1) of this 
Item (Sec. 229.908), describe in reasonable detail the potential 
alternative of continuation of the partnerships in accordance with their 
existing business plans, including the effects of such continuation and 
the material risks and benefits that likely would arise in connection 
therewith, and, if applicable, the general partner's reasons for not 
considering such alternative.
    (3) Whether or not described in response to paragraph (b)(1) of this 
Item (Sec. 229.908), describe in reasonable detail the potential 
alternative of liquidation of the partnerships, the procedures required 
to accomplish liquidation, the effects of liquidation, the material 
risks and benefits that likely would arise in connection with 
liquidation, and, if applicable, the general partner's reasons for not 
considering such alternative.
    (c) State the reasons for the structure of the roll-up transaction 
and for undertaking such transaction at this time.
    (d) State whether the general partner initiated the roll-up 
transaction and, if not, whether the general partner participated in the 
structuring of the transaction.
    (e) State whether the general partner recommends the roll-up 
transaction and briefly describe the reasons for such recommendation.



Sec. 229.909  (Item 909) Conflicts of interest.

    (a) Briefly describe the general partner's fiduciary duties to each 
partnership subject to the roll-up transaction and each actual or 
potential material conflict of interest between the general partner and 
the investors relating to the roll-up transaction.

[[Page 468]]

    (b)(1) State whether or not the general partner has retained an 
unaffiliated representative to act on behalf of investors for purposes 
of negotiating the terms of the roll-up transaction. If no such 
representative has been retained, describe the reasons therefor and the 
risks arising from the absence of separate representation.
    (2) If an unaffiliated representative has been retained to represent 
investors:
    (i) Identify such unaffiliated representative;
    (ii) Briefly describe the representative's qualifications, including 
a brief description of any other transaction similar to the roll-up 
transaction in which the representative has served in a similar capacity 
within the past five years;
    (iii) Describe the method of selection of such representative, 
including a statement as to whether or not any investors were consulted 
in the selection of the representative and, if so, the names of such 
investors;
    (iv) Describe the scope and terms of the engagement of the 
representative, including, but not limited to, what party will be 
responsible for paying the representative's fees and whether such fees 
are contingent upon the outcome of the roll-up transaction;
    (v) Describe any material relationship between the representative or 
its affiliates and:
    (A) The general partner, sponsor, any affiliate of the general 
partner or sponsor; or
    (B) Any other person having a material interest in the roll-up 
transaction,

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;
    (vi) Describe in reasonable detail the actions taken by the 
representative on behalf of investors; and
    (vii) Describe the fiduciary duties or other legal obligations of 
the representative to investors in each of the partnerships.



Sec. 229.910  (Item 910) Fairness of the transaction.

    (a) State whether the general partner reasonably believes that the 
roll-up transaction is fair or unfair to investors and the reasons for 
such belief. Such discussion must address the fairness of the roll-up 
transaction to investors in each of the partnerships and as a whole. If 
the roll-up transaction may be completed with a combination of 
partnerships consisting of less than all partnerships, or with portions 
of partnerships, the belief stated must address each possible 
combination.
    (b) Discuss in reasonable detail the material factors upon which the 
belief stated in paragraph (a) of this Item (Sec. 229.910) 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 Instructions (2) and 
(3) to this Item (Sec. 229.910), paragraph (b)(1) of Item 909 of this 
subpart (Sec. 229.909(b)(1)) and Item 911 of this subpart 
(Sec. 229.911). This discussion also must:
    (1) Compare the value of the consideration to be received in the 
roll-up transaction to the value of the consideration that would be 
received pursuant to each of the alternatives discussed in response to 
Item 908(b) of this subpart (Sec. 229.908(b)); and
    (2) Describe any material differences among the partnerships (e.g., 
different types of assets or different investment objectives) relating 
to the fairness of the transaction.
    (c) If any offer of the type described in Instruction (2)(viii) to 
this Item (Sec. 229.910) has been received, describe such offer and 
state the reason(s) for its rejection.
    (d) Describe any factors known to the general partner that may 
affect materially the value of the consideration to be received by 
investors in the roll-up transaction, the values assigned to the 
partnerships for purposes of the comparisons to alternatives required by 
paragraph (b) of this Item (Sec. 229.910) and the fairness of the 
transaction to investors.
    (e) State whether the general partner's statements in response to 
paragraphs (a) and (b) of this Item (Sec. 229.910) are based, in whole 
or in part, on any report, opinion or appraisal described in response to 
Item 911 of this subpart (Sec. 229.911). If so, describe any material

[[Page 469]]

uncertainties known to the general partner that relate to the 
conclusions in any such report, opinion or appraisal including, but not 
limited to, developments or trends that have affected or are reasonably 
likely to affect materially such conclusions.

Instructions to Item 910: (1) A statement that the general partner has 
no reasonable belief as to the fairness of the roll-up transaction to 
investors will not be considered sufficient disclosure in response to 
paragraph (a) of this Item (Sec. 229.910(a)).
    (2) The factors which are important in determining the fairness of a 
roll-up transaction to investors 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 paragraph (b)(1) of 
Item 909 (Sec. 229.909(b)(1)) and whether the consideration offered to 
investors constitutes fair value in relation to:
    (i) Current market prices, if any;
    (ii) Historic market prices, if any;
    (iii) Net book value;
    (iv) Going concern value;
    (v) Liquidation value;
    (vi) Purchases of limited partnership interests by the general 
partner or sponsor or their affiliates since the commencement of the 
partnership's second full fiscal year preceding the date of filing of 
the disclosure document for the roll-up transaction;
    (vii) Any report, opinion, or appraisal described in Item 911 of 
this subpart (Sec. 229.911); and
    (viii) Offers of which the general partner or sponsor is aware made 
during the preceding eighteen months for a merger, consolidation, or 
combination of any of the partnerships; an acquisition of any of the 
partnerships or a material amount of their assets; a tender offer for or 
other acquisition of securities of any class issued by any of the 
partnerships; or a change in control of any of the partnerships.
    (3) The discussion concerning fairness should specifically address 
material terms of the transaction including whether the consideration 
offered to investors constitutes fair value in relation to:
    (i) The form and amount of consideration to be received by investors 
and the sponsor in the roll-up transaction;
    (ii) The methods used to determine such consideration; and
    (iii) The compensation to be paid to the sponsor in the future.
    (4) Conclusory statements, such as ``The roll-up transaction is fair 
to investors in relation to net book value, going concern value, 
liquidation value and future prospects of the partnership,'' will not be 
considered sufficient disclosure in response to paragraph (b) of this 
Item (Sec. 229.910(b)).
    (5) Consideration should be given to presenting the comparative 
numerical data as to the value of the consideration being received by 
investors, liquidation value and other values in a tabular format. 
Financial and other information concerning the partnerships should be 
prepared based upon the most recent available information, such as, in 
the case of financial information, the periods covered by interim 
selected financial information included in the prospectus in accordance 
with Item 914 of this subpart (Sec. 229.914).



Sec. 229.911  (Item 911) Reports, opinions and appraisals.

    (a)(1) All material reports, opinions or appraisals. State whether 
or not the general partner or sponsor has received any report, opinion 
(other than an opinion of counsel) or appraisal from an outside party 
which is materially related to the roll-up 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 
investors in connection with the roll-up transaction or the fairness of 
such transaction to the general partner or investors.
    (2) With respect to any report, opinion or appraisal described in 
paragraph (a)(1) of this Item (Sec. 229.911);
    (i) Identify such outside party;
    (ii) Briefly describe the qualifications of such outside party;
    (iii) Describe the method of selection of such outside party;
    (iv) Describe any material relationship between:
    (A) The outside party or its affiliates; and
    (B) The general partner, sponsor, the successor or any of their 
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;
    (v) If such report, opinion or appraisal relates to the fairness of 
the consideration, state whether the general partner, sponsor or 
affiliate determined the amount of consideration to be paid or whether 
the outside party recommended the amount of consideration to be paid.

[[Page 470]]

    (vi) Furnish a summary concerning such 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 
general partner, sponsor or its affiliates; and any limitation imposed 
by the general partner, sponsor or affiliate on the scope of the 
investigation. If any limitation was imposed by the general partner, 
sponsor or affiliate on the scope of the investigation, including, but 
not limited to, access to its personnel, premises, and relevant books 
and records, state the reasons therefor.
    (vii) State whether any compensation paid to such outside party is 
contingent on the approval or completion of the roll-up transaction and, 
if so, the reasons for compensating such parties on a contingent basis.
    (3) Furnish a statement to the effect that upon written request by 
an investor or his representative who has been so designated in writing, 
a copy of any such report, opinion or appraisal shall be transmitted 
promptly, without charge, by the general partner or sponsor. The 
statement also must include the name and address of the person to whom 
investors or their representatives should make their request.
    (4) All reports, opinions or appraisals referred to in paragraph 
(a)(1) of this Item (Sec. 229.911) shall be filed as exhibits to the 
registration statement.
    (5)(i) Describe any contacts in connection with the roll-up 
transaction between the sponsor or the general partner and any outside 
party with respect to the preparation by such party of an opinion 
concerning the fairness of the roll-up transaction, a valuation of a 
partnership or its assets, or any other report with respect to the roll-
up transaction. No description is required, however, of contacts with 
respect to reports, opinions or appraisals filed as exhibits pursuant to 
paragraph (a)(4) of this Item (Sec. 229.911).
    (ii) The description of contacts with any outside party required by 
paragraph (a)(5)(i) of this Item (Sec. 229.911) shall include the 
following:
    (A) The identity of each such party;
    (B) The nature of the contact;
    (C) The actions taken by such party;
    (D) Any views, preliminary or final, expressed on the proposed 
subject matter of the report, opinion or appraisal; and
    (E) Any reasons such party did not provide a report, opinion or 
appraisal.
    (b) Fairness opinions: (1) If any report, opinion or appraisal 
relates to the fairness of the roll-up transaction to investors in the 
partnerships, state whether or not the report, opinion or appraisal 
addresses the fairness of:
    (i) The roll-up transaction as a whole and to investors in each 
partnership; and
    (ii) All possible combinations of partnerships in the roll-up 
transaction (including portions of partnerships if the transaction is 
structured to permit portions of partnerships to participate). If all 
possible combinations are not addressed:
    (A) Identify the combinations that are addressed;
    (B) Identify the person(s) that determined which combinations would 
be addressed and state the reasons for the selection of the 
combinations; and
    (C) State that if the roll-up transaction is completed with a 
combination of partnerships not addressed, no report, opinion or 
appraisal concerning the fairness of the roll-up transaction will have 
been obtained.
    (2) If the sponsor or the general partner has not obtained any 
opinion on the fairness of the proposed roll-up transaction to investors 
in each of the affected partnerships, state the sponsor's or general 
partner's reasons for concluding that such an opinion is not necessary 
in order to permit the limited partners or shareholders to make an 
informed decision on the proposed transaction.
    (c) Appraisals. If the report, opinion or appraisal consists of an 
appraisal of the assets of the partnerships:
    (1) Describe the purpose(s) for which the appraisals were obtained 
and their use in connection with the roll-up transaction;
    (2) Describe which assets are covered by the appraisals and state 
the aggregate appraised value of the assets covered by the appraisals 
(including such value net of associated indebtedness). Provide a 
description of, and valuation

[[Page 471]]

of, any assets subject to any material qualifications by the appraiser 
and a summary of such qualifications;
    (3) Identify the date as of which the appraisals were prepared. 
State whether and in what circumstances the appraisals will be updated. 
State whether any events have occurred or conditions have changed since 
the date of the appraisals that may have caused a material change in the 
value of the assets;
    (4) Include as an appendix to the prospectus one or more tables 
setting forth the following information:
    (i) The appraised value of any separately appraised asset that is 
significant to the partnership holding such asset;
    (ii) If the appraiser considered different valuation approaches in 
preparing the appraisals of the assets identified in response to 
paragraph (c)(4)(i) of this Item (Sec. 229.911(c)(4)(i)), the value of 
each such asset under each valuation approach considered by the 
appraiser, identifying the valuation approach used by the appraiser in 
determining the appraised value and the reason such approach was chosen; 
and
    (iii) All material assumptions used by the appraiser in appraising 
the assets identified in response to paragraph (c)(4)(i) of this Item 
(Sec. 229.911(c)(4)(i)), and, if the appraiser used different 
assumptions for any of such assets, the reasons the different 
assumptions were chosen.
    (5) For purposes of this Item and Item 902 of this subpart 
(Sec. 229.902), an asset is ``significant'' to a partnership if it 
represents more than 10% of the value of the partnership's assets as of 
the end of the most recently-completed fiscal year or recently-completed 
interim period or if 10% or more of the partnership's cash flow or net 
income for the most recently-completed fiscal year or most recently-
completed subsequent interim period was derived from such asset.

Instructions to Item 911: (1) The reports, opinions and appraisals 
required to be identified in response to paragraph (a) of this Item 
(Sec. 229.911) include any reports, opinions and appraisals which 
materially relate to the roll-up transaction whether or not relied upon, 
such as reports or opinions regarding alternatives to the roll-up 
transaction whether or not the alternatives were rejected.
    (2) The information called for by paragraph (a)(2) of this Item 
(Sec. 229.911) 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.
    (3) With respect to appraisals, a summary prepared by the appraisers 
should not be included in lieu of the description of the appraisals 
required by paragraph (c) of this Item (Sec. 229.911). A clear and 
concise summary description of the appraisals is required.

[56 FR 57247, Nov. 8, 1991, as amended at 59 FR 63683, Dec. 8, 1994]



Sec. 229.912  (Item 912) Source and amount of funds and transactional expenses.

    (a) State the source and total amount of funds or other 
consideration to be used in the roll-up transaction.
    (b)(1) Furnish a reasonably itemized statement of all expenses 
incurred or estimated to be incurred in connection with the roll-up 
transaction including, but not limited to, filing fees, legal, financial 
advisory, accounting and appraisal fees, solicitation expenses and 
printing costs. Identify the persons responsible for paying any or all 
of such expenses.
    (2) State whether or not any partnership subject to the roll-up 
transaction will be, directly or indirectly, responsible for any or all 
of the expenses of the transaction. If any partnership will be so 
responsible, state the amount to be provided by each partnership and the 
sources of capital to finance such amount.
    (c) If all or any part of the consideration to be used by the 
sponsor or successor in the roll-up transaction is expected to be, 
directly or indirectly, provided by any partnership, state the amount to 
be provided by each partnership and the sources of capital to finance 
such amount.
    (d) If all or any part of the funds or other consideration is, or is 
expected to be, directly or indirectly borrowed by the sponsor or 
successor for the purpose of the roll-up transaction:
    (1) Provide a summary of each such loan agreement containing the 
identity 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

[[Page 472]]

borrowing, or, if no plans or arrangements have been made, make a 
statement to that effect.
    (e) If the source of all or any part of the funds to be used in the 
roll-up transaction is a loan made in the ordinary course of business by 
a bank as defined by section 3(a)(6) of the Exchange 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.



Sec. 229.913  (Item 913) Other provisions of the transaction.

    (a) State whether or not appraisal rights are provided under 
applicable state law, under the partnership's governing instruments or 
will be voluntarily accorded by the successor, the general partner or 
the sponsor (or any of their affiliates) in connection with the roll-up 
transaction. If so, summarize such appraisal rights. If appraisal rights 
will not be available to investors who object to the transaction, 
briefly outline the rights which may be available to such investors 
under such law.
    (b) If any provision has been made to allow investors to obtain 
access to the books and records of the partnership or to obtain counsel 
or appraisal services at the expense of the successor, the general 
partner, the partnership, the sponsor (or any of their affiliates), 
describe such provision.
    (c) Discuss the investors' rights under federal and state law to 
obtain a partnership's list of investors.



Sec. 229.914  (Item 914) Pro forma financial statements: selected financial data.

    (a) In addition to the information required by Item 301 of 
Regulation S-K, Selected Financial Data (Sec. 229.301), and Item 302 of 
Regulation S-K, Supplementary Financial Information (Sec. 229.302), for 
each partnership proposed to be included in a roll-up transaction 
provide: Ratio of earnings to fixed charges, cash and cash equivalents, 
total assets at book value, total assets at the value assigned for 
purposes of the roll-up transaction (if applicable), total liabilities, 
general and limited partners' equity, net increase (decrease) in cash 
and cash equivalents, net cash provided by operating activities, 
distributions; and per unit data for net income (loss), book value, 
value assigned for purposes of the roll-up transaction (if applicable), 
and distributions (separately identifying distributions that represent a 
return of capital). This information should be provided for the same 
period(s) for which Selected Financial Data and Supplementary Financial 
Information are required to be provided. Additional or other information 
should be provided if material to an understanding of each partnership 
proposed to be included in a roll-up transaction.
    (b) Provide pro forma financial information (including oil and gas 
reserves and cash flow disclosure, if appropriate), assuming:
    (1) All partnerships participate in the roll-up transaction; and
    (2) Participation in a roll-up transaction of those partnerships 
that on a combined basis have the lowest combined net cash provided by 
operating activities for the last fiscal year of such partnerships, 
provided participation by such partnerships satisfies all conditions to 
consummation of the roll-up transaction. If the combination of all 
partnerships proposed to be included in a roll-up transaction results in 
such lowest combined net cash provided by operating activities, this 
shall be noted and no separate pro forma financial statements are 
required.
    (c) The pro forma financial statements required by paragraph (b) of 
this Item (Sec. 229.914) shall disclose the effect of the roll-up 
transaction on the successor's:
    (1) Balance sheet as of the later of the end of the most recent 
fiscal year or the latest interim period;
    (2) Statement of income (with separate line items to reflect income 
(loss) excluding and including the roll-up expenses and payments), 
earnings per share amounts, and ratio of earnings to fixed charges for 
the most recent fiscal year and the latest interim period;
    (3) Statement of cash flows for the most recent fiscal year and the 
latest interim period; and

[[Page 473]]

    (4) Book value per share as of the later of the end of the most 
recent fiscal year or the latest interim period.
Instructions to Item 914. (1) Notwithstanding the provisions of this 
Item (Sec. 229.914), any or all of the information required by 
paragraphs (b) and (c) of this Item (Sec. 229.914) that is not material 
for the exercise of prudent judgment in regard to the matter to be acted 
upon, may be omitted.
    (2) If the roll-up transaction is structured to permit participation 
by portions of partnerships, consideration should be given to the effect 
of such participation in preparing the pro forma financial statements 
reflecting a partial roll-up.



Sec. 229.915  (Item 915) Federal income tax consequences.

    (a) Provide a brief, clear and understandable summary of the 
material Federal income tax consequences of the roll-up transaction and 
an investment in the successor. Where a tax opinion has been provided, 
briefly summarize the substance of such opinion, including 
identification of the material consequences upon which counsel has not 
been asked, or is unable, to opine. If any of the material Federal 
income tax consequences are not expected to be the same for investors in 
all partnerships, the differences shall be described.
    (b) State whether or not the opinion of counsel is included as an 
appendix to the prospectus. If filed as an exhibit to the registration 
statement and not included as an appendix to the prospectus, include a 
statement to the effect that, upon receipt of a written request by an 
investor or his representative who has been so designated in writing, a 
copy of the opinion of counsel will be transmitted promptly, without 
charge, by the general partner or sponsor. The statement should include 
the name and address of the person to whom investors should make their 
request.



       Subpart 229.1000--Mergers and Acquisitions (Regulation M-A)

    Source: 64 FR 61443, Nov. 10, 1999, unless otherwise noted.



Sec. 229.1000  (Item 1000) Definitions.

    The following definitions apply to the terms used in Regulation M-A 
(Secs. 229.1000 through 229.1016), unless specified otherwise:
    (a) Associate has the same meaning as in Sec. 240.12b-2 of this 
chapter;
    (b) Instruction C means General Instruction C to Schedule 13E-3 
(Sec. 240.13e-100 of this chapter) and General Instruction C to Schedule 
TO (Sec. 240.14d-100 of this chapter);
    (c) Issuer tender offer has the same meaning as in Sec. 240.13e-
4(a)(2) of this chapter;
    (d) Offeror means any person who makes a tender offer or on whose 
behalf a tender offer is made;
    (e) Rule 13e-3 transaction has the same meaning as in Sec. 240.13e-
3(a)(3) of this chapter;
    (f) Subject company means the company or entity whose securities are 
sought to be acquired in the transaction (e.g., the target), or that is 
otherwise the subject of the transaction;
    (g) Subject securities means the securities or class of securities 
that are sought to be acquired in the transaction or that are otherwise 
the subject of the transaction; and
    (h) Third-party tender offer means a tender offer that is not an 
issuer tender offer.



Sec. 229.1001  (Item 1001) Summary term sheet.

    Summary term sheet. Provide security holders with a summary term 
sheet that is written in plain English. The summary term sheet must 
briefly describe in bullet point format the most material terms of the 
proposed transaction. The summary term sheet must provide security 
holders with sufficient information to understand the essential features 
and significance of the proposed transaction. The bullet points must 
cross-reference a more detailed discussion contained in the disclosure 
document that is disseminated to security holders.

    Instructions to Item 1001:
    1. The summary term sheet must not recite all information contained 
in the disclosure document that will be provided to security holders. 
The summary term sheet is intended to serve as an overview of all 
material matters that are presented in the accompanying documents 
provided to security holders.

[[Page 474]]

    2. The summary term sheet must begin on the first or second page of 
the disclosure document provided to security holders.
    3. Refer to Rule 421(b) and (d) of Regulation C of the Securities 
Act (Sec. 230.421 of this chapter) for a description of plain English 
disclosure.



Sec. 229.1002  (Item 1002) Subject company information.

    (a) Name and address. State the name of the subject company (or the 
issuer in the case of an issuer tender offer), and the address and 
telephone number of its principal executive offices.
    (b) Securities. State the exact title and number of shares 
outstanding of the subject class of equity securities as of the most 
recent practicable date. This may be based upon information in the most 
recently available filing with the Commission by the subject company 
unless the filing person has more current information.
    (c) Trading market and price. Identify the principal market in which 
the subject securities are traded and state the high and low sales 
prices for the subject securities in the principal market (or, if there 
is no principal market, the range of high and low bid quotations and the 
source of the quotations) for each quarter during the past two years. If 
there is no established trading market for the securities (except for 
limited or sporadic quotations), so state.
    (d) Dividends. State the frequency and amount of any dividends paid 
during the past two years with respect to the subject securities. 
Briefly describe any restriction on the subject company's current or 
future ability to pay dividends. If the filing person is not the subject 
company, furnish this information to the extent known after making 
reasonable inquiry.
    (e) Prior public offerings. If the filing person has made an 
underwritten public offering of the subject securities for cash during 
the past three years that was registered under the Securities Act of 
1933 or exempt from registration under Regulation A (Sec. 230.251 
through Sec. 230.263 of this chapter), state the date of the offering, 
the amount of securities offered, the offering price per share (adjusted 
for stock splits, stock dividends, etc. as appropriate) and the 
aggregate proceeds received by the filing person.
    (f) Prior stock purchases. If the filing person purchased any 
subject securities during the past two years, state the amount of the 
securities purchased, the range of prices paid and the average purchase 
price for each quarter during that period. Affiliates need not give 
information for purchases made before becoming an affiliate.



Sec. 229.1003  (Item 1003) Identity and background of filing person.

    (a) Name and address. State the name, business address and business 
telephone number of each filing person. Also state the name and address 
of each person specified in Instruction C to the schedule (except for 
Schedule 14D-9 (Sec. 240.14d-101 of this chapter)). If the filing person 
is an affiliate of the subject company, state the nature of the 
affiliation. If the filing person is the subject company, so state.
    (b) Business and background of entities. If any filing person (other 
than the subject company) or any person specified in Instruction C to 
the schedule is not a natural person, state the person's principal 
business, state or other place of organization, and the information 
required by paragraphs (c)(3) and (c)(4) of this section for each 
person.
    (c) Business and background of natural persons. If any filing person 
or any person specified in Instruction C to the schedule is a natural 
person, provide the following information for each person:
    (1) Current principal occupation or employment and the name, 
principal business and address of any corporation or other organization 
in which the employment or occupation is conducted;
    (2) Material occupations, positions, offices or employment during 
the past five years, giving the starting and ending dates of each and 
the name, principal business and address of any corporation or other 
organization in which the occupation, position, office or employment was 
carried on;
    (3) A statement whether or not the person was convicted in a 
criminal proceeding during the past five years (excluding traffic 
violations or similar misdemeanors). If the person was convicted, 
describe the criminal proceeding, including the dates, nature of

[[Page 475]]

conviction, name and location of court, and penalty imposed or other 
disposition of the case;
    (4) A statement whether or not the person was a party to any 
judicial or administrative proceeding during the past five years (except 
for matters that were dismissed without sanction or settlement) that 
resulted in a judgment, decree or final order enjoining the person from 
future violations of, or prohibiting activities subject to, federal or 
state securities laws, or a finding of any violation of federal or state 
securities laws. Describe the proceeding, including a summary of the 
terms of the judgment, decree or final order; and
    (5) Country of citizenship.
    (d) Tender offer. Identify the tender offer and the class of 
securities to which the offer relates, the name of the offeror and its 
address (which may be based on the offeror's Schedule TO (Sec. 240.14d-
100 of this chapter) filed with the Commission).

Instruction to Item 1003
    If the filing person is making information relating to the 
transaction available on the Internet, state the address where the 
information can be found.



Sec. 229.1004  (Item 1004) Terms of the transaction.

    (a) Material terms. State the material terms of the transaction.
    (1) Tender offers. In the case of a tender offer, the information 
must include:
    (i) The total number and class of securities sought in the offer;
    (ii) The type and amount of consideration offered to security 
holders;
    (iii) The scheduled expiration date;
    (iv) Whether a subsequent offering period will be available, if the 
transaction is a third-party tender offer;
    (v) Whether the offer may be extended, and if so, how it could be 
extended;
    (vi) The dates before and after which security holders may withdraw 
securities tendered in the offer;
    (vii) The procedures for tendering and withdrawing securities;
    (viii) The manner in which securities will be accepted for payment;
    (ix) If the offer is for less than all securities of a class, the 
periods for accepting securities on a pro rata basis and the offeror's 
present intentions in the event that the offer is oversubscribed;
    (x) An explanation of any material differences in the rights of 
security holders as a result of the transaction, if material;
    (xi) A brief statement as to the accounting treatment of the 
transaction, if material; and
    (xii) The federal income tax consequences of the transaction, if 
material.
    (2) Mergers or similar transactions. In the case of a merger or 
similar transaction, the information must include:
    (i) A brief description of the transaction;
    (ii) The consideration offered to security holders;
    (iii) The reasons for engaging in the transaction;
    (iv) The vote required for approval of the transaction;
    (v) An explanation of any material differences in the rights of 
security holders as a result of the transaction, if material;
    (vi) A brief statement as to the accounting treatment of the 
transaction, if material; and
    (vii) The federal income tax consequences of the transaction, if 
material.

Instruction to Item 1004(a):
    If the consideration offered includes securities exempt from 
registration under the Securities Act of 1933, provide a description of 
the securities that complies with Item 202 of Regulation S-K 
(Sec. 229.202). This description is not required if the issuer of the 
securities meets the requirements of General Instructions I.A, I.B.1 or 
I.B.2, as applicable, or I.C. of Form S-3 (Sec. 239.13 of this chapter) 
and elects to furnish information by incorporation by reference; only 
capital stock is to be issued; and securities of the same class are 
registered under section 12 of the Exchange Act and either are listed 
for trading or admitted to unlisted trading privileges on a national 
securities exchange; or are securities for which bid and offer 
quotations are reported in an automated quotations system operated by a 
national securities association.

    (b) Purchases. State whether any securities are to be purchased from 
any officer, director or affiliate of the subject company and provide 
the details of each transaction.

[[Page 476]]

    (c) Different terms. Describe any term or arrangement in the Rule 
13e-3 transaction that treats any subject security holders differently 
from other subject security holders.
    (d) Appraisal rights. State whether or not dissenting security 
holders are entitled to any appraisal rights. If so, summarize the 
appraisal rights. If there are no appraisal rights available under state 
law for security holders who object to the transaction, briefly outline 
any other rights that may be available to security holders under the 
law.
    (e) Provisions for unaffiliated security holders. Describe any 
provision made by the filing person in connection with the transaction 
to grant unaffiliated security holders access to the corporate files of 
the filing person or to obtain counsel or appraisal services at the 
expense of the filing person. If none, so state.
    (f) Eligibility for listing or trading. If the transaction involves 
the offer of securities of the filing person in exchange for equity 
securities held by unaffiliated security holders of the subject company, 
describe whether or not the filing person will take steps to assure that 
the securities offered are or will be eligible for trading on an 
automated quotations system operated by a national securities 
association.



Sec. 229.1005  (Item 1005) Past contacts, transactions, negotiations and agreements.

    (a) Transactions. Briefly state the nature and approximate dollar 
amount of any transaction, other than those described in paragraphs (b) 
or (c) of this section, that occurred during the past two years, between 
the filing person (including any person specified in Instruction C of 
the schedule) and;
    (1) The subject company or any of its affiliates that are not 
natural persons if the aggregate value of the transactions is more than 
one percent of the subject company's consolidated revenues for:
    (i) The fiscal year when the transaction occurred; or
    (ii) The past portion of the current fiscal year, if the transaction 
occurred in the current year; and

    Instruction to Item 1005(a)(1):
    The information required by this Item may be based on information in 
the subject company's most recent filing with the Commission, unless the 
filing person has reason to believe the information is not accurate.

    (2) Any executive officer, director or affiliate of the subject 
company that is a natural person if the aggregate value of the 
transaction or series of similar transactions with that person exceeds 
$60,000.
    (b) Significant corporate events. Describe any negotiations, 
transactions or material contacts during the past two years between the 
filing person (including subsidiaries of the filing person and any 
person specified in Instruction C of the schedule) and the subject 
company or its affiliates concerning any:
    (1) Merger;
    (2) Consolidation;
    (3) Acquisition;
    (4) Tender offer for or other acquisition of any class of the 
subject company's securities;
    (5) Election of the subject company's directors; or
    (6) Sale or other transfer of a material amount of assets of the 
subject company.
    (c) Negotiations or contacts. Describe any negotiations or material 
contacts concerning the matters referred to in paragraph (b) of this 
section during the past two years between:
    (1) Any affiliates of the subject company; or
    (2) The subject company or any of its affiliates and any person not 
affiliated with the subject company who would have a direct interest in 
such matters.

    Instruction to paragraphs (b) and (c) of Item 1005
    Identify the person who initiated the contacts or negotiations.

    (d) Conflicts of interest. If material, describe any agreement, 
arrangement or understanding and any actual or potential conflict of 
interest between the filing person or its affiliates and:
    (1) The subject company, its executive officers, directors or 
affiliates; or
    (2) The offeror, its executive officers, directors or affiliates.

    Instruction to Item 1005(d)
    If the filing person is the subject company, no disclosure called 
for by this paragraph is required in the document disseminated to 
security holders, so long as substantially the

[[Page 477]]

same information was filed with the Commission previously and disclosed 
in a proxy statement, report or other communication sent to security 
holders by the subject company in the past year. The document 
disseminated to security holders, however, must refer specifically to 
the discussion in the proxy statement, report or other communication 
that was sent to security holders previously. The information also must 
be filed as an exhibit to the schedule.

    (e) Agreements involving the subject company's securities. Describe 
any agreement, arrangement, or understanding, whether or not legally 
enforceable, between the filing person (including any person specified 
in Instruction C of the schedule) and any other person with respect to 
any securities of the subject company. Name all persons that are a party 
to the agreements, arrangements, or understandings and describe all 
material provisions.

    Instructions to Item 1005(e)
    1. The information required by this Item includes: the transfer or 
voting of securities, joint ventures, loan or option arrangements, puts 
or calls, guarantees of loans, guarantees against loss, or the giving or 
withholding of proxies, consents or authorizations.
    2. Include information for any 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 the 
subject securities. No disclosure, however, is required about standard 
default and similar provisions contained in loan agreements.



Sec. 229.1006  (Item 1006) Purposes of the transaction and plans or proposals.

    (a) Purposes. State the purposes of the transaction.
    (b) Use of securities acquired. Indicate whether the securities 
acquired in the transaction will be retained, retired, held in treasury, 
or otherwise disposed of.
    (c) Plans. Describe any plans, proposals or negotiations that relate 
to or would result in:
    (1) Any extraordinary transaction, such as a merger, reorganization 
or liquidation, involving the subject company or any of its 
subsidiaries;
    (2) Any purchase, sale or transfer of a material amount of assets of 
the subject company or any of its subsidiaries;
    (3) Any material change in the present dividend rate or policy, or 
indebtedness or capitalization of the subject company;
    (4) 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 or to change any material term of the 
employment contract of any executive officer;
    (5) Any other 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 (15 U.S.C. 80a-13);
    (6) Any class of equity securities of the subject company to be 
delisted from a national securities exchange or cease to be authorized 
to be quoted in an automated quotations system operated by a national 
securities association;
    (7) Any class of equity securities of the subject company becoming 
eligible for termination of registration under section 12(g)(4) of the 
Act (15 U.S.C. 78l);
    (8) The suspension of the subject company's obligation to file 
reports under Section 15(d) of the Act (15 U.S.C. 78o);
    (9) The acquisition by any person of additional securities of the 
subject company, or the disposition of securities of the subject 
company; or (10) Any changes in the subject company's charter, bylaws or 
other governing instruments or other actions that could impede the 
acquisition of control of the subject company.
    (d) Subject company negotiations. If the filing person is the 
subject company:
    (1) State whether or not that person is undertaking or engaged in 
any negotiations in response to the tender offer that relate to:
    (i) A tender offer or other acquisition of the subject company's 
securities by the filing person, any of its subsidiaries, or any other 
person; or
    (ii) Any of the matters referred to in paragraphs (c)(1) through 
(c)(3) of this section; and

[[Page 478]]

    (2) Describe any transaction, board resolution, agreement in 
principle, or signed contract that is entered into in response to the 
tender offer that relates to one or more of the matters referred to in 
paragraph (d)(1) of this section.

    Instruction to Item 1006(d)(1)
    If an agreement in principle has not been reached at the time of 
filing, no disclosure under paragraph (d)(1) of this section is required 
of the possible terms of or the parties to the transaction if in the 
opinion of the board of directors of the subject company disclosure 
would jeopardize continuation of the negotiations. In that case, 
disclosure indicating that negotiations are being undertaken or are 
underway and are in the preliminary stages is sufficient.



Sec. 229.1007  (Item 1007) Source and amount of funds or other consideration.

    (a) Source of funds. State the specific sources and total amount of 
funds or other consideration to be used in the transaction. If the 
transaction involves a tender offer, disclose the amount of funds or 
other consideration required to purchase the maximum amount of 
securities sought in the offer.
    (b) Conditions. State any material conditions to the financing 
discussed in response to paragraph (a) of this section. Disclose any 
alternative financing arrangements or alternative financing plans in the 
event the primary financing plans fall through. If none, so state.
    (c) Expenses. Furnish a reasonably itemized statement of all 
expenses incurred or estimated to be incurred in connection with the 
transaction including, but not limited to, filing, legal, accounting and 
appraisal fees, solicitation expenses and printing costs and state 
whether or not the subject company has paid or will be responsible for 
paying any or all expenses.
    (d) Borrowed funds. If all or any part of the funds or other 
consideration required is, or is expected, to be borrowed, directly or 
indirectly, for the purpose of the transaction:
    (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 any other material terms or 
conditions of the loan; and
    (2) Briefly describe any plans or arrangements to finance or repay 
the loan, or, if no plans or arrangements have been made, so state.

    Instruction to Item 1007(d):
    If the transaction is a third-party tender offer and the source of 
all or any part of the funds used in the transaction is to come from a 
loan made in the ordinary course of business by a bank as defined by 
section 3(a)(6) of the Act (15 U.S.C. 78c), the name of the bank will 
not be made available to the public if the filing person so requests in 
writing and files the request, naming the bank, with the Secretary of 
the Commission.



Sec. 229.1008  (Item 1008) Interest in securities of the subject company.

    (a) Securities ownership. State the aggregate number and percentage 
of subject securities that are beneficially owned by each person named 
in response to Item 1003 of Regulation M-A (Sec. 229.1003) and by each 
associate and majority-owned subsidiary of those persons. Give the name 
and address of any associate or subsidiary.

    Instructions to Item 1008(a)
    1. For purposes of this section, beneficial ownership is determined 
in accordance with Rule 13d-3 (Sec. 240.13d-3 of this chapter) under the 
Exchange Act. Identify the shares that the person has a right to 
acquire.
    2. The information required by this section may be based on the 
number of outstanding securities disclosed in the subject company's most 
recently available filing with the Commission, unless the filing person 
has more current information.
    3. The information required by this section with respect to 
officers, directors and associates of the subject company must be given 
to the extent known after making reasonable inquiry.

    (b) Securities transactions. Describe any transaction in the subject 
securities during the past 60 days. The description of transactions 
required must include, but not necessarily be limited to:
    (1) The identity of the persons specified in the Instruction to this 
section who effected the transaction;
    (2) The date of the transaction;
    (3) The amount of securities involved;
    (4) The price per share; and
    (5) Where and how the transaction was effected.

    Instructions to Item 1008(b)
    1. Provide the required transaction information for the following 
persons:

[[Page 479]]

    (a) The filing person (for all schedules);
    (b) Any person named in Instruction C of the schedule and any 
associate or majority-owned subsidiary of the issuer or filing person 
(for all schedules except Schedule 14D-9 (Sec. 240.14d-101 of this 
chapter));
    (c) Any executive officer, director, affiliate or subsidiary of the 
filing person (for Schedule 14D-9 (Sec. 240.14d-101 of this chapter);
    (d) The issuer and any executive officer or director of any 
subsidiary of the issuer or filing person (for an issuer tender offer on 
Schedule TO (Sec. 240.14d-100 of this chapter)); and
    (e) The issuer and any pension, profit-sharing or similar plan of 
the issuer or affiliate filing the schedule (for a going-private 
transaction on Schedule 13E-3 (Sec. 240.13e-100 of this chapter)).
    2. Provide the information required by this Item if it is available 
to the filing person at the time the statement is initially filed with 
the Commission. If the information is not initially available, it must 
be obtained and filed with the Commission promptly, but in no event 
later than three business days after the date of the initial filing, and 
if material, disclosed in a manner reasonably designed to inform 
security holders. The procedure specified by this instruction is 
provided to maintain the confidentiality of information in order to 
avoid possible misuse of inside information.



Sec. 229.1009  (Item 1009) Persons/assets, retained, employed, compensated or used.

    (a) Solicitations or recommendations. Identify all persons and 
classes of persons that are directly or indirectly employed, retained, 
or to be compensated to make solicitations or recommendations in 
connection with the transaction. Provide a summary of all material terms 
of employment, retainer or other arrangement for compensation.
    (b) Employees and corporate assets. Identify any officer, class of 
employees or corporate assets of the subject company that has been or 
will be employed or used by the filing person in connection with the 
transaction. Describe the purpose for their employment or use.

    Instruction to Item 1009(b):
    Provide all information required by this Item except for the 
information required by paragraph (a) of this section and Item 1007 of 
Regulation M-A (Sec. 229.1007).



Sec. 229.1010  (Item 1010) Financial statements.

    (a) Financial information. Furnish the following financial 
information:
    (1) Audited financial statements for the two fiscal years required 
to be filed with the company's most recent annual report under sections 
13 and 15(d) of the Exchange Act (15 U.S.C. 78m; 15 U.S.C. 78o);
    (2) Unaudited balance sheets, comparative year-to-date income 
statements and related earnings per share data, statements of cash 
flows, and comprehensive income required to be included in the company's 
most recent quarterly report filed under the Exchange Act;
    (3) Ratio of earnings to fixed charges, computed in a manner 
consistent with Item 503(d) of Regulation S-K (Sec. 229.503(d)), for the 
two most recent fiscal years and the interim periods provided under 
paragraph (a)(2) of this section; and
    (4) Book value per share as of the date of the most recent balance 
sheet presented.
    (b) Pro forma information. If material, furnish pro forma 
information disclosing the effect of the transaction on:
    (1) The company's balance sheet as of the date of the most recent 
balance sheet presented under paragraph (a) of this section;
    (2) The company's statement of income, earnings per share, and ratio 
of earnings to fixed charges for the most recent fiscal year and the 
latest interim period provided under paragraph (a)(2) of this section; 
and
    (3) The company's book value per share as of the date of the most 
recent balance sheet presented under paragraph (a) of this section.
    (c) Summary information. Furnish a fair and adequate summary of the 
information specified in paragraphs (a) and (b) of this section for the 
same periods specified. A fair and adequate summary includes:
    (1) The summarized financial information specified in Sec. 210.1-
02(bb)(1) of this chapter;
    (2) Income per common share from continuing operations (basic and 
diluted, if applicable);
    (3) Net income per common share (basic and diluted, if applicable);
    (4) Ratio of earnings to fixed charges, computed in a manner 
consistent with Item 503(d) of Regulation S-K (Sec. 229.503(d));

[[Page 480]]

    (5) Book value per share as of the date of the most recent balance 
sheet; and
    (6) If material, pro forma data for the summarized financial 
information specified in paragraphs (c)(1) through (c)(5) of this 
section disclosing the effect of the transaction.



Sec. 229.1011  (Item 1011) Additional information.

    (a) Agreements, regulatory requirements and legal proceedings. If 
material to a security holder's decision whether to sell, tender or hold 
the securities sought in the tender offer, furnish the following 
information:
    (1) Any present or proposed material agreement, arrangement, 
understanding or relationship between the offeror 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 agreement, 
arrangement or understanding disclosed under any other sections of 
Regulation M-A (Secs. 229.1000 through 229.1016));

    Instruction to paragraph (a)(1):
    In an issuer tender offer disclose any material agreement, 
arrangement, understanding or relationship between the offeror and any 
of its executive officers, directors, controlling persons or 
subsidiaries.

    (2) To the extent known by the offeror after reasonable 
investigation, the applicable regulatory requirements which must be 
complied with or approvals which must be obtained in connection with the 
tender offer;
    (3) The applicability of any anti-trust laws;
    (4) The applicability of margin requirements under section 7 of the 
Act (15 U.S.C. 78g) and the applicable regulations; and
    (5) 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, 
and a brief summary of the proceedings and the relief sought.

    Instruction to Item 1011(a)(5):
    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 must be furnished promptly to the Commission staff on a 
supplemental basis.

    (b) Other material information. Furnish 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.



Sec. 229.1012  (Item 1012) The solicitation or recommendation.

    (a) Solicitation or recommendation. State the nature of the 
solicitation or the recommendation. If this statement relates to a 
recommendation, state whether the filing person is advising holders of 
the subject securities to accept or reject the tender offer or to take 
other action with respect to the tender offer and, if so, describe the 
other action recommended. If the filing person is the subject company 
and is not making a recommendation, state whether the subject company is 
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) Reasons. State the reasons for the position (including the 
inability to take a position) stated in paragraph (a) of this section. 
Conclusory statements such as ``The tender offer is in the best 
interests of shareholders'' are not considered sufficient disclosure.
    (c) Intent to tender. To the extent known by the filing person after 
making reasonable inquiry, state whether the filing person or any 
executive officer, director, affiliate or subsidiary of the filing 
person currently intends to tender, sell or hold the subject securities 
that are held of record or beneficially owned by that person.
    (d) Intent to tender or vote in a going-private transaction. To the 
extent known by the filing person after making reasonable inquiry, state 
whether or not any executive officer, director or affiliate of the 
issuer (or any person specified in Instruction C to the schedule) 
currently intends to tender or sell subject securities owned or held by 
that person and/or how each person

[[Page 481]]

currently intends to vote subject securities, including any securities 
the person has proxy authority for. State the reasons for the intended 
action.

    Instruction to Item 1012(d):
    Provide the information required by this section if it is available 
to the filing person at the time the statement is initially filed with 
the Commission. If the information is not available, it must be filed 
with the Commission promptly, but in no event later than three business 
days after the date of the initial filing, and if material, disclosed in 
a manner reasonably designed to inform security holders.

    (e) Recommendations of others. To the extent known by the filing 
person after making reasonable inquiry, state whether or not any person 
specified in paragraph (d) of this section has made a recommendation 
either in support of or opposed to the transaction and the reasons for 
the recommendation.



Sec. 229.1013  (Item 1013) Purposes, alternatives, reasons and effects in a going-private transaction.

    (a) Purposes. State the purposes for the Rule 13e-3 transaction.
    (b) Alternatives. If the subject company or affiliate considered 
alternative means to accomplish the stated purposes, briefly describe 
the alternatives and state the reasons for their rejection.
    (c) Reasons. State the reasons for the structure of the Rule 13e-3 
transaction and for undertaking the transaction at this time.
    (d) Effects. Describe the effects of the Rule 13e-3 transaction on 
the subject company, its affiliates and unaffiliated security holders, 
including the federal tax consequences of the transaction.

    Instructions to Item 1013:
    1. Conclusory statements will not be considered sufficient 
disclosure in response to this section.
    2. The description required by paragraph (d) of this section must 
include a reasonably detailed discussion of both the benefits and 
detriments of the Rule 13e-3 transaction to the subject company, its 
affiliates and unaffiliated security holders. The benefits and 
detriments of the Rule 13e-3 transaction must be quantified to the 
extent practicable.
    3. If this statement is filed by an affiliate of the subject 
company, the description required by paragraph (d) of this section must 
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 subject company in terms of both dollar amounts and percentages.



Sec. 229.1014  (Item 1014) Fairness of the going-private transaction.

    (a) Fairness. State whether the subject company or affiliate filing 
the statement 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 the director, and indicate, if known, after making reasonable 
inquiry, the reasons for the dissent or abstention.
    (b) Factors considered in determining fairness. Discuss in 
reasonable detail the material factors upon which the belief stated in 
paragraph (a) of this section is based and, to the extent practicable, 
the weight assigned to each factor. The discussion must include an 
analysis of the extent, if any, to which the filing person's beliefs are 
based on the factors described in Instruction 2 of this section, 
paragraphs (c), (d) and (e) of this section and Item 1015 of Regulation 
M-A (Sec. 229.1015).
    (c) Approval of security holders. State whether or not the 
transaction is structured so that approval of at least a majority of 
unaffiliated security holders is required.
    (d) Unaffiliated representative. State whether or not a majority of 
directors who are not employees of the subject company has retained an 
unaffiliated representative to act solely on behalf of unaffiliated 
security holders for purposes of negotiating the terms of the Rule 13e-3 
transaction and/or preparing a report concerning the fairness of the 
transaction.
    (e) Approval of directors. State whether or not the Rule 13e-3 
transaction was approved by a majority of the directors of the subject 
company who are not employees of the subject company.
    (f) Other offers. If any offer of the type described in paragraph 
(viii) of Instruction 2 to this section has been received, describe the 
offer and state the reasons for its rejection.

    Instructions to Item 1014:
    1. A statement that the issuer or affiliate has no reasonable belief 
as to the fairness of

[[Page 482]]

the Rule 13e-3 transaction to unaffiliated security holders will not be 
considered sufficient disclosure in response to paragraph (a) of this 
section.
    2. The factors that are important in determining the fairness of a 
transaction to unaffiliated security holders and the weight, if any, 
that 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 section 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) Purchase prices paid in previous purchases disclosed in 
response to Item 1002(f) of Regulation M-A (Sec. 229.1002(f));
    (vii) Any report, opinion, or appraisal described in Item 1015 of 
Regulation M-A (Sec. 229.1015); and
    (viii) Firm offers of which the subject company or affiliate is 
aware made by any unaffiliated person, other than the filing persons, 
during the past two years for:
    (A) The merger or consolidation of the subject company with or into 
another company, or vice versa;
    (B) The sale or other transfer of all or any substantial part of the 
assets of the subject company; or
    (C) A purchase of the subject company's securities that would enable 
the holder to exercise control of the subject company.
    3. 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 paragraph (b) of this 
section.



Sec. 229.1015  (Item 1015) Reports, opinions, appraisals and negotiations.

    (a) Report, opinion or appraisal. State whether or not the subject 
company or affiliate has received any report, opinion (other than an 
opinion of counsel) or appraisal from an outside party that is 
materially related to the Rule 13e-3 transaction, including, but not 
limited to: Any report, opinion or appraisal relating to the 
consideration or the fairness of the consideration to be offered to 
security holders or the fairness of the transaction to the issuer or 
affiliate or to security holders who are not affiliates.
    (b) Preparer and summary of the report, opinion or appraisal. For 
each report, opinion or appraisal described in response to paragraph (a) 
of this section or any negotiation or report described in response to 
Item 1014(d) of Regulation M-A (Sec. 229.1014) or Item 14(b)(6) of 
Schedule 14A (Sec. 240.14a-101 of this chapter) concerning the terms of 
the transaction:
    (1) Identify the outside party and/or unaffiliated representative;
    (2) Briefly describe the qualifications of the outside party and/or 
unaffiliated representative;
    (3) Describe the method of selection of the outside party and/or 
unaffiliated representative;
    (4) Describe any material relationship that 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 the relationship 
between:
    (i) The outside party, its affiliates, and/or unaffiliated 
representative; and
    (ii) The subject company or its affiliates;
    (5) If the report, opinion or appraisal relates to the fairness of 
the consideration, state whether the subject company or affiliate 
determined the amount of consideration to be paid or whether the outside 
party recommended the amount of consideration to be paid; and
    (6) Furnish a summary concerning the negotiation, report, opinion or 
appraisal. The summary must include, but need 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 subject company or affiliate; and any limitation 
imposed by the subject company or affiliate on the scope of the 
investigation.

    Instruction to Item 1015(b):
    The information called for by paragraphs (b)(1), (2) and (3) of this 
section must be given with respect to the firm that provides the report, 
opinion or appraisal rather than the employees of the firm that prepared 
the report.

    (c) Availability of documents. Furnish a statement to the effect 
that the report, opinion or appraisal will be made available for 
inspection and copying at the principal executive offices of the subject 
company or affiliate during its

[[Page 483]]

regular business hours by any interested equity security holder of the 
subject company or representative who has been so designated in writing. 
This statement also may provide that a copy of the report, opinion or 
appraisal will be transmitted by the subject company or affiliate to any 
interested equity security holder of the subject company or 
representative who has been so designated in writing upon written 
request and at the expense of the requesting security holder.



Sec. 229.1016  (Item 1016) Exhibits.

    File as an exhibit to the schedule:
    (a) Any disclosure materials furnished to security holders by or on 
behalf of the filing person, including:
    (1) Tender offer materials (including transmittal letter);
    (2) Solicitation or recommendation (including those referred to in 
Item 1012 of Regulation M-A (Sec. 229.1012));
    (3) Going-private disclosure document;
    (4) Prospectus used in connection with an exchange offer where 
securities are registered under the Securities Act of 1933; and
    (5) Any other disclosure materials;
    (b) Any loan agreement referred to in response to Item 1007(d) of 
Regulation M-A (Sec. 229.1007(d));

    Instruction to Item 1016(b):
    If the filing relates to a third-party tender offer and a request is 
made under Item 1007(d) of Regulation M-A (Sec. 229.1007(d)), the 
identity of the bank providing financing may be omitted from the loan 
agreement filed as an exhibit.

    (c) Any report, opinion or appraisal referred to in response to Item 
1014(d) or Item 1015 of Regulation M-A (Sec. 229.1014(d) or 
Sec. 229.1015);
    (d) Any document setting forth the terms of any agreement, 
arrangement, understanding or relationship referred to in response to 
Item 1005(e) or Item 1011(a)(1) of Regulation M-A (Sec. 229.1005(e) or 
Sec. 229.1011(a)(1));
    (e) Any agreement, arrangement or understanding referred to in 
response to Sec. 229.1005(d), or the pertinent portions of any proxy 
statement, report or other communication containing the disclosure 
required by Item 1005(d) of Regulation M-A (Sec. 229.1005(d));
    (f) A detailed statement describing security holders' appraisal 
rights and the procedures for exercising those appraisal rights referred 
to in response to Item 1004(d) of Regulation M-A (Sec. 229.1004(d));
    (g) Any written instruction, form or other material that is 
furnished to persons making an oral solicitation or recommendation by or 
on behalf of the filing person for their use directly or indirectly in 
connection with the transaction; and
    (h) Any written opinion prepared by legal counsel at the filing 
person's request and communicated to the filing person pertaining to the 
tax consequences of the transaction.

              Exhibit Table to Item 1016 of Regulation M-A
------------------------------------------------------------------------
                                    13E-3          TO           14D-9
------------------------------------------------------------------------
Disclosure Material...........            X             X             X
Loan Agreement................            X             X   ............
Report, Opinion or Appraisal..            X   ............  ............
Contracts, Arrangements or                X             X             X
 Understandings...............
Statement re: Appraisal Rights            X   ............  ............
Oral Solicitation Materials...            X             X             X
Tax Opinion                     ............            X   ............
------------------------------------------------------------------------



PART 230--GENERAL RULES AND REGULATIONS, SECURITIES ACT OF 1933--Table of Contents




                                 General

Sec.
230.100  Definitions of terms used in the rules and regulations.
230.110  Business hours of the Commission.
230.111  Payment of fees.
230.120  Inspection of registration statements.
230.122  Nondisclosure of information obtained in the course of 
          examinations and investigations.
230.130  Definition of ``rules and regulations'' as used in certain 
          sections of the Act.

[[Page 484]]

230.131  Definition of security issued under governmental obligations.
230.132  Definition of ``common trust fund'' as used in section 3(a)(2) 
          of the Act.
230.133  Definition for purposes of section 5 of the Act, of ``sale'', 
          ``offer'', ``offer to sell'', and ``offer for sale''''.
230.134  Communications not deemed a prospectus.
230.134a  Options material not deemed a prospectus.
230.134b  Statements of additional information.
230.135  Notice of proposed registered offerings.
230.135a  Generic advertising.
230.135b  Materials not deemed an offer to sell or offer to buy nor a 
          prospectus.
230.135c  Notice of certain proposed offerings.
230.135d  [Reserved]
230.135e  Offshore press conferences, meetings with issuer 
          representatives conducted offshore, and press-related 
          materials released offshore.
230.136  Definition of certain terms in relation to assessable stock.
230.137  Definition of ``offers'', ``participates'', or 
          ``participation'' in section 2(11) in relation to certain 
          publications by persons independent of participants in a 
          distribution.
230.138  Definition of ``offer for sale'' and ``offer to sell'' in 
          sections 2(10) and 5(c) in relation to certain publications.
230.139  Definition of ``offer for sale'' and ``offer to sell'' in 
          sections 2(10) and 5(c) in relation to certain publications.
230.140  Definition of ``distribution'' in section 2(11) for certain 
          transactions.
230.141  Definition of ``commission from an underwriter or dealer not in 
          excess of the usual and customary distributors' or sellers' 
          commissions'' in section 2(11), for certain transactions.
230.142  Definition of ``participates'' and ``participation'', as used 
          in section 2(11), in relation to certain transactions.
230.143  Definition of ``has purchased'', ``sells for'', 
          ``participates'', and ``participation'', as used in section 
          2(11), in relation to certain transactions of foreign 
          governments for war purposes.
230.144  Persons deemed not to be engaged in a distribution and 
          therefore not underwriters.
230.144A  Private resales of securities to institutions.
230.145  Reclassification of securities, mergers, consolidations and 
          acquisitions of assets.
230.146  Rules under section 18 of the Act.
230.147  ``Part of an issue'', ``person resident'', and ``doing business 
          within'' for purposes of section 3(a)(11).
230.148  [Reserved]
230.149  Definition of ``exchanged'' in section 3(a)(9), for certain 
          transactions.
230.150  Definition of ``commission or other remuneration'' in section 
          3(a)(9), for certain transactions.
230.151  Safe harbor definition of certain ``annuity contracts or 
          optional annuity contracts'' within the meaning of section 
          3(a)(8).
230.152  Definition of ``transactions by an issuer not involving any 
          public offering'' in section 4(2), for certain transactions.
230.152a  Offer or sale of certain fractional interests.
230.153  Definition of ``preceded by a prospectus'', as used in section 
          5(b)(2), in relation to certain transactions.
230.153a  Definition of ``preceded by a prospectus'' as used in section 
          5(b)(2) of the Act, in relation to certain transactions 
          requiring approval of security holders.
230.153b  Definition of ``preceded by a prospectus'', as used in section 
          5(b)(2), in connection with certain transactions in 
          standardized options.
230.154  Delivery of prospectuses to investors at the same address.
230.155  Integration of abandoned offerings.
230.156  Investment company sales literature.
230.157  Small entities under the Securities Act for purposes of the 
          Regulatory Flexibility Act.
230.158  Definitions of certain terms in the last paragraph of section 
          11(a).
230.160  Registered investment company exemption from Section 101(c)(1) 
          of the Electronic Signatures in Global and National Commerce 
          Act.
230.161  Amendments to rules and regulations governing exemptions.
230.162  Submission of tenders in registered exchange offers.
230.165  Offers made in connection with a business combination 
          transaction.
230.166  Exemption from section 5(c) for certain communications in 
          connection with business combination transactions.
230.170  Prohibition of use of certain financial statements.
230.171  Disclosure detrimental to the national defense or foreign 
          policy.
230.174  Delivery of prospectus by dealers; exemptions under section 
          4(3) of the Act.
230.175  Liability for certain statements by issuers.
230.176  Circumstances affecting the determination of what constitutes 
          reasonable investigation and reasonable grounds for belief 
          under section 11 of the Securities Act.
230.180  Exemption from registration of interests and participations 
          issued in connection with certain H.R. 10 plans.
230.215  Accredited investor.

[[Page 485]]

                   Regulation A-R--Special Exemptions

230.236  Exemption of shares offered in connection with certain 
          transactions.
230.237  Exemption for offers and sales to certain Canadian tax-deferred 
          retirement savings accounts.
230.238  Exemption for standardized options.

            Regulation A--Conditional Small Issues Exemption

230.251  Scope of exemption.
230.252  Offering statement.
230.253  Offering circular.
230.254  Solicitation of interest document for use prior to an offering 
          statement.
230.255  Preliminary Offering Circulars.
230.256  Filing of sales material.
230.257  Reports of sales and use of proceeds.
230.258  Suspension of the exemption.
230.259  Withdrawal or abandonment of offering statements.
230.260  Insignificant deviations from a term, condition or requirement 
          of Regulation A.
230.261  Definitions.
230.262  Disqualification provisions.
230.263  Consent to Service of Process.
230.300-230.346  [Reserved]

                       Regulation C--Registration

230.400  Application of Secs. 230.400 to 230.494, inclusive.

                          general requirements

230.401  Requirements as to proper form.
230.401a  Requirements as to proper form.
230.402  Number of copies; binding; signatures.
230.403  Requirements as to paper, printing, language and pagination.
230.404  Preparation of registration statement.
230.405  Definitions of terms.
230.406  Confidential treatment of information filed with the 
          Commission.
230.408  Additional information.
230.409  Information unknown or not reasonably available.
230.410  Disclaimer of control.
230.411  Incorporation by reference.
230.412  Modified or superseded documents.
230.413  Registration of additional securities.
230.414  Registration by certain successor issuers.
230.415  Delayed or continuous offering and sale of securities.
230.416  Securities to be issued as a result of stock splits, stock 
          dividends and anti-dilution provisions and interests to be 
          issued pursuant to certain employee benefit plans.
230.417  Date of financial statements.
230.418  Supplemental information.
230.419  Offerings by blank check companies.

                    form and content of prospectuses

230.420  Legibility of prospectus.
230.421  Presentation of information in prospectuses.
230.423  Date of prospectuses.
230.424  Filing of prospectuses; number of copies.
230.425  Filing of certain prospectuses and communications under 
          Sec. 230.135 in connection with business combination 
          transactions.
230.427  Contents of prospectus used after nine months.
230.428  Documents constituting a section 10(a) prospectus for Form S-8 
          registration statement; requirements relating to offerings of 
          securities registered on Form S-8.
230.429  Prospectus relating to several registration statements.
230.430  Prospectus for use prior to effective date.
230.430A  Prospectus in a registration statement at the time of 
          effectiveness.
230.431  Summary prospectuses.
230.432  Additional information required to be included in prospectuses 
          relating to tender offers.
230.434  Prospectus delivery requirements in firm commitment 
          underwritten offerings of securities for cash.

                            written consents

230.436  Consents required in special cases.
230.437  Application to dispense with consent.
230.437a  Written consents.
230.438  Consents of persons about to become directors.
230.439  Consent to use of material incorporated by reference.
230.445-30.447  [Reserved]

                      filing; fees; effective date

230.455  Place of filing.
230.456  Date of filing.
230.457  Computation of fee.
230.459  Calculation of effective date.
230.460  Distribution of preliminary prospectus.
230.461  Acceleration of effective date.
230.462  Immediate effectiveness of certain registration statements and 
          post-effective amendments.
230.463  Report of offering of securities and use of proceeds therefrom.
230.464  Effective date of post-effective amendments to registration 
          statements filed on Form S-8 and on certain Forms S-3, S-4, F-
          2 and F-3.
230.466  Effective date of certain registration statements on Form F-6.
230.467  Effectiveness of registration statements and post-effective 
          amendments thereto made on Forms F-7, F-8, F-9, F-10 and F-80.

[[Page 486]]

                         amendments; withdrawals

230.470  Formal requirements for amendments.
230.471  Signatures to amendments.
230.472  Filing of amendments; number of copies.
230.473  Delaying amendments.
230.474  Date of filing of amendments.
230.475  Amendment filed with consent of Commission.
230.475a  Certain pre-effective amendments deemed filed with the consent 
          of the Commission.
230.476  Amendment filed pursuant to order of Commission.
230.477  Withdrawal of registration statement or amendment.
230.478  Powers to amend or withdraw registration statement.
230.479  Procedure with respect to abandoned registration statements and 
          post-effective amendments.

          investment companies; business development companies

230.480  Title of securities.
230.481  Information required in prospectuses.
230.482  Advertising by an investment company as satisfying requirements 
          of section 10.
230.483  Exhibits for certain registration statements.
230.484  Undertaking required in certain registration statements.
230.485  Effective date of post-effective amendments filed by certain 
          registered investment companies.
230.486  Effective date of post-effective amendments and registration 
          statements filed by certain closed-end management investment 
          companies.
230.487  Effectiveness of registration statements filed by certain unit 
          investment trusts.
230.488  Effective date of registration statements relating to 
          securities to be issued in certain business combination 
          transactions.
230.489  Filing of form by foreign banks and insurance companies and 
          certain of their holding companies and finance subsidiaries.

  registration by foreign governments or political subdivisions thereof

230.490  Information to be furnished under paragraph (3) of Schedule B.
230.491  Information to be furnished under paragraph (6) of Schedule B.
230.492  Omissions from prospectuses.
230.493  Additional Schedule B disclosure and filing requirements.
230.494  Newspaper prospectuses.
230.495  Preparation of registration statement.
230.496  Contents of prospectus and statement of additional information 
          used after nine months.
230.497  Filing of investment company prospectuses--number of copies.
230.498  Profiles for certain open-end management investment companies.

 Regulation D--Rules Governing the Limited Offer and Sale of Securities 
          Without Registration Under the Securities Act of 1933

230.501  Definitions and terms used in Regulation D.
230.502  General conditions to be met.
230.503  Filing of notice of sales.
230.504  Exemption for limited offerings and sales of securities not 
          exceeding $1,000,000.
230.505  Exemption for limited offers and sales of securities not 
          exceeding $5,000,000.
230.506  Exemption for limited offers and sales without regard to dollar 
          amount of offering.
230.507  Disqualifying provision relating to exemptions under 
          Secs. 230.504, 230.505 and 230.506.
230.508  Insignificant deviations from a term, condition or requirement 
          of Regulation D.

  Regulation E--Exemption for Securities of Small Business Investment 
                                Companies

230.601  Definitions of terms used in Secs. 230.601 to 230.610a.
230.602  Securities exempted.
230.603  Amount of securities exempted.
230.604  Filing of notification on Form 1-E.
230.605  Filing and use of the offering circular.
230.606  Offering not in excess of $100,000.
230.607  Sales material to be filed.
230.608  Prohibition of certain statements.
230.609  Reports of sales hereunder.
230.610  Suspension of exemption.
230.610a  Schedule A: Contents of offering circular for small business 
          investment companies; Schedule B: Contents of offering 
          circular for business development companies.
230.651-230.656  [Reserved]
230.701  Exemption for offers and sales of securities pursuant to 
          certain compensatory benefit plans and contracts relating to 
          compensation.
230.702(T)-230.703(T)  [Reserved]

   exemptions for cross-border rights offerings, exchange offers and 
                          business combinations

Sec. 230.800  Definitions for Secs. 230.800, 230.801, and 230.802.
Sec. 230.801  Exemption in connection with a rights offering.

[[Page 487]]

Sec. 230.802  Exemption for offerings in connection with an exchange 
          offer or business combination for the securities of foreign 
          private issuers.

 Regulation S--Rules Governing Offers and Sales Made Outside the United 
      States Without Registration Under the Securities Act of 1933

                            preliminary notes

Sec. 230.901  General statement.
Sec. 230.902  Definitions.
Sec. 230.903  Offers or sales of securities by the issuer, a 
          distributor, any of their respective affiliates, or any person 
          acting on behalf of any of the foregoing; conditions relating 
          to specific securities.
Sec. 230.904  Offshore resales.
Sec. 230.905  Resale limitations.

 Regulation CE--Coordinated Exemptions for Certain Issues of Securities 
                         Exempt Under State Law

Sec. 230.1001  Exemption for transactions exempt from qualification 
          under Sec. 25102(n) of the California Corporations Code.

    Authority: 15 U.S.C. 77b, 77c, 77d, 77f, 77g, 77h, 77j, 77r, 77s, 
77sss, 77z-3, 78c, 78d, 78l, 78m, 78n, 78o, 78t, 78w, 78ll(d), 78mm, 
79t, 80a-8, 80a-24, 80a-28, 80a-29, 80a-30, and 80a-37, unless otherwise 
noted.
Section 230.151 is also issued under 15 U.S.C. 77s(a).
    Section 230.160 is also issued under Section 104(d) of the 
Electronic Signatures Act.
    Sections 230.400 to 230.499 issued under 15 U.S.C. 77f, 77h, 77j, 
77s, unless otherwise noted.
    Section 230.473 is also issued under 15 U.S.C. 79(t).
    Section 230.502 is also issued under 15 U.S.C. 80a-8, 80a-29, 80a-
30.

    Editorial Note: Nomenclature changes to part 230 appear at 57 FR 
36501, Aug. 13, 1992, and 57 FR 47409, Oct. 16, 1992.

                       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

    Note: In Secs. 230.100 to 230.174, the numbers to the right of the 
decimal point correspond with the respective rule numbers in general 
rules and regulations adopted by the Securities and Exchange Commission 
under the Securities Act of 1933.

    Cross Reference: For regulations governing registration, see 
Secs. 230.400--230.494.



Sec. 230.100  Definitions of terms used in the rules and regulations.

    (a) As used in the rules and regulations prescribed in this part by 
the Securities and Exchange Commission pursuant to the Securities Act of 
1933, unless the context otherwise requires:
    (1) The term Commission means the Securities and Exchange 
Commission.
    (2) The term Act means the Securities Act of 1933.
    (3) The term rules and regulations refers to all rules and 
regulations adopted by the Commission pursuant to the Act, including the 
forms and accompanying instructions thereto.
    (4) The term registrant means the issuer of securities for which a 
registration statement is filed.
    (5) The term agent for service means the person authorized in the 
registration statement to receive notices and communications from the 
Commission.
    (6) 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).
    (7) 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 provided, the terms used in this 
part shall have the meanings defined in the act.
    (c) A rule in the general rules and regulations 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 
requires.

[2 FR 1076, May 26, 1937, as amended at 21 FR 7566, Oct. 3, 1956; 58 FR 
14669, Mar. 18, 1993]



Sec. 230.110  Business hours of the Commission.

    (a) General. The principal office of the Commission, at 450 Fifth 
Street, NW., Washington, DC 20549, is open each day,

[[Page 488]]

except Saturdays, Sundays, and federal holidays, from 9 a.m. to 5:30 
p.m., Eastern Standard Time or Eastern Daylight Saving Time, whichever 
is currently in effect, 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), (c) and (d) of this section.
    (b) Submissions made in paper or on magnetic cartridge. Paper 
documents filed with or otherwise furnished to the Commission, as well 
as electronic filings and submissions on magnetic cartridge 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) Filings by direct transmission. 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.
    (d) Filings by facsimile. Registration statements and post-effective 
amendments thereto filed by facsimile transmission pursuant to Rule 
462(b) (Sec. 230.462(b)) and Rule 455 (Sec. 230.455) may be filed with 
the Commission each day, except Saturdays, Sundays and federal holidays, 
from 5:30 p.m. to 10 p.m., Eastern Standard Time or Eastern Daylight 
Savings Time, whichever is currently in effect.

[58 FR 14669, Mar. 18, 1993, as amended at 60 FR 26615, May 17, 1995; 65 
FR 24799, Apr. 27, 2000]



Sec. 230.111  Payment of fees.

    (a) All payments of fees for registration statements under the Act 
shall be made in cash or by U.S. postal money order, certified check, 
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. In addition, all other filing fees may be paid by personal 
check. There will be no refunds.
    (b) Notwithstanding paragraph (a) of this section, for registration 
statements filed pursuant to Rule 462(b) (Sec. 230.462(b)) and Rule 
110(d) (Sec. 230.110(d)), payment of filing fees for the purposes of 
this section may be made by:
    (1) The registrant or its agent instructing its bank or a wire 
transfer service to transmit to the Commission the applicable filing fee 
by a wire transfer of such amount from the issuer's account or its 
agent's account to the Commission's account at Mellon Bank as soon as 
practicable but no later than the close of the next business day 
following the filing of the registration statement; and
    (2) The registrant submitting with the registration statement at the 
time of filing a certification that:
    (i) The registrant or its agent has so instructed its bank or a wire 
transfer service;
    (ii) The registrant or its agent will not revoke such instructions; 
and
    (iii) The registrant or its agent has sufficient funds in such 
account to cover the amount of such filing fee.
    Note to paragraph(b): Such instructions may be sent on the date of 
filing the registration statement after the close of business of such 
bank or wire transfer service, provided that the registrant undertakes 
in the certification sent to the Commission with the registration 
statement that it will confirm receipt of such instructions by the bank 
or wire transfer service during regular business hours on the following 
business day.

[37 FR 1471, Jan. 29, 1972, as amended at 49 FR 27307, July 3, 1984; 60 
FR 26615, May 17, 1995; 61 FR 49959, Sept. 24, 1996]



Sec. 230.120  Inspection of registration statements.

    Except for material contracts or portions thereof accorded 
confidential treatment pursuant to Sec. 230.406, all registration 
statements are available for public inspection, during business hours, 
at the principal office of the Commission in Washington, D.C. Electronic 
registration statements made through the Electronic Data Gathering, 
Analysis, and Retrieval system are publicly available through the 
Commission's Web site (http://www.sec.gov).

[61 FR 24654, May 15, 1996]

[[Page 489]]



Sec. 230.122  Non-disclosure of information obtained in the course of 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 8(e) or 20(a) (48 Stat. 80, 86; 15 U.S.C. 77h(e), 77t(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 on 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, 89b-11, 78d-1))

[44 FR 50836, Aug. 30, 1979, as amended at 53 FR 17459, May 17, 1988; 54 
FR 33501, Aug. 15, 1989]



Sec. 230.130  Definition of ``rules and regulations'' as used in certain sections of the Act.

    The term rules and regulations as used in sections 7, 10 (a), (c) 
and (d) and 19(a) of the Act, shall include the forms for registration 
of securities under the Act and the related instructions thereto.

[21 FR 1046, Feb. 15, 1956]



Sec. 230.131  Definition of security 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)(2) 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 2(l) 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)(2) of the Act, having other resources which may be used for 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.

(15 U.S.C. 77w)

[33 FR 12648, Sept. 6, 1968, as amended at 35 FR 6000, Apr. 11, 1970]



Sec. 230.132  Definition of ``common trust fund'' as used in section 3(a)(2) of the Act.

    The term common trust fund as used in section 3(a)(2) of the Act (15 
U.S.C. 77c(a)(2)) shall include a common trust fund which is maintained 
by a bank

[[Page 490]]

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 
entry; 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. 77s(a))

[43 FR 2392, Jan. 17, 1978]



Sec. 230.133  Definition for purposes of section 5 of the Act, of ``sale'', ``offer'', ``offer to sell'', and ``offer for sale''.

    (a) For purposes only of section 5 of the Act, no sale, offer to 
sell, or offer for sale shall be deemed to be involved so far as the 
stockholders of a corporation are concerned where, pursuant to statutory 
provisions in the state of incorporation or provisions contained in the 
certificate of incorporation, there is submitted to the vote of such 
stockholders a plan or agreement for a statutory merger or consolidation 
or reclassification of securities, or a proposal for the transfer of 
assets of such corporation to another person in consideration of the 
issuance of securities of such other person or securities of a 
corporation which owns stock possessing at least 80 percent of the total 
combined voting power of all classes of stock entitled to vote and at 
least 80 percent of the total number of shares of all other classes of 
stock of such person, under such circumstances that the vote of a 
required favorable majority (1) will operate to authorize the proposed 
transaction as far as concerns the corporation whose stockholders are 
voting (except for the taking of action by the directors of the 
corporation involved and for compliance with such statutory provisions 
as the filing of the plan or agreement with the appropriate State 
authority), and (2) will bind all stockholders of such corporation 
except to the extent that dissenting shareholders may be entitled, under 
statutory provisions or provisions contained in the certificate of 
incorporation, to receive the appraised or fair value of their holdings.
    (b) Any person who purchases securities of the issuer from security 
holders of a constituent corporation with a view to, or offers or sells 
such securities for such security holders in connection with, a 
distribution thereof pursuant to any contract or arrangement, made in 
connection with any transaction specified in paragraph (a) of this 
section, with the issuer or with any affiliate of the issuer, or with 
any person who in connection with such transaction is acting as an 
underwriter of such securities, shall be deemed to an underwriter of 
such securities within the meaning of section 2(11) of the Act. This 
paragraph does not refer to arrangements limited to provision for the 
matching and combination of fractional interests in securities into 
whole interests, or the purchase and sale of such fractional interests, 
among security holders of the constituent corporation and to the sale on 
behalf of, and as agent for, such security holders of such number of 
fractional or whole interests as may be necessary to adjust for any 
remaining fractional interests after such matching.
    (c) Any constituent corporation, or any person who is an affiliate 
of a constituent corporation at the time any transaction specified in 
paragraph (a) of this section, is submitted to a vote of the 
stockholders of such corporation, who acquires securities of the issuer 
in connection with such transaction with a view to the distribution 
thereof shall be deemed to be an underwriter of such securities within 
the meaning of section 2(11) of the Act. A transfer by a constituent 
corporation to its security holders of securities of the issuer upon a 
complete or partial liquidation shall not be deemed a distribution for 
the purpose of this paragraph.

[[Page 491]]

    (d) Notwithstanding the provisions of paragraph (c) of this section, 
a person specified therein shall not be deemed to be an underwriter nor 
to be engaged in a distribution with respect to securities acquired in 
any transaction specified in paragraph (a) of this section, which are 
sold by him in brokers' transactions within the meaning of section 4(4) 
of the Act, in accordance with the conditions and subject to the 
limitations specified in paragraph (e) of this section, if such person:
    (1) Does not directly or indirectly solicit or arrange for the 
solicitation of orders to buy in anticipation of or in connection with 
such brokers' transactions;
    (2) Makes no payment in connection with the execution of such 
brokers' transactions to any person other than the broker; and
    (3) Limits such brokers' transactions to a sale or series of sales 
which, together with all other sales of securities of the same class by 
such person or on his behalf within the preceding six months, will not 
exceed the following:
    (i) If the security is traded only otherwise than on a securities 
exchange, approximately one percent of the shares or units of such 
security outstanding at the time of receipt by the broker of the order 
to execute such transactions, or
    (ii) If the security is admitted to trading on a securities 
exchange, the lesser of approximately (a) one percent of the shares or 
units of such security outstanding at the time of receipt by the broker 
of the order to execute such transactions or (b) the largest aggregate 
reported volume of trading on securities exchanges during any one week 
within the four calendar weeks preceding the receipt of such order.
    (e) For the purposes of paragraph (d) of this section:
    (1) The term brokers' transactions in section 4(4) of the Act shall 
be deemed to include transactions by a broker acting as agent for the 
account of the seller where:
    (i) The broker performs no more than the usual and customary 
broker's functions,
    (ii) The broker does no more than execute an order or orders to sell 
as a broker and receives no more than the usual or customary broker's 
commissions,
    (iii) The broker does not solicit or arrange for the solicitation of 
orders to buy in anticipation of or in connection with such transactions 
and
    (iv) The broker is not aware of any circumstances indicating that 
his principal is failing to comply with the provisions of paragraph (d) 
of this section;
    (2) The term solicitation of such orders in section 4(4) of the Act 
shall be deemed to include the solicitation of an order to buy a 
security, but shall not be deemed to include the solicitation of an 
order to sell a security;
    (3) Where within the previous 60 days a dealer has made a written 
bid for a security or a written solicitation of an offer to sell such 
security, the term solicitation in section 4(4) shall not be deemed to 
include an inquiry regarding the dealer's bid or solicitation.
    (f) For the purposes of this rule, the term constituent corporation 
means any corporation, other than the issuer, which is a party to any 
transaction specified in paragraph (a) of this section. The term 
affiliate means a person controlling, controlled by or under common 
control with a specified person.
    Note: This section is rescinded effective on and after January 1, 
1973, except that it shall remain in effect: (1) For transactions 
submitted before that date for vote or consent of security holders; (2) 
for transactions formally submitted before such date for approval to any 
governmental regulatory agency, if such approval is required by law; and 
(3) for resales of securities received by persons in such transactions.

(Sec. 5, 48 Stat. 77; 15 U.S.C. 77e)

[19 FR 7129, Nov. 3, 1954, as amended at 24 FR 5900, July 23, 1959; 30 
FR 2022, Feb. 13, 1965; 33 FR 566, Jan. 17, 1968. Rescinded at 37 FR 
23636, Nov. 7, 1972]



Sec. 230.134  Communications not deemed a prospectus.

    The term prospectus as defined in section 2(10) of the Act shall not 
include a notice, circular, advertisement, letter, or other 
communication published or transmitted to any person after a 
registration statement has been filed if it contains only the statements 
required or permitted to be included therein by the following provisions 
of this section:

[[Page 492]]

    (a) Such communication may include any one or more of the following 
items of information, which need not follow the numerical sequence of 
this paragraph:
    (1) The name of the issuer of the security;
    (2) The full title of the security and the amount being offered;
    (3) A brief indication of the general type of business of the 
issuer, limited to the following:
    (i) In the case of a manufacturing company, the general type of 
manufacturing and the principal products or classes of products 
manufactured;
    (ii) In the case of a public utility company, the general type of 
services rendered and a brief indication of the area served;
    (iii) In the case of an investment company registered under the 
Investment Company Act of 1940, the company's classification and 
subclassification under the Act, whether it is a balanced, specialized, 
bond, preferred stock or common stock fund and whether in the selection 
of investments emphasis is placed upon income or growth characteristics, 
and a general description of an investment company including its general 
attributes, methods of operation and services offered provided that such 
description is not inconsistent with the operation of the particular 
investment company for which more specific information is being given, 
identification of the company's investment adviser, any logo, corporate 
symbol or trademark of the company or its investment adviser and any 
graphic design or device or an attention-getting headline, not involving 
performance figures, designed to direct the reader's attention to 
textual material included in the communication pursuant to other 
provisions of this rule; and, with respect to an investment company 
issuing redeemable securities:
    (A) A description of such company's investment objectives and 
policies, services, and method of operation;
    (B) Identification of the company's principal officers;
    (C) The year of incorporation or organization or period of existence 
of the company, its investment adviser, or both;
    (D) The company's aggregate net asset value as of the most recent 
practicable date;
    (E) The aggregate net asset value as of the most recent practicable 
date of all registered investment companies under the management of the 
company's investment adviser;
    (F) Any pictorial illustration which is appropriate for inclusion in 
the company's prospectus and not involving performance figures;
    (G) Descriptive material relating to economic conditions, or to 
retirement plans or other goals to which an investment in the company 
could be directed, but not directly or indirectly relating to past 
performance or implying achievement of investment objectives; Provided, 
That, (1) if any printed material permitted by paragraphs (a)(3)(iii) 
(A) through (G) of this section is included, such communication shall 
also contain the following legend set in a size type at least as large 
as and of a style different from, but at least as prominent as, that 
used in the major portion of the advertisement; and
    (H) Written notice of the terms of an offer made solely to all 
registered holders of the securities, or of a particular class or series 
of securities, issued by the company proportate to their holdings, 
offering to sell additional shares to such holders of securities at 
prices reflecting a reduction in, or elimination of, the regular sales 
load charged: Provided, That, (1) if any printed material permitted by 
pargraphs (a)(3)(iii) (A) through (H) of this section is included, such 
communication shall also contain the following legend set in a size type 
at least as large as and of a style different from, but at least as 
prominent as, that used in the major portion of the advertisements:

For more complete information about (Name of Company) including charges 
and expenses (get) (obtain) (send for) a prospectus (from (Name and 
Address)) (by sending this coupon). Read it carefully before you invest 
or (pay) (forward funds) (send money).


Or, (2) if any material permitted by paragraphs (a)(3)(iii) (A) through 
(G) of this section is used in a radio or television advertisement, such 
communication shall also contain the following legend given emphasis 
equal to

[[Page 493]]

that used in the major portion of the advertisement:

For more complete information about (Name of Company) including charges 
and expenses (get) (obtain) (send for) a prospectus (from (Name and 
Address)). Read it carefully before you invest or (pay) (forward funds) 
(send money).


For purposes of paragraph (a)(3)(iii)(B) of this section, principal 
officers means the president in charge of a principal business function 
and any other person who performs similar policy making functions for 
the company on a regular basis. In the case of two or more registered 
investment companies having the same investment adviser or principal 
underwriter, the same information described in this paragraph 
(a)(3)(iii) may be included as to each such company in a joint 
communication on the same basis as it is permitted in communications 
dealing with individual companies under this paragraph (a)(3)(iii).
    (iv) In the case of any other type of company, a corresponding 
statement;
    (4) The price of the security, or if the price is not known, the 
method of its determination or the probable price range as specified by 
the issuer or the managing underwriter;
    (5) In the case of a debt security with a fixed (non-contingent) 
interest provision, the yield or, if the yield is not known, the 
probable yield range, as specified by the issuer or the managing 
underwriter;
    (6) The name and address of the sender of the communication and the 
fact that he is participating, or expects to participate, in the 
distribution of the security;
    (7) The names of the managing underwriters;
    (8) The approximate date upon which it is anticipated the proposed 
sale to the public will commence;
    (9) Whether, in the opinion of counsel, the security is a legal 
investment for savings banks, fiduciaries, insurance companies, or 
similar investors under the laws of any State or Territory or the 
District of Columbia;
    (10) Whether, in the opinion of counsel, the security is exempt from 
specified taxes, or the extent to which the issuer has agreed to pay any 
tax with respect to the security or measured by the income therefrom;
    (11) Whether the security is being offered through rights issued to 
security holders, and, if so, the class of securities the holders of 
which will be entitled to subscribe, the subscription ratio, the actual 
or proposed record date, the date upon which the rights were issued or 
are expected to be issued, the actual or anticipated date upon which 
they will expire, and the approximate subscription price, or any of the 
foregoing;
    (12) Any statement or legend required by any state law or 
administrative authority; and
    (13) A communication concerning the securities of a registered 
investment company may also include any one or more of the following 
items of information: Offers, descriptions, and explanations of any 
products and services not constituting securities subject to 
registration under the Securities Act of 1933, and descriptions of 
corporations provided that such offers, descriptions and explanations do 
not relate directly to the desirability of owning or purchasing a 
security issued by a registered investment company and that all direct 
references in such communications to a security issued by a registered 
investment company contain only the statements required or permitted to 
be included therein by the other provisions of this rule, and that all 
such direct references be placed in a separate and enclosed area in the 
communication.
    (14)(i) With respect to any class of debt securities, any class of 
convertible debt securities or any class of preferred stock, the 
security rating or ratings assigned to the class of securities by any 
nationally recognized statistical rating organization and the name or 
names of the nationally recognized statistical rating organization(s) 
which assigned such rating(s), and with respect to any class of debt 
securities, any class of convertible debt securities or any class of 
preferred stock registered on Form F-9 (Sec. 239.39 of this chapter), 
the security rating or ratings assigned to the class of securities by 
any other rating organization specified in the Instruction to paragraph 
(a)(2) of General Instruction I of Form F-9 and

[[Page 494]]

the name or names of the rating organization or organizations which 
assigned such rating(s).
    (ii) For the purpose of paragraph (a)(14)(i) of this section, the 
term nationally recognized statistical rating organization shall have 
the same meaning as used in Rule 15c-3-1(c)(2)(vi)(F) under the 
Securities Exchange Act of 1934 (17 CFR 240.15c3-1(c)(2)(vi)(F)).
    (b) Except as provided in paragraph (c) of this section, every 
communication used pursuant to this section shall contain the following:
    (1) If the registration statement has not yet become effective, the 
following statement:

A registration statement relating to these securities has been filed 
with the Securities and Exchange Commission but has not yet become 
effective. These securities may not be sold nor may offers to buy be 
accepted prior to the time the registration statement becomes effective. 
This (communication) shall not constitute an offer to sell or the 
solicitation of an offer to buy nor shall there be any sale of these 
securities in any State in which such offer, solicitation or sale would 
be unlawful prior to registration or qualification under the securities 
laws of any such State.

    (2) A statement whether the security is being offered in connection 
with a distribution by the issuer or by a security holder, or both, and 
whether the issue represents new financing or refunding or both; and
    (3) The name and address of a person or persons from whom a written 
prospectus meeting the requirements of section 10 of the Act may be 
obtained.
    (c) Any of the statements or information specified in paragraph (b) 
of this section may, but need not, be contained in a communication: (i) 
Which does no more than state from whom a written prospectus meeting the 
requirements of section 10 of the Act may be obtained, identify the 
security, state the price thereof and state by whom orders will be 
executed; or (ii) which is accompanied or preceded by a prospectus or a 
summary prospectus which meets the requirements of section 10 of the act 
at the date of such preliminary communication.
    (d) A communication sent or delivered to any person pursuant to this 
rule which is accompanied or preceded by a prospectus which meets the 
requirements of section 10 of the Act at the date of such communication, 
may solicit from the recipient of the communication an offer to buy the 
security or request the recipient to indicate, upon an enclosed or 
attached coupon or card, or in some other manner, whether he might be 
interested in the security, if the communication contains substantially 
the following statement:

No offer to buy the securities can be accepted and no part of the 
purchase price can be received until the registration statement has 
become effective, and any such offer may be withdrawn or revoked, 
without obligation or commitment of any kind, at any time prior to 
notice of its acceptance given after the effective date. An indication 
of interest in response to this advertisement will involve no obligation 
or commitment of any kind.


Provided, That such statement need not be included in such a 
communication to a dealer if the communication refers to a prior 
communication to the dealer, with respect to the same security, in which 
the statement was included.

    (e) In the case of an investment company registered under the 
Investment Company Act of 1940 that holds itself out as a ``money market 
fund,'' a communication used under this section

[[Page 495]]

shall contain the disclosure required by Sec. 230.482(a)(7).

(Sec. 2, 48 Stat. 74, as amended; 15 U.S.C. 77b; secs. 2(10), 10(b), 
10(c), 10(d), 10(f), and 19(a) of the 1933 Act (15 U.S.C. 77b(10), 
77j(b), 77j(c), 77j(d), 77j(f) and 77s(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, 68 Stat. 685; sec. 308(a)(2), 90 Stat. 57; secs. 
3(b), 12, 13, 14, 15(d), 23(a), 48 Stat. 882, 892, 894, 895, 901; secs. 
203(a), 1, 3, 8, 49 Stat. 704, 1375, 1377, 1379; sec. 202, 68 Stat. 686; 
secs. 4, 5, 6(d), 78 Stat. 569, 570-574; secs. 1, 2, 3, 82 Stat. 454, 
455; secs. 28(c), 1, 2, 3, 4, 5, 84 Stat. 1435, 1497; sec. 105(b), 88 
Stat. 1503; secs. 8, 9, 10, 89 Stat. 117, 118, 119; sec. 308(b), 90 Stat 
57; sec. 18, 89 Stat. 155; secs. 202, 203, 204, 91 Stat. 1494, 1498-
1500; sec. 20(a), 49 Stat. 833; sec. 319, 53 Stat. 1173; sec. 38, 54 
Stat. 841; 15 U.S.C. 77f, 77g, 77h, 77j, 77s(a), 78c(b), 78l, 78m, 78n, 
78o(d), 78w(a), 79t(a), 77sss(a), 80a-37; 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, 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))

[20 FR 6524, Sept. 3, 1955, as amended at 23 FR 184, Jan. 10, 1958; 37 
FR 10073, May 19, 1972; 39 FR 39869, Nov. 12, 1974; 40 FR 27443, June 
30, 1975; 43 FR 47495, Oct. 16, 1978; 44 FR 52818, Sept. 10, 1979; 47 FR 
11433, Mar. 16, 1982; 48 FR 19875, May 3, 1983; 58 FR 62029, Nov. 23, 
1993; 61 FR 13975, Mar. 28, 1996]



Sec. 230.134a  Options material not deemed a prospectus.

    Written materials, including advertisements, relating to 
standardized options, as that term is defined in Rule 9b-1 under the 
Securities Exchange Act of 1934, shall not be deemed to be a prospectus 
for the purposes of section 2(10) of the Securities Act of 1933; 
Provided, That such materials are limited to explanatory information 
describing the general nature of the standardized options markets or one 
or more strategies; And, Provided further, That:
    (a) The potential risks related to options trading generally and to 
each strategy addressed are explained;
    (b) No past or projected performance figures, including annualized 
rates of return are used;
    (c) No recommendation to purchase or sell any option contract is 
made;
    (d) No specific security is identified, other than
    (1) An option or other security exempt from registration under the 
Act, or
    (2) An index option, including the component securities of the 
index; and
    (e) If there is a definitive options disclosure document, as defined 
in Rule 9b-1 under the Securities Exchange Act of 1934, the materials 
shall contain the name and address of a person or persons from whom a 
copy of such document may be obtained.

(15 U.S.C. 77a et seq.; secs. 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)

[47 FR 41955, Sept. 23, 1982, as amended at 49 FR 12688, Mar. 30, 1984]



Sec. 230.134b  Statements of additional information.

    For the purpose only of Section 5(b) of the Act (15 U.S.C. 77e(b)), 
the term ``prospectus'' as defined in Section 2(a)(10) of the Act (15 
U.S.C. 77b(a)(10)) does not include a Statement of Additional 
Information filed as part of a registration statement on Form N-1A 
(Sec. 239.15A and Sec. 274.11A of this chapter), Form N-2 (Sec. 239.14 
and Sec. 274.11a-1 of this chapter), Form N-3 (Sec. 239.17a and 
Sec. 274.11b of this chapter), Form N-4 (Sec. 239.17b and Sec. 274.11c 
of this chapter), or Form N-6 (Sec. 239.17c and Sec. 274.11d of this 
chapter) transmitted prior to the effective date of the registration 
statement if it is accompanied or preceded by a preliminary prospectus 
meeting the requirements of Sec. 230.430.

[67 FR 19868, Apr. 23, 2002]



Sec. 230.135  Notice of proposed registered offerings.

    (a) When notice is not an offer. For purposes of section 5 of the 
Act (15 U.S.C. 77e) only, an issuer or a selling security holder (and 
any person acting on behalf of either of them) that publishes through 
any medium a notice of a proposed offering to be registered under the 
Act will not be deemed to offer its securities for sale through that 
notice if:

[[Page 496]]

    (1) Legend. The notice includes a statement to the effect that it 
does not constitute an offer of any securities for sale; and
    (2) Limited notice content. The notice otherwise includes no more 
than the following information:
    (i) The name of the issuer;
    (ii) The title, amount and basic terms of the securities offered;
    (iii) The amount of the offering, if any, to be made by selling 
security holders;
    (iv) The anticipated timing of the offering;
    (v) A brief statement of the manner and the purpose of the offering, 
without naming the underwriters;
    (vi) Whether the issuer is directing its offering to only a 
particular class of purchasers;
    (vii) Any statements or legends required by the laws of any state or 
foreign country or administrative authority; and
    (viii) In the following offerings, the notice may contain additional 
information, as follows:
    (A) Rights offering. In a rights offering to existing security 
holders:
    (1) The class of security holders eligible to subscribe;
    (2) The subscription ratio and expected subscription price;
    (3) The proposed record date;
    (4) The anticipated issuance date of the rights; and
    (5) The subscription period or expiration date of the rights 
offering.
    (B) Offering to employees. In an offering to employees of the issuer 
or an affiliated company:
    (1) The name of the employer;
    (2) The class of employees being offered the securities;
    (3) The offering price; and
    (4) The duration of the offering period.
    (C) Exchange offer. In an exchange offer:
    (1) The basic terms of the exchange offer;
    (2) The name of the subject company;
    (3) The subject class of securities sought in the exchange offer.
    (D) Rule 145(a) offering. In a Sec. 230.145(a) offering:
    (1) The name of the person whose assets are to be sold in exchange 
for the securities to be offered;
    (2) The names of any other parties to the transaction;
    (3) A brief description of the business of the parties to the 
transaction;
    (4) The date, time and place of the meeting of security holders to 
vote on or consent to the transaction; and
    (5) A brief description of the transaction and the basic terms of 
the transaction.
    (b) Corrections of misstatements about the offering. A person that 
publishes a notice in reliance on this section may issue a notice that 
contains no more information than is necessary to correct inaccuracies 
published about the proposed offering.

    Note to Sec. 230.135: Communications under this section relating to 
business combination transactions must be filed as required by 
Sec. 230.425(b).

[64 FR 61449, Nov. 10, 1999]



Sec. 230.135a  Generic advertising.

    (a) For the purposes only of section 5 of the Act, a notice, 
circular, advertisement, letter, sign, or other communication, published 
or transmitted to any person which does not specifically refer by name 
to the securities of a particular investment company, to the investment 
company itself, or to any other securities not exempt under section 3(a) 
of the Act, will not be deemed to offer any security for sale, provided:
    (1) Such communication is limited to any one or more of the 
following:
    (i) Explanatory information relating to securities of investment 
companies generally or to the nature of investment companies, or to 
services offered in connection with the ownership of such securities,
    (ii) The mention or explanation of investment companies of different 
generic types or having various investment objectives, such as balanced 
funds, growth funds, income funds, leveraged funds, specialty funds, 
variable annuities, bond funds, and no-load funds,
    (iii) Offers, descriptions, and explanation of various products and 
services not constituting a security subject to registration under the 
Act: Provided, That such offers, descriptions, and explanations do not 
relate directly to the

[[Page 497]]

desirability of owning or purchasing a security issued by a registered 
investment company,
    (iv) Invitation to inquire for further information, and
    (2) Such communication contains the name and address of a registered 
broker or dealer or other person sponsoring the communication.
    (b) If such communication contains a solicitation of inquiries and 
prospectuses for investment company securities are to be sent or 
delivered in response to such inquiries, the number of such investment 
companies and, if applicable, the fact that the sponsor of the 
communication is the principal underwriter or investment adviser in 
respect to such investment companies shall be stated.
    (c) With respect to any communication describing any type of 
security, service, or product, the broker, dealer, or other person 
sponsoring such communication must offer for sale a security, service, 
or product of the type described in such communication.

[37 FR 10073, May 19, 1972, as amended at 37 FR 10931, June 1, 1972]



Sec. 230.135b  Materials not deemed an offer to sell or offer to buy nor a prospectus.

    Materials meeting the requirements of Sec. 240.9b-1 of this chapter 
shall not be deemed an offer to sell or offer to buy a security for 
purposes solely of Section 5 (15 U.S.C. 77e) of the Act, nor shall such 
materials be deemed a prospectus for purposes of Sections 2(a)(10) and 
12(a)(2) (15 U.S.C. 77b(a)(10) and 77l(a)(2)) of the Act, even if such 
materials are referred to in, deemed to be incorporated by reference 
into, or otherwise in any manner deemed to be a part of a Form S-20 
prospectus.

[67 FR 228, Jan. 2, 2002]



Sec. 230.135c  Notice of certain proposed unregistered offerings.

    (a) For the purposes only of section 5 of the Act, a notice given by 
an issuer required to file reports pursuant to section 13 or 15(d) of 
the Securities Exchange Act of 1934 or a foreign issuer that is exempt 
from registration under the Securities Exchange Act of 1934 pursuant to 
Sec. 240.12g3-2(b) of this chapter that it proposes to make, is making 
or has made an offering of securities not registered or required to be 
registered under the Act shall not be deemed to offer any securities for 
sale if:
    (1) Such notice is not used for the purpose of conditioning the 
market in the United States for any of the securities offered;
    (2) Such notice states that the securities offered will not be or 
have not been registered under the Act and may not be offered or sold in 
the United States absent registration or an applicable exemption from 
registration requirements; and
    (3) Such notice contains no more than the following additional 
information:
    (i) The name of the issuer;
    (ii) The title, amount and basic terms of the securities offered, 
the amount of the offering, if any, made by selling security holders, 
the time of the offering and a brief statement of the manner and purpose 
of the offering without naming the underwriters;
    (iii) In the case of a rights offering to security holders of the 
issuer, the class of securities the holders of which will be or were 
entitled to subscribe to the securities offered, the subscription ratio, 
the record date, the date upon which the rights are proposed to be or 
were issued, the term or expiration date of the rights and the 
subscription price, or any of the foregoing;
    (iv) In the case of an offering of securities in exchange for other 
securities of the issuer or of another issuer, the name of the issuer 
and the title of the securities to be surrendered in exchange for the 
securities offered, the basis upon which the exchange may be made, or 
any of the foregoing;
    (v) In the case of an offering to employees of the issuer or to 
employees of any affiliate of the issuer, the name of the employer and 
class or classes of employees to whom the securities are offered, the 
offering price or basis of the offering and the period during which the 
offering is to be or was made or any of the foregoing; and
    (vi) Any statement or legend required by State or foreign law or 
administrative authority.
    (b) Any notice contemplated by this section may take the form of a 
news

[[Page 498]]

release or a written communication directed to security holders or 
employees, as the case may be, or other published statements.
    (c) Notwithstanding the provisions of paragraphs (a) and (b) of this 
section, in the case of a rights offering of a security listed or 
subject to unlisted trading privileges on a national securities exchange 
or quoted on the NASDAQ inter-dealer quotation system information with 
respect to the interest rate, conversion ratio and subscription price 
may be disseminated through the facilities of the exchange, the 
consolidated transaction reporting system, the NASDAQ system or the Dow 
Jones broad tape, provided such information is already disclosed in a 
Form 8-K (Sec. 249.308 of this chapter) on file with the Commission, in 
a Form 6-K (Sec. 249.306 of this chapter) furnished to the Commission 
or, in the case of an issuer relying on Sec. 240.12g3-2(b) of this 
chapter, in a submission made pursuant to that Section to the 
Commission.
    (d) The issuer shall file any notice contemplated by this section 
with the Commission under cover of Form 8-K (Sec. 249.308 of this 
chapter) or furnish such notice under Form 6-K (Sec. 249.306 of this 
chapter), as applicable, and, if relying on Sec. 240.12g3-2(b) of this 
chapter, shall furnish such notice to the Commission in accordance with 
the provisions of that exemptive Section.

[59 FR 21649, Apr. 26, 1994]



Sec. 230.135d  [Reserved]



Sec. 230.135e  Offshore press conferences, meetings with issuer representatives conducted offshore, and press-related materials released offshore.

    (a) For the purposes only of Section 5 of the Act (15 U.S.C. 77e), 
an issuer that is a foreign private issuer (as defined in Sec. 230.405) 
or a foreign government issuer, a selling security holder of the 
securities of such issuers, or their representatives will not be deemed 
to offer any security for sale by virtue of providing any journalist 
with access to its press conferences held outside of the United States, 
to meetings with issuer or selling security holder representatives 
conducted outside of the United States, or to written press-related 
materials released outside the United States, at or in which a present 
or proposed offering of securities is discussed, if:
    (1) The present or proposed offering is not being, or to be, 
conducted solely in the United States;

    Note to Paragraph (a)(1): An offering will be considered not to be 
made solely in the United States under this paragraph (a)(1) only if 
there is an intent to make a bona fide offering offshore.

    (2) Access is provided to both U.S. and foreign journalists; and
    (3) Any written press-related materials pertaining to transactions 
in which any of the securities will be or are being offered in the 
United States satisfy the requirements of paragraph (b) of this section.
    (b) Any written press-related materials specified in paragraph 
(a)(3) of this section must:
    (1) State that the written press-related materials are not an offer 
of securities for sale in the United States, that securities may not be 
offered or sold in the United States absent registration or an exemption 
from registration, that any public offering of securities to be made in 
the United States will be made by means of a prospectus that may be 
obtained from the issuer or the selling security holder and that will 
contain detailed information about the company and management, as well 
as financial statements;
    (2) If the issuer or selling security holder intends to register any 
part of the present or proposed offering in the United States, include a 
statement regarding this intention; and
    (3) Not include any purchase order, or coupon that could be returned 
indicating interest in the offering, as part of, or attached to, the 
written press-related materials.
    (c) For the purposes of this section, United States means the United 
States of America, its territories and possessions, any State of the 
United States, and the District of Columbia.

[62 FR 53954, Oct. 17, 1997]



Sec. 230.136  Definition of certain terms in relation to assessable stock.

    (a) An offer, offer to sell, or offer for sale of securities shall 
be deemed to be made to the holders of assessable stock

[[Page 499]]

of a corporation when such corporation shall give notice of an 
assessment to the holders of such assessable stock. A sale shall be 
deemed to occur when a stockholder shall pay or agree to pay all or any 
part of such an assessment.
    (b) The term transactions by any person other than an issuer, 
underwriter or dealer in section 4(1) of the Act shall not be deemed to 
include the offering or sale of assessable stock, at public auction or 
otherwise, upon the failure of the holder of such stock to pay an 
assessment levied thereon by the issuer, where the offer or sale is made 
for the purpose of realizing the amount of the assessment and any of the 
proceeds of such sale are to be received by the issuer. However, any 
person whose functions are limited to acting as auctioneer at such an 
auction sale shall not be deemed to be an underwriter of the securities 
offered or sold at the auction sale. Any person who acquires assessable 
stock at any such public auction or other sale with a view to the 
distribution thereof shall be deemed to be an underwriter of such 
assessable stock.
    (c) The term assessable stock means stock which is subject to resale 
by the issuer pursuant to statute or otherwise in the event of a failure 
of the holder of such stock to pay any assessment levied thereon.

[24 FR 6386, Aug. 8, 1959]



Sec. 230.137  Definition of ``offers'', ``participates'', or ``participation'' in section 2(11) in relation to certain publications by persons independent of 
          participants in a distribution.

    The terms offers, participates, or participation in section 2(11) of 
the Act shall not be deemed to apply to the publication or distribution 
of information, opinions or recommendations with respect to the 
securities of a registrant which is required to file reports pursuant to 
section 13 or 15(d) of the Securities Exchange Act of 1934 and proposes 
to file, has filed or has an effective registration statement under the 
Securities Act of 1933 if--
    (a) Such information, opinions, and recommendations are published 
and distributed in the regular course of its business by a broker or 
dealer which is not and does not propose to be a participant in the 
distribution of the security to which the registration statement 
relates; and
    (b) Such broker or dealer receives no consideration, directly or 
indirectly, in connection with the publication and distribution of such 
information, opinions or recommendations from the registrant, a selling 
security holder or any participant in the distribution or any other 
person interested in the securities to which the registration statement 
relates, and such information, opinions or recommendations are not 
published or distributed pursuant to any arrangement or understanding, 
direct or indirect, with such registrant, underwriter, dealer, or 
selling security holder; Provided, however, That nothing herein shall 
forbid payment of the regular subscription or purchase price of the 
document or other written communication in which such information, 
opinions or recommendations appear.

(Secs. 6, 7, 10, 19(a), 48 Stat. 78, 81, 85; secs. 205, 109, 48 Stat. 
906, 908; sec. 8, 68 Stat. 685; sec. 308(a)(2), 90 Stat. 57; 15 U.S.C. 
77f, 77g, 77j, 77s(a))

[49 FR 37573, Sept. 25, 1984]



Sec. 230.138  Definition of ``offer for sale'' and ``offer to sell'' in sections 2(10) and 5(c) in relation to certain publications.

    (a) Where a registrant which meets the requirements of paragraph 
(c)(1), (c)(2) or (c)(3) of this section proposes to file, has filed or 
has an effective registration statement under the Act relating solely to 
a nonconvertible debt security or to a nonconvertible, nonparticipating 
preferred stock, publication or distribution in the regular course of 
its business by a broker or dealer of information, opinions or 
recommendations relating solely to common stock or to debt or preferred 
stock convertible into common stock of such registrant shall not be 
deemed to constitute an offer for sale or offer to sell the security to 
which such registration statement relates for purposes of sections 2(10) 
and 5(c) of the Act (15 U.S.C. 77a et seq.) even though such broker or 
dealer is or will be a participant in the distribution of the security 
to which such registration statement relates.
    (b) Where a registrant which meets the requirements of paragraph 
(c)(1),

[[Page 500]]

(c)(2) or (c)(3) of this section proposes to file, has filed or has an 
effective registration statement under the Act relating solely to common 
stock or to debt or preferred stock convertible into common stock, the 
publication or distribution in the regular course of its business by a 
broker or dealer of information, opinions or recommendations relating 
solely to a nonconvertible debt security, or to a nonconvertible 
nonparticipating preferred stock shall not be deemed to constitute an 
offer for sale or offer to sell the security to which such registration 
statement relates for purposes of sections 2(10) and 5(c) of the Act (15 
U.S.C. 77a et seq.), even though such broker or dealer is or will be a 
participant in the distribution of the security to which such 
registration statement relates.
    (c)(1) The registrant meets all of the conditions for the use of 
Form S-2 [Sec. 239.12 of this chapter] or Form F-2 [Sec. 239.32 of this 
chapter];
    (2) The registrant meets the registrant requirements of Form S-3 
[Sec. 239.13 of this chapter] or Form F-3 [Sec. 239.33 of this chapter]; 
or
    (3) The registrant is a foreign private issuer which meets all the 
registrant requirements of Form F-3 [Sec. 239.33 of this chapter], other 
than the reporting history provisions of paragraph A.1. and A.2.(a) of 
General Instruction I of such form, and meets the minimum float or 
investment grade securities provisions of either paragraph B.1. or B.2. 
of General Instruction I. of such form and the registrant's securities 
have been traded for a period of at least 12 months on a designated 
offshore securities market, as defined in Sec. 230.902(a).

Instruction to Rule 138: When a registration statement relates to 
securities which are being registered for an offering to be made on a 
continuous or delayed basis pursuant to Rule 415(a)(1)(x) under the Act 
(Sec. 230.415(a)(1)(x)) and the securities which are being registered 
include classes of securities which are specified in both paragraphs (a) 
and (b) of this section on either an allocated or unallocated basis, a 
broker or dealer may nonetheless rely on:
    1. Paragraph (a) of this section when the offering in which such 
broker or dealer is or will be a participant relates solely to classes 
of securities specified in paragraph (a) of this section, and
    2. Paragraph (b) of this section when the offering in which such 
broker or dealer is or will be a participant relates solely to classes 
of securities specified in paragraph (b) of this section.

[60 FR 6965, Feb. 6, 1995]



Sec. 230.139  Definition of ``offer for sale'' and ``offer to sell'' in sections 2(10) and 5(c) in relation to certain publications.

    Where a registrant which is required to file reports pursuant to 
section 13 or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 
78a et seq.) or which is a foreign private issuer meeting the conditions 
of paragraph (a)(2) of this section proposes to file, has filed or has 
an effective registration statement under the Securities Act of 1933 (15 
U.S.C. 77a et seq.) relating to its securities, the publication or 
distribution by a broker or dealer of information, an opinion or a 
recommendation with respect to the registrant or any class of its 
securities shall not be deemed to constitute an offer for sale or offer 
to sell the securities registered or proposed to be registered for 
purposes of sections 2(10) and 5(c) of the Act (15 U.S.C. 77a et seq.), 
even though such broker or dealer is or will be a participant in the 
distribution of such securities, if the conditions of paragraph (a) or 
(b) of this section have been met:
    (a)(1) The registrant meets the registrant requirements of Form S-3 
(Sec. 239.13 of this chapter) or Form F-3 (Sec. 239.33 of this chapter) 
and the minimum float or investment grade securities provisions of 
either paragraph (B) (1) or (2) of General Instruction I of the 
respective form and such information, opinion or recommendation is 
contained in a publication which is distributed with reasonable 
regularity in the normal course of business; or
    (2) The registrant is a foreign private issuer that meets all the 
registrant requirements of Form F-3 (Sec. 239.33 of this chapter), other 
than the reporting history provisions of paragraphs A.1. and A.2.(a) of 
General Instruction I of such form, and meets the minimum float or 
investment grade securities provisions of either paragraph B.1. or B.2. 
of General Instruction I of such form, and the registrant's securities 
have been traded for a period of at least 12 months on a designated 
offshore securities market,

[[Page 501]]

as defined in Sec. 230.902(a), and such information, opinion or 
recommendation is contained in a publication which is distributed with 
reasonable regularity in the normal course of business.
    (b)(1) Such information, opinion or recommendation is contained in a 
publication which:
    (i) Is distributed with reasonable regularity in the normal course 
of business and
    (ii) Includes similar information, opinions or recommendations with 
respect to a substantial number of companies in the registrant's 
industry, or sub-industry, or contains a comprehensive list of 
securities currently recommend by such broker or dealer.
    (2) Such information, opinion or recommendation is given no 
materially greater space or prominence in such publication than that 
given to other securities or registrants; and
    (3) An opinion or recommendation as favorable or more favorable as 
to the registrant or any class of its securities was published by the 
broker or dealer in the last publication of such broker or dealer 
addressing the registrant or its securities prior to the commencement of 
participation in the distribution.
Instructions to Rule 139: 1. For purposes of paragraph (a), a research 
report has not been distributed with reasonable regularity if it 
contains information, an opinion, or a recommendation concerning a 
company with respect to which a broker or dealer currently is not 
publishing research.
    2. Where projections of a registrant's sales or earnings are 
included, the publication must comply with the following in order to 
meet paragraphs (b)(1) and (b)(3).
    A. The projections must have been published previously on a regular 
basis in order for the publication to meet paragraph (b)(1)(i);
    B. The projections must be included with respect to either a 
substantial number of companies in the registrant's industry or sub-
industry or all companies in a comprehensive list which is contained in 
the publication, and must cover the same periods with respect to such 
companies as with respect to the registrant, in order to meet the 
requirements of paragraph (b)(1)(ii); and
    C. Because projections constitute opinions within the meaning of the 
Rule, they must come within paragraph (b)(3).

[49 FR 37573, Sept. 25, 1984, as amended at 59 FR 21650, Apr. 26, 1994; 
60 FR 6966, Feb. 6, 1995]



Sec. 230.140  Definition of ``distribution'' in section 2(11) for certain transactions.

    A person, the chief part of whose business consists of the purchase 
of the securities of one issuer, or of two or more affiliated issuers, 
and the sale of its own securities, including the levying of assessments 
on its assessable stock and the resale of such stock upon the failure of 
the holder thereof to pay any assessment levied thereon, to furnish the 
proceeds with which to acquire the securities of such issuer or 
affiliated issuers, is to be regarded as engaged in the distribution of 
the securities of such issuer or affiliated issuers within the meaning 
of section 2(11) of the Act.

[24 FR 6386, Aug. 8, 1959]



Sec. 230.141  Definition of ``commission from an underwriter or dealer not in excess of the usual and customary distributors' or sellers' commissions'' in 
          section 2(11), for certain transactions.

    (a) The term commission in section 2(11) of the Act shall include 
such remuneration, commonly known as a spread, as may be received by a 
distributor or dealer as a consequence of reselling securities bought 
from an underwriter or dealer at a price below the offering price of 
such securities, where such resales afford the distributor or dealer a 
margin of profit not in excess of what is usual and customary in such 
transactions.
    (b) The term commission from an underwriter or dealer in section 
2(11) of the Act shall include commissions paid by an underwriter or 
dealer directly or indirectly controlling or controlled by, or under 
direct or indirect common control with the issuer.
    (c) The term usual and customary distributors' or sellers' 
commission in section 2(11) of the Act shall mean a commission or 
remuneration, commonly known as a spread, paid to or received by any 
person selling securities either for his own account or for the account 
of others, which is not in excess of the amount usual and customary in 
the distribution and sale of issues of similar type and size; and not in 
excess of the amount allowed to other persons, if

[[Page 502]]

any, for comparable service in the distribution of the particular issue; 
but such term shall not include amounts paid to any person whose 
function is the management of the distribution of all or a substantial 
part of the particular issue, or who performs the functions normally 
performed by an underwriter or underwriting syndicate.

[2 FR 1075, May 26, 1937]



Sec. 230.142  Definition of ``participates'' and ``participation,'' as used in section 2(11), in relation to certain transactions.

    (a) The terms participates and participation in section 2(11) (48 
Stat. 74, 48 Stat. 905; 15 U.S.C. 77b) shall not include the interest of 
a person (1) who is not in privity of contract with the issuer nor 
directly or indirectly controlling, controlled by, or under common 
control with, the issuer, and (2) who has no association with any 
principal underwriter of the securities being distributed, and (3) whose 
function in the distribution is confined to an undertaking to purchase 
all or some specified proportion of the securities remaining unsold 
after the lapse of some specified period of time, and (4) who purchases 
such securities for investment and not with a view to distribution.
    (b) As used in this section:
    (1) The term issuer shall have the meaning defined in section 2(4) 
(48 Stat. 74, 48 Stat. 905; 15 U.S.C. 77b) and in the last sentence of 
section 2(11).
    (2) The term association shall include a relationship between two 
persons under which one:
    (i) Is directly or indirectly controlling, controlled by, or under 
common control with, the other, or
    (ii) Has, in common with the other, one or more partners, officers, 
directors, trustees, branch managers, or other persons occupying a 
similar status or performing similar functions, or
    (iii) Has a participation, direct or indirect, in the profits of the 
other, or has a financial stake, by debtor-creditor relationship, stock 
ownership, contract or otherwise, in the income or business of the 
other.
    (3) The term principal underwriter shall have the meaning defined in 
Sec. 230.405.

[3 FR 3015, Dec. 16, 1938]

    Cross Reference: For interpretative release applicable to 
Sec. 230.142, see No. 1862 in tabulation, part 231, of this chapter.



Sec. 230.143  Definition of ``has purchased'', ``sells for'', ``participates'', and ``participation'', as used in section 2(11), in relation to certain 
          transactions of foreign governments for war purposes.

    The terms has purchased, sells for, participates, and participation, 
in section 2(11) (48 Stat. 74, 48 Stat. 905; 15 U.S.C. 77b), shall not 
be deemed to apply to any action of a foreign government in acquiring, 
for war purposes and by or in anticipation of the exercise of war 
powers, from any person subject to its jurisdiction securities of a 
person organized under the laws of the United States or any State or 
Territory, or in disposing of such securities with a view to their 
distribution by underwriters in the United States, notwithstanding the 
fact that the price to be paid to such foreign government upon the 
disposition of such securities by it may be measured by or may be in 
direct or indirect relation to such price as may be realized by the 
underwriters.

[6 FR 2052, Apr. 23, 1941]



Sec. 230.144  Persons deemed not to be engaged in a distribution and therefore not underwriters.

    Preliminary Note: Rule 144 is designed to implement the fundamental 
purposes of the Act, as expressed in its preamble, To provide full and 
fair disclosure of the character of the securities sold in interstate 
commerce and through the mails, and to prevent fraud in the sale thereof 
* * * The rule is designed to prohibit the creation of public markets in 
securities of issuers concerning which adequate current information is 
not available to the public. At the same time, where adequate current 
information concerning the issuer is available to the public, the rule 
permits the public sale in ordinary trading transactions of limited 
amounts of securities owned by persons controlling, controlled by or 
under common control with the issuer and by persons who have acquired 
restricted securities of the issuer.
    Certain basic principles are essential to an understanding of the 
requirement of registration in the Act:

[[Page 503]]

    1. If any person utilizes the jurisdictional means to sell any 
nonexempt security to any other person, the security must be registered 
unless a statutory exemption can be found for the transaction.
    2. In addition to the exemptions found in section 3, four exemptions 
applicable to transactions in securities are contained in section 4. 
Three of these section 4 exemptions are clearly not available to anyone 
acting as an underwriter of securities. (The fourth, found in section 
4(4), is available only to those who act as brokers under certain 
limited circumstances.) An understanding of the term underwriter is 
therefore important to anyone who wishes to determine whether or not an 
exemption from registration is available for his sale of securities.
    The term underwriter is broadly defined in section 2(11) of the Act 
to mean any person who has purchased from an issuer with a view to, or 
offers or sells for an issuer in connection with, the distribution of 
any 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. The 
interpretation of this definition has traditionally focused on the words 
with a view to in the phrase purchased from an issuer with a view to * * 
* distribution. Thus, an investment banking firm which arranges with an 
issuer for the public sale of its securities is clearly an underwriter 
under that section. Individual investors who are not professionals in 
the securities business may also be underwriters within the meaning of 
that term as used in the Act if they act as links in a chain of 
transactions through which securities move from an issuer to the public. 
Since it is difficult to ascertain the mental state of the purchaser at 
the time of his acquisition, subsequent acts and circumstances have been 
considered to determine whether such person took with a view to 
distribution at the time of his acquisition. Emphasis has been placed on 
factors such as the length of time the person has held the securities 
and whether there has been an unforeseeable change in circumstances of 
the holder. Experience has shown, however, that reliance upon such 
factors as the above has not assured adequate protection of investors 
through the maintenance of informed trading markets and has led to 
uncertainty in the application of the registration provisions of the 
Act.
    It should be noted that the statutory language of section 2(11) is 
in the disjunctive. Thus, it is insufficient to conclude that a person 
is not an underwriter solely because he did not purchase securities from 
an issuer with a view to their distribution. It must also be established 
that the person is not offering or selling for an issuer in connection 
with the distribution of the securities, does not participate or have a 
direct or indirect participation in any such undertaking, and does not 
participate or have a participation in the direct or indirect 
underwriting of such an undertaking.
    In determining when a person is deemed not to be engaged in a 
distribution several factors must be considered.
    First, the purpose and underlying policy of the Act to protect 
investors requires that there be adequate current information concerning 
the issuer, whether the resales of securities by persons result in a 
distribution or are effected in trading transactions. Accordingly, the 
availability of the rule is conditioned on the existence of adequate 
current public information.
    Secondly, a holding period prior to resale is essential, among other 
reasons, to assure that those persons who buy under a claim of a section 
4(2) exemption have assumed the economic risks of investment, and 
therefore are not acting as conduits for sale to the public of 
unregistered securities, directly or indirectly, on behalf of an issuer. 
It should be noted that there is nothing in section 2(11) which places a 
time limit on a person's status as an underwriter. The public has the 
same need for protection afforded by registration whether the securities 
are distributed shortly after their purchase or after a considerable 
length of time.
    A third factor, which must be considered in determining what is 
deemed not to constitute a distribution, is the impact of the particular 
transaction or transactions on the trading markets. Section 4(1) was 
intended to exempt only routine trading transactions between individual 
investors with respect to securities already issued and not to exempt 
distributions by issuers or acts of other individuals who engage in 
steps necessary to such distributions. Therefore, a person reselling 
securities under section 4(1) of the Act must sell the securities in 
such limited quantities and in such a manner as not to disrupt the 
trading markets. The larger the amount of securities involved, the more 
likely it is that such resales may involve methods of offering and 
amounts of compensation usually associated with a distribution rather 
than routine trading transactions. Thus, solicitation of buy orders or 
the payment of extra compensation are not permitted by the rule.
    In summary, if the sale in question is made in accordance with all 
of the provisions of the section as set forth below, any person who 
sells restricted securities shall be deemed not to be engaged in a 
distribution of such securities and therefore not an underwriter 
thereof. The rule also provides that any person who sells restricted or 
other securities on behalf of a person in a control relationship with 
the issuer shall be deemed not to be engaged in a distribution of such

[[Page 504]]

securities and therefore not to be an underwriter thereof, if the sale 
is made in accordance with all the conditions of the section.

    (a) Definitions. The following definitions shall apply for the 
purposes of this section.
    (1) An affiliate of an issuer 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 person when used with reference to a person for whose 
account securities are to be sold in reliance upon this section 
includes, in addition to such person, all of the following persons:
    (i) Any relative or spouse of such person, or any relative of such 
spouse, any one of whom has the same home as such person;
    (ii) Any trust or estate in which such person or any of the persons 
specified in paragraph (a)(2)(i) of this section collectively own 10 
percent or more of the total beneficial interest or of which any of such 
persons serve as trustee, executor or in any similar capacity; and
    (iii) Any corporation or other organization (other than the issuer) 
in which such person or any of the persons specified in paragraph 
(a)(2)(i) of this section are the beneficial owners collectively of 10 
percent or more of any class of equity securities or 10 percent or more 
of the equity interest.
    (3) The term restricted securities means:
    (i) Securities acquired directly or indirectly from the issuer, or 
from an affiliate of the issuer, in a transaction or chain of 
transactions not involving any public offering;
    (ii) Securities acquired from the issuer that are subject to the 
resale limitations of Sec. 230.502(d) under Regulation D or 
Sec. 230.701(c);
    (iii) Securities acquired in a transaction or chain of transactions 
meeting the requirements of Sec. 230.144A;
    (iv) Securities acquired from the issuer in a transaction subject to 
the conditions of Regulation CE (Sec. 230.1001);
    (v) Equity securities of domestic issuers acquired in a transaction 
or chain of transactions subject to the conditions of Sec. 230.901 or 
Sec. 230.903 under Regulation S (Sec. 230.901 through Sec. 230.905, and 
Preliminary Notes);
    (vi) Securities acquired in a transaction made under Sec. 230.801 to 
the same extent and proportion that the securities held by the security 
holder of the class with respect to which the rights offering was made 
were as of the record date for the rights offering ``restricted 
securities'' within the meaning of this paragraph (a)(3); and
    (vii) Securities acquired in a transaction made under Sec. 230.802 
to the same extent and proportion that the securities that were tendered 
or exchanged in the exchange offer or business combination were 
``restricted securities'' within the meaning of this paragraph (a)(3).
    (b) Conditions to be met. Any affiliate or other person who sells 
restricted securities of an issuer for his own account, or any person 
who sells restricted or any other securities for the account of an 
affiliate of the issuer of such securities, shall be deemed not to be 
engaged in a distribution of such securities and therefore not to be an 
underwriter thereof within the meaning of section 2(11) of the Act if 
all of the conditions of this section are met.
    (c) Current public information. There shall be available adequate 
current public information with respect to the issuer of the securities. 
Such information shall be deemed to be available only if either of the 
following conditions is met:
    (1) Filing of reports. The issuer has securities registered pursuant 
to section 12 of the Securities Exchange Act of 1934, has been subject 
to the reporting requirements of section 13 of that Act for a period of 
at least 90 days immediately preceding the sale of the securities and 
has filed all the reports required to be filed thereunder during the 12 
months preceding such sale (or for such shorter period that the issuer 
was required to file such reports); or has securities registered 
pursuant to the Securities Act of 1933, has been subject to the 
reporting requirements of section 15(d) of the Securities Exchange Act 
of 1934 for a period of at least 90 days immediately preceding the sale 
of the securities and has filed all the reports required to be filed 
thereunder during the 12 months preceding such sale (or for

[[Page 505]]

such shorter period that the issuer was required to file such reports). 
The person for whose account the securities are to be sold shall be 
entitled to rely upon a statement in whichever is the most recent 
report, quarterly or annual, required to be filed and filed by the 
issuer that such issuer has filed all reports required to be filed by 
section 13 or 15(d) of the Securities Exchange Act of 1934 during the 
preceding 12 months (or for such shorter period that the issuer was 
required to file such reports) and has been subject to such filing 
requirements for the past 90 days, unless he knows or has reason to 
believe that the issuer has not complied with such requirements. Such 
person shall also be entitled to rely upon a written statement from the 
issuer that it has complied with such reporting requirements unless he 
knows or has reasons to believe that the issuer has not complied with 
such requirements.
    (2) Other public information. If the issuer is not subject to 
section 13 or 15(d) of the Securities Exchange Act of 1934, there is 
publicly available the information concerning the issuer specified in 
paragraphs (a)(5)(i) to (xiv), inclusive, and paragraph (a)(5)(xvi) of 
Rule 15c2-11 (Sec. 240.15c2-11 of this chapter) under that Act or, if 
the issuer is an insurance company, the information specified in section 
12(g)(2)(G)(i) of that Act.
    (d) Holding period for restricted securities. If the securities sold 
are restricted securities, the following provisions apply:
    (1) General rule. A minimum of one year must elapse between the 
later of the date of the acquisition of the securities from the issuer 
or from an affiliate of the issuer, and any resale of such securities in 
reliance on this section for the account of either the acquiror or any 
subsequent holder of those securities. If the acquiror takes the 
securities by purchase, the one-year period shall not begin until the 
full purchase price or other consideration is paid or given by the 
person acquiring the securities from the issuer or from an affiliate of 
the issuer.
    (2) Promissory notes, other obligations or installment contracts. 
Giving the issuer or affiliate of the issuer from whom the securities 
were purchased a promissory note or other obligation to pay the purchase 
price, or entering into an installment purchase contract with such 
seller, shall not be deemed full payment of the purchase price unless 
the promissory note, obligation or contract:
    (i) Provides for full recourse against the purchaser of the 
securities;
    (ii) Is secured by collateral, other than the securities purchased, 
having a fair market value at least equal to the purchase price of the 
securities purchased; and
    (iii) Shall have been discharged by payment in full prior to the 
sale of the securities.
    (3) Determination of holding period. The following provisions shall 
apply for the purpose of determining the period securities have been 
held:
    (i) Stock dividends, splits and recapitalizations. Securities 
acquired from the issuer as a dividend or pursuant to a stock split, 
reverse split or recapitalization shall be deemed to have been acquired 
at the same time as the securities on which the dividend or, if more 
than one, the initial dividend was paid, the securities involved in the 
split or reverse split, or the securities surrendered in connection with 
the recapitalization;
    (ii) Conversions. If the securities sold were acquired from the 
issuer for a consideration consisting solely of other securities of the 
same issuer surrendered for conversion, the securities so acquired shall 
be deemed to have been acquired at the same time as the securities 
surrendered for conversion;
    (iii) Contingent issuance of securities. Securities acquired as a 
contingent payment of the purchase price of an equity interest in a 
business, or the assets of a business, sold to the issuer or an 
affiliate of the issuer shall be deemed to have been acquired at the 
time of such sale if the issuer or affiliate was then committed to issue 
the securities subject only to conditions other than the payment of 
further consideration for such securities. An agreement entered into in 
connection with any such purchase to remain in the employment of, or not 
to compete with, the issuer or affiliate or the rendering of services 
pursuant to such agreement shall not be deemed to be

[[Page 506]]

the payment of further consideration for such securities.
    (iv) Pledged securities. Securities which are bona-fide pledged by 
an affiliate of the issuer when sold by the pledgee, or by a purchaser, 
after a default in the obligation secured by the pledge, shall be deemed 
to have been acquired when they were acquired by the pledgor, except 
that if the securities were pledged without recourse they shall be 
deemed to have been acquired by the pledgee at the time of the pledge or 
by the purchaser at the time of purchase.
    (v) Gifts of securities. Securities acquired from an affiliate of 
the issuer by gift shall be deemed to have been acquired by the donee 
when they were acquired by the donor.
    (vi) Trusts. Where a trust settlor is an affiliate of the issuer, 
securities acquired from the settlor by the trust, or acquired from the 
trust by the beneficiaries thereof, shall be deemed to have been 
acquired when such securities were acquired by the settlor.
    (vii) Estates. Where a deceased person was an affiliate of the 
issuer, securities held by the estate of such person or acquired from 
such estate by the beneficiaries thereof shall be deemed to have been 
acquired when they were acquired by the deceased person, except that no 
holding period is required if the estate is not an affiliate of the 
issuer or if the securities are sold by a beneficiary of the estate who 
is not such an affiliate.

    Note: While there is no holding period or amount limitation for 
estates and beneficiaries thereof which are not affiliates of the 
issuer, paragraphs (c), (h) and (i) of the rule apply to securities sold 
by such persons in reliance upon the rule.

    (viii) Rule 145(a) transactions. The holding period for securities 
acquired in a transaction specified in Rule 145(a) shall be deemed to 
commence on the date the securities were acquired by the purchaser in 
such transaction. This provision shall not apply, however, to a 
transaction effected solely for the purpose of forming a holding 
company.
    (e) Limitation on amount of securities sold. Except as hereinafter 
provided, the amount of securities which may be sold in reliance upon 
this rule shall be determined as follows:
    (1) Sales by affiliates. If restricted or other securities are sold 
for the account of an affiliate of the issuer, the amount of securities 
sold, together with all sales of restricted and other securities of the 
same class for the account of such person within the preceding three 
months, shall not exceed the greater of
    (i) One percent of the shares or other units of the class 
outstanding as shown by the most recent report or statement published by 
the issuer, or
    (ii) The average weekly reported volume of trading in such 
securities on all national securities exchanges and/or reported through 
the automated quotation system of a registered securities association 
during the four calendar weeks preceding the filing of notice required 
by paragraph (h), or if no such notice is required the date of receipt 
of the order to execute the transaction by the broker or the date of 
execution of the transaction directly with a market maker, or
    (iii) The average weekly volume of trading in such securities 
reported through the consolidated transaction reporting system 
contemplated by Rule 11Aa3-1 under the Securities Exchange Act of 1934 
(Sec. 240.11A3-1) during the four-week period specified in paragraph 
(e)(1)(ii) of this section.
    (2) Sales by persons other than affiliates. The amount of restricted 
securities sold for the account of any person other than an affiliate of 
the issuer, together with all other sales of restricted securities of 
the same class for the account of such person within the preceding three 
months, shall not exceed the amount specified in paragraphs (e)(1) (i), 
(ii) or (iii) of this section, whichever is applicable, unless the 
conditions of paragraph (k) of this rule are satisfied.
    (3) Determination of amount. For the purpose of determining the 
amount of securities specified in paragraphs (e) (1) and (2) of this 
section, the following provisions shall apply:
    (i) Where both convertible securities and securities of the class 
into which they are convertible are sold, the amount of convertible 
securities sold shall be deemed to be the amount of securities of the 
class into which they

[[Page 507]]

are convertible for the purpose of determining the aggregate amount of 
securities of both classes sold;
    (ii) The amount of securities sold for the account of a pledgee 
thereof, or for the account of a purchaser of the pledged securities, 
during any period of three months within one year after a default in the 
obligation secured by the pledge, and the amount of securities sold 
during the same three-month period for the account of the pledgor shall 
not exceed, in the aggregate, the amount specified in paragraph (e) (1) 
or (2) of this section, whichever is applicable;
    (iii) The amount of securities sold for the account of a donee 
thereof during any period of three months within one year after the 
donation, and the amount of securities sold during the same three-month 
period for the account of the donor, shall not exceed, in the aggregate, 
the amount specified in paragraph (e) (1) or (2) of this section, 
whichever is applicable;
    (iv) Where securities were acquired by a trust from the settlor of 
the trust, the amount of such securities sold for the account of the 
trust during any period of three months within one year after the 
acquisition of the securities by the trust, and the amount of securities 
sold during the same three-month period for the account of the settlor, 
shall not exceed, in the aggregate, the amount specified in paragraph 
(e) (1) or (2) of this section, whichever is applicable;
    (v) The amount of securities sold for the account of the estate of a 
deceased person, or for the account of a beneficiary of such estate, 
during any period of 3 months and the amount of securities sold during 
the same period for the account of the deceased person prior to his 
death shall not exceed, in the aggregate, the amount specified in 
paragraph (e) (1) or (2) of this section, whichever is applicable: 
Provided, That no limitation on amount shall apply if the estate or 
beneficiary thereof is not an affiliate of the issuer;
    (vi) When two or more affiliates or other persons agree to act in 
concert for the purpose of selling securities of an issuer, all 
securities of the same class sold for the account of all such persons 
during any period of 3 months shall be aggregated for the purpose of 
determining the limitation on the amount of securities sold;
    (vii) The following sales of securities need not be included in 
determining the amount of securities sold in reliance upon this section: 
securities sold pursuant to an effective registration statement under 
the Act; securities sold pursuant to an exemption provided by Regulation 
A (Sec. 230.251 through Sec. 230.263) under the Act; securities sold in 
a transaction exempt pursuant to Section 4 of the Act (15 U.S.C. 77d) 
and not involving any public offering; and securities sold offshore 
pursuant to Regulation S (Sec. 230.901 through Sec. 230.905, and 
Preliminary Notes) under the Act.
    (f) Manner of sale. The securities shall be sold in brokers' 
transactions within the meaning of section 4(4) of the Act or in 
transactions directly with a market maker, as that term is defined in 
section 3(a)(38) of the Securities Exchange Act of 1934, and the person 
selling the securities shall not (1) solicit or arrange for the 
solicitation of orders to buy the securities in anticipation of or in 
connection with such transaction, or (2) make any payment in connection 
with the offer or sale of the securities to any person other than the 
broker who executes an order to sell the securities. The requirements of 
this paragraph, however, shall not apply to securities sold for the 
account of the estate of a deceased person or for the account of a 
beneficiary of such estate provided the estate or beneficiary thereof is 
not an affiliate of the issuer; nor shall they apply to securities sold 
for the account of any person other than an affiliate of the issuer 
provided the conditions of paragraph (k) of this rule are satisfied.
    (g) Brokers' transactions. The term brokers' transactions in section 
4(4) of the Act shall for the purposes of this rule be deemed to include 
transactions by a broker in which such broker:
    (1) Does not more than execute the order or orders to sell the 
securities as agent for the person for whose account the securities are 
sold; and receives no more than the usual and customary broker's 
commission;
    (2) Neither solicits nor arranges for the solicitation of customers' 
orders to buy the securities in anticipation of or

[[Page 508]]

in connection with the transaction; provided, that the foregoing shall 
not preclude (i) inquiries by the broker of other brokers or dealers who 
have indicated an interest in the securities within the preceding 60 
days, (ii) inquiries by the broker of his customers who have indicated 
an unsolicited bona fide interest in the securities within the preceding 
10 business days; or (iii) the publication by the broker of bid and ask 
quotations for the security in an inter-dealer quotation system provided 
that such quotations are incident to the maintenance of a bona fide 
inter-dealer market for the security for the broker's own account and 
that the broker has published bona fide bid and ask quotations for the 
security in an inter-dealer quotation system on each of at least twelve 
days within the preceding thirty calendar days with no more than four 
business days in succession without such two-way quotations;

    Note to Paragraph (g)(2)(ii): The broker should obtain and retain in 
his files written evidence of indications of bona fide unsolicited 
interest by his customers in the securities at the time such indications 
are received.

    (3) After reasonable inquiry is not aware of circumstances 
indicating that the person for whose account the securities are sold is 
an underwriter with respect to the securities or that the transaction is 
a part of a distribution of securities of the issuer. Without limiting 
the foregoing, the broker shall be deemed to be aware of any facts or 
statements contained in the notice required by paragraph (h) of this 
section.

    Notes: (i) The broker, for his own protection, should obtain and 
retain in his files a copy of the notice required by paragraph (h) of 
this section.
    (ii) The reasonable inquiry required by paragraph (g)(3) of this 
section should include, but not necessarily be limited to, inquiry as to 
the following matters:
    (a) The length of time the securities have been held by the person 
for whose account they are to be sold. If practicable, the inquiry 
should include physical inspection of the securities;
    (b) The nature of the transaction in which the securities were 
acquired by such person;
    (c) The amount of securities of the same class sold during the past 
3 months by all persons whose sales are required to be taken into 
consideration pursuant to paragraph (e) of this section;
    (d) Whether such person intends to sell additional securities of the 
same class through any other means;
    (e) Whether such person has solicited or made any arrangement for 
the solicitation of buy orders in connection with the proposed sale of 
securities;
    (f) Whether such person has made any payment to any other person in 
connection with the proposed sale of the securities; and
    (g) The number of shares or other units of the class outstanding, or 
the relevant trading volume.

    (h) Notice of proposed sale. If the amount of securities to be sold 
in reliance upon the rule during any period of three months exceeds 500 
shares or other units or has an aggregate sale price in excess of 
$10,000, three copies of a notice on Form 144 shall be filed with the 
Commission at its principal office in Washington, DC; and if such 
securities are admitted to trading on any national securities exchange, 
one copy of such notice shall also be transmitted to the principal 
exchange on which such securities are so admitted. The Form 144 shall be 
signed by the person for whose account the securities are to be sold and 
shall be transmitted for filing concurrently with either the placing 
with a broker of an order to execute a sale of securities in reliance 
upon this rule or the execution directly with a market maker of such a 
sale. Neither the filing of such notice nor the failure of the 
Commission to comment thereon shall be deemed to preclude the Commission 
from taking any action it deems necessary or appropriate with respect to 
the sale of the securities referred to in such notice. The requirements 
of this paragraph, however, shall not apply to securities sold for the 
account of any person other than an affiliate of the issuer, provided 
the conditions of paragraph (k) of this rule are satisfied.
    (i) Bona fide intention to sell. The person filing the notice 
required by paragraph (h) of this section shall have a bona fide 
intention to sell the securities referred to therein within a reasonable 
time after the filing of such notice.
    (j) Non-exclusive rule. Although this rule provides a means for 
reselling restricted securities and securities held by affiliates 
without registration, it is not the exclusive means for reselling

[[Page 509]]

such securities in that manner. Therefore, it does not eliminate or 
otherwise affect the availability of any exemption for resales under the 
Securities Act that a person or entity may be able to rely upon.
    (k) Termination of certain restrictions on sales of restricted 
securities by persons other than affiliates. The requirements of 
paragraphs (c), (e), (f) and (h) of this section shall not apply to 
restricted securities sold for the account of a person who is not an 
affiliate of the issuer at the time of the sale and has not been an 
affiliate during the preceding three months, provided a period of at 
least two years has elapsed since the later of the date the securities 
were acquired from the issuer or from an affiliate of the issuer. The 
two-year period shall be calculated as described in paragraph (d) of 
this section.

(Secs. 2(11), 4(1), 4(4), 19(a), 19(c), 48 Stat. 74, 75, 77, 85; secs. 
201, 203, 209, 210, 48 Stat. 904, 906, 908; secs. 1-4, 6, 68 Stat. 683, 
684; sec. 12, 78 Stat. 580, 84 Stat. 1480; sec. 308(a)(2), 90 Stat. 58 
(15 U.S.C. 77b(11), 77d(1), 77d(4), 77s(a); sec. 209, 59 Stat. 167; sec. 
3(b), 48 Stat. 75; sec. 308(a) (1), (2), (3), 90 Stat. 56, 57; secs. 2, 
18, 92 Stat. 275, 962; secs. 505, 622, 701, 94 Stat. 2291, 2292, 2294 
(15 U.S.C. 77c(b), 77d(1), 77s(a), 77s(c)); secs. 2(11), 4(1), 4(4), 
19(a), 48 Stat. 74, 77, 85; secs. 201, 203, 209, 210, 48 Stat. 904, 906, 
908; secs. 14, 5, 68 Stat. 683, 684; sec. 12, 78 Stat. 580 (15 U.S.C. 
77b(11), 77d(1), 77d(4), 77s(a)))

[37 FR 596, Jan. 14, 1972, as amended at 39 FR 6071, Feb. 19, 1974; 39 
FR 8914, Mar. 7, 1974; 43 FR 43711, Sept. 27, 1978; 43 FR 54230, Nov. 
21, 1978; 44 FR 15612, Mar. 14, 1979; 45 FR 12391, Feb. 28, 1980; 46 FR 
12197, Feb. 12, 1981; 47 FR 11261, Mar. 16, 1982; 53 FR 12921, Apr. 20, 
1988; 55 FR 17944, Apr. 30, 1990; 58 FR 67312, Dec. 21, 1993; 61 FR 
21359, May 9, 1996; 62 FR 9244, Feb. 28, 1997; 63 FR 9642, Feb. 25, 
1998; 64 FR 61400, Nov. 10, 1999]



Sec. 230.144A  Private resales of securities to institutions.

    Preliminary Notes: 1. This section relates solely to the application 
of section 5 of the Act and not to antifraud or other provisions of the 
federal securities laws.
    2. Attempted compliance with this section does not act as an 
exclusive election; any seller hereunder may also claim the availability 
of any other applicable exemption from the registration requirements of 
the Act.
    3. In view of the objective of this section and the policies 
underlying the Act, this section is not available with respect to any 
transaction or series of transactions that, although in technical 
compliance with this section, is part of a plan or scheme to evade the 
registration provisions of the Act. In such cases, registration under 
the Act is required.
    4. Nothing in this section obviates the need for any issuer or any 
other person to comply with the securities registration or broker-dealer 
registration requirements of the Securities Exchange Act of 1934 (the 
Exchange Act), whenever such requirements are applicable.
    5. Nothing in this section obviates the need for any person to 
comply with any applicable state law relating to the offer or sale of 
securities.
    6. Securities acquired in a transaction made pursuant to the 
provisions of this section are deemed to be restricted securities within 
the meaning of Sec. 230.144(a)(3) of this chapter.
    7. The fact that purchasers of securities from the issuer thereof 
may purchase such securities with a view to reselling such securities 
pursuant to this section will not affect the availability to such issuer 
of an exemption under section 4(2) of the Act, or Regulation D under the 
Act, from the registration requirements of the Act.

    (a) Definitions. (1) For purposes of this section, qualified 
institutional buyer shall mean:
    (i) Any of the following entities, acting for its own account or the 
accounts of other qualified institutional buyers, that in the aggregate 
owns and invests on a discretionary basis at least $100 million in 
securities of issuers that are not affiliated with the entity:
    (A) Any insurance company as defined in section 2(13) of the Act;

    Note: A purchase by an insurance company for one or more of its 
separate accounts, as defined by section 2(a)(37) of the Investment 
Company Act of 1940 (the ``Investment Company Act''), which are neither 
registered under section 8 of the Investment Company Act nor required to 
be so registered, shall be deemed to be a purchase for the account of 
such insurance company.

    (B) Any investment company registered under the Investment Company 
Act or any business development company as defined in section 2(a)(48) 
of that Act;
    (C) Any Small Business Investment Company licensed by the U.S. Small 
Business Administration under section 301(c) or (d) of the Small 
Business Investment Act of 1958;

[[Page 510]]

    (D) Any plan established and maintained by a state, its political 
subdivisions, or any agency or instrumentality of a state or its 
political subdivisions, for the benefit of its employees;
    (E) Any employee benefit plan within the meaning of title I of the 
Employee Retirement Income Security Act of 1974;
    (F) Any trust fund whose trustee is a bank or trust company and 
whose participants are exclusively plans of the types identified in 
paragraph (a)(1)(i) (D) or (E) of this section, except trust funds that 
include as participants individual retirement accounts or H.R. 10 plans.
    (G) Any business development company as defined in section 
202(a)(22) of the Investment Advisers Act of 1940;
    (H) Any organization described in section 501(c)(3) of the Internal 
Revenue Code, corporation (other than a bank as defined in section 
3(a)(2) of the Act or a savings and loan association or other 
institution referenced in section 3(a)(5)(A) of the Act or a foreign 
bank or savings and loan association or equivalent institution), 
partnership, or Massachusetts or similar business trust; and
    (I) Any investment adviser registered under the Investment Advisers 
Act.
    (ii) Any dealer registered pursuant to section 15 of the Exchange 
Act, acting for its own account or the accounts of other qualified 
institutional buyers, that in the aggregate owns and invests on a 
discretionary basis at least $10 million of securities of issuers that 
are not affiliated with the dealer, Provided, That securities 
constituting the whole or a part of an unsold allotment to or 
subscription by a dealer as a participant in a public offering shall not 
be deemed to be owned by such dealer;
    (iii) Any dealer registered pursuant to section 15 of the Exchange 
Act acting in a riskless principal transaction on behalf of a qualified 
institutional buyer;

    Note: A registered dealer may act as agent, on a non-discretionary 
basis, in a transaction with a qualified institutional buyer without 
itself having to be a qualified institutional buyer.

    (iv) Any investment company registered under the Investment Company 
Act, acting for its own account or for the accounts of other qualified 
institutional buyers, that is part of a family of investment companies 
which own in the aggregate at least $100 million in securities of 
issuers, other than issuers that are affiliated with the investment 
company or are part of such family of investment companies. Family of 
investment companies means any two or more investment companies 
registered under the Investment Company Act, except for a unit 
investment trust whose assets consist solely of shares of one or more 
registered investment companies, that have the same investment adviser 
(or, in the case of unit investment trusts, the same depositor), 
Provided That, for purposes of this section:
    (A) Each series of a series company (as defined in Rule 18f-2 under 
the Investment Company Act [17 CFR 270.18f-2]) shall be deemed to be a 
separate investment company; and
    (B) Investment companies shall be deemed to have the same adviser 
(or depositor) if their advisers (or depositors) are majority-owned 
subsidiaries of the same parent, or if one investment company's adviser 
(or depositor) is a majority-owned subsidiary of the other investment 
company's adviser (or depositor);
    (v) Any entity, all of the equity owners of which are qualified 
institutional buyers, acting for its own account or the accounts of 
other qualified institutional buyers; and
    (vi) Any bank as defined in section 3(a)(2) of the Act, any savings 
and loan association or other institution as referenced in section 
3(a)(5)(A) of the Act, or any foreign bank or savings and loan 
association or equivalent institution, acting for its own account or the 
accounts of other qualified institutional buyers, that in the aggregate 
owns and invests on a discretionary basis at least $100 million in 
securities of issuers that are not affiliated with it and that has an 
audited net worth of at least $25 million as demonstrated in its latest 
annual financial statements, as of a date not more than 16 months 
preceding the date of sale under the Rule in the case of a U.S. bank or 
savings and loan association, and not more than 18 months preceding such 
date of sale for a foreign bank or savings and

[[Page 511]]

loan association or equivalent institution.
    (2) In determining the aggregate amount of securities owned and 
invested on a discretionary basis by an entity, the following 
instruments and interests shall be excluded: bank deposit notes and 
certificates of deposit; loan participations; repurchase agreements; 
securities owned but subject to a repurchase agreement; and currency, 
interest rate and commodity swaps.
    (3) The aggregate value of securities owned and invested on a 
discretionary basis by an entity shall be the cost of such securities, 
except where the entity reports its securities holdings in its financial 
statements on the basis of their market value, and no current 
information with respect to the cost of those securities has been 
published. In the latter event, the securities may be valued at market 
for purposes of this section.
    (4) In determining the aggregate amount of securities owned by an 
entity and invested on a discretionary basis, securities owned by 
subsidiaries of the entity that are consolidated with the entity in its 
financial statements prepared in accordance with generally accepted 
accounting principles may be included if the investments of such 
subsidiaries are managed under the direction of the entity, except that, 
unless the entity is a reporting company under section 13 or 15(d) of 
the Exchange Act, securities owned by such subsidiaries may not be 
included if the entity itself is a majority-owned subsidiary that would 
be included in the consolidated financial statements of another 
enterprise.
    (5) For purposes of this section, riskless principal transaction 
means a transaction in which a dealer buys a security from any person 
and makes a simultaneous offsetting sale of such security to a qualified 
institutional buyer, including another dealer acting as riskless 
principal for a qualified institutional buyer.
    (6) For purposes of this section, effective conversion premium means 
the amount, expressed as a percentage of the security's conversion 
value, by which the price at issuance of a convertible security exceeds 
its conversion value.
    (7) For purposes of this section, effective exercise premium means 
the amount, expressed as a percentage of the warrant's exercise value, 
by which the sum of the price at issuance and the exercise price of a 
warrant exceeds its exercise value.
    (b) Sales by persons other than issuers or dealers. Any person, 
other than the issuer or a dealer, who offers or sells securities in 
compliance with the conditions set forth in paragraph (d) of this 
section shall be deemed not to be engaged in a distribution of such 
securities and therefore not to be an underwriter of such securities 
within the meaning of sections 2(11) and 4(1) of the Act.
    (c) Sales by Dealers. Any dealer who offers or sells securities in 
compliance with the conditions set forth in paragraph (d) of this 
section shall be deemed not to be a participant in a distribution of 
such securities within the meaning of section 4(3)(C) of the Act and not 
to be an underwriter of such securities within the meaning of section 
2(11) of the Act, and such securities shall be deemed not to have been 
offered to the public within the meaning of section 4(3)(A) of the Act.
    (d) Conditions to be met. To qualify for exemption under this 
section, an offer or sale must meet the following conditions:
    (1) The securities are offered or sold only to a qualified 
institutional buyer or to an offeree or purchaser that the seller and 
any person acting on behalf of the seller reasonably believe is a 
qualified institutional buyer. In determining whether a prospective 
purchaser is a qualified institutional buyer, the seller and any person 
acting on its behalf shall be entitled to rely upon the following non-
exclusive methods of establishing the prospective purchaser's ownership 
and discretionary investments of securities:
    (i) The prospective purchaser's most recent publicly available 
financial statements, Provided That such statements present the 
information as of a date within 16 months preceding the date of sale of 
securities under this section in the case of a U.S. purchaser and within 
18 months preceding such date of sale for a foreign purchaser;

[[Page 512]]

    (ii) The most recent publicly available information appearing in 
documents filed by the prospective purchaser with the Commission or 
another United States federal, state, or local governmental agency or 
self-regulatory organization, or with a foreign governmental agency or 
self-regulatory organization, Provided That any such information is as 
of a date within 16 months preceding the date of sale of securities 
under this section in the case of a U.S. purchaser and within 18 months 
preceding such date of sale for a foreign purchaser;
    (iii) The most recent publicly available information appearing in a 
recognized securities manual, Provided That such information is as of a 
date within 16 months preceding the date of sale of securities under 
this section in the case of a U.S. purchaser and within 18 months 
preceding such date of sale for a foreign purchaser; or
    (iv) A certification by the chief financial officer, a person 
fulfilling an equivalent function, or other executive officer of the 
purchaser, specifying the amount of securities owned and invested on a 
discretionary basis by the purchaser as of a specific date on or since 
the close of the purchaser's most recent fiscal year, or, in the case of 
a purchaser that is a member of a family of investment companies, a 
certification by an executive officer of the investment adviser 
specifying the amount of securities owned by the family of investment 
companies as of a specific date on or since the close of the purchaser's 
most recent fiscal year;
    (2) The seller and any person acting on its behalf takes reasonable 
steps to ensure that the purchaser is aware that the seller may rely on 
the exemption from the provisions of section 5 of the Act provided by 
this section;
    (3) The securities offered or sold:
    (i) Were not, when issued, of the same class as securities listed on 
a national securities exchange registered under section 6 of the 
Exchange Act or quoted in a U.S. automated inter-dealer quotation 
system; Provided, That securities that are convertible or exchangeable 
into securities so listed or quoted at the time of issuance and that had 
an effective conversion premium of less than 10 percent, shall be 
treated as securities of the class into which they are convertible or 
exchangeable; and that warrants that may be exercised for securities so 
listed or quoted at the time of issuance, for a period of less than 3 
years from the date of issuance, or that had an effective exercise 
premium of less than 10 percent, shall be treated as securities of the 
class to be issued upon exercise; and Provided further, That the 
Commission may from time to time, taking into account then-existing 
market practices, designate additional securities and classes of 
securities that will not be deemed of the same class as securities 
listed on a national securities exchange or quoted in a U.S. automated 
inter-dealer quotation system; and
    (ii) Are not securities of an open-end investment company, unit 
investment trust or face-amount certificate company that is or is 
required to be registered under section 8 of the Investment Company Act; 
and
    (4)(i) In the case of securities of an issuer that is neither 
subject to section 13 or 15(d) of the Exchange Act, nor exempt from 
reporting pursuant to Rule 12g3-2(b) (Sec. 240.12g3-2(b) of this 
chapter) under the Exchange Act, nor a foreign government as defined in 
Rule 405 (Sec. 230.405 of this chapter) eligible to register securities 
under Schedule B of the Act, the holder and a prospective purchaser 
designated by the holder have the right to obtain from the issuer, upon 
request of the holder, and the prospective purchaser has received from 
the issuer, the seller, or a person acting on either of their behalf, at 
or prior to the time of sale, upon such prospective purchaser's request 
to the holder or the issuer, the following information (which shall be 
reasonably current in relation to the date of resale under this 
section): a very brief statement of the nature of the business of the 
issuer and the products and services it offers; and the issuer's most 
recent balance sheet and profit and loss and retained earnings 
statements, and similar financial statements for such part of the two 
preceding fiscal years as the issuer has been in operation (the 
financial statements should be audited to the extent reasonably 
available).

[[Page 513]]

    (ii) The requirement that the information be reasonably current will 
be presumed to be satisfied if:
    (A) The balance sheet is as of a date less than 16 months before the 
date of resale, 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 
date of resale, 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 date of 
resale; and
    (B) The statement of the nature of the issuer's business and its 
products and services offered is as of a date within 12 months prior to 
the date of resale; or
    (C) With regard to foreign private issuers, the required information 
meets the timing requirements of the issuer's home country or principal 
trading markets.
    (e) Offers and sales of securities pursuant to this section shall be 
deemed not to affect the availability of any exemption or safe harbor 
relating to any previous or subsequent offer or sale of such securities 
by the issuer or any prior or subsequent holder thereof.

[55 FR 17945, Apr. 30, 1990, as amended at 57 FR 48722, Oct. 28, 1992]



Sec. 230.145  Reclassification of securities, mergers, consolidations and acquisitions of assets.

    Preliminary Note: Rule 145 (Sec. 230.145 of this chapter) is 
designed to make available the protection provided by registration under 
the Securities Act of 1933, as amended (Act), to persons who are offered 
securities in a business combination of the type described in paragraphs 
(a) (1), (2) and (3) of the rule. The thrust of the rule is that an 
offer, offer to sell, offer for sale, or sale occurs when there is 
submitted to security holders a plan or agreement pursuant to which such 
holders are required to elect, on the basis of what is in substance a 
new investment decision, whether to accept a new or different security 
in exchange for their existing security. Rule 145 embodies the 
Commission's determination that such transactions are subject to the 
registration requirements of the Act, and that the previously existing 
no-sale theory of Rule 133 is no longer consistent with the statutory 
purposes of the Act. See Release No. 33-5316 (October 6, 1972) [37 FR 
23631]. Securities issued in transactions described in paragraph (a) of 
Rule 145 may be registered 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) 
under the Act.

    Transactions for which statutory exemptions under the Act, including 
those contained in sections 3(a)(9), (10), (11) and 4(2), are otherwise 
available are not affected by Rule 145.

    Note 1: Reference is made to Rule 153a (Sec. 230.153a of this 
chapter) describing the prospectus delivery required in a transaction of 
the type referred to in Rule 145.
    Note 2: A reclassification of securities covered by Rule 145 would 
be exempt from registration pursuant to section 3(a)(9) or (11) of the 
Act if the conditions of either of these sections are satisfied.

    (a) Transactions within this section. An offer, offer to sell, offer 
for sale, or sale shall be deemed to be involved, within the meaning of 
section 2(3) of the Act, so far as the security holders of a corporation 
or other person are concerned where, pursuant to statutory provisions of 
the jurisdiction under which such corporation or other person is 
organized, or pursuant to provisions contained in its certificate of 
incorporation or similar controlling instruments, or otherwise, there is 
submitted for the vote or consent of such security holders a plan or 
agreement for:
    (1) Reclassifications. A reclassification of securities of such 
corporation or other person, other than a stock split, reverse stock 
split, or change in par value, which involves the substitution of a 
security for another security;
    (2) Mergers of Consolidations. A statutory merger or consolidation 
or similar plan or acquisition in which securities of such corporation 
or other person held by such security holders will become or be 
exchanged for securities of any person, unless the sole purpose of the 
transaction is to change an issuer's domicile solely within the United 
States; or
    (3) Transfers of assets. A transfer of assets of such corporation or 
other person, to another person in consideration of the issuance of 
securities of such other person or any of its affiliates, if:
    (i) Such plan or agreement provides for dissolution of the 
corporation or

[[Page 514]]

other person whose security holders are voting or consenting; or
    (ii) Such plan or agreement provides for a pro rata or similar 
distribution of such securities to the security holders voting or 
consenting; or
    (iii) The board of directors or similar representatives of such 
corporation or other person, adopts resolutions relative to paragraph 
(a)(3) (i) or (ii) of this section within 1 year after the taking of 
such vote or consent; or
    (iv) The transfer of assets is a part of a preexisting plan for 
distribution of such securities, notwithstanding paragraph (a)(3) (i), 
(ii), or (iii) of this section.
    (b) Communications before a Registration Statement is filed. 
Communications made in connection with or relating to a transaction 
described in paragraph (a) of this section that will be registered under 
the Act may be made under Sec. 230.135, Sec. 230.165 or Sec. 230.166.
    (c) Persons and parties deemed to be underwriters. For purposes of 
this section, any party to any transaction specified in paragraph (a) of 
this section, other than the issuer, or any person who is an affiliate 
of such party at the time any such transaction is submitted for vote or 
consent, who publicly offers or sells securities of the issuer acquired 
in connection with any such transaction, shall be deemed to be engaged 
in a distribution and therefore to be an underwriter thereof within the 
meaning of section 2(11) of the Act. The term party as used in this 
paragraph (c) shall mean the corporations, business entities, or other 
persons, other than the issuer, whose assets or capital structure are 
affected by the transactions specified in paragraph (a) of this section.
    (d) Resale provisions for persons and parties deemed underwriters. 
Notwithstanding the provisions of paragraph (c), a person or party 
specified therein shall not be deemed to be engaged in a distribution 
and therefore not to be an underwriter of registered securities acquired 
in a transaction specified in paragraph (a) of this section if:
    (1) Such securities are sold by such person or party in accordance 
with the provisions of paragraphs (c), (e), (f) and (g) of Sec. 230.144;
    (2) Such person or party is not an affiliate of the issuer, and a 
period of at least one year, as determined in accordance with paragraph 
(d) of Sec. 230.144, has elapsed since the date the securities were 
acquired from the issuer in such transaction, and the issuer meets the 
requirements of paragraph (c) of Sec. 230.144; or
    (3) Such person or party is not, and has not been for at least three 
months, an affiliate of the issuer, and a period of at least two years, 
as determined in accordance with paragraph (d) of Sec. 230.144, has 
elapsed since the date the securities were acquired from the issuer in 
such transaction.
    (e) Definition of person. The term person as used in paragraphs (c) 
and (d) of this section, when used with reference to a person for whose 
account securities are to be sold, shall have the same meaning as the 
definition of that term in paragraph (a)(2) of Sec. 230.144.

(Secs. 2(11), 4(1), 4(4), 19(a), 48 Stat. 74, 77, 85; sec. 209, 48 Stat. 
908; secs. 1-4, 68 Stat. 683; sec. 12, 78 Stat. 580; sec. 308(a)(2), 90 
Stat. 57; 15 U.S.C. 77b(11), 77d(1), 77d(4), 77s(a))

[37 FR 23636, Nov. 7, 1972, as amended at 49 FR 5921, Feb. 16, 1984; 50 
FR 19016, May 6, 1985; 50 FR 48382, Nov. 25, 1985; 55 FR 17944, Apr. 30, 
1990; 62 FR 9245, Feb. 28, 1997; 64 FR 61449, Nov. 10, 1999]



Sec. 230.146  Rules under section 18 of the Act.

    (a) Prepared by or on behalf of the issuer. An offering document (as 
defined in Section 18(d)(1) of the Act [15 U.S.C. 77r(d)(1)]) is 
``prepared by or on behalf of the issuer'' for purposes of Section 18 of 
the Act, if the issuer or an agent or representative:
    (1) Authorizes the document's production, and
    (2) Approves the document before its use.
    (b) Covered securities for purposes of Section 18. (1) For purposes 
of Section 18(b) of the Act (15 U.S.C. 77r), the Commission finds that 
the following national securities exchanges, or segments or tiers 
thereof, have listing standards that are substantially similar to those 
of the New York Stock Exchange (``NYSE''), the American Stock Exchange 
(``Amex''), or the National Market System of the Nasdaq Stock

[[Page 515]]

Market (``Nasdaq/NMS''), and that securities listed on such exchanges 
shall be deemed covered securities:
    (i) Tier I of the Pacific Exchange, Incorporated;
    (ii) Tier I of the Philadelphia Stock Exchange, Incorporated; and
    (iii) The Chicago Board Options Exchange, Incorporated.
    (2) The designation of securities in paragraphs (b)(1) (i) through 
(iii) of this section as covered securities is conditioned on such 
exchanges' listing standards (or segments or tiers thereof) continuing 
to be substantially similar to those of the NYSE, Amex, or Nasdaq/NMS.

[62 FR 24573, May 6, 1997, as amended at 63 FR 3035, Jan. 21, 1998]



Sec. 230.147  ``Part of an issue'', ``person resident'', and ``doing business within'' for purposes of section 3(a)(11).

    Preliminary Notes: 1. This rule shall not raise any presumption that 
the exemption provided by section 3(a)(11) of the Act is not available 
for transactions by an issuer which do not satisfy all of the provisions 
of the rule.
    2. Nothing in this rule obviates the need for compliance with any 
state law relating to the offer and sale of the securities.
    3. Section 5 of the Act requires that all securities offered by the 
use of the mails or by any means or instruments of transportation or 
communication in interstate commerce be registered with the Commission. 
Congress, however, provided certain exemptions in the Act from such 
registration provisions where there was no practical need for 
registration or where the benefits of registration were too remote. 
Among those exemptions is that provided by section 3(a)(11) of the Act 
for transactions in any security which is a part of an issue offered and 
sold only to persons resident within a single State or Territory, where 
the issuer of such security is a person resident and doing business 
within * * * such State or Territory. The legislative history of that 
Section suggests that the exemption was intended to apply only to issues 
genuinely local in character, which in reality represent local financing 
by local industries, carried out through local investment. Rule 147 is 
intended to provide more objective standards upon which responsible 
local businessmen intending to raise capital from local sources may rely 
in claiming the section 3(a)(11) exemption.
    All of the terms and conditions of the rule must be satisfied in 
order for the rule to be available. These are: (i) That the issuer be a 
resident of and doing business within the state or territory in which 
all offers and sales are made; and (ii) that no part of the issue be 
offered or sold to non-residents within the period of time specified in 
the rule. For purposes of the rule the definition of issuer in section 
2(4) of the Act shall apply.
    All offers, offers to sell, offers for sale, and sales which are 
part of the same issue must meet all of the conditions of Rule 147 for 
the rule to be available. The determination whether offers, offers to 
sell, offers for sale and sales of securities are part of the same issue 
(i.e., are deemed to be integrated) will continue to be a question of 
fact and will depend on the particular circumstances. See Securities Act 
of 1933 Release No. 4434 (December 6, 1961) (26 FR 9158). Securities Act 
Release No. 4434 indicated that in determining whether offers and sales 
should be regarded as part of the same issue and thus should be 
integrated any one or more of the following factors may be 
determinative:
    (i) Are the offerings part of a single plan of financing;
    (ii) Do the offerings involve issuance of the same class of 
securities;
    (iii) Are the offerings made at or about the same time;
    (iv) Is the same type of consideration to be received; and
    (v) Are the offerings made for the same general purpose.
    Subparagraph (b)(2) of the rule, however, is designed to provide 
certainty to the extent feasible by identifying certain types of offers 
and sales of securities which will be deemed not part of an issue, for 
purposes of the rule only.
    Persons claiming the availability of the rule have the burden of 
proving that they have satisfied all of its provisions. However, the 
rule does not establish exclusive standards for complying with the 
section 3(a)(11) exemption. The exemption would also be available if the 
issuer satisfied the standards set forth in relevant administrative and 
judicial interpretations at the time of the offering but the issuer 
would have the burden of proving the availability of the exemption. Rule 
147 relates to transactions exempted from the registration requirements 
of section 5 of the Act by section 3(a)(11). Neither the rule nor 
section 3(a)(11) provides an exemption from the registration 
requirements of section 12(g) of the Securities Exchange Act of 1934, 
the anti-fraud provisions of the federal securities laws, the civil 
liability provisions of section 12(2) of the Act or other provisions of 
the federal securities laws.
    Finally, in view of the objectives of the rule and the purposes and 
policies underlying the Act, the rule shall not be available to any 
person with respect to any offering which, although in technical 
compliance with the rule, is part of a plan or scheme by such person to 
make interstate offers or sales of securities. In such cases 
registration pursuant to the Act is required.

[[Page 516]]

    4. The rule provides an exemption for offers and sales by the issuer 
only. It is not available for offers or sales of securities by other 
persons. Section 3(a)(11) of the Act has been interpreted to permit 
offers and sales by persons controlling the issuer, if the exemption 
provided by that section would have been available to the issuer at the 
time of the offering. See Securities Act Release No. 4434. Controlling 
persons who want to offer or sell securities pursuant to section 
3(a)(11) may continue to do so in accordance with applicable judicial 
and administrative interpretations.

    (a) Transactions covered. Offers, offers to sell, offers for sale 
and sales by an issuer of its securities made in accordance with all of 
the terms and conditions of this rule shall be deemed to be part of an 
issue offered and sold only to persons resident within a single state or 
territory where the issuer is a person resident and doing business 
within such state or territory, within the meaning of section 3(a)(11) 
of the Act.
    (b) Part of an issue. (1) For purposes of this rule, all securities 
of the issuer which are part of an issue shall be offered, offered for 
sale or sold in accordance with all of the terms and conditions of this 
rule.
    (2) For purposes of this rule only, an issue shall be deemed not to 
include offers, offers to sell, offers for sale or sales of securities 
of the issuer pursuant to the exemption provided by section 3 or section 
4(2) of the Act or pursuant to a registration statement filed under the 
Act, that take place prior to the six month period immediately preceding 
or after the six month period immediately following any offers, offers 
for sale or sales pursuant to this rule, Provided, That, there are 
during either of said six month periods no offers, offers for sale or 
sales of securities by or for the issuer of the same or similar class as 
those offered, offered for sale or sold pursuant to the rule.

    Note: In the event that securities of the same or similar class as 
those offered pursuant to the rule are offered, offered for sale or sold 
less than six months prior to or subsequent to any offer, offer for sale 
or sale pursuant to this rule, see Preliminary Note 3 hereof as to which 
offers, offers to sell, offers for sale, or sales are part of an issue.

    (c) Nature of the issuer. The issuer of the securities shall at the 
time of any offers and the sales be a person resident and doing business 
within the state or territory in which all of the offers, offers to 
sell, offers for sale and sales are made.
    (1) The issuer shall be deemed to be a resident of the state or 
territory in which:
    (i) It is incorporated or organized, if a corporation, limited 
partnership, trust or other form of business organization that is 
organized under state or territorial law;
    (ii) Its principal office is located, if a general partnership or 
other form of business organization that is not organized under any 
state or territorial law;
    (iii) His principal residence is located if an individual.
    (2) The issuer shall be deemed to be doing business within a state 
or territory if:
    (i) The issuer derived at least 80 percent of its gross revenues and 
those of its subsidiaries on a consolidated basis.
    (A) For its most recent fiscal year, if the first offer of any part 
of the issue is made during the first six months of the issuer's current 
fiscal year; or
    (B) For the first six months of its current fiscal year or during 
the twelve-month fiscal period ending with such six-month period, if the 
first offer of any part of the issue is made during the last six months 
of the issuer's current fiscal year from the operation of a business or 
of real property located in or from the rendering of services within 
such state or territory; provided, however, that this provision does not 
apply to any issuer which has not had gross revenues in excess of $5,000 
from the sale of products or services or other conduct of its business 
for its most recent twelve-month fiscal period;
    (ii) The issuer had at the end of its most recent semi-annual fiscal 
period prior to the first offer of any part of the issue, at least 80 
percent of its assets and those of its subsidiaries on a consolidated 
basis located within such state or territory;
    (iii) The issuer intends to use and uses at least 80 percent of the 
net proceeds to the issuer from sales made pursuant to this rule in 
connection with the operation of a business or of real property, the 
purchase of real property located in, or the rendering of

[[Page 517]]

services within such state or territory; and
    (iv) The principal office of the issuer is located within such state 
or territory.
    (d) Offerees and purchasers: Person Resident. Offers, offers to 
sell, offers for sale and sales of securities that are part of an issue 
shall be made only to persons resident within the state or territory of 
which the issuer is a resident. For purposes of determining the 
residence of offerees and purchasers:
    (1) A corporation, partnership, trust or other form of business 
organization shall be deemed to be a resident of a state or territory 
if, at the time of the offer and sale to it, it has its principal office 
within such state or territory.
    (2) An individual shall be deemed to be a resident of a state or 
territory if such individual has, at the time of the offer and sale to 
him, his principal residence in the state or territory.
    (3) A corporation, partnership, trust or other form of business 
organization which is organized for the specific purpose of acquiring 
part of an issue offered pursuant to this rule shall be deemed not to be 
a resident of a state or territory unless all of the beneficial owners 
of such organization are residents of such state or territory.
    (e) Limitation of resales. During the period in which securities 
that are part of an issue are being offered and sold by the issuer, and 
for a period of nine months from the date of the last sale by the issuer 
of such securities, all resales of any part of the issue, by any person, 
shall be made only to persons resident within such state or territory.

    Notes: 1. In the case of convertible securities resales of either 
the convertible security, or if it is converted, the underlying 
security, could be made during the period described in paragraph (e) 
only to persons resident within such state or territory. For purposes of 
this rule a conversion in reliance on section 3(a)(9) of the Act does 
not begin a new period.
    2. Dealers must satisfy the requirements of Rule 15c2-11 under the 
Securities Exchange Act of 1934 prior to publishing any quotation for a 
security, or submitting any quotation for publication, in any quotation 
medium.

    (f) Precautions against interstate offers and sales. (1) The issuer 
shall, in connection with any securities sold by it pursuant to this 
rule:
    (i) Place a legend on the certificate or other document evidencing 
the security stating that the securities have not been registered under 
the Act and setting forth the limitations on resale contained in 
paragraph (e) of this section;
    (ii) Issue stop transfer instructions to the issuer's transfer 
agent, if any, with respect to the securities, or, if the issuer 
transfers its own securities make a notation in the appropriate records 
of the issuer; and
    (iii) Obtain a written representation from each purchaser as to his 
residence.
    (2) The issuer shall, in connection with the issuance of new 
certificates for any of the securities that are part of the same issue 
that are presented for transfer during the time period specified in 
paragraph (e), take the steps required by paragraphs (f)(1) (i) and (ii) 
of this section.
    (3) The issuer shall, in connection with any offers, offers to sell, 
offers for sale or sales by it pursuant to this rule, disclose, in 
writing, the limitations on resale contained in paragraph (e) and the 
provisions of paragraphs (f)(1) (i) and (ii) and paragraph (f)(2) of 
this section.

[39 FR 2356, Jan. 21, 1974]



Sec. 230.148  [Reserved]



Sec. 230.149  Definition of ``exchanged'' in section 3(a)(9), for certain transactions.

    The term exchanged in section 3(a)(9) (sec. 202(c), 48 Stat. 906; 15 
U.S.C. 77c(9)) shall be deemed to include the issuance of a security in 
consideration of the surrender, by the existing security holders of the 
issuer, of outstanding securities of the issuer, notwithstanding the 
fact that the surrender of the outstanding securities may be required by 
the terms of the plans of exchange to be accompanied by such payment in 
cash by the security holder as may be necessary to effect an equitable 
adjustment, in respect of dividends or interest paid or payable on the 
securities involved in the exchange, as between such security holder and 
other security holders of the same class accepting the offer of 
exchange.

[2 FR 1382, July 7, 1937]

[[Page 518]]



Sec. 230.150  Definition of ``commission or other remuneration'' in section 3(a)(9), for certain transactions.

    The term commission or other remuneration in section 3(a)(9) of the 
Act shall not include payments made by the issuer, directly or 
indirectly, to its security holders in connection with an exchange of 
securities for outstanding securities, when such payments are part of 
the terms of the offer of exchange.

[2 FR 1076, May 26, 1937]



Sec. 230.151  Safe harbor definition of certain ``annuity contracts or optional annuity contracts'' within the meaning of section 3(a)(8).

    (a) Any annuity contract or optional annuity contract (a contract) 
shall be deemed to be within the provisions of section 3(a)(8) of the 
Securities Act of 1933 (15 U.S.C. 77c(a)(8)), Provided, That
    (1) The annuity or optional annuity contract is issued by a 
corporation (the insurer) subject to the supervision of the insurance 
commissioner, bank commissioner, or any agency or officer performing 
like functions, of any State or Territory of the United States or the 
District of Columbia;
    (2) The insurer assumes the investment risk under the contract as 
prescribed in paragraph (b) of this section; and
    (3) The contract is not marketed primarily as an investment.
    (b) The insurer shall be deemed to assume the investment risk under 
the contract if:
    (1) The value of the contract does not vary according to the 
investment experience of a separate account;
    (2) The insurer for the life of the contract
    (i) Guarantees the principal amount of purchase payments and 
interest credited thereto, less any deduction (without regard to its 
timing) for sales, administrative or other expenses or charges; and
    (ii) Credits a specified rate of interest (as defined in paragraph 
(c) of this section to net purchase payments and interest credited 
thereto; and
    (3) The insurer guarantees that the rate of any interest to be 
credited in excess of that described in paragraph (b)(2)(ii) of this 
section will not be modifed more frequently than once per year.
    (c) The term specified rate of interest, as used in paragraph 
(b)(2)(ii) of this section, means a rate of interest under the contract 
that is at least equal to the minimum rate required to be credited by 
the relevant nonforfeiture law in the jurisdiction in which the contract 
is issued. If that jurisdiction does not have any applicable 
nonforfeiture law at the time the contract is issued (or if the minimum 
rate applicable to an existing contract is no longer mandated in that 
jurisdiction), the specified rate under the contract must at least be 
equal to the minimum rate then required for individual annuity contracts 
by the NAIC Standard Nonforfeiture Law.

[51 FR 20262, June 4, 1986]



Sec. 230.152  Definition of ``transactions by an issuer not involving any public offering'' in section 4(2), for certain transactions.

    The phrase transactions by an issuer not involving any public 
offering in section 4(2) (48 Stat. 77, sec. 203(a), 48 Stat. 906; 15 
U.S.C. 77d) shall be deemed to apply to transactions not involving any 
public offering at the time of said transactions although subsequently 
thereto the issuer decides to make a public offering and/or files a 
registration statement.

[2 FR 1076, May 26, 1937, as amended at 30 FR 2022, Feb. 13, 1965]

    Cross Reference: For regulations relating to registration statement, 
see Secs. 230.400--230.494.



Sec. 230.152a  Offer or sale of certain fractional interests.

    Any offer or sale of a security, evidenced by a scrip certificate, 
order form or similar document which represents a fractional interest in 
a share of stock or similar security shall be deemed a transaction by a 
person other than an issuer, underwriter or dealer, within the meaning 
of section 4(1) of the act, if the fractional interest (a) resulted from 
a stock dividend, stock split, reverse stock split, conversion, merger 
or similar transaction, and (b)

[[Page 519]]

is offered or sold pursuant to arrangements for the purchase and sale of 
fractional interests among the person entitled to such fractional 
interests for the purpose of combining such interests into whole shares, 
and for the sale of such number of whole shares as may be necessary to 
compensate security holders for any remaining fractional interests not 
so combined, notwithstanding that the issuer or an affiliate of the 
issuer may act on behalf of or as agent for the security holders in 
effecting such transactions.

(Sec. 4, 48 Stat. 77; 15 U.S.C. 77d)

[30 FR 2657, Mar. 2, 1965]



Sec. 230.153  Definition of ``preceded by a prospectus'', as used in section 5(b)(2), in relation to certain transactions.

    (a) The term preceded by a prospectus, as used in section 5(b)(2) of 
the Securities Act of 1933 (48 Stat. 77; 15 U.S.C. 77e(b)(2), as 
amended, in respect of any requirement of delivery of a prospectus to a 
member of a national securities exchange, on account of a transaction in 
a security effected on such exchange, shall mean delivery, prior to such 
transaction, of copies of a prospectus descriptive of such security and 
meeting the requirements of section 10(a) (48 Stat. 81, sec. 205, 48 
Stat. 906; 15 U.S.C. 77j) to such exchange by the issuer or any 
underwriter, for the purpose of redelivery to members of such exchange 
upon their request: Provided, That as to any transaction occurring prior 
to the expiration of forty days after the effective date of the 
registration statement or the expiration of forty days after the first 
date upon which the security was bona fide offered to the public by the 
issuer or by or through an underwriter after such effective date, 
whichever is later (exclusive of the time during which a stop order 
issued under section 8 is in effect as to such security):
    (1) Such exchange shall theretofore have requested of the issuer or, 
if such requests shall not have been compiled with, of a principal 
underwriter (as that term is defined in Sec. 230.405), from time to 
time, such number of copies of such prospectus as may have appeared 
reasonably necessary to comply with the requests of its members, and 
shall have delivered from its supply on hand a copy to any member 
theretofore making a written request therefor, and
    (2) The issuer or any underwriter shall theretofore have furnished 
such exchange with such reasonable number of copies of such prospectus 
as may have been requested by the exchange for the purpose stated above.
    (b) The term national securities exchange, as used herein shall mean 
a securities exchange registered as a national securities exchange under 
the Securities Exchange Act of 1934 (48 Stat. 881; 15 U.S.C. Chapter 
2B), as amended.

[2 FR 1076, May 26, 1937, as amended at 19 FR 6737, Oct. 20, 1954]

    Cross References: For the rules and regulations under the Securities 
Exchange Act of 1934, see part 240 of this chapter. For general 
requirements as to prospectuses, see Secs. 230.400-230.434a.



Sec. 230.153a  Definition of ``preceded by a prospectus'' as used in section 5(b)(2) of the Act, in relation to certain transactions requiring approval of 
          security holders.

    The term preceded by a prospectus, as used in section 5(b)(2) of the 
Act with respect to any requirement for the delivery of a prospectus to 
security holders of a corporation or other person, in connection with 
transactions of the character specified in paragraph (a) of 
Sec. 230.145, shall mean the delivery of a prospectus:
    (a) Prior to the vote of security holders on such transactions; or,
    (b) With respect to actions taken by consent, prior to the earliest 
date on which the corporate action may be taken; to all security holders 
of record of such corporation or other person, entitled to vote on or 
consent to the proposed transaction, at their address of record on the 
transfer records of the corporation or other person.

[37 FR 23636, Nov. 7, 1972]



Sec. 230.153b  Definition of ``preceded by a prospectus'', as used in section 5(b)(2), in connection with certain transactions in standardized options.

    The term preceded by a prospectus, as used in section 5(b)(2) of the 
Act with

[[Page 520]]

respect to any requirement for the delivery of a prospectus relating to 
standardized options registered on Form S-20, shall mean the delivery, 
prior to any transactions, of copies of such prospectus to each options 
market upon which the options are traded, for the purpose of redelivery 
to options customers upon their request, Provided That:
    (a) Such options market shall thereto have requested of the issuer, 
from time to time, such number of copies of such prospectus as may have 
appeared reasonably necessary to comply with the requests of options 
customers, and shall have delivered promptly from its supply on hand a 
copy to any options customer making a request thereof; and
    (b) The issuer shall have furnished such options market with such 
reasonable number of copies of such prospectus as may have been 
requested by the options market for the purpose stated above.

(15 U.S.C. 77a et seq.)

[47 FR 41955, Sept. 23, 1982]



Sec. 230.154  Delivery of prospectuses to investors at the same address.

    (a) Delivery of a single prospectus. If you must deliver a 
prospectus under the federal securities laws, for purposes of sections 
5(b) and 2(a)(10) of the Act (15 U.S.C. 77e(b) and 77b(a)(10)) or 
Sec. 240.15c2-8(b) of this chapter, you will be considered to have 
delivered a prospectus to investors who share an address if:
    (1) You deliver a prospectus to the shared address;
    (2) You address the prospectus to the investors as a group (for 
example, ``ABC Fund [or Corporation] Shareholders,'' ``Jane Doe and 
Household,'' ``The Smith Family'') or to each of the investors 
individually (for example, ``John Doe and Richard Jones''); and
    (3) The investors consent in writing to delivery of one prospectus.
    (b) Implied consent. You do not need to obtain written consent from 
an investor under paragraph (a)(3) of this section if all of the 
following conditions are met:
    (1) The investor has the same last name as the other investors, or 
you reasonably believe that the investors are members of the same 
family;
    (2) You have sent the investor a notice at least 60 days before you 
begin to rely on this section concerning delivery of prospectuses to 
that investor. The notice must be a separate written statement and:
    (i) State that only one prospectus will be delivered to the shared 
address unless you receive contrary instructions;
    (ii) Include a toll-free telephone number or be accompanied by a 
reply form that is pre-addressed with postage provided, that the 
investor can use to notify you that he or she wishes to receive a 
separate prospectus;
    (iii) State the duration of the consent;
    (iv) Explain how an investor can revoke consent;
    (v) State that you will begin sending individual copies to an 
investor within 30 days after you receive revocation of the investor's 
consent; and
    (vi) Contain the following prominent statement, or similar clear and 
understandable statement, in bold-face type: ``Important Notice 
Regarding Delivery of Shareholder Documents.'' This statement also must 
appear on the envelope in which the notice is delivered. Alternatively, 
if the notice is delivered separately from other communications to 
investors, this statement may appear either on the notice or on the 
envelope in which the notice is delivered;

    Note to paragraph (b)(2): The notice should be written in plain 
English. See Sec. 230.421(d)(2) of this chapter for a discussion of 
plain English principles.

    (3) You have not received the reply form or other notification 
indicating that the investor wishes to continue to receive an individual 
copy of the prospectus, within 60 days after you sent the notice; and
    (4) You deliver the prospectus to a post office box or to a 
residential street address. You can assume a street address is a 
residence unless you have information that indicates it is a business.
    (c) Revocation of consent. If an investor, orally or in writing, 
revokes consent to delivery of one prospectus to a shared address 
(provided under paragraphs (a)(3) or (b) of this section), you

[[Page 521]]

must begin sending individual copies to that investor within 30 days 
after you receive the revocation. If the individual's consent concerns 
delivery of the prospectus of a registered open-end management 
investment company, at least once a year you must explain to investors 
who have consented how they can revoke their consent. The explanation 
must be reasonably designed to reach these investors.
    (d) Definition of address. For purposes of this section, address 
means a street address, a post office box number, an electronic mail 
address, a facsimile telephone number, or other similar destination to 
which paper or electronic documents are delivered, unless otherwise 
provided in this section. If you have reason to believe that an address 
is the street address of a multi-unit building, the address must include 
the unit number.

[64 FR 62545, Nov. 16, 1999, as amended at 65 FR 65749, Nov. 2, 2000]



Sec. 230.155  Integration of abandoned offerings.

    Preliminary Note: Compliance with paragraph (b) or (c) of this 
section provides a non-exclusive safe harbor from integration of private 
and registered offerings. Because of the objectives of Rule 155 and the 
policies underlying the Act, Rule 155 is not available to any issuer for 
any transaction or series of transactions that, although in technical 
compliance with the rule, is part of a plan or scheme to evade the 
registration requirements of the Act.

    (a) Definition of terms. For the purposes of this section only, a 
private offering means an unregistered offering of securities that is 
exempt from registration under Section 4(2) or 4(6) of the Act (15 
U.S.C. 77d(2) and 77d(6)) or Rule 506 of Regulation D (Sec. 230.506).
    (b) Abandoned private offering followed by a registered offering. A 
private offering of securities will not be considered part of an 
offering for which the issuer later files a registration statement if:
    (1) No securities were sold in the private offering;
    (2) The issuer and any person(s) acting on its behalf terminate all 
offering activity in the private offering before the issuer files the 
registration statement;
    (3) The Section 10(a) final prospectus and any Section 10 
preliminary prospectus used in the registered offering disclose 
information about the abandoned private offering, including:
    (i) The size and nature of the private offering;
    (ii) The date on which the issuer abandoned the private offering;
    (iii) That any offers to buy or indications of interest given in the 
private offering were rejected or otherwise not accepted; and
    (iv) That the prospectus delivered in the registered offering 
supersedes any offering materials used in the private offering; and
    (4) The issuer does not file the registration statement until at 
least 30 calendar days after termination of all offering activity in the 
private offering, unless the issuer and any person acting on its behalf 
offered securities in the private offering only to persons who were (or 
who the issuer reasonably believes were):
    (i) Accredited investors (as that term is defined in 
Sec. 230.501(a)); or
    (ii) Persons who satisfy the knowledge and experience standard of 
Sec. 230.506(b)(2)(ii).
    (c) Abandoned registered offering followed by a private offering. An 
offering for which the issuer filed a registration statement will not be 
considered part of a later commenced private offering if:
    (1) No securities were sold in the registered offering;
    (2) The issuer withdraws the registration statement under 
Sec. 230.477;
    (3) Neither the issuer nor any person acting on the issuer's behalf 
commences the private offering earlier than 30 calendar days after the 
effective date of withdrawal of the registration statement under 
Sec. 230.477;
    (4) The issuer notifies each offeree in the private offering that:
    (i) The offering is not registered under the Act;
    (ii) The securities will be ``restricted securities'' (as that term 
is defined in Sec. 230.144(a)(3)) and may not be resold unless they are 
registered under the Act or an exemption from registration is available;
    (iii) Purchasers in the private offering do not have the protection 
of Section 11 of the Act (15 U.S.C. 77k); and

[[Page 522]]

    (iv) A registration statement for the abandoned offering was filed 
and withdrawn, specifying the effective date of the withdrawal; and
    (5) Any disclosure document used in the private offering discloses 
any changes in the issuer's business or financial condition that 
occurred after the issuer filed the registration statement that are 
material to the investment decision in the private offering.

[66 FR 8896, Feb. 5, 2001]



Sec. 230.156  Investment company sales literature.

    (a) Under the federal securities laws, including section 17(a) of 
the Securities Act of 1933 (15 U.S.C. 77q(a)) and section 10(b) of the 
Securities Exchange Act of 1934 (15 U.S.C. 78j(b)) and Rule 10b-5 
thereunder (17 CFR part 240), it is unlawful for any person, directly or 
indirectly, by the use of any means or instrumentality of interstate 
commerce or of the mails, to use sales literature which is materially 
misleading in connection with the offer or sale of securities issued by 
an investment company. Under these provisions, sales literature is 
materially misleading if it: (1) Contains an untrue statement of a 
material fact or (2) omits to state a material fact necessary in order 
to make a statement made, in the light of the circumstances of its use, 
not misleading.
    (b) Whether or not a particular description, representation, 
illustration, or other statement involving a material fact is misleading 
depends on evaluation of the context in which it is made. In considering 
whether a particular statement involving a material fact is or might be 
misleading, weight should be given to all pertinent factors, including, 
but not limited to, those listed below.
    (1) A Statement could be misleading because of:
    (i) Other statements being made in connection with the offer of sale 
or sale of the securities in question;
    (ii) The absence of explanations, qualifications, limitations or 
other statements necessary or appropriate to make such statement not 
misleading; or
    (iii) General economic or financial conditions or circumstances.
    (2) Representations about past or future investment performance 
could be misleading because of statements or omissions made involving a 
material fact, including situations where:
    (i) Portrayals of past income, gain, or growth of assets convey an 
impression of the net investment results achieved by an actual or 
hypothetical investment which would not be justified under the 
circumstances; and
    (ii) Representations, whether express or implied, about future 
investment performance, including:
    (A) Representations, as to security of capital, possible future 
gains or income, or expenses associated with an investment;
    (B) Representations implying that future gain or income may be 
inferred from or predicted based on past investment performance; or
    (C) Portrayals of past performance, made in a manner which would 
imply that gains or income realized in the past would be repeated in the 
future.
    (3) A statement involving a material fact about the characteristics 
or attributes of an investment company could be misleading because of:
    (i) Statements about possible benefits connected with or resulting 
from services to be provided or methods of operation which do not give 
equal prominence to discussion of any risks or limitations associated 
therewith;
    (ii) Exaggerated or unsubstantiated claims about management skill or 
techniques, characteristics of the investment company or an investment 
in securities issued by such company, services, security of investment 
or funds, effects of government supervision, or other attributes; and
    (iii) Unwarranted or incompletely explained comparisons to other 
investment vehicles or to indexes.
    (c) For purposes of this section, the term sales literature shall be 
deemed to include any communication (whether in writing, by radio, or by 
television) used by any person to offer to sell or induce the sale of 
securities of any investment company. Communications between issuers, 
underwriters and dealers are included in this definition of sales 
literature if such communications, or the information contained therein, 
can be reasonably expected to

[[Page 523]]

be communicated to prospective investors in the offer or sale of 
securities or are designed to be employed in either written or oral form 
in the offer or sale of securities.

(Sec. 38(a) (15 U.S.C. 80a-37(a)); sec. 19(a) (15 U.S.C. 77s(a)); secs. 
10(b) and 23(a) (15 U.S.C. 78j(b) and 78w(a)))

[44 FR 64072, Nov. 6, 1979]



Sec. 230.157  Small entities under the Securities Act 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, other than an investment 
company, for purposes of the Securities Act of 1933, mean an issuer 
whose total assets on the last day of its most recent fiscal year were 
$5 million or less and that is engaged or proposing to engage in small 
business financing. An issuer is considered to be engaged or proposing 
to engage in small business financing under this section if it is 
conducting or proposes to conduct an offering of securities which does 
not exceed the dollar limitation prescribed by section 3(b) of the 
Securities Act.
    (b) When used with reference to an investment company that is an 
issuer for purposes of the Act, have the meaning ascribed to those terms 
by Sec. 270.0-10 of this chapter.

[47 FR 5221, Feb. 4, 1982, as amended at 51 FR 25362, July 14, 1986; 63 
FR 35514, June 30, 1998]



Sec. 230.158  Definitions of certain terms in the last paragraph of section 11(a).

    (a) An ``earning statement'' made generally available to 
securityholders of the registrant pursuant to the last paragraph of 
section 11(a) of the Act shall be sufficient for the purposes of such 
paragraph if:
    (1) There is included the information required for statements of 
income contained either:
    (i) In Item 8 of Form 10-K and Form 10-KSB (Sec. 249.310 of this 
chapter), part I, Item 1 of Form 10-Q and Form 10-QSB (Sec. 249.308a of 
this chapter), or rule 14a-3(b) (Sec. 240.14a-3(b) of this chapter) 
under the Securities Exchange Act of 1934;
    (ii) In Item 17 of Form 20-F (Sec. 249.220f of this chapter), if 
appropriate; or
    (iii) In Form 40-F (Sec. 249.240f of this chapter); and
    (2) The information specified in the last paragraph of section 11(a) 
is contained in one report or any combination of reports either:
    (i) On Form 10-K and Form 10-KSB, Form 10-Q and Form 10-QSB, Form 8-
K (Sec. 249.308 of this chapter), or in the annual report to 
securityholders pursuant to rule 14a-3 under the Securities Exchange Act 
of 1934; or
    (ii) On Form 20-F, Form 40-F or Form 6-K (Sec. 249.306 of this 
chapter).

A subsidiary issuing debt securities guaranteed by its parent will be 
deemed to have met the requirements of this paragraph if the parent's 
income statements satisfy the criteria of this paragraph and information 
respecting the subsidiary is included to the same extent as was 
presented in the registration statement. An ``earning statement'' not 
meeting the requirements of this paragraph may otherwise be sufficient 
for purposes of the last paragraph of section 11(a).
    (b) For purposes of the last paragraph of section 11(a) only, the 
``earning statement'' contemplated by paragraph (a) of this section 
shall be deemed to be ``made generally available to its 
securityholders'' if the registrant:
    (1) Is required to file reports pursuant to section 13 or 15(d) of 
the Securities Exchange Act of 1934 and
    (2) Has filed its report or reports on Form 10-K and Form 10-KSB, 
Form 10-Q and Form 10-QSB, Form 8-K, Form 20-F, Form 40-F, or Form 6-K, 
or has supplied to the Commission copies of the annual report sent to 
securityholders pursuant to rule 14a-3(c), containing such information.

A registrant may use other methods to make an earning statement 
``generally available to its securityholders'' for purposes of the last 
paragraph of section 11(a).
    (c) For purposes of the last paragraph of section 11(a) only, the 
effective date of the registration statement is deemed to be the date of 
the latest to occur of (1) the effective date of the registration

[[Page 524]]

statement: (2) the effective date of the last post-effective amendment 
to the registration statement, next preceding a particular sale by the 
registrant of registered securities to the public filed for purposes of 
(i) including any prospectus required by section 10(a)(3) of the Act, 
(ii) reflecting in the prospectus any facts or events arising after the 
effective date of the registration statement (or the most recent post-
effective amendment thereof) which, individually or in the aggregate, 
represent a fundamental change in the information set forth in the 
registration statement, or (iii) including any material information with 
respect to the plan or distribution not previously disclosed in this 
registration statement or any material change to such information in the 
registration statement, or (3) the date of filing of the last report of 
the registrant incorporated by reference into the prospectus, and relied 
upon in lieu of filing a post-effective amendment for purposes of 
paragraphs (c)(2) (i) and (ii) of this rule, next preceding a particular 
sale by the registrant of registered securities to the public.
    (d) If an earnings statement was made available by ``other methods'' 
than those specified in paragraphs (a) and (b) of this section, the 
earnings statement must be filed as exhibit 99 to the next periodic 
report required by section 13 or 15(d) of the Exchange Act covering the 
period in which the earnings statement was released.

[48 FR 44770, Sept. 30, 1983, as amended at 56 FR 30054, July 1, 1991; 
58 FR 14669, Mar. 18, 1993]



Sec. 230.160.  Registered investment company exemption from Section 101(c)(1) of the Electronic Signatures in Global and National Commerce Act.

    A prospectus for an investment company registered under the 
Investment Company Act of 1940 (15 U.S.C. 80a-1 et seq.) that is sent or 
given for the sole purpose of permitting a communication not to be 
deemed a prospectus under section 2(a)(10)(a) of the Act (15 U.S.C. 
77b(a)(10)(a)) shall be exempt from the requirements of section 
101(c)(1) of the Electronic Signatures in Global and National Commerce 
Act.

[65 FR 47284, Aug. 2, 2000]



Sec. 230.161  Amendments to rules and regulations governing exemptions.

    The rules and regulations governing the exemption of securities 
under section 3(b) of the Act, as in effect at the time the securities 
are first bona fide offered to the public in conformity therewith, shall 
continue to govern the exemption of such securities notwithstanding the 
subsequent amendment of such rules and regulations. This section shall 
not apply, however, to any new offering of such securities by an issuer 
or underwriter after the effective date of any such amendment, nor shall 
it apply to any offering after January 1, 1959, of securities by an 
issuer or underwriter pursuant to Regulation D or pursuant to Regulation 
A as in effect at any time prior to July 23, 1956.

[23 FR 4454, June 20, 1958]



Sec. 230.162  Submission of tenders in registered exchange offers.

    (a) Notwithstanding section 5(a) of the Act (15 U.S.C. 77e(a)), 
offerors may solicit tenders of securities in an exchange offer subject 
to Sec. 240.13e-4(e) or Sec. 240.14d-4(b) of this chapter before a 
registration statement is effective as to the security offered, so long 
as no securities are purchased until the registration statement is 
effective and the tender offer has expired in accordance with the tender 
offer rules.
    (b) Notwithstanding section 5(b)(2) of the Act (15 U.S.C. 
77e(b)(2)), a prospectus that meets the requirements of section 10(a) of 
the Act (15 U.S.C. 77j(a)) need not be delivered to security holders in 
an exchange offer subject to Sec. 240.13e-4(e) or Sec. 240.14d-4(b) of 
this chapter, so long as a preliminary prospectus, prospectus 
supplements and revised prospectuses are delivered to security holders 
in accordance with Sec. 240.13e-4(e)(2) or Sec. 240.14d-4(b) of this 
chapter, as applicable.

[64 FR 61450, Nov. 10, 1999]

[[Page 525]]



Sec. 230.165  Offers made in connection with a business combination transaction.

    Preliminary Note: This section is available only to communications 
relating to business combinations. The exemption does not apply to 
communications that may be in technical compliance with this section, 
but have the primary purpose or effect of conditioning the market for 
another transaction, such as a capital-raising or resale transaction.

    (a) Communications before a registration statement is filed. 
Notwithstanding section 5(c) of the Act (15 U.S.C. 77e(c)), the offeror 
of securities in a business combination transaction to be registered 
under the Act may make an offer to sell or solicit an offer to buy those 
securities from and including the first public announcement until the 
filing of a registration statement related to the transaction, so long 
as any written communication (other than non-public communications among 
participants) made in connection with or relating to the transaction 
(i.e., prospectus) is filed in accordance with Sec. 230.425 and the 
conditions in paragraph (c) of this section are satisfied.
    (b) Communications after a registration statement is filed. 
Notwithstanding section 5(b)(1) of the Act (15 U.S.C. 77e(b)(1)), any 
written communication (other than non-public communications among 
participants) made in connection with or relating to a business 
combination transaction (i.e., prospectus) after the filing of a 
registration statement related to the transaction need not satisfy the 
requirements of section 10 (15 U.S.C. 77j) of the Act, so long as the 
prospectus is filed in accordance with Sec. 230.424 or Sec. 230.425 and 
the conditions in paragraph (c) of this section are satisfied.
    (c) Conditions. To rely on paragraphs (a) and (b) of this section:
    (1) Each prospectus must contain a prominent legend that urges 
investors to read the relevant documents filed or to be filed with the 
Commission because they contain important information. The legend also 
must explain to investors that they can get the documents for free at 
the Commission's web site and describe which documents are available 
free from the offeror; and
    (2) In an exchange offer, the offer must be made in accordance with 
the applicable tender offer rules (Secs. 240.14d-1 through 240.14e-8 of 
this chapter); and, in a transaction involving the vote of security 
holders, the offer must be made in accordance with the applicable proxy 
or information statement rules (Secs. 240.14a-1 through 240.14a-101 and 
Secs. 240.14c-1 through 240.14c-101 of this chapter).
    (d) Applicability. This section is applicable not only to the 
offeror of securities in a business combination transaction, but also to 
any other participant that may need to rely on and complies with this 
section in communicating about the transaction.
    (e) Failure to file or delay in filing. An immaterial or 
unintentional failure to file or delay in filing a prospectus described 
in this section will not result in a violation of section 5(b)(1) or (c) 
of the Act (15 U.S.C. 77e(b)(1) and (c)), so long as:
    (1) A good faith and reasonable effort was made to comply with the 
filing requirement; and
    (2) The prospectus is filed as soon as practicable after discovery 
of the failure to file.
    (f) Definitions.
    (1) A business combination transaction means any transaction 
specified in Sec. 230.145(a) or exchange offer;
    (2) A participant is any person or entity that is a party to the 
business combination transaction and any persons authorized to act on 
their behalf; and
    (3) Public announcement is any oral or written communication by a 
participant that is reasonably designed to, or has the effect of, 
informing the public or security holders in general about the business 
combination transaction.

[64 FR 61450, Nov. 10, 1999]



Sec. 230.166  Exemption from section 5(c) for certain communications in connection with business combination transactions.

    Preliminary Note: This section is available only to communications 
relating to business combinations. The exemption does not apply to 
communications that may be in technical compliance with this section, 
but have the primary purpose or effect of conditioning the market for 
another transaction, such as a capital-raising or resale transaction.


[[Page 526]]


    (a) Communications. In a registered offering involving a business 
combination transaction, any communication made in connection with or 
relating to the transaction before the first public announcement of the 
offering will not constitute an offer to sell or a solicitation of an 
offer to buy the securities offered for purposes of section 5(c) of the 
Act (15 U.S.C. 77e(c)), so long as the participants take all reasonable 
steps within their control to prevent further distribution or 
publication of the communication until either the first public 
announcement is made or the registration statement related to the 
transaction is filed.
    (b) Definitions. The terms business combination transaction, 
participant and public announcement have the same meaning as set forth 
in Sec. 230.165(f).

[64 FR 61450, Nov. 10, 1999]



Sec. 230.170  Prohibition of use of certain financial statements.

    Financial statements which purport to give effect to the receipt and 
application of any part of the proceeds from the sale of securities for 
cash shall not be used unless such securities are to be offered through 
underwriters and the underwriting arrangements are such that the 
underwriters are or will be committed to take and pay for all of the 
securities, if any are taken, prior to or within a reasonable time after 
the commencement of the public offering, or if the securities are not so 
taken to refund to all subscribers the full amount of all subscription 
payments made for the securities. The caption of any such financial 
statement shall clearly set forth the assumptions upon which such 
statement is based. The caption shall be in type at least as large as 
that used generally in the body of the statement.

[21 FR 7566, Oct. 3, 1956]



Sec. 230.171  Disclosure detrimental to the national defense or foreign policy.

    (a) Any requirement to the contrary notwithstanding, no registration 
statement, prospectus, or other document filed with the Commission or 
used in connection with the offering or sale of any securities 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 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]

[[Page 527]]



Sec. 230.174  Delivery of prospectus by dealers; exemptions under section 4(3) of the Act.

    The obligations of a dealer (including an underwriter no longer 
acting as an underwriter in respect of the security involved in such 
transactions) to deliver a prospectus in transactions in a security as 
to which a registration statement has been filed taking place prior to 
the expiration of the 40- or 90-day period specified in section 4(3) of 
the Act after the effective date of such registration statement or prior 
to the expiration of such period after the first date upon which the 
security was bona fide offered to the public by the issuer or by or 
through an underwriter after such effective date, whichever is later, 
shall be subject to the following provisions:
    (a) No prospectus need be delivered if the registration statement is 
on Form F-6 (Sec. 239.36 of this chapter).
    (b) No prospectus need be delivered if the issuer is subject, 
immediately prior to the time of filing the registration statement, to 
the reporting requirements of section 13 or 15(d) of the Securities 
Exchange Act of 1934.
    (c) Where a registration statement relates to offerings to be made 
from time to time no prospectus need be delivered after the expiration 
of the initial prospectus delivery period specified in section 4(3) of 
the Act following the first bona fide offering of securities under such 
registration statement.
    (d) If (1) the registration statement relates to the security of an 
issuer that is not subject, immediately prior to the time of filing the 
registration statement, to the reporting requirements of section 13 or 
15(d) of the Securities Exchange Act of 1934, and (2) as of the offering 
date, the security is listed on a registered national securities 
exchange or authorized for inclusion in an electronic inter-dealer 
quotation system sponsored and governed by the rules of a registered 
securities association, no prospectus need be delivered after the 
expiration of twenty-five calendar days after the offering date. For 
purposes of this provision, the term offering date refers to the later 
of the effective date of the registration statement or the first date on 
which the security was bona fide offered to the public.
    (e) Notwithstanding the foregoing, the period during which a 
prospectus must be delivered by a dealer shall be:
    (1) As specified in section 4(3) of the Act if the registration 
statement was the subject of a stop order issued under section 8 of the 
Act; or
    (2) As the Commission may provide upon application or on its own 
motion in a particular case.
    (f) Nothing in this section shall affect the obligation to deliver a 
prospectus pursuant to the provisions of section 5 of the Act by a 
dealer who is acting as an underwriter with respect to the securities 
involved or who is engaged in a transaction as to securities 
constituting the whole or a part of an unsold allotment to or 
subscription by such dealer as a participant in the distribution of such 
securities by the issuer or by or through an underwriter.
    (g) If the registration statement relates to an offering of 
securities of a ``blank check company,'' as defined in Rule 419 under 
the Act (17 CFR 230.419), the statutory period for prospectus delivery 
specified in section 4(3) of the Act shall not terminate until 90 days 
after the date funds and securities are released from the escrow or 
trust account pursuant to Rule 419 under the Act.

(15 U.S.C. 77d; 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. 565-568, 569, 570-574; 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, 1499, 1500; 15 
U.S.C. 77f, 77g, 77h, 77j, 77s(a), 78l, 78m, 78o(d), 78w(a))

[35 FR 18457, Dec. 4, 1970, as amended at 48 FR 12347, Mar. 24, 1983; 53 
FR 11845, Apr. 11, 1988; 57 FR 18043, Apr. 28, 1992]



Sec. 230.175  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

[[Page 528]]

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 shareholders 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 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, Form 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 Act, 
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 240.14a-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) 
``Management's Discussion and Analysis of Financial Condition and 
Results of Operations, or Item 5 of Form 20-F, Operating and Financial 
Review and Prospects, (Sec. 249.220f of this chapter)'' 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 Item 5 of Form 
20-F.
    (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

[[Page 529]]

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 Act of 1933 or the rules or regulations promulgated 
thereunder.

[46 FR 13990, Feb. 25, 1981, as amended at 46 FR 19457, Mar. 31, 1981; 
47 FR 54770, Dec. 6, 1982; 48 FR 19875, May 3, 1983; 56 FR 30054, July 
1, 1991; 57 FR 36468, Aug. 13, 1992; 64 FR 53909, Oct. 5, 1999]



Sec. 230.176  Circumstances affecting the determination of what constitutes reasonable investigation and reasonable grounds for belief under section 11 of the 
          Securities Act.

    In determining whether or not the conduct of a person constitutes a 
reasonable investigation or a reasonable ground for belief meeting the 
standard set forth in section 11(c), relevant circumstances include, 
with respect to a person other than the issuer.
    (a) The type of issuer;
    (b) The type of security;
    (c) The type of person;
    (d) The office held when the person is an officer;
    (e) The presence or absence of another relationship to the issuer 
when the person is a director or proposed director;
    (f) Reasonable reliance on officers, employees, and others whose 
duties should have given them knowledge of the particular facts (in the 
light of the functions and responsibilities of the particular person 
with respect to the issuer and the filing);
    (g) When the person is an underwriter, the type of underwriting 
arrangement, the role of the particular person as an underwriter and the 
availability of information with respect to the registrant; and
    (h) Whether, with respect to a fact or document incorporated by 
reference, the particular person had any responsibility for the fact or 
document at the time of the filing from which it was incorporated.

(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. 
308(a)(2), 90 Stat. 57; secs. 3(b), 12, 13, 14, 15(d), 23(a), 48 Stat. 
882, 892, 894, 895, 901; secs. 203(a), 1, 3, 8, 49 Stat. 704, 1375, 
1377, 1379; sec. 202, 68 Stat. 686; secs. 4, 5, 6(d), 78 Stat. 569, 570-
574; secs. 1, 2, 3, 82 Stat. 454, 455; secs. 28(c), 1, 2, 3, 4, 5, 84 
Stat. 1435, 1497; sec. 105(b), 88 Stat. 1503; secs. 8, 9, 10, 89 Stat. 
117, 118, 119; sec. 308(b), 90 Stat 57; sec. 18, 89 Stat. 155; secs. 
202, 203, 204, 91 Stat. 1494, 1498-1500; sec. 20(a), 49 Stat. 833; sec. 
319, 53 Stat. 1173; sec. 38, 54 Stat. 841; 15 U.S.C. 77f, 77g, 77h, 77j, 
77s(a), 78c(b), 78l, 78m, 78n, 78o(d), 78w(a), 79t(a), 77sss(a), 80a-37)

[47 FR 11433, Mar. 16, 1982]



Sec. 230.180  Exemption from registration of interests and participations issued in connection with certain H.R. 10 plans.

    (a) Any interest or participation in a single trust fund or in a 
collective trust fund maintained by a bank, or any security arising out 
of a contract issued by an insurance company, issued to an employee 
benefit plan shall be exempt from the provisions of section 5 of the Act 
if the following terms and conditions are met:
    (1) The plan covers employees, some or all of whom are employees 
within the meaning of section 401(c)(1) of the Internal Revenue Code of 
1954, and is either: (i) A pension or profit-sharing plan which meets 
the requirements for qualification under section 401 of such Code, or 
(ii) an annuity plan which meets the requirements for the deduction of 
the employer's contribution under section 404(a)(2) of such Code;
    (2) The plan covers only employees of a single employer or employees 
of interrelated partnerships; and
    (3) The issuer of such interest, participation or security shall 
have reasonable grounds to believe and, after making reasonable inquiry, 
shall believe immediately prior to any issuance that:
    (i) The employer is a law firm, accounting firm, investment banking 
firm, pension consulting firm or investment advisory firm that is 
engaged in furnishing services of a type that involve such knowledge and 
experience in financial and business matters that

[[Page 530]]

the employer is able to represent adequately its interests and those of 
its employees; or
    (ii) In connection with the plan, the employer prior to adopting the 
plan obtains the advice of a person or entity that (A) is not a 
financial institution providing any funding vehicle for the plan, and is 
neither an affiliated person as defined in section 2(a)(3) of the 
Investment Company Act of 1940 of, nor a person who has a material 
business relationship with, a financial institution providing a funding 
vehicle for the plan; and (B) is, by virtue of knowledge and experience 
in financial and business matters, able to represent adequately the 
interests of the employer and its employees.
    (b) Any interest or participation issued to a participant in either 
a pension or profit-sharing plan which meets the requirements for 
qualification under section 401 of the Internal Revenue Code of 1954 or 
an annuity plan which meets the requirements for the deduction of the 
employer's contribution under section 404(a)(2) of such Code, and which 
covers employees, some or all of whom are employees within the meaning 
of section 401(c)(1) of such Code, shall be exempt from the provisions 
of section 5 of the Act.

[46 FR 58291, Dec. 1, 1981]



Sec. 230.215  Accredited investor.

    The term accredited investor as used in section 2(15)(ii) of the 
Securities Act of 1933 (15 U.S.C. 77b(15)(ii)) shall include the 
following persons:
    (a) Any savings and loan association or other institution specified 
in section 3(a)(5)(A) of the Act whether acting in its individual or 
fiduciary capacity; any broker or dealer registered pursuant to section 
15 of the Securities Exchange Act of 1934; any plan established and 
maintained by a state, its political subdivisions, or any agency or 
instrumentality of a state or its political subdivisions, for the 
benefit of its employees, if such plan has total assets in excess of 
$5,000,000; any employee benefit plan within the meaning of Table I of 
the Employee Retirement Income Security Act of 1974, if the investment 
decision is made by a plan fiduciary, as defined in section 3(21) of 
such Act, which is a savings and loan association, or if the employee 
benefit plan has total assets in excess of $5,000,000 or, if a self-
directed plan, with investment decisions made solely by persons that are 
accredited investors;
    (b) Any private business development company as defined in section 
202(a)(22) of the Investment Advisers Act of 1940;
    (c) Any organization described in section 501(c)(3) of the Internal 
Revenue Code, corporation, Massachusetts or similar business trust, or 
partnership, not formed for the specific purpose of acquiring the 
securities offered, with total assets in excess of $5,000,000;
    (d) Any director, executive officer, or general partner of the 
issuer of the securities being offered or sold, or any director, 
executive officer, or general partner of a general partner of that 
issuer;
    (e) Any natural person whose individual net worth, or joint net 
worth with that person's spouse, at the time of his purchase exceeds 
$1,000,000;
    (f) Any natural person who had an individual income in excess of 
$200,000 in each of the two most recent years or joint income with that 
person's spouse in excess of $300,000 in each of those years and has a 
reasonable expectation of reaching the same income level in the current 
year;
    (g) Any trust, with total assets in excess of $5,000,000, not formed 
for the specific purpose of acquiring the securities offered, whose 
purchase is directed by a sophisticated person as described in 
Sec. 230.506(b)(2)(ii); and
    (h) Any entity in which all of the equity owners are accredited 
investors.

[47 FR 11261, Mar. 16, 1982, as amended at 53 FR 7868, Mar. 10, 1988; 54 
FR 11372, Mar. 20, 1989]

                   Regulation A-R--Special Exemptions



Sec. 230.236  Exemption of shares offered in connection with certain transactions.

    Shares of stock or similar security offered to provide funds to be 
distributed to shareholders of the issuer of such securities in lieu of 
issuing fractional shares, script certificates or order forms, in 
connection with a stock dividend, stock split, reverse stock split, 
conversion, merger or similar

[[Page 531]]

transaction, shall be exempt from registration under the Act if the 
following conditions are met:
    (a) The issuer of such shares is required to file and has filed 
reports with the Commission pursuant to section 13 or 15(d) of the 
Securities Exchange Act of 1934.
    (b) The aggregate gross proceeds from the sale of all shares offered 
in connection with the transaction for the purpose of providing such 
funds does not exceed $300,000.
    (c) At least ten days prior to the offering of the shares, the 
issuer shall furnish to the Commission in writing the following 
information: (1) That it proposes to offer shares in reliance upon the 
exemption provided by this rule; (2) the estimated number of shares to 
be so offered; (3) the aggregate market value of such shares as of the 
latest practicable date; and (4) a brief description of the transaction 
in connection with which the shares are to be offered.

(Secs. 3, 4, and 19, 48 Stat. 75, 77, 85, as amended; 15 U.S.C. 77c, 
77d, 77s; secs. 3(b), 4(l), 19(a), 48 Stat. 75, 77, 85; secs. 209, 48 
Stat. 908; 59 Stat. 167; sec. 12, 78 Stat. 580; 84 Stat. 1480; sec. 
308(a)(2), 90 Stat. 57; sec. 18, 92 Stat. 275; sec. 2, 92 Stat. 962; 
sec. 301, 94 Stat. 2291, 2294; secs. 12(a), 12(h), 12(i), 16(a), 23(a), 
48 Stat. 892, 896, 901; sec. 203a, 49 Stat. 704; sec. 8, 49 Stat. 1379, 
secs. 3, 8, 78 Stat. 565-568, 579; sec. 1, 82 Stat. 454; sec. 105(b), 88 
Stat. 1503; sec. 18, 89 Stat. 155; 15 U.S.C. 77c(b), 77d(l), 77s(a), 
78l(a), 78l(h), 78l(i), 78p(a), 78w(a))

[27 FR 3289, Apr. 6, 1962, as amended at 37 FR 22978, Oct. 27, 1972; 47 
FR 29652, July 8, 1982; 61 FR 49959, Sept. 24, 1996]



Sec. 230.237  Exemption for offers and sales to certain Canadian tax-deferred retirement savings accounts.

    (a) Definitions. As used in this section:
    (1) Canadian law means the federal laws of Canada, the laws of any 
province or territory of Canada, and the rules or regulations of any 
federal, provincial, or territorial regulatory authority, or any self-
regulatory authority, of Canada.
    (2) Canadian Retirement Account means a trust or other arrangement, 
including, but not limited to, a ``Registered Retirement Savings Plan'' 
or ``Registered Retirement Income Fund'' administered under Canadian 
law, that is managed by the Participant and:
    (i) Operated to provide retirement benefits to a Participant; and
    (ii) Established in Canada, administered under Canadian law, and 
qualified for tax-deferred treatment under Canadian law.
    (3) Eligible Security means a security issued by a Qualified Company 
that:
    (i) Is offered to a Participant, or sold to his or her Canadian 
Retirement Account, in reliance on this section; and
    (ii) May also be purchased by Canadians other than Participants.
    (4) Foreign Government means the government of any foreign country 
or of any political subdivision of a foreign country.
    (5) Foreign Issuer means any issuer that 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, except 
an issuer meeting the following conditions:
    (i) More than 50 percent of the outstanding voting securities of the 
issuer are held of record either directly or through voting trust 
certificates or depositary receipts by residents of the United States; 
and
    (ii) Any of the following:
    (A) The majority of the executive officers or directors are United 
States citizens or residents;
    (B) More than 50 percent of the assets of the issuer are located in 
the United States; or
    (C) The business of the issuer is administered principally in the 
United States.
    (iii) For purposes of this definition, the term resident, as applied 
to security holders, means any person whose address appears on the 
records of the issuer, the voting trustee, or the depositary as being 
located in the United States.
    (6) Participant means a natural person who is a resident of the 
United States, or is temporarily present in the United States, and who 
contributes to, or is or will be entitled to receive the income and 
assets from, a Canadian Retirement Account.
    (7) Qualified Company means a Foreign Issuer whose securities are 
qualified for investment on a tax-deferred

[[Page 532]]

basis by a Canadian Retirement Account under Canadian law.
    (8) United States means the United States of America, its 
territories and possessions, any State of the United States, and the 
District of Columbia.
    (b) Exemption. The offer to a Participant, or the sale to his or her 
Canadian Retirement Account, of Eligible Securities by any person is 
exempt from Section 5 of the Act (15 U.S.C. 77e) if the person:
    (1) Includes in any written offering materials delivered to a 
Participant, or to his or her Canadian Retirement Account, a prominent 
statement that the Eligible Security is not registered with the U.S. 
Securities and Exchange Commission and the Eligible Security is being 
offered or sold in the United States under an exemption from 
registration.
    (2) Has not asserted that Canadian law, or the jurisdiction of the 
courts of Canada, does not apply in a proceeding involving an Eligible 
Security.

[65 FR 37676, June 15, 2000]



Sec. 230.238  Exemption for standardized options.

    (a) Exemption. Except as expressly provided in paragraphs (b) and 
(c) of this section, the Act does not apply to any standardized option, 
as that term is defined by section 240.9b-1(a)(4) of this chapter, that 
is:
    (1) Issued by a clearing agency registered under section 17A of the 
Securities Exchange Act of 1934 (15 U.S.C. 78q-1); and
    (2) Traded on a national securities exchange registered pursuant to 
section 6(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78f(a)) 
or on a national securities association registered pursuant to section 
15A(a) of the Securities Exchange Act of 1934 (15 U.S.C. 780-3(a)).
    (b) Limitation. The exemption provided in paragraph (a) of this 
section does not apply to the provisions of section 17 of the Act (15 
U.S.C. 77q).
    (c) Offers and sales. Any offer or sale of a standardized option by 
or on behalf of the issuer of the securities underlying the standardized 
option, an affiliate of the issuer, or an underwriter, will constitute a 
contract for sale of, sale of, offer for sale, or offer to sell the 
underlying securities as defined in section 2(a)(3) of the Act (15 
U.S.C. 77b(a)(3)).

[68 FR 192, Jan. 2, 2003]

            Regulation A--Conditional Small Issues Exemption

    Authority: Secs. 230.251 to 230.263 issued under 15 U.S.C. 77c, 77s.

    Source: 57 FR 36468, Aug. 13, 1992, unless otherwise noted.



Sec. 230.251  Scope of exemption.

    A public offer or sale of securities that meets the following terms 
and conditions shall be exempt under section 3(b) from the registration 
requirements of the Securities Act of 1933 (the ``Securities Act''):
    (a) Issuer. The issuer of the securities:
    (1) Is an entity organized under the laws of the United States or 
Canada, or any State, Province, Territory or possession thereof, or the 
District of Columbia, with its principal place of business in the United 
States or Canada;
    (2) Is not subject to section 13 or 15(d) of the Securities Exchange 
Act of 1934 (the ``Exchange Act'') (15 U.S.C. 78a et seq.) immediately 
before the offering;
    (3) Is not a development stage company that either has no specific 
business plan or purpose, or has indicated that its business plan is to 
merge with an unidentified company or companies;
    (4) Is not an investment company registered or required to be 
registered under the Investment Company Act of 1940 (15 U.S.C. 80a-1 et 
seq.);
    (5) Is not issuing fractional undivided interests in oil or gas 
rights as defined in Sec. 230.300, or a similar interest in other 
mineral rights; and
    (6) Is not disqualified because of Sec. 230.262.
    (b) Aggregate Offering Price. The sum of all cash and other 
consideration to be received for the securities (``aggregate offering 
price'') shall not exceed $5,000,000, including no more than $1,500,000 
offered by all selling security holders, less the aggregate offering 
price for all securities sold within the twelve months before the start 
of and during the offering of securities in reliance upon Regulation A. 
No affiliate resales are permitted if the issuer has

[[Page 533]]

not had net income from continuing operations in at least one of its 
last two fiscal years.

    Note: Where a mixture of cash and non-cash consideration is to be 
received, the aggregate offering price shall be based on the price at 
which the securities are offered for cash. Any portion of the aggregate 
offering price attributable to cash received in a foreign currency shall 
be translated into United States currency at a currency exchange rate in 
effect on or at a reasonable time prior to the date of the sale of the 
securities. If securities are not offered for cash, the aggregate 
offering price shall be based on the value of the consideration as 
established by bona fide sales of that consideration made within a 
reasonable time, or, in the absence of sales, on the fair value as 
determined by an accepted standard. Valuations of non-cash consideration 
must be reasonable at the time made.

    (c) Integration with Other Offerings. Offers and sales made in 
reliance on this Regulation A will not be integrated with:
    (1) Prior offers or sales of securities; or
    (2) Subsequent offers or sales of securities that are:
    (i) Registered under the Securities Act, except as provided in 
Sec. 230.254(d);
    (ii) Made in reliance on Sec. 230.701;
    (iii) Made pursuant to an employee benefit plan;
    (iv) Made in reliance on Regulation S (Sec. 230.901-904); or
    (v) Made more than six months after the completion of the Regulation 
A offering.

    Note: If the issuer offers or sells securities for which the safe 
harbor rules are unavailable, such offers and sales still may not be 
integrated with the Regulation A offering, depending on the particular 
facts and circumstances. See Securities Act Release No. 4552 (November 
6, 1962) [27 FR 11316].

    (d) Offering Conditions--(1) Offers. (i) Except as allowed by 
Sec. 230.254, no offer of securities shall be made unless a Form 1-A 
offering statement has been filed with the Commission.
    (ii) After the Form 1-A offering statement has been filed:
    (A) Oral offers may be made;
    (B) Written offers under Sec. 230.255 may be made;
    (C) Printed advertisements may be published or radio or television 
broadcasts made, if they state from whom a Preliminary Offering Circular 
or Final Offering Circular may be obtained, and contain no more than the 
following information:
    (1) The name of the issuer of the security;
    (2) The title of the security, the amount being offered and the per 
unit offering price to the public;
    (3) The general type of the issuer's business; and
    (4) A brief statement as to the general character and location of 
its property.
    (iii) After the Form 1-A offering statement has been qualified, 
other written offers may be made, but only if accompanied with or 
preceded by a Final Offering Circular.
    (2) Sales. (i) No sale of securities shall be made until:
    (A) The Form 1-A offering statement has been qualified;
    (B) A Preliminary Offering Circular or Final Offering Circular is 
furnished to the prospective purchaser at least 48 hours prior to the 
mailing of the confirmation of sale to that person; and
    (C) A Final Offering Circular is delivered to the purchaser with the 
confirmation of sale, unless it has been delivered to that person at an 
earlier time.
    (ii) Sales by a dealer (including an underwriter no longer acting in 
that capacity for the security involved in such transaction) that take 
place within 90 days after the qualification of the Regulation A 
offering statement may be made only if the dealer delivers a copy of the 
current offering circular to the purchaser before or with the 
confirmation of sale. The issuer or underwriter of the offering shall 
provide requesting dealers with reasonable quantities of the offering 
circular for this purpose.
    (3) Continuous or delayed offerings. Continuous or delayed offerings 
may be made under this Regulation A if permitted by Sec. 230.415.



Sec. 230.252  Offering statement.

    (a) Documents to be included. The offering statement consists of the 
facing sheet of Form 1-A [Sec. 239.90 of this chapter], the contents 
required by the form and any other material information

[[Page 534]]

necessary to make the required statements, in the light of the 
circumstances under which they are made, not misleading.
    (b) Paper, printing, language and pagination. The requirements for 
offering statements are the same as those specified in Sec. 230.403 for 
registration statements under the Act.
    (c) Confidential treatment. A request for confidential treatment may 
be made under Sec. 230.406 for information required to be filed, and 
Sec. 200.83 of this chapter for information not required to be filed.
    (d) Signatures. The issuer, its Chief Executive Officer, Chief 
Financial Officer, a majority of the members of its board of directors 
or other governing body, and each selling security holder shall sign the 
offering statement. If a signature is by a person on behalf of any other 
person, evidence of authority to sign shall be filed, except where an 
executive officer signs for the issuer. If the issuer is Canadian, its 
authorized representative in the United States shall sign. If the issuer 
is a limited partnership, a majority of the board of directors of any 
corporate general partner also shall sign.
    (e) Number of copies and where to file. Seven copies of the offering 
statement, at least one of which is manually signed, shall be filed with 
the Commission's main office in Washington, DC.
    (f) [Reserved]
    (g) Qualification. (1) If there is no delaying notation as permitted 
by paragraph (g)(2) of this section or suspension proceeding under 
Sec. 230.258, an offering statement is qualified without Commission 
action on the 20th calendar day after its filing.
    (2) An offering statement containing the following notation can be 
qualified only by order of the Commission, unless such notation is 
removed prior to Commission action as described in paragraph (g)(3) of 
this section:

This offering statement shall only be qualified upon order of the 
Commission, unless a subsequent amendment is filed indicating the 
intention to become qualified by operation of the terms of Regulation A.

    (3) The delaying notation specified in paragraph (g)(2) of this 
section can be removed only by an amendment to the offering statement 
that contains the following language:

This offering statement shall become qualified on the 20th calendar day 
following the filing of this amendment.

    (h) Amendments. (1) If any information in the offering statement is 
amended, an amendment, signed in the same manner as the initial filing, 
shall be filed. Seven copies of every amendment shall be filed with the 
Commission's Office that accepted the initial filing. Seven copies of 
every amendment shall be filed with the Commission's main office in 
Washington, DC.
    (2) An amendment to include a delaying notation pursuant to 
paragraph (g)(2) or to remove one pursuant to paragraph (g)(3) of this 
section after the initial filing of an offering statement may be made by 
telegram, letter or facsimile transmission. Each such telegraphic 
amendment shall be confirmed in writing within a reasonable time by 
filing a signed copy. Such confirmation shall not be deemed an 
amendment.

[57 FR 36468, Aug. 13, 1992, as amended at 58 FR 65542, Dec. 15, 1993; 
61 FR 30401, June 14, 1996; 61 FR 49959, Sept. 24, 1996; 61 FR 67202, 
Dec. 20, 1996]



Sec. 230.253  Offering circular.

    (a) Contents. An offering circular shall include the narrative and 
financial information required by Form 1-A.
    (b) Presentation of information. (1) Information in the offering 
circular shall be presented in a clear, concise and understandable 
manner and in a type size that is easily readable. Repetition of 
information should be avoided; cross-referencing of information within 
the document is permitted.
    (2) Where an offering circular is distributed through an electronic 
medium, issuers may satisfy legibility requirements applicable to 
printed documents by presenting all required information in a format 
readily communicated to investors.
    (c) Date. An offering circular shall be dated approximately as of 
the date of the qualification of the offering statement of which it is a 
part.
    (d) Cover page legend. The cover page of every offering circular 
shall display

[[Page 535]]

the following statement in capital letters printed in boldfaced type at 
least as large as that used generally in the body of such offering 
circular:

THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION DOES NOT PASS UPON 
THE MERITS OF OR GIVE ITS APPROVAL TO ANY SECURITIES OFFERED OR THE 
TERMS OF THE OFFERING, NOR DOES IT PASS UPON THE ACCURACY OR 
COMPLETENESS OF ANY OFFERING CIRCULAR OR OTHER SELLING LITERATURE. THESE 
SECURITIES ARE OFFERED PURSUANT TO AN EXEMPTION FROM REGISTRATION WITH 
THE COMMISSION; HOWEVER, THE COMMISSION HAS NOT MADE AN INDEPENDENT 
DETERMINATION THAT THE SECURITIES OFFERED HEREUNDER ARE EXEMPT FROM 
REGISTRATION.

    (e) Revisions. (1) An offering circular shall be revised during the 
course of an offering whenever the information it contains has become 
false or misleading in light of existing circumstances, material 
developments have occurred, or there has been a fundamental change in 
the information initially presented.
    (2) An offering circular for a continuous offering shall be updated 
to include, among other things, updated financial statements, 12 months 
after the date the offering statement was qualified.
    (3) Every revised or updated offering circular shall be filed as an 
amendment to the offering statement and requalified in accordance with 
Sec. 230.252.

[57 FR 36468, Aug. 13, 1992, as amended at 61 FR 24654, May 15, 1996]



Sec. 230.254  Solicitation of interest document for use prior to an offering statement.

    (a) An issuer may publish or deliver to prospective purchasers a 
written document or make scripted radio or television broadcasts to 
determine whether there is any interest in a contemplated securities 
offering. Following submission of the written document or script of the 
broadcast to the Commission, as required by paragraph (b) of this 
section, oral communications with prospective investors and other 
broadcasts are permitted. The written documents, broadcasts and oral 
communications are each subject to the antifraud provisions of the 
federal securities laws. No solicitation or acceptance of money or other 
consideration, nor of any commitment, binding or otherwise, from any 
prospective investor is permitted. No sale may be made until 
qualification of the offering statement.
    (b) While not a condition to any exemption pursuant to this section:
    (1) On or before the date of its first use, the issuer shall submit 
a copy of any written document or the script of any broadcast with the 
Commission's main office in Washington, DC. (Attention: Office of Small 
Business Review).The document or broadcast script shall either contain 
or be accompanied by the name and telephone number of a person able to 
answer questions about the document or the broadcast.

    Note: Only solicitation of interest material that contains 
substantive changes from or additions to previously submitted material 
needs to be submitted.

    (2) The written document or script of the broadcast shall:
    (i) State that no money or other consideration is being solicited, 
and if sent in response, will not be accepted;
    (ii) State that no sales of the securities will be made or 
commitment to purchase accepted until delivery of an offering circular 
that includes complete information about the issuer and the offering;
    (iii) State that an indication of interest made by a prospective 
investor involves no obligation or commitment of any kind; and
    (iv) Identify the chief executive officer of the issuer and briefly 
and in general its business and products.
    (3) Solicitations of interest pursuant to this provision may not be 
made after the filing of an offering statement.
    (4) Sales may not be made until 20 calendar days after the last 
publication or delivery of the document or radio or television 
broadcast.
    (c) Any written document under this section may include a coupon, 
returnable to the issuer indicating interest in a potential offering, 
revealing the name, address and telephone number of the prospective 
investor.
    (d) Where an issuer has a bona fide change of intention and decides 
to register an offering after using the process

[[Page 536]]

permitted by this section without having filed the offering statement 
prescribed by Sec. 230.252, the Regulation A exemption for offers made 
in reliance upon this section will not be subject to integration with 
the registered offering, if at least 30 calendar days have elapsed 
between the last solicitation of interest and the filing of the 
registration statement with the Commission, and all solicitation of 
interest documents have been submitted to the Commission. With respect 
to integration with other offerings, see Sec. 230.251(c).
    (e) Written solicitation of interest materials submitted to the 
Commission and otherwise in compliance with this section shall not be 
deemed to be a prospectus as defined in section 2(10) of the Securities 
Act (15 U.S.C. 77b(10)).

[57 FR 36468, Aug. 13, 1992, as amended at 58 FR 26514, May 4, 1993; 61 
FR 67202, Dec. 20, 1996]



Sec. 230.255  Preliminary Offering Circulars.

    (a) Prior to qualification of the required offering statement, but 
after its filing, a written offer of securities may be made if it meets 
the following requirements:
    (1) The outside front cover page of the material bears the caption 
``Preliminary Offering Circular,'' the date of issuance, and the 
following statement, which shall run along the left hand margin of the 
page and be printed perpendicular to the text, in boldfaced type at 
least as large as that used generally in the body of such offering 
circular:

An offering statement pursuant to Regulation A relating to these 
securities has been filed with the Securities and Exchange Commission.
    Information contained in this Preliminary Offering Circular is 
subject to completion or amendment. These securities may not be sold nor 
may offers to buy be accepted prior to the time an offering circular 
which is not designated as a Preliminary Offering Circular is delivered 
and the offering statement filed with the Commission becomes qualified. 
This Preliminary Offering Circular shall not constitute an offer to sell 
or the solicitation of an offer to buy nor shall there be any sales of 
these securities in any state in which such offer, solicitation or sale 
would be unlawful prior to registration or qualification under the laws 
of any such state.

    (2) The Preliminary Offering Circular contains substantially the 
information required in an offering circular by Form 1-A (Sec. 239.90 of 
this chapter), except that information with respect to offering price, 
underwriting discounts or commissions, discounts or commissions to 
dealers, amount of proceeds, conversion rates, call prices, or other 
matters dependent upon the offering price may be omitted. The outside 
front cover page of the Preliminary Offering Circular shall include a 
bona fide estimate of the range of the maximum offering price and 
maximum number of shares or other units of securities to be offered or a 
bona fide estimate of the principal amount of debt securities to be 
offered.
    (3) The material is filed as a part of the offering statement.
    (b) If a Preliminary Offering Circular is inaccurate or inadequate 
in any material respect, a revised Preliminary Offering Circular or a 
complete Offering Circular shall be furnished to all persons to whom 
securities are to be sold at least 48 hours prior to the mailing of any 
confirmation of sale to such persons, or shall be sent to such persons 
under such circumstances that it would normally be received by them 48 
hours prior to receipt of confirmation of the sale.

[57 FR 36468, Aug. 13, 1992, as amended at 61 FR 67202, Dec. 20, 1996]



Sec. 230.256  Filing of sales material.

    While not a condition to an exemption pursuant to this provision, 
seven copies of any advertisement or written communication, or the 
script of any radio or television broadcast, shall be filed with the 
main office of the Commission in Washington, DC.

    Note: Only sales material that contains substantive changes from or 
additions from previously filed material needs to be filed.

[57 FR 36468, Aug. 13, 1992, as amended at 61 FR 67202, Dec. 20, 1996]



Sec. 230.257  Reports of sales and use of proceeds.

    While not a condition to an exemption pursuant to this provision, 
the issuer and/or each selling security

[[Page 537]]

holder shall file seven copies of a report concerning sales and use of 
proceeds on Form 2-A (Sec. 239.91 of this chapter), or other prescribed 
form with the main office of the Commission in Washington, DC. This 
report shall be filed at the following times:
    (a) Every six months after the qualification of the offering 
statement or any amendment until substantially all the proceeds have 
been applied; and
    (b) within 30 calendar days after the termination, completion or 
final sale of securities in the offering, or the application of the 
proceeds from the offering, whichever is the latest event. This report 
should be labelled the final report. For purposes of this section, the 
temporary investment of proceeds pending final application shall not 
constitute application of the proceeds.

[57 FR 36468, Aug. 13, 1992, as amended at 61 FR 67202, Dec. 20, 1996]



Sec. 230.258  Suspension of the exemption.

    (a) The Commission may at any time enter an order temporarily 
suspending a Regulation A exemption if it has reason to believe that:
    (1) No exemption is available or any of the terms, conditions or 
requirements of the Regulation have not been complied with, including 
failures to provide the Commission a copy of the document or broadcast 
script under Sec. 230.254, to file any sales material as required by 
Sec. 230.256 or report as required by Sec. 230.257;
    (2) The offering statement, any sales or solicitation of interest 
material contains any untrue statement of a material fact or omits to 
state a material fact necessary in order to make the statements made, in 
light of the circumstances under which they are made, not misleading;
    (3) The offering is being made or would be made in violation of 
section 17 of the Securities Act;
    (4) An event has occurred after the filing of the offering statement 
which would have rendered the exemption hereunder unavailable if it had 
occurred prior to such filing;
    (5) Any person specified in paragraph (a) of Sec. 230.262 has been 
indicted for any crime or offense of the character specified in 
paragraph (a)(3) of 230.262, or any proceeding has been initiated for 
the purpose of enjoining any such person from engaging in or continuing 
any conduct or practice of the character specified in paragraph (a)(4) 
of Sec. 230.262;
    (6) Any person specified in paragraph (b) of Sec. 230.262 has been 
indicted for any crime or offense of the character specified in 
paragraph (b)(1) of Sec. 230.262, or any proceeding has been initiated 
for the purpose of enjoining any such person from engaging in or 
continuing any conduct or practice of the character specified in 
paragraph (b)(2) of Sec. 230.262; or
    (7) The issuer or any promoter, officer, director or underwriter has 
failed to cooperate, or has obstructed or refused to permit the making 
of an investigation by the Commission in connection with any offering 
made or proposed to be made in reliance on Regulation A.
    (b) Upon the entry of an order under paragraph (a) of this section, 
the Commission will promptly give notice to the issuer, any underwriter 
and any selling security holder:
    (1) That such order has been entered, together with a brief 
statement of the reasons for the entry of the order; and
    (2) That the Commission, upon receipt of a written request within 30 
calendar days after the entry of the order, will within 20 calendar days 
after receiving the request, order a hearing at a place to be designated 
by the Commission.
    (c) If no hearing is requested and none is ordered by the 
Commission, an order entered under paragraph (a) of this section shall 
become permanent on the 30th calendar day after its entry and shall 
remain in effect unless or until it is modified or vacated by the 
Commission. Where a hearing is requested or is ordered by the 
Commission, the Commission will, after notice of and opportunity for 
such hearing, either vacate the order or enter an order permanently 
suspending the exemption.
    (d) The Commission may, at any time after notice of and opportunity 
for hearing, enter an order permanently suspending the exemption for any 
reason upon which it could have entered a temporary suspension order 
under paragraph (a) of this section. Any such

[[Page 538]]

order shall remain in effect until vacated by the Commission.
    (e) All notices required by this section shall be given by personal 
service, registered or certified mail to the addresses given by the 
issuer, any underwriter and any selling security holder in the offering 
statement.



Sec. 230.259  Withdrawal or abandonment of offering statements.

    (a) If none of the securities which are the subject of an offering 
statement have been sold and such offering statement is not the subject 
of a proceeding under Sec. 230.258, the offering statement may be 
withdrawn with the Commission's consent. The application for withdrawal 
shall state the reason the offering statement is to be withdrawn, shall 
be signed by an authorized representative of the issuer and shall be 
provided to the main office of the Commission in Washington, DC.
    (b) When an offering statement has been on file with the Commission 
for nine months without amendment and has not become qualified, the 
Commission may, in its discretion, proceed in the following manner to 
determine whether such offering statement has been abandoned by the 
issuer. If the offering statement has been amended, the 9-month period 
shall be computed from the date of the latest amendment.
    (1) Notice will be sent to the issuer, and to any counsel for the 
issuer named in the offering statement, by registered or certified mail, 
return receipt requested, addressed to the most recent addresses for the 
issuer and issuer's counsel as reflected in the offering statement. Such 
notice will inform the issuer and issuer's counsel that the offering 
statement or amendments thereto is out of date and must be either 
amended to comply with applicable requirements of Regulation A or be 
withdrawn within 30 calendar days after the notice.
    (2) If the issuer or issuer's counsel fail to respond to such notice 
by filing a substantive amendment or withdrawing the offering statement 
or does not furnish a satisfactory explanation as to why the issuer has 
not done so within 30 calendar days, the Commission may declare the 
offering statement abandoned.

[57 FR 36468, Aug. 13, 1992, as amended at 61 FR 67202, Dec. 20, 1996]



Sec. 230.260  Insignificant deviations from a term, condition or requirement of Regulation A.

    (a) A failure to comply with a term, condition or requirement of 
Regulation A will not result in the loss of the exemption from the 
requirements of section 5 of the Securities Act for any offer or sale to 
a particular individual or entity, if the person relying on the 
exemption establishes:
    (1) The failure to comply did not pertain to a term, condition or 
requirement directly intended to protect that particular individual or 
entity;
    (2) The failure to comply was insignificant with respect to the 
offering as a whole, provided that any failure to comply with paragraphs 
(a), (b), (d) (1) and (3) Of Sec. 230.251 shall be deemed to be 
significant to the offering as a whole; and
    (3) A good faith and reasonable attempt was made to comply with all 
applicable terms, conditions and requirements of Regulation A.
    (b) A transaction made in reliance upon Regulation A shall comply 
with all applicable terms, conditions and requirements of the 
regulation. Where an exemption is established only through reliance upon 
paragraph (a) of this section, the failure to comply shall nonetheless 
be actionable by the Commission under section 20 of the Act.
    (c) This provision provides no relief or protection from a 
proceeding under Sec. 230.258.



Sec. 230.261  Definitions.

    As used in this Regulation A, all terms have the same meanings as in 
Sec. 230.405, except that all references to ``registrant'' in those 
definitions shall refer to the issuer of the securities to be offered 
and sold under Regulation A. In addition, these terms have the following 
meanings:
    (a) Final Offering Circular--The current offering circular contained 
in a qualified offering statement;
    (b) Preliminary Offering Circular--The offering circular described 
in Sec. 230.255(a).

[[Page 539]]



Sec. 230.262  Disqualification provisions.

    Unless, upon a showing of good cause and without prejudice to any 
other action by the Commission, the Commission determines that it is not 
necessary under the circumstances that the exemption provided by this 
Regulation A be denied, the exemption shall not be available for the 
offer or sale of securities, if:
    (a) The issuer, any of its predecessors or any affiliated issuer:
    (1) Has filed a registration statement which is the subject of any 
pending proceeding or examination under section 8 of the Act, or has 
been the subject of any refusal order or stop order thereunder within 5 
years prior to the filing of the offering statement required by 
Sec. 230.252;
    (2) Is subject to any pending proceeding under Sec. 230.258 or any 
similar section adopted under section 3(b) of the Securities Act, or to 
an order entered thereunder within 5 years prior to the filing of such 
offering statement;
    (3) Has been convicted within 5 years prior to the filing of such 
offering statement of any felony or misdemeanor in connection with the 
purchase or sale of any security or involving the making of any false 
filing with the Commission;
    (4) Is subject to any order, judgment, or decree of any court of 
competent jurisdiction temporarily or preliminarily restraining or 
enjoining, or is subject to any order, judgment or decree of any court 
of competent jurisdiction, entered within 5 years prior to the filing of 
such offering statement, permanently restraining or enjoining, such 
person from engaging in or continuing any conduct or practice in 
connection with the purchase or sale of any security or involving the 
making of any false filing with the Commission; or
    (5) Is subject to a United States Postal Service false 
representation order entered under 39 U.S.C. Sec. 3005 within 5 years 
prior to the filing of the offering statement, or is subject to a 
temporary restraining order or preliminary injunction entered under 39 
U.S.C. Sec. 3007 with respect to conduct alleged to have violated 39 
U.S.C. Sec. 3005. The entry of an order, judgment or decree against any 
affiliated entity before the affiliation with the issuer arose, if the 
affiliated entity is not in control of the issuer and if the affiliated 
entity and the issuer are not under the common control of a third party 
who was in control of the affiliated entity at the time of such entry 
does not come within the purview of this paragraph (a) of this section.
    (b) Any director, officer or general partner of the issuer, 
beneficial owner of 10 percent or more of any class of its equity 
securities, any promoter of the issuer presently connected with it in 
any capacity, any underwriter of the securities to be offered, or any 
partner, director or officer of any such underwriter:
    (1) Has been convicted within 10 years prior to the filing of the 
offering statement required by Sec. 230.252 of any felony or misdemeanor 
in connection with the purchase or sale of any security, involving the 
making of a false filing with the Commission, or arising out of the 
conduct of the business of an underwriter, broker, dealer, municipal 
securities dealer, or investment adviser;
    (2) Is subject to any order, judgment, or decree of any court of 
competent jurisdiction temporarily or preliminarily enjoining or 
restraining, or is subject to any order, judgment, or decree of any 
court of competent jurisdiction, entered within 5 years prior to the 
filing of such offering statement, permanently enjoining or restraining 
such person from engaging in or continuing any conduct or practice in 
connection with the purchase or sale of any security, involving the 
making of a false filing with the Commission, or arising out of the 
conduct of the business of an underwriter, broker, dealer, municipal 
securities dealer, or investment adviser;
    (3) Is subject to an order of the Commission entered pursuant to 
section 15(b), 15B(a), or 15B(c) of the Exchange Act, or section 203(e) 
or (f) of the Investment Advisers Act of 1940 (15 U.S.C. 80b-1 et seq.);
    (4) Is suspended or expelled from membership in, or suspended or 
barred from association with a member of, a national securities exchange 
registered under section 6 of the Exchange Act or

[[Page 540]]

a national securities association registered under section 15A of the 
Exchange Act for any act or omission to act constituting conduct 
inconsistent with just and equitable principles of trade; or
    (5) Is subject to a United States Postal Service false 
representation order entered under 39 U.S.C. Sec. 3005 within 5 years 
prior to the filing of the offering statement required by Sec. 230.252, 
or is subject to a restraining order or preliminary injunction entered 
under 39 U.S.C. Sec. 3007 with respect to conduct alleged to have 
violated 39 U.S.C. Sec. 3005.
    (c) Any underwriter of such securities was an underwriter or was 
named as an underwriter of any securities:
    (1) Covered by any registration statement which is the subject of 
any pending proceeding or examination under section 8 of the Act, or is 
the subject of any refusal order or stop order entered thereunder within 
5 years prior to the filing of the offering statement required by 
Sec. 230.252; or
    (2) Covered by any filing which is subject to any pending proceeding 
under Sec. 230.258 or any similar rule adopted under section 3(b) of the 
Securities Act, or to an order entered thereunder within 5 years prior 
to the filing of such offering statement.



Sec. 230.263  Consent to Service of Process.

    (a) If the issuer is not organized under the laws of any of the 
states of or the United States of America, it shall at the time of 
filing the offering statement required by Sec. 230.252, furnish to the 
Commission a written irrevocable consent and power of attorney on Form 
F-X [Sec. 239.42 of this chapter].
    (b) Any change to the name or address of the agent for service of 
the issuer shall be communicated promptly to the Commission through 
amendment of the requisite form and referencing the file number of the 
relevant offering statement.



Secs. 230.300-200.346  [Reserved]

                       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.

                       Regulation C--Registration

    Authority: Sections 230.400 to 230.499 issued under secs. 6, 8, 10, 
19, 48 Stat. 78 79, 81, and 85, as amended (15 U.S.C. 77f, 77h, 77j, 
77s)
    Sec. 230.457 also issued under secs. 6 and 7, 15 U.S.C. 77f and 77g.
    Sec. 230.499 also issued under secs. 6, 7, 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. 308(a)(2), 48 Stat. 882, 892, 894, 895, 901; 
secs. 203(a), 1, 3, 8, 49 Stat. 704, 1375, 1377, 1379; sec. 202, 68 
Stat. 686; secs. 3, 4, 5, 6(d), 78 Stat. 569, 570-574; secs. 1, 2, 3, 82 
Stat. 454, 455; secs. 28(c), 1, 2, 3, 4, 5, 84 Stat. 1435, 1497; sec. 
105(b) 88 Stat. 1503; secs. 8, 9, 10, 18, 89 Stat. 117, 118, 119; sec. 
308(b), 90 Stat. 57; sec. 18, 89 Stat. 155; secs. 202, 203, 204, 91 
Stat. 1494, 1498-1500; sec. 20(a), 49 Stat. 833; sec. 319, 54 Stat. 
1173; sec. 38, 54 Stat. 841; 15 U.S.C. 77f, 77g, 77h, 77j, 77s(a), 
78c(b), 78l, 78m, 78n, 78o(d), 78w(a), 79t(a), 77sss(a), 80a-37.
    Note: In Secs. 230.400 to 230.499, the numbers to the right of the 
decimal point correspond with the respective rule number in Regulation 
C, under the Securities Act of 1933.



Sec. 230.400  Application of Secs. 230.400 to 230.494, inclusive.

    Sections 230.400 to 230.494 shall govern every registration of 
securities under the Act, except that any provision in a form, or an 
item of Regulation S-K (17 CFR 229.001 et seq.) referred to in such 
form, covering the same subject matter as any such rule shall be 
controlling unless otherwise specifically provided in Secs. 230.400 to 
230.494.

(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. 
308(a)(2), 90 Stat. 57; secs. 3(b), 12, 13, 14, 15(d), 23(a), 48 Stat. 
882, 892, 894, 895, 901; secs. 203(a), 1, 3, 8, 49 Stat. 704, 1375, 
1377, 1379; sec. 202, 68 Stat. 686; secs. 4, 5, 6(d), 78 Stat. 569, 570-
574; secs. 1, 2, 3, 82 Stat. 454, 455; secs. 28(c), 1, 2, 3, 4, 5, 84 
Stat. 1435, 1497; sec. 105(b), 88 Stat. 1503; secs. 8, 9, 10, 89 Stat. 
117, 118, 119; sec. 308(b), 90 Stat 57; sec. 18, 89 Stat. 155; secs. 
202, 203, 204, 91 Stat. 1494, 1498-1500; sec. 20(a), 49 Stat. 833; sec. 
319, 53 Stat. 1173; sec. 38, 54 Stat. 841; 15 U.S.C. 77f, 77g, 77h, 77j, 
77s(a), 78c(b), 78l, 78m, 78n, 78o(d), 78w(a), 79t(a), 77sss(a), 80a-37)

[47 FR 11434, Mar. 16, 1982]

[[Page 541]]

                          general requirements



Sec. 230.401  Requirements as to proper form.

    (a) The form and contents of a registration statement and prospectus 
shall conform to the applicable rules and forms as in effect on the 
initial filing date of such registration statement and prospectus.
    (b) If an amendment to a registration statement and prospectus is 
filed for the purpose of meeting the requirements of section 10(a)(3) of 
the Act or pursuant to the provisions of section 24(e) or 24(f) of the 
Investment Company Act of 1940, the form and contents of such an 
amendment shall conform to the applicable rules and forms as in effect 
on the filing date of such amendment.
    (c) An amendment to a registration statement and prospectus, other 
than an amendment described in paragraph (b) of this section, may be 
filed on any shorter Securities Act registration form for which it is 
eligible on the filing date of the amendment. At the issuer's option, 
the amendment also may be filed on the same Securities Act registration 
form used for the most recent amendment described in paragraph (b) of 
this section or, if no such amendment has been filed, the initial 
registration statement and prospectus.
    (d) The form and contents of a prospectus forming part of a 
registration statement which is the subject of a stop order entered 
under section 8(d) of the Act, if used after the date such stop order 
ceases to be effective, shall conform to the applicable rules and forms 
as in effect on the date such stop order ceases to be effective.
    (e) A prospectus filed as part of an amendment to an effective 
registration statement, or other amendment to such registration 
statement, on any form may be prepared in accordance with the 
requirements of any other form which would then be appropriate for the 
registration of securities to which the prospectus or other amendment 
relates, provided that all of the other requirements of such other form 
and applicable rules (including any required undertakings) are met.
    (f) Notwithstanding the provisions of this section, a registrant (1) 
shall comply with the rules and forms as in effect at a date different 
from those specified in paragraphs (a), (b), (c) and (d) of this section 
if the rules or forms or amendments thereto specifically so provide; and 
(2) may comply voluntarily with the rules and forms as in effect at 
dates subsequent to those specified in paragraphs (a), (b), (c) and (d) 
of this section, provided that all of the requirements of the particular 
rules and forms in effect at such dates (including any required 
undertakings) are met.
    (g) Except for registration statements and post-effective amendments 
that become effective automatically pursuant to Secs. 230.462 and 
230.464, a registration statement or any amendment thereto is deemed 
filed on the proper form unless the Commission objects to the form 
before the effective date.

(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. 
308(a)(2), 90 Stat. 57; secs. 3(b), 12, 13, 14, 15(d), 23(a), 48 Stat. 
882, 892, 894, 895, 901; secs. 203(a), 1, 3, 8, 49 Stat. 704, 1375, 
1377, 1379; sec. 202, 68 Stat. 686; secs. 4, 5, 6(d), 78 Stat. 569, 570-
574; secs. 1, 2, 3, 82 Stat. 454, 455; secs. 28(c), 1, 2, 3, 4, 5, 84 
Stat. 1435, 1497; sec. 105(b), 88 Stat. 1503; secs. 8, 9, 10, 89 Stat. 
117, 118, 119; sec. 308(b), 90 Stat 57; sec. 18, 89 Stat. 155; secs. 
202, 203, 204, 91 Stat. 1494, 1498-1500; sec. 20(a), 49 Stat. 833; sec. 
319, 53 Stat. 1173; sec. 38, 54 Stat. 841; 15 U.S.C. 77f, 77g, 77h, 77j, 
77s(a), 78c(b), 78l, 78m, 78n, 78o(d), 78w(a), 79t(a), 77sss(a), 80a-37)

[47 FR 11434, Mar. 16, 1982, as amended at 62 FR 39762, July 24, 1997; 
64 FR 11116, Mar. 8, 1999]



Sec. 230.401a  Requirements as to proper form.

    With regard to issuers eligible to rely on Release No. 34-45589 
(March 18, 2002) (which may be viewed on the Commission's website at 
www.sec.gov), the filing of reports in accordance with the provisions of 
that Release shall result in those reports being ``timely filed'' for 
purposes of all form eligibility standards in registration statement 
forms under the Securities Act of 1933 (15 U.S.C. 77a et seq.).

[67 FR 13536, Mar. 22, 2002]



Sec. 230.402  Number of copies; binding; signatures.

    (a) Three copies of the complete registration statement, including 
exhibits

[[Page 542]]

and all other papers and documents filed as a part of the statement, 
shall be filed with the Commission. Each copy shall be bound, 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. At least one such copy of every registration shall be signed by 
the persons specified in section 6(a) of the Act. Unsigned copies shall 
be conformed.
    (b) Ten additional copies of the registration statement, similarly 
bound, shall be furnished for use in the examination of the registration 
statement, public inspection, copying and other purposes. Where a 
registration statement incorporates into the prospectus documents which 
are required to be delivered with the prospectus in lieu of prospectus 
presentation, the ten additional copies of the registration statement 
shall be accompanied by ten copies of such documents. No other exhibits 
are required to accompany such additional copies.
    (c) Notwithstanding any other provision of this section, if a 
registration statement is filed on Form S-8 (Sec. 239.16b of this 
chapter), three copies of the complete registration statement, including 
exhibits and all other papers and documents filed as a part of the 
statement, shall be filed with the Commission. Each copy shall be bound, 
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. At least one such copy shall be signed by the persons 
specified in section 6(a) of the Act. Unsigned copies shall be 
conformed. Three additional copies of the registration statement, 
similarly bound, also shall be furnished to the Commission for use in 
the examination of the registration statement, public inspection, 
copying and other purposes. No exhibits are required to accompany the 
additional copies of registration statements filed on Form S-8.
    (d) Notwithstanding any other provision of this section, if a 
registration statement is filed pursuant to Rule 462(b) 
(Sec. 230.462(b)) and Rule 110(d) (Sec. 230.110(d)), one copy of the 
complete registration statement, including exhibits and all other papers 
and documents filed as a part thereof shall be filed with the 
Commission. Such copy should not be bound and may contain facsimile 
versions of manual signatures in accordance with paragraph (e) of this 
section.
    (e) Signatures. Where the Act or the rules thereunder, including 
paragraphs (a) and (c) 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 registrant for a period of 
five years. Upon request, the registrant shall furnish to the Commission 
or its staff a copy of any or all documents retained pursuant to this 
section.

[47 FR 11434, Mar. 16, 1982, as amended at 55 FR 23922, June 13, 1990; 
60 FR 26615, May 17, 1995; 61 FR 30402, June 14, 1996]



Sec. 230.403  Requirements as to paper, printing, language and pagination.

    (a) Registration statements, applications and reports shall be filed 
on good quality, unglazed, white paper no larger than 8\1/2\x11 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\x11 inches in size.
    (b) The registration statement and, insofar as practicable, all 
papers and documents filed as a part thereof shall be printed, 
lithographed, mimeographed or typewritten. However, the statement 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. 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

[[Page 543]]

so as to be clearly distinguishable as such on photocopies.
    (c)(1) All Securities Act filings and submissions must be in the 
English language, except as otherwise provided by this section. If a 
registration statement or other filing requires the inclusion of a 
document that is in a foreign language, the filer must submit instead a 
fair and accurate English translation of the entire foreign language 
document, except as provided by paragraph (c)(3) of this section.
    (2) If a registration statement or other filing or submission 
subject to review by the Division of Corporation Finance requires the 
inclusion of a foreign language document as an exhibit or attachment, 
the filer must submit a fair and accurate English translation of the 
foreign language document if consisting of any of the following, or an 
amendment of any of the following:
    (i) Articles of incorporation, memoranda of association, bylaws, and 
other comparable documents, whether original or restated;
    (ii) Instruments defining the rights of security holders, including 
indentures qualified or to be qualified under the Trust Indenture Act of 
1939;
    (iii) Voting agreements, including voting trust agreements;
    (iv) Contracts to which directors, officers, promoters, voting 
trustees or security holders named in a registration statement are 
parties;
    (v) Contracts upon which a filer's business is substantially 
dependent;
    (vi) Audited annual and interim consolidated financial information; 
and
    (vii) Any document that is or will be the subject of a confidential 
treatment request under Sec. 230.406 or Sec. 240.24b-2 of this chapter.
    (3)(i) A filer may submit an English summary instead of an English 
translation of a foreign language document as an exhibit or attachment 
to a filing subject to review by the Division of Corporation Finance as 
long as:
    (A) The foreign language document does not consist of any of the 
subject matter enumerated in paragraph (c)(2) of this section; or
    (B) The applicable form permits the use of an English summary.
    (ii) Any English summary submitted under paragraph (c)(3) of this 
section must:
    (A) Fairly and accurately summarize the terms of each material 
provision of the foreign language document; and
    (B) Fairly and accurately describe the terms that have been omitted 
or abridged.
    (4) When submitting an English summary or English translation of a 
foreign language document under this section, a filer must identify the 
submission as either an English summary or English translation. A filer 
may submit a copy of the unabridged foreign language document when 
including an English summary or English translation of a foreign 
language document in a filing. A filer must provide a copy of any 
foreign language document upon the request of Commission staff.
    (5) A Canadian issuer may file an exhibit or other part of a 
registration statement on Form F-7, F-8, F-9, F-10, or F-80 
(Secs. 239.37, 239.38, 239.39, 239.40, or 239.41 of this chapter), that 
contains text in both French and English if the issuer included the 
French text to comply with the requirements of the Canadian securities 
administrator or other Canadian authority and, for an electronic filing, 
if the filing is an HTML document, as defined in Regulation S-T Rule 
11(Sec. 232.11).
    (d) 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 Act 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.

[47 FR 11434, Mar. 16, 1982, as amended at 47 FR 58238, Dec. 30, 1982; 
67 FR 36698, May 24, 2002]

[[Page 544]]



Sec. 230.404  Preparation of registration statement.

    (a) A registration statement shall consist of the facing sheet of 
the applicable form; a prospectus containing the information called for 
by Part I of such form; the information, list of exhibits, undertakings 
and signatures required to be set forth in Part II of such form; 
financial statements and schedules; exhibits; any other information or 
documents filed as part of the registration statement; and all documents 
or information incorporated by reference in the foregoing (whether or 
not required to be filed).
    (b) All general instructions, instructions to items of the form, and 
instructions as to financial statements, exhibits, or prospectuses are 
to be omitted from the registration statement in all cases.
    (c) The prospectus shall contain the information called for by all 
of the items of Part I of the applicable form, except that unless 
otherwise specified, no reference need be made to inapplicable items, 
and negative answers to any item in Part I may be omitted. A copy of the 
prospectus may be filed as a part of the registration statement in lieu 
of furnishing the information in item-and-answer form. Wherever a copy 
of the prospectus is filed in lieu of information in item-and-answer 
form, the text of the items of the form is to be omitted from the 
registration statement, as well as from the prospectus, except to the 
extent provided in paragraph (d) of this rule.
    (d) Where any items of a form call for information not required to 
be included in the prospectus, generally Part II of such form, the text 
of such items, including the numbers and captions thereof, together with 
the answers thereto shall be filed with the prospectus under cover of 
the facing sheet of the form as a part of the registration statement. 
However, the text of such items may be omitted provided the answers are 
so prepared as to indicate the coverage of the item without the 
necessity of reference to the text of the item. If any such item is 
inapplicable, or the answer thereto is in the negative, a statement to 
that effect shall be made. Any financial statements not required to be 
included in the prospectus shall also be filed as a part of the 
registration statement proper, unless incorporated by reference pursuant 
to Rule 411 (Sec. 230.411).

(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. 
308(a)(2), 90 Stat. 57; secs. 3(b), 12, 13, 14, 15(d), 23(a), 48 Stat. 
882, 892, 894, 895, 901; secs. 203(a), 1, 3, 8, 49 Stat. 704, 1375, 
1377, 1379; sec. 202, 68 Stat. 686; secs. 4, 5, 6(d), 78 Stat. 569, 570-
574; secs. 1, 2, 3, 82 Stat. 454, 455; secs. 28(c), 1, 2, 3, 4, 5, 84 
Stat. 1435, 1497; sec. 105(b), 88 Stat. 1503; secs. 8, 9, 10, 89 Stat. 
117, 118, 119; sec. 308(b), 90 Stat 57; sec. 18, 89 Stat. 155; secs. 
202, 203, 204, 91 Stat. 1494, 1498-1500; sec. 20(a), 49 Stat. 833; sec. 
319, 53 Stat. 1173; sec. 38, 54 Stat. 841; 15 U.S.C. 77f, 77g, 77h, 77j, 
77s(a), 78c(b), 78l, 78m, 78n, 78o(d), 78w(a), 79t(a), 77sss(a), 80a-37)

[47 FR 11435, Mar. 16, 1982, as amended at 62 FR 39763, July 24, 1997]



Sec. 230.405  Definitions of terms.

    Unless the context otherwise requires, all terms used in 
Secs. 230.400 to 230.494, inclusive, or in the forms for registration 
have the same meanings as in the Act and in the general rules and 
regulations. In addition, the following definitions apply, unless the 
context otherwise requires:
    Affiliate. An affiliate of, or 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, when used to indicate a relationship 
with any person, means (1) a 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 benefical interest or as to which such person serves as 
trustee or in a similar capacity, and (3) any relative or spouse

[[Page 545]]

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.
    Business development company. The term business development company 
refers to a company which has elected to be regulated as a business 
development company under sections 55 through 65 of the Investment 
Company Act of 1940.
    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, affecting (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.
    Commission. The term Commission means the Securities and Exchange 
Commission.
    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.
    Director. The term director means any director of a corporation or 
any person performing similar functions with respect to any organization 
whether incorporated or unincorporated.
    Dividend or interest reinvestment plan. The term dividend or 
interest reinvestment plan means a plan which is offered solely to the 
existing security holders of the registrant, which allows such persons 
to reinvest dividends or interest paid to them on securities issued by 
the registrant, and also may allow additional cash amounts to be 
contributed by the participants in the plan, provided the securities to 
be registered are newly issued, or are purchased for the account of plan 
participants, at prices not in excess of current market prices at the 
time of purchase, or at prices not in excess of an amount determined in 
accordance with a pricing formula specified in the plan and based upon 
average or current market prices at the time of purchase.
    Electronic filer. The term electronic filer means a person or an 
entity that submits filings electronically pursuant to Rules 100 and 101 
of Regulation S-T (Secs. 232.100 and 232.101 of this chapter, 
respectively).
    Electronic filing. The term electronic filing means a document under 
the federal securities laws that is transmitted or delivered to the 
Commission in electronic format.
    Employee. The term employee does not include a director, trustee, or 
officer.
    Employee benefit plan. The term employee benefit plan means any 
written purchase, savings, option, bonus, appreciation, profit sharing, 
thrift, incentive, pension or similar plan or written compensation 
contract solely for employees, directors, general partners, trustees 
(where the registrant is a business trust), officers, or consultants or 
advisors. However, consultants or advisors may participate in an 
employee benefit plan only if:
    (1) They are natural persons;
    (2) They provide bona fide services to the registrant; and
    (3) The services are not in connection with the offer or sale of 
securities in a capital-raising transaction, and do not directly or 
indirectly promote or maintain a market for the registrant's securities.
    Equity security. The term equity security means 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

[[Page 546]]

certificate of interest in a business trust; any security future on any 
such security; 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.
    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.
    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.
    Foreign government. The term foreign government means the government 
of any foreign country or of any political subdivision of a foreign 
country.
    Foreign issuer. 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.
    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 directly or indirectly owned of record 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.

    Instructions to paragraph (1) of this definition: To determine the 
percentage of outstanding voting securities held by U.S. residents:
    A. Use the method of calculating record ownership in Rule 12g3-2(a) 
under the Exchange Act (Sec. 240.12g3-2(a) of this chapter), except that 
your inquiry as to the amount of shares represented by accounts of 
customers resident in the United States may be limited to brokers, 
dealers, banks and other nominees located in:
    (1) The United States,
    (2) Your jurisdiction of incorporation, and
    (3) The jurisdiction that is the primary trading market for your 
voting securities, if different than your jurisdiction of incorporation.
    B. If, after reasonable inquiry, you are unable to obtain 
information about the amount of shares represented by accounts of 
customers resident in the United States, you may assume, for purposes of 
this definition, that the customers are residents of the jurisdiction in 
which the nominee has its principal place of business.
    C. Count shares of voting securities beneficially owned by residents 
of the United States as reported on reports of beneficial ownership that 
are provided to you or publicly filed and based on information otherwise 
provided to you.

    Graphic communication. The term graphic communication, which appears 
in the definition of ``write, written'' in Section 2(9) of the 
Securities Act, shall include magnetic impulses or other forms of 
computer data compilation.
    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.
    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 purchase the security registered.
    Officer. The term officer means a president, vice president, 
secretary,

[[Page 547]]

treasurer 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.
    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 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.
    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, the term issuer having the meaning given in 
sections 2(4) and 2(11) of the Act.
    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 Act.
    Registrant. The term registrant means the issuer of the securities 
for which the registration statement is filed.
    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 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.

[[Page 548]]

    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 outstanding 
voting and non-voting common equity 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, totally held subsidiary, and wholly owned 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.

[47 FR 11435, Mar. 16, 1982, as amended at 47 FR 29840, July 9, 1982; 47 
FR 39803, Sept. 10, 1982; 47 FR 54770, Dec. 6, 1982; 48 FR 12347, Mar. 
24, 1983; 48 FR 46738, Oct. 14, 1983; 50 FR 25216, June 18, 1985; 55 FR 
23923, June 13, 1990; 57 FR 36472, Aug. 13, 1992; 58 FR 14669, 14670, 
Mar. 18, 1993; 59 FR 67761, Dec. 30, 1994; 62 FR 26388, May 14, 1997; 62 
FR 36456, July 8, 1997; 64 FR 11116, Mar. 8, 1999; 64 FR 53909, Oct. 5, 
1999; 67 FR 19673, April 23, 2002]



Sec. 230.406  Confidential treatment of information filed with the Commission.

    Preliminary Notes: (1) Confidential treatment of supplemental 
information or other information not required to be filed under the Act 
should be requested under 17 CFR 200.83 and not under this rule.
    (2) All confidential treatment requests shall be submitted in paper 
format only, whether or not the filer is an electronic filer. See Rule 
101(c)(1)(i) of Regulation S-T (Sec. 232.101(c)(1)(i) of this chapter).

    (a) Any person submitting any information in a document required to 
be filed under the Act may make written objection to its public 
disclosure by following the procedure in paragraph (b) of this section, 
which shall be the exclusive means of requesting confidential treatment 
of information included in any document (hereinafter referred to as the 
material filed) required to be filed under the Act, except

[[Page 549]]

that if the material filed is a registration statement on Form S-8 
(Sec. 239.16b of this chapter) or on Form S-3, F-2, F-3 (Sec. 239.13, 
Sec. 239.32 or Sec. 239.33 of this chapter) relating to a dividend or 
interest reinvestment plan, or on Form S-4 (Sec. 239.25 of this chapter) 
complying with General Instruction G of that Form or if the material 
filed is a registration statement that does not contain a delaying 
amendment pursuant to Rule 473 (Sec. 230.473 of this chapter), the 
person shall comply with the procedure in paragraph (b) prior to the 
filing of a registration statement.
    (b) The person shall omit from the material filed the portion 
thereof which it desires to keep undisclosed (hereinafter called the 
confidential portion). In lieu thereof, the person shall indicate at the 
appropriate place in the material filed that the confidential portion 
has been so omitted and filed separately with the Commission. The person 
shall file with the material filed:
    (1) One copy of the confidential portion, marked ``Confidential 
Treatment,'' of the material filed with the Commission. The copy shall 
contain an appropriate identification of the item or other requirement 
involved and, notwithstanding that the confidential portion does not 
constitute the whole of the answer or required disclosure, the entire 
answer or required disclosure, except that in the case where the 
confidential portion is part of a financial statement or schedule, only 
the particular financial statement or schedule need be included. The 
copy of the confidential portion shall be in the same form as the 
remainder of the material filed;
    (2) An application making objection to the disclosure of the 
confidential portion. Such application shall be on a sheet or sheets 
separate from the confidential portion, and shall contain:
    (i) An identification of the portion;
    (ii) A statement of the grounds of the objection referring to and 
analyzing the applicable exemption(s) from disclosure under Sec. 200.80 
of this chapter, the Commission's rule adopted under the Freedom of 
Information Act (5 U.S.C. 552), and a justification of the period of 
time for which confidential treatment is sought;
    (iii) A detailed explanation of why, based on the facts and 
circumstances of the particular case, disclosure of the information is 
unnecessary for the protection of investors;
    (iv) A written consent to the furnishing of the confidential portion 
to other government agencies, offices, or bodies and to the Congress; 
and
    (v) The name, address and telephone number of the person to whom all 
notices and orders issued under this rule at any time should be 
directed.
    (3) The copy of the confidential portion and the application filed 
in accordance with this paragraph (b) shall be enclosed in a separate 
envelope marked ``Confidential Treatment'' and addressed to The 
Secretary, Securities and Exchange Commission, Washington, DC 20549.
    (c) Pending a determination as to the objection, the material for 
which confidential treatment has been applied will not be made available 
to the public.
    (d) If it is determined by the Division, acting pursuant to 
delegated authority, that the application should be granted, an order to 
that effect will be entered, and a notation to that effect will be made 
at the appropriate place in the material filed. Such a determination 
will not preclude reconsideration whenever appropriate, such as upon 
receipt of any subsequent request under the Freedom of Information Act 
and, if appropriate, revocation of the confidential status of all or a 
portion of the information in question.
    (e) If the Commission denies the application, or the Division, 
acting pursuant to delegated authority, denies the application and 
Commission review is not sought pursuant to Sec. 201.431 of this 
chapter, confirmed telegraphic notice of the order of denial will be 
sent to the person named in the application pursuant to paragraph 
(b)(2)(v) of this section. In such case, if the material filed may be 
withdrawn pursuant to an applicable statute, rule, or regulation, the 
registrant shall have the right to withdraw the material filed in 
accordance with the terms of the applicable statute, rule, or 
regulation, but without the necessity of stating any

[[Page 550]]

grounds for the withdrawal or of obtaining the further assent of the 
Commission. In the event of such withdrawal, the confidential portion 
will be returned to the registrant. If the material filed may not be so 
withdrawn, the confidential portion will be made available for public 
inspection in the same manner as if confidential treatment had been 
revoked under paragraph (h) of this section.
    (f) If a right of withdrawal pursuant to paragraph (e) of this 
section is not exercised, the confidential portion will be made 
available for public inspection as part of the material filed, and the 
registrant shall amend the material filed to include all information 
required to be set forth in regard to such confidential portion.
    (g) In any case where a prior grant of confidential treatment has 
been revoked, the person named in the application pursuant to paragraph 
(b)(2)(v) of this section will be so informed by registered or certified 
mail. Pursuant to Sec. 201.431 of this chapter, persons making objection 
to disclosure may petition the Commission for review of a determination 
by the Division revoking confidential treatment.
    (h) Upon revocation of confidential treatment, the confidential 
portion shall be made available to the public at the time and according 
to the conditions specified in paragraphs (h) (1)-(2):
    (1) Upon the lapse of five days after the dispatch of notice by 
registered or certified mail of a determination disallowing an 
objection, if prior to the lapse of such five days the person shall not 
have communicated to the Secretary of the Commission his intention to 
seek review by the Commission under Sec. 201.431 of this chapter of the 
determination made by the Division; or
    (2) If such a petition for review shall have been filed under 
Sec. 201.431 of this chapter, upon final disposition adverse to the 
petitioner.
    (i) If the confidential portion is made available to the public, one 
copy thereof shall be attached to each copy of the material filed with 
the Commission.

[49 FR 13336, Apr. 4, 1984, as amended at 50 FR 19000, May 6, 1985; 58 
FR 14669, 14670, Mar. 18, 1993; 60 FR 32824, June 23, 1995; 60 FR 47692, 
Sept. 14, 1995; 61 FR 30402, June 14, 1996]



Sec. 230.408  Additional information.

    In addition to the information expressly required to be included in 
a registration statement, 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.

[Reg. C, 12 FR 4072, June 24, 1947]



Sec. 230.409  Information unknown or not reasonably 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 could 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.

[Reg. C, 12 FR 4072, June 24, 1947, as amended at 14 FR 91, Jan. 7, 
1949]



Sec. 230.410  Disclaimer of control.

    If the existence of control is open to reasonable doubt in any 
instance, the registrant may disclaim the existence

[[Page 551]]

of control and any admission thereof; in such case, however, the 
registrant shall state the material facts pertinent to the possible 
existence of control.

[Reg. C, 12 FR 4073, June 24, 1947]



Sec. 230.411  Incorporation by reference.

    (a) Prospectus. Except as provided by this section or unless 
otherwise provided in the appropriate form, information shall not be 
incorporated by reference in a prospectus. Where a summary or outline of 
the provisions of any document is required in the prospectus, the 
summary or outline may incorporate by reference particular items, 
sections or paragraphs of any exhibit and may be qualified in its 
entirety by such reference.
    (b) Information not required in a prospectus. Except for exhibits 
covered by paragraph (c) of this section, information may be 
incorporated by reference in answer, or partial answer, to any item that 
calls for information not required to be included in a prospectus 
subject to the following provisions:
    (1) Non-financial information may be incorporated by reference to 
any document;
    (2) Financial information may be incorporated by reference to any 
document, provided any financial statement so incorporated meets the 
requirements of the forms on which the statement is filed. 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 information incorporated by reference includes 
the entire period for which the comparative data is given;
    (3) Information contained in any part of the registration statement, 
including the prospectus, may be incorporated by reference in answer, or 
partial answer, to any item that calls for information not required to 
be included in the prospectus; and
    (4) Unless the information is incorporated by reference to a 
document which complies with the time limitations of Sec. 228.10(f) and 
Sec. 229.10(d) of this chapter, then the document, or part thereof, 
containing the incorporated information is required to be filed as an 
exhibit.
    (c) Exhibits. Any document or part thereof filed with the Commission 
pursuant to any Act administered by the Commission may, subject to the 
limitations of Sec. 228.10(f) and Sec. 229.11(d) of this chapter, be 
incorporated by reference as an exhibit to any registration statement. 
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 such 
modification and the date thereof.
    (d) General. Any incorporation by reference of information pursuant 
to this section shall be subject to the provisions of Rule 24 of the 
Commission's Rules of Practice restricting incorporation by reference of 
documents which incorporate by reference other information. Information 
incorporated by reference shall be clearly identified in the reference 
by page, paragraph, caption or otherwise. If the information is 
incorporated by reference to a previously filed document, the file 
number of such document shall be included. Where only certain pages of a 
document are incorporated by reference and filed with the statement, the 
document from which the information 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 
registration statement where the information is required. Information 
shall not be incorporated by reference in any case where such 
incorporation would render the statement incomplete, unclear or 
confusing.

(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. 
308(a)(2), 90 Stat. 57; secs. 3(b), 12, 13, 14, 15(d), 23(a), 48 Stat. 
882, 892, 894, 895, 901; secs. 203(a), 1, 3, 8, 49 Stat. 704, 1375, 
1377, 1379; sec. 202, 68 Stat. 686; secs. 4, 5, 6(d), 78 Stat. 569, 570-
574; secs. 1, 2, 3, 82 Stat. 454, 455; secs. 28(c), 1, 2, 3, 4, 5, 84 
Stat. 1435, 1497; sec. 105(b), 88 Stat. 1503; secs. 8, 9, 10, 89 Stat. 
117, 118, 119; sec. 308(b), 90 Stat 57; sec. 18, 89 Stat. 155; secs. 
202, 203, 204, 91 Stat. 1494, 1498-1500; sec. 20(a), 49 Stat. 833; sec. 
319, 53 Stat. 1173; sec. 38, 54 Stat. 841; 15 U.S.C. 77f, 77g, 77h, 77j, 
77s(a), 78c(b), 78l, 78m, 78n, 78o(d), 78w(a), 79t(a), 77sss(a), 80a-37)

[47 FR 11437, Mar. 16, 1982, as amended at 60 FR 32824, June 23, 1995]

[[Page 552]]



Sec. 230.412  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 registration statement or the prospectus 
to the extent that a statement contained in the prospectus or in any 
other subsequently filed document which 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 
that it has modified or superseded a prior statement or include any 
other information set forth in the document which 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 Act, the Securities 
Exchange Act of 1934, 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 registration statement or prospectus for 
purpose of the Act. Any statement so superseded shall not be deemed to 
constitute a part of the registration statement or the prospectus for 
purposes of the Act.

(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. 
308(a)(2), 90 Stat. 57; secs. 3(b), 12, 13, 14, 15(d), 23(a), 48 Stat. 
882, 892, 894, 895, 901; secs. 203(a), 1, 3, 8, 49 Stat. 704, 1375, 
1377, 1379; sec. 202, 68 Stat. 686; secs. 4, 5, 6(d), 78 Stat. 569, 570-
574; secs. 1, 2, 3, 82 Stat. 454, 455; secs. 28(c), 1, 2, 3, 4, 5, 84 
Stat. 1435, 1497; sec. 105(b), 88 Stat. 1503; secs. 8, 9, 10, 89 Stat. 
117, 118, 119; sec. 308(b), 90 Stat 57; sec. 18, 89 Stat. 155; secs. 
202, 203, 204, 91 Stat. 1494, 1498-1500; sec. 20(a), 49 Stat. 833; sec. 
319, 53 Stat. 1173; sec. 38, 54 Stat. 841; 15 U.S.C. 77f, 77g, 77h, 77j, 
77s(a), 78c(b), 78l, 78m, 78n, 78o(d), 78w(a), 79t(a), 77sss(a), 80a-37)

[47 FR 11438, Mar. 16, 1982]



Sec. 230.413  Registration of additional securities.

    Except as provided in sections 24(e)(1) and 24(f) of the Investment 
Company Act of 1940, the registration of additional securities of the 
same class as other securities for which a registration statement is 
already in effect shall be effected through a separate registration 
statement relating to the additional securities.

(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. 
308(a)(2), 90 Stat. 57; secs. 3(b), 12, 13, 14, 15(d), 23(a), 48 Stat. 
882, 892, 894, 895, 901; secs. 203(a), 1, 3, 8, 49 Stat. 704, 1375, 
1377, 1379; sec. 202, 68 Stat. 686; secs. 4, 5, 6(d), 78 Stat. 569, 570-
574; secs. 1, 2, 3, 82 Stat. 454, 455; secs. 28(c), 1, 2, 3, 4, 5, 84 
Stat. 1435, 1497; sec. 105(b), 88 Stat. 1503; secs. 8, 9, 10, 89 Stat. 
117, 118, 119; sec. 308(b), 90 Stat 57; sec. 18, 89 Stat. 155; secs. 
202, 203, 204, 91 Stat. 1494, 1498-1500; sec. 20(a), 49 Stat. 833; sec. 
319, 53 Stat. 1173; sec. 38, 54 Stat. 841; 15 U.S.C. 77f, 77g, 77h, 77j, 
77s(a), 78c(b), 78l, 78m, 78n, 78o(d), 78w(a), 79t(a), 77sss(a), 80a-37)

[47 FR 11438, Mar. 16, 1982]



Sec. 230.414  Registration by certain successor issuers.

    If any issuer, except a foreign issuer exempted by Rule 3a12-3 (17 
CFR 240.3a12-3), incorporated under the laws of any State or foreign 
government and

[[Page 553]]

having securities registered under the Act has been succeeded by an 
issuer incorporated under the laws of another State or foreign 
government for the purpose of changing the State or country of 
incorporation of the enterprises, or if any issuer has been succeeded by 
an issuer for the purpose of changing its form of organization, the 
registration statement of the predecessor issuer shall be deemed the 
registration statement of the successor issuer for the purpose of 
continuing the offering provided:
    (a) Immediately prior to the succession the successor issuer had no 
assets or liabilities other than nominal assets or liabilities;
    (b) The succession was effected by a merger or similar succession 
pursuant to statutory provisions or the terms of the organic instruments 
under which the successor issuer acquired all of the assets and assumed 
all of the liabilities and obligations of the predecessor issuer;
    (c) The succession was approved by security holders of the 
predecessor issuer at a meeting for which proxies were solicited 
pursuant to section 14(a) of the Securities Exchange Act of 1934 or 
section 20(a) of the Investment Company Act of 1940 or information was 
furnished to security holders pursuant to section 14(c) of the 
Securities Exchange Act of 1934; and
    (d) The successor issuer has filed an amendment to the registration 
statement of the predecessor issuer expressly adopting such statements 
as its own registration statement for all purposes of the Act and the 
Securities Exchange Act of 1934 and setting forth any additional 
information necessary to reflect any material changes made in connection 
with or resulting from the succession, or necessary to keep the 
registration statement from being misleading in any material respect, 
and such amendment has become effective.

(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. 
308(a)(2), 90 Stat. 57; secs. 3(b), 12, 13, 14, 15(d), 23(a), 48 Stat. 
882, 892, 894, 895, 901; secs. 203(a), 1, 3, 8, 49 Stat. 704, 1375, 
1377, 1379; sec. 202, 68 Stat. 686; secs. 4, 5, 6(d), 78 Stat. 569, 570-
574; secs. 1, 2, 3, 82 Stat. 454, 455; secs. 28(c), 1, 2, 3, 4, 5, 84 
Stat. 1435, 1497; sec. 105(b), 88 Stat. 1503; secs. 8, 9, 10, 89 Stat. 
117, 118, 119; sec. 308(b), 90 Stat 57; sec. 18, 89 Stat. 155; secs. 
202, 203, 204, 91 Stat. 1494, 1498-1500; sec. 20(a), 49 Stat. 833; sec. 
319, 53 Stat. 1173; sec. 38, 54 Stat. 841; 15 U.S.C. 77f, 77g, 77h, 77j, 
77s(a), 78c(b), 78l, 78m, 78n, 78o(d), 78w(a), 79t(a), 77sss(a), 80a-37)

[47 FR 11438, Mar. 16, 1982]



Sec. 230.415  Delayed or continuous offering and sale of securities.

    (a) Securities may be registered for an offering to be made on a 
continuous or delayed basis in the future, Provided, That:
    (1) The registration statement pertains only to:
    (i) Securities which are to be offered or sold solely by or on 
behalf of a person or persons other than the registrant, a subsidiary of 
the registrant or a person of which the registrant is a subsidiary;
    (ii) Securities which are to be offered and sold pursuant to a 
dividend or interest reinvestment plan or an employee benefit plan of 
the registrant;
    (iii) Securities which are to be issued upon the exercise of 
outstanding options, warrants or rights;
    (iv) Securities which are to be issued upon conversion of other 
outstanding securities;
    (v) Securities which are pledged as collateral;
    (vi) Securities which are registered on Form F-6 (Sec. 239.36 of 
this chapter);
    (vii) Mortgage related securities, including such securities as 
mortgage backed debt and mortgage participation or pass through 
certificates;
    (viii) Securities which are to be issued in connection with business 
combination transactions;

[[Page 554]]

    (ix) Securities the offering of which will be commenced promptly, 
will be made on a continuous basis and may continue for a period in 
excess of 30 days from the date of initial effectiveness;
    (x) Securities registered (or qualified to be registered) on Form S-
3 or Form F-3 (Sec. 239.13 or Sec. 239.33 of this chapter) which are to 
be offered and sold on a continuous or delayed basis by or on behalf of 
the registrant, a subsidiary of the registrant or a person of which the 
registrant is a subsidiary; or
    (xi) Shares of common stock which are to be offered and sold on a 
delayed or continuous basis by or on behalf of a registered closed-end 
management investment company or business development company that makes 
periodic repurchase offers pursuant to Sec. 270.23c-3 of this chapter.
    (2) Securities in paragraphs (a)(1) (viii) through (x) may only be 
registered in an amount which, at the time the registration statement 
becomes effective, is reasonably expected to be offered and sold within 
two years from the initial effective date of the registration.
    (3) The registrant furnishes the undertakings required by Item 
512(a) of Regulation S-K (Sec. 229.512 of this chapter).
    (4) In the case of a registration statement pertaining to an at the 
market offering of equity securities by or on behalf of the registrant:
    (i) The offering comes within paragraph (a)(1)(x);
    (ii) Where voting stock is registered, the amount of securities 
registered for such purposes must not exceed 10% of the aggregate market 
value of the registrant's outstanding voting stock held by non-
affiliates of the registrant (calculated as of a date within 60 days 
prior to the date of filing);
    (iii) The securities must be sold through an underwriter or 
underwriters, acting as principal(s) or as agent(s) for the registrant; 
and
    (iv) The underwriter or underwriters must be named in the prospectus 
which is part of the registration statement.


As used in this paragraph, the term at the market offering means an 
offering of securities into an existing trading market for outstanding 
shares of the same class at other than a fixed price on or through the 
facilities of a national securities exchange or to or through a market 
maker otherwise than on an exchange.
    (b) This section shall not apply to any registration statement 
pertaining to securities issued by a face-amount certificate company or 
redeemable securities issued by an open-end management company or unit 
investment trust under the Investment Company Act of 1940 or any 
registration statement filed by any foreign government or political 
subdivision thereof.

(Secs. 6, 7, 10, 19(a), 48 Stat 78, 81, 85; secs. 205 209, 48 Stat. 906, 
908; sec. 8. 68 Stat. 685; sec. 1, 79 Stat. 1051; sec. 308(a)(2), 90 
Stat. 57; 15 U.S.C. 77f, 77g, 77j, 77s(a))

[48 FR 52896, Nov. 23, 1983, as amended at 59 FR 43470, Aug. 24, 1994]



Sec. 230.416  Securities to be issued as a result of stock splits, stock dividends and anti-dilution provisions and interests to be issued pursuant to certain 
          employee benefit plans.

    (a) If a registration statement purports to register securities to 
be offered pursuant to terms which provide for a change in the amount of 
securities being offered or issued to prevent dilution resulting from 
stock splits, stock dividends, or similar transactions, such 
registration statement shall, unless otherwise expressly provided, be 
deemed to cover the additional securities to be offered or issued in 
connection with any such provision.
    (b) If prior to completion of the distribution of the securities 
covered by a registration statement, additional securities of the same 
class are issued or issuable as a result of a stock split or stock 
dividend, the registration statement shall, unless otherwise expressly 
provided therein, be deemed to cover such additional securities 
resulting from the split of, or the stock dividend on, the registered 
securities. If prior to completion of the distribution of the securities 
covered by a registration statement, all the securities of a class which 
includes the registered securities are combined by a reverse split into 
a lesser amount of securities of the same class, the amount of 
undistributed securities of such class

[[Page 555]]

deemed to be covered by the registration statement shall be 
proportionately reduced. If paragraph (a) of this section is not 
applicable, the registration statement shall be amended prior to the 
offering of such additional or lesser amount of securities to reflect 
the change in the amount of securities registered.
    (c) Where a registration statement on Form S-8 relates to securities 
to be offered pursuant to an employee benefit plan, including interests 
in such plan that constitute separate securities required to be 
registered under the Act, such registration statement shall be deemed to 
register an indeterminate amount of such plan interests.

[30 FR 13824, Oct. 30, 1965, as amended at 55 FR 23923, June 13, 1990]



Sec. 230.417  Date of financial statements.

    Whenever financial statements of any person are required to be 
furnished as of a date within a specified period prior to the date of 
filing the registration statement and the last day of such period falls 
on a Saturday, Sunday, or holiday, such registration statement may be 
filed on the first business day following the last day of the specified 
period.

[22 FR 2328, Apr. 9, 1957]



Sec. 230.418  Supplemental information.

    (a) The Commission or its staff may, where it is deemed appropriate, 
request supplemental information concerning the registrant, the 
registration statement, the distribution of the securities, market 
activities and underwriters' activities. Such information includes, but 
is not limited to, the following items which the registrant should be 
prepared to furnish promptly upon request:
    (1)(i) Any reports or memoranda which have been prepared for 
external use by the registrant or a principal underwriter, as defined in 
Rule 405 (Sec. 230.405), in connection with the proposed offering;
    (ii) A statement as to the actual or proposed use and distribution 
of the reports or memoranda specified in paragraph (a)(1)(i) of this 
section, identifying each class of persons who have received or will 
receive such reports or memoranda and the number of copies distributed 
to each such class;
    (2) In the case of a registration statement relating to a business 
combination as defined in Rule 145(a) (17 CFR 230.145(a)), exchange 
offer, tender offer or similar transaction, any feasibility studies, 
management analyses, fairness opinions or similar reports prepared by or 
for any of the parties to the subject transaction in connection with 
such transaction;
    (3) Except in the case of a registrant eligible to use Form S-2 or 
Form S-3 (Secs. 239.12 or 239.13 of this chapter), any engineering, 
management or similar reports or memoranda relating to broad aspects of 
the business, operations or products of the registrant, which have been 
prepared within the past twelve months for or by the registrant, any 
affiliate of the registrant or any principal underwriter, as defined in 
Rule 405 (Sec. 230.405), of the securities being registered except for:
    (i) Reports solely comprised of recommendations to buy, sell or hold 
the securities of the registrant, unless such recommendations have 
changed within the past six months; and
    (ii) Any information contained in documents already filed with the 
Commission.
    (4) Where there is a registration of an at-the-market offering, as 
defined in Sec. 242.100 of this chapter, of more than 10 percent of the 
securities outstanding, where the offering includes securities owned by 
officers, directors or affiliates of the registrant and where there is 
no underwriting agreement, information (i) concerning contractual 
arrangements between selling security holders of a limited group or of 
several groups of related shareholders to comply with the anti-
manipulation rules until the offering by all members of the group is 
completed and to inform the exchange, brokers and selling security 
holders when the distribution by the members of the group is over; or 
(ii) concerning the registrant's efforts to notify members of a large 
group of unrelated sellers of the applicable Commission rules and 
regulations;
    (5) Where the registrant recently has introduced a new product or 
has begun to do business in a new industry segment or has made public 
its intentions

[[Page 556]]

to introduce a new product or to do business in a new industry segment, 
and this action requires the investment of a material amount of the 
assets of the registrant or otherwise is material, copies of any studies 
prepared for the registrant by outside persons or any internal studies, 
documents, reports or memoranda the contents of which were material to 
the decision to develop the product or to do business in the new segment 
including, but not limited to, documents relating to financial 
requirements and engineering, competitive, environmental and other 
considerations, but excluding technical documents;
    (6) Where reserve estimates are referred to in a document, a copy of 
the full report of the engineer or other expert who estimated the 
reserves; and
    (7) With respect to the extent of the distribution of a preliminary 
prospectus, information concerning:
    (i) The date of the preliminary prospectus distributed;
    (ii) The dates or approximate dates of distribution;
    (iii) The number of prospective underwriters and dealers to whom the 
preliminary prospectus was furnished;
    (iv) The number of prospectuses so distributed;
    (v) The number of prospectuses distributed to others, identifying 
them in general terms; and
    (vi) The steps taken by such underwriters and dealers to comply with 
the provisions of Rule 15c2-8 under the Securities Exchange Act of 1934 
(Sec. 240.15c2-8 of this chapter).
    (b) Supplemental information described in paragraph (a) of this 
section shall not be required to be filed with or deemed part of the 
registration statement. The information shall be returned to the 
registrant upon request, provided that:
    (1) Such request is made at the time such information is furnished 
to the staff;
    (2) The return of such information is consistent with the protection 
of investors;
    (3) The return of such information is consistent with the provisions 
of the Freedom of Information Act [5 U.S.C. 552]; and
    (4) The information was not filed in electronic format.

[47 FR 11439, Mar. 16, 1982, as amended at 58 FR 14669, 14670, Mar. 18, 
1993; 62 FR 543, Jan. 3, 1997]



Sec. 230.419  Offerings by blank check companies.

    (a) Scope of the rule and definitions. (1) The provisions of this 
section shall apply to every registration statement filed under the Act 
relating to an offering by a blank check company.
    (2) For purposes of this section, the term ``blank check company'' 
shall mean a company that:
    (i) Is a development stage company that has no specific business 
plan or purpose or has indicated that its business plan is to engage in 
a merger or acquisition with an unidentified company or companies, or 
other entity or person; and
    (ii) Is issuing ``penny stock,'' as defined in Rule 3a51-1 (17 CFR 
240.3a51-1) under the Securities Exchange Act of 1934 (``Exchange 
Act'').
    (3) For purposes of this section, the term ``purchaser'' shall mean 
any person acquiring securities directly or indirectly in the offering, 
for cash or otherwise, including promoters or others receiving 
securities as compensation in connection with the offering.
    (b) Deposit of securities and proceeds in escrow or trust account--
(1) General. (i) Except as otherwise provided in this section or 
prohibited by other applicable law, all securities issued in connection 
with an offering by a blank check company and the gross proceeds from 
the offering shall be deposited promptly into:
    (A) An escrow account maintained by an ``insured depository 
institution,'' as that term is defined in section 3(c)(2) of the Federal 
Deposit Insurance Act (12 U.S.C. 1813(C)(2)); or
    (B) A separate bank account established by a broker or dealer 
registered under the Exchange Act maintaining net capital equal to or 
exceeding $25,000 (as calculated pursuant to Exchange Act Rule 15c3-1 
(17 CFR 240.15c3-1), in which the broker or dealer acts as trustee for 
persons having the beneficial interests in the account.
    (ii) If funds and securities are deposited into an escrow account 
maintained

[[Page 557]]

by an insured depository institution, the deposit account records of the 
insured depository institution must provide that funds in the escrow 
account are held for the benefit of the purchasers named and identified 
in accordance with 12 CFR 330.1 of the regulations of the Federal 
Deposit Insurance Corporation, and the records of the escrow agent, 
maintained in good faith and in the regular course of business, must 
show the name and interest of each party to the account. If funds and 
securities are deposited in a separate bank account established by a 
broker or dealer acting as a trustee, the books and records of the 
broker-dealer must indicate the name, address, and interest of each 
person for whom the account is held.
    (2) Deposit and investment of proceeds. (i) All offering proceeds, 
after deduction of cash paid for underwriting commissions, underwriting 
expenses and dealer allowances, and amounts permitted to be released to 
the registrant pursuant to paragraph (b)(2)(vi) of this section, shall 
be deposited promptly into the escrow or trust account; provided, 
however, that no deduction may be made for underwriting commissions, 
underwriting expenses or dealer allowances payable to an affiliate of 
the registrant.
    (ii) Deposited proceeds shall be in the form of checks, drafts, or 
money orders payable to the order of the escrow agent or trustee.
    (iii) Deposited proceeds and interest or dividends thereon, if any, 
shall be held for the sole benefit of the purchasers of the securities.
    (iv) Deposited proceeds shall be invested in one of the following:
    (A) An obligation that constitutes a ``deposit,'' as that term is 
defined in section 3(1) of the Federal Deposit Insurance Act (12 U.S.C. 
1813 (1));
    (B) Securities of any open-end investment company registered under 
the Investment Company Act of 1940 (15 U.S.C. 80a-1 et seq.) that holds 
itself out as a money market fund meeting the conditions of paragraphs 
(c)(2), (c)(3), and (c)(4) of 17 CFR 270.2a-7 (Rule 2a-7) under the 
Investment Company Act; or
    (C) Securities that are direct obligations of, or obligations 
guaranteed as to principal or interest by, the United States.

    Note to Sec. 230.419(b)(2)(iv): Issuers are cautioned that 
investments in government securities are inappropriate unless such 
securities can be readily sold or otherwise disposed of for cash at the 
time required without any dissipation of offering proceeds invested.

    (v) Interest or dividends earned on the funds, if any, shall be held 
in the escrow or trust account until the funds are released in 
accordance with the provisions of this section. If funds held in the 
escrow or trust account are released to a purchaser of the securities, 
the purchasers shall receive interest or dividends earned, if any, on 
such funds up to the date of release. If funds held in the escrow or 
trust account are released to the registrant, interest or dividends 
earned on such funds up to the date of release may be released to the 
registrant.
    (vi) The registrant may receive up to 10 percent of the proceeds 
remaining after payment of underwriting commissions, underwriting 
expenses and dealer allowances permitted by paragraph (b)(2)(i) of this 
section, exclusive of interest or dividends, as those proceeds are 
deposited into the escrow or trust account.
    (3) Deposit of securities. (i) All securities issued in connection 
with the offering, whether or not for cash consideration, and any other 
securities issued with respect to such securities, including securities 
issued with respect to stock splits, stock dividends, or similar rights, 
shall be deposited directly into the escrow or trust account promptly 
upon issuance. The identity of the purchaser of the securities shall be 
included on the stock certificates or other documents evidencing such 
securities. See also 17 CFR 240.15g-8 regarding restrictions on sales 
of, or offers to sell, securities deposited in the escrow or trust 
account.
    (ii) Securities held in the escrow or trust account are to remain as 
issued and deposited and shall be held for the sole benefit of the 
purchasers, who shall have voting rights, if any, with respect to 
securities held in their names, as provided by applicable state law. No 
transfer or other disposition of securities held in the escrow or trust 
account or any interest related to such

[[Page 558]]

securities shall be permitted other than by will or the laws of descent 
and distribution, or pursuant to a qualified domestic relations order as 
defined by the Internal Revenue Code of 1986 as amended (26 U.S.C. 1 et 
seq.), or Title 1 of the Employee Retirement Income Security Act (29 
U.S.C. 1001 et seq.), or the rules thereunder.
    (iii) Warrants, convertible securities or other derivative 
securities relating to securities held in the escrow or trust account 
may be exercised or converted in accordance with their terms; provided, 
however, that securities received upon exercise or conversion, together 
with any cash or other consideration paid in connection with the 
exercise or conversion, are promptly deposited into the escrow or trust 
account.
    (4) Escrow or trust agreement. A copy of the executed escrow or 
trust agreement shall be filed as an exhibit to the registration 
statement and shall contain the provisions of paragraphs (b)(2), (b)(3), 
and (e)(3) of this section.
    (5) Request for supplemental information. Upon request by the 
Commission or the staff, the registrant shall furnish as supplemental 
information the names and addresses of persons for whom securities are 
held in the escrow or trust account.

    Note to Sec. 230.419(b): With respect to a blank check offering 
subject to both Rule 419 and Exchange Act Rule 15c2-4 (17 CFR 240.15c2-
4, the requirements of Rule 15c2-4 are applicable only until the 
conditions of the offering governed by that Rule are met (e.g., reaching 
the minimum in a ``part-or-none'' offering). When those conditions are 
satisfied, Rule 419 continues to govern the use of offering proceeds.

    (c) Disclosure of offering terms. The initial registration statement 
shall disclose the specific terms of the offering, including, but not 
limited to:
    (1) The terms and provisions of the escrow or trust agreement and 
the effect thereof upon the registrant's right to receive funds and the 
effect of the escrow or trust agreement upon the purchaser's funds and 
securities required to be deposited into the escrow or trust account, 
including, if applicable, any material risk of non-insurance of 
purchasers' funds resulting from deposits in excess of the insured 
amounts; and
    (2) The obligation of the registrant to provide, and the right of 
the purchaser to receive, information regarding an acquisition, 
including the requirement that pursuant to this section, purchasers 
confirm in writing their investment in the registrant's securities as 
specified in paragraph (e) of this section.
    (d) Probable acquisition post-effective amendment requirement. If, 
during any period in which offers or sales are being made, a significant 
acquisition becomes probable, the registrant shall file promptly a post-
effective amendment disclosing the information specified by the 
applicable registration statement form and Industry Guides, including 
financial statements of the registrant and the company to be acquired as 
well as pro forma financial information required by the form and 
applicable rules and regulations. Where warrants, rights or other 
derivative securities issued in the initial offering are exercisable, 
there is a continuous offering of the underlying security.
    (e) Release of deposited and funds securities--(1) Post-effective 
amendment for acquisition agreement. Upon execution of an agreement(s) 
for the acquisition(s) of a business(es) or assets that will constitute 
the business (or a line of business) of the registrant and for which the 
fair value of the business(es) or net assets to be acquired represents 
at least 80 percent of the maximum offering proceeds, including proceeds 
received or to be received upon the exercise or conversion of any 
securities offered, but excluding amounts payable to non-affiliates for 
underwriting commissions, underwriting expenses, and dealer allowances, 
the registrant shall file a post-effective amendment that:
    (i) Discloses the information specified by the applicable 
registration statement form and Industry Guides, including financial 
statements of the registrant and the company acquired or to be acquired 
and pro forma financial information required by the form and applicable 
rules and regulations;
    (ii) Discloses the results of the initial offering, including but 
not limited to:
    (A) The gross offering proceeds received to date, specifying the 
amounts

[[Page 559]]

paid for underwriter commissions, underwriting expenses and dealer 
allowances, amounts disbursed to the registrant, and amounts remaining 
in the escrow or trust account; and
    (B) The specific amount, use and application of funds disbursed to 
the registrant to date, including, but not limited to, the amounts paid 
to officers, directors, promoters, controlling shareholders or 
affiliates, either directly or indirectly, specifying the amounts and 
purposes of such payments; and
    (iii) Discloses the terms of the offering as described pursuant to 
paragraph (e)(2) of this section.
    (2) Terms of the offering. The terms of the offering must provide, 
and the registrant must satisfy, the following conditions.
    (i) Within five business days after the effective date of the post-
effective amendment(s), the registrant shall send by first class mail or 
other equally prompt means, to each purchaser of securities held in 
escrow or trust, a copy of the prospectus contained in the post-
effective amendment and any amendment or supplement thereto;
    (ii) Each purchaser shall have no fewer than 20 business days and no 
more than 45 business days from the effective date of the post-effective 
amendment to notify the registrant in writing that the purchaser elects 
to remain an investor. If the registrant has not received such written 
notification by the 45th business day following the effective date of 
the post-effective amendment, funds and interest or dividends, if any, 
held in the escrow or trust account shall be sent by first class mail or 
other equally prompt means to the purchaser within five business days;
    (iii) The acquisition(s) meeting the criteria set forth in paragraph 
(e)(1) of this section will be consummated if a sufficient number of 
purchasers confirm their investments; and
    (iv) If a consummated acquisition(s) meeting the requirements of 
this section has not occurred by a date 18 months after the effective 
date of the initial registration statement, funds held in the escrow or 
trust account shall be returned by first class mail or equally prompt 
means to the purchaser within five business days following that date.
    (3) Conditions for release of deposited securities and funds. Funds 
held in the escrow or trust account may be released to the registrant 
and securities may be delivered to the purchaser or other registered 
holder identified on the deposited securities only at the same time as 
or after:
    (i) The escrow agent or trustee has received a signed representation 
from the registrant, together with other evidence acceptable to the 
escrow agent or trustee, that the requirements of paragraphs (e)(1) and 
(e)(2) of this section have been met; and
    (ii) Consummation of an acquisition(s) meeting the requirements of 
paragraph (e)(2)(iii) of this section.
    (4) Prospectus supplement. If funds and securities are released from 
the escrow or trust account to the registrant pursuant to this 
paragraph, the prospectus shall be supplemented to indicate the amount 
of funds and securities released and the date of release.

    Notes to Sec. 230.419(e): 1. With respect to a blank check offering 
subject to both Rule 419 and Exchange Act Rule 10b-9 (17 CFR 240.10b-9), 
the requirements of Rule 10b-9 are applicable only until the conditions 
of the offering governed by that Rule are met (e.g., reaching the 
minimum in a ``part-or-none'' offering). When those conditions are 
satisfied, Rule 419 continues to govern the use of offering proceeds.
    2. If the business(es) or assets are acquired for cash, the fair 
value shall be presumed to be equal to the cash paid. If all or part of 
the consideration paid consists of securities or other non-cash 
consideration, the fair value shall be determined by an accepted 
standard, such as bona fide sales of the assets or similar assets made 
within a reasonable time, forecasts of expected cash flows, independent 
appraisals, etc. Such valuation must be reasonable at the time made.

    (f) Financial statements. The registrant shall:
    (1) Furnish to security holders audited financial statements for the 
first full fiscal year of operations following consummation of an 
acquisition pursuant to paragraph (e) of this section, together with the 
information required by Item 303(a) of Regulation S-K (17 CFR 
229.303(a)), no later than 90 days after the end of such fiscal year; 
and

[[Page 560]]

    (2) File the financial statements and additional information with 
the Commission under cover of Form 8-K (17 CFR 249.308); provided, 
however, that such financial statements and related information need not 
be filed separately if the registrant is filing reports pursuant to 
Section 13(a) or 15(d) of the Exchange Act.

[57 FR 18043, Apr. 28, 1992]

                    form and content of prospectuses



Sec. 230.420  Legibility of prospectus.

    (a) The body of all printed prospectuses 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, 
(a) to the extent necessary for convenient presentation, financial 
statements and other tabular data, including tabular data in notes, and 
(b) prospectuses deemed to be omitting prospectuses under rule 482 (17 
CFR 230.482) 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.
    (b) Where a prospectus is distributed through an electronic medium, 
issuers may satisfy legibility requirements applicable to printed 
documents, such as paper size, type size and font, bold-face type, 
italics and red ink, by presenting all required information in a format 
readily communicated to investors, and where indicated, in a manner 
reasonably calculated to draw investor attention to specific 
information.

[53 FR 3878, Feb. 10, 1988, as amended at 61 FR 24655, May 15, 1996]



Sec. 230.421  Presentation of information in prospectuses.

    (a) The information required in a prospectus need not follow the 
order of the items or other requirements in the form. Such information 
shall not, however, be set forth in such fashion as to obscure any of 
the required information or any information necessary to keep the 
required information from being incomplete or misleading. Where an item 
requires information to be given in a prospectus in tabular form it 
shall be given in substantially the tabular form specified in the item.
    (b) You must present the information in a prospectus in a clear, 
concise and understandable manner. You must prepare the prospectus using 
the following standards:
    (1) Present information in clear, concise sections, paragraphs, and 
sentences. Whenever possible, use short, explanatory sentences and 
bullet lists;
    (2) Use descriptive headings and subheadings;
    (3) Avoid frequent reliance on glossaries or defined terms as the 
primary means of explaining information in the prospectus. Define terms 
in a glossary or other section of the document only if the meaning is 
unclear from the context. Use a glossary only if it facilitates 
understanding of the disclosure; and
    (4) Avoid legal and highly technical business terminology.

    Note to Sec. 230.421(b): In drafting the disclosure to comply with 
this section, you should avoid the following:
    1. Legalistic or overly complex presentations that make the 
substance of the disclosure difficult to understand;
    2. Vague ``boilerplate'' explanations that are imprecise and readily 
subject to different interpretations;
    3. Complex information copied directly from legal documents without 
any clear and concise explanation of the provision(s); and
    4. Disclosure repeated in different sections of the document that 
increases the size of the document but does not enhance the quality of 
the information.

    (c) All information required to be included in a prospectus shall be 
clearly understandable without the necessity of referring to the 
particular form or to the general rules and regulations. Except as to 
financial statements and information required in a tabular form, the 
information set forth in a prospectus may be expressed in condensed or 
summarized form. In lieu of repeating information in the form of notes 
to financial statements, references may be made to other parts of the 
prospectus where such information is set forth.
    (d)(1) To enhance the readability of the prospectus, you must use 
plain English principles in the organization, language, and design of 
the front and back cover pages, the summary, and the risk factors 
section.

[[Page 561]]

    (2) You must draft the language in these sections so that at a 
minimum it substantially complies with each of the following plain 
English writing principles:
    (i) Short sentences;
    (ii) Definite, concrete, everyday words;
    (iii) Active voice;
    (iv) Tabular presentation or bullet lists for complex material, 
whenever possible;
    (v) No legal jargon or highly technical business terms; and
    (vi) No multiple negatives.
    (3) In designing these sections or other sections of the prospectus, 
you may include pictures, logos, charts, graphs, or other design 
elements so long as the design is not misleading and the required 
information is clear. You are encouraged to use tables, schedules, 
charts and graphic illustrations of the results of operations, balance 
sheet, or other financial data that present the data in an 
understandable manner. Any presentation must be consistent with the 
financial statements and non-financial information in the prospectus. 
You must draw the graphs and charts to scale. Any information you 
provide must not be misleading.

Instruction to Sec. 230.421: You should read Securities Act Release No. 
33-7497 (January 28, 1998) for information on plain English principles.

(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. 
308(a)(2), 90 Stat. 57; secs. 3(b), 12, 13, 14, 15(d), 23(a), 48 Stat. 
882, 892, 894, 895, 901; secs. 203(a), 1, 3, 8, 49 Stat. 704, 1375, 
1377, 1379; sec. 202, 68 Stat. 686; secs. 4, 5, 6(d), 78 Stat. 569, 570-
574; secs. 1, 2, 3, 82 Stat. 454, 455; secs. 28(c), 1, 2, 3, 4, 5, 84 
Stat. 1435, 1497; sec. 105(b), 88 Stat. 1503; secs. 8, 9, 10, 89 Stat. 
117, 118, 119; sec. 308(b), 90 Stat 57; sec. 18, 89 Stat. 155; secs. 
202, 203, 204, 91 Stat. 1494, 1498-1500; sec. 20(a), 49 Stat. 833; sec. 
319, 53 Stat. 1173; sec. 38, 54 Stat. 841; 15 U.S.C. 77f, 77g, 77h, 77j, 
77s(a), 78c(b), 78l, 78m, 78n, 78o(d), 78w(a), 79t(a), 77sss(a), 80a-37)

[47 FR 11439, Mar. 16, 1982, as amended at 63 FR 6384, Feb. 6, 1998]



Sec. 230.423  Date of prospectuses.

    Except for a form of prospectus used after the effective date of the 
registration statement and before the determination of the offering 
price as permitted by Rule 430A(c) under the Securities Act 
(Sec. 230.430A(c) of this chapter) or before the opening of bids as 
permitted by Rule 445(c) under the Securities Act (Sec. 230.445(c) of 
this chapter), each prospectus used after the effective date of the 
registration statement shall be dated approximately as of such effective 
date; provided, however, that a revised or amended prospectus used 
thereafter need only bear the approximate date of its issuance. Each 
supplement to a prospectus shall be dated separately the approximate 
date of its issuance.

(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. 
308(a)(2), 90 Stat. 57; secs. 3(b), 12, 13, 14, 15(d), 23(a), 48 Stat. 
882, 892, 894, 895, 901; secs. 203(a), 1, 3, 8, 49 Stat. 704, 1375, 
1377, 1379; sec. 202, 68 Stat. 686; secs. 4, 5, 6(d), 78 Stat. 569, 570-
574; secs. 1, 2, 3, 82 Stat. 454, 455; secs. 28(c), 1, 2, 3, 4, 5, 84 
Stat. 1435, 1497; sec. 105(b), 88 Stat. 1503; secs. 8, 9, 10, 89 Stat. 
117, 118, 119; sec. 308(b), 90 Stat 57; sec. 18, 89 Stat. 155; secs. 
202, 203, 204, 91 Stat. 1494, 1498-1500; sec. 20(a), 49 Stat. 833; sec. 
319, 53 Stat. 1173; sec. 38, 54 Stat. 841; 15 U.S.C. 77f, 77g, 77h, 77j, 
77s(a), 78c(b), 78l, 78m, 78n, 78o(d), 78w(a), 79t(a), 77sss(a), 80a-37)

[47 FR 11440, Mar. 16, 1982, as amended at 52 FR 21260, June 5, 1987]



Sec. 230.424  Filing of prospectuses, number of copies.

    (a) Except as provided in paragraph (f) of this section, five copies 
of every form of prospectus sent or given to any person prior to the 
effective date of the registration statement which varies from the form 
or forms of prospectus included in the registration statement as filed 
pursuant to Sec. 230.402(a) of this chapter shall be filed as a part of 
the registration statement not later than the date such form of 
prospectus is first sent or given to any person: Provided, however, That 
only a form of prospectus that contains substantive changes from or 
additions to a prospectus previously filed with the Commission as part 
of a registration statement need be filed pursuant to this paragraph 
(a).
    (b) Ten copies of each form of prospectus purporting to comply with 
section 10 of the Securities Act (15 U.S.C. 77j), except for documents 
constituting a prospectus pursuant to Rule 428(a)

[[Page 562]]

(Sec. 230.428(a) of this chapter), shall be filed with the Commission in 
the form in which it is used after the effectiveness of the registration 
statement and identified as required by paragraph (e); Provided, 
however, That only a form of prospectus that contains substantive 
changes from or additions to a previously filed prospectus is required 
to be filed; Provided, further, That this paragraph (b) shall not apply 
in respect of a form of prospectus contained in a registration statement 
and relating solely to securities offered at competitive bidding, which 
prospectus is intended for use prior to the opening of bids. The ten 
copies shall be filed or transmitted for filing as follows:
    (1) A form of prospectus that discloses information previously 
omitted from the prospectus filed as part of an effective registration 
statement in reliance upon Rule 430A under the Securities Act 
(Sec. 230.430A of this chapter) shall be filed with the commission no 
later than the second business day following the earlier of the date of 
determination of the offering price or the date it is first used after 
effectiveness in connection with a public offering or sales, or 
transmitted by a means reasonably calculated to result in filing with 
the Commission by that date.
    (2) A form of prospectus used in connection with a primary offering 
of securities on a delayed basis pursuant to Rule 415(a)(1)(vii), (viii) 
or (x) under the Securities Act (Sec. 230.415(a)(1)(vii), (viii) or (x) 
of this chapter) that discloses the public offering price, description 
of securities, specific method of distribution or similar matters shall 
be filed with the Commission no later than the second business day 
following the earlier of the date of the determination of the offering 
price or the date it is first used after effectiveness in connection 
with a public offering or sales, or transmitted by a means reasonably 
calculated to result in filing with the Commission by that date.
    (3) A form of prospectus that reflects facts or events other than 
those covered in paragraphs (b) (1), (2) and (6) of this section that 
constitute a substantive change from or addition to the information set 
forth in the last form of prospectus filed with the Commission under 
this section or as part of a registration statement under the Securities 
Act shall be filed with the Commission no later than the fifth business 
day after the date it is first used after effectiveness in connection 
with a public offering or sales, or transmitted by a means reasonably 
calculated to result in filing with the Commission by that date.
    (4) A form of prospectus that discloses information, facts or events 
covered in both paragraphs (b) (1) and (3) shall be filed with the 
Commission no later than the second business day following the earlier 
of the date of the determination of the offering price or the date it is 
first used after effectiveness in connection with a public offering or 
sales, or transmitted by a means reasonably calculated to result in 
filing with the Commission by that date.
    (5) A form of prospectus that discloses information, facts or events 
covered in both paragraphs (b) (2) and (3) shall be filed with the 
Commission no later than the second business day following the earlier 
of the date of the determination of the offering price or the date it is 
first used after effectiveness in connection with a public offering or 
sales, or transmitted by a means reasonably calculated to result in 
filing with the Commission by that date.
    (6) A form of prospectus used in connection with an offering of 
securities under Canada's National Policy Statement No. 45 pursuant to 
rule 415 under the Securities Act (Sec. 230.415 of this chapter) that is 
not made in the United States shall be filed with the Commission no 
later than the date it is first used in Canada, or transmitted by a 
means reasonably calculated to result in filing with the Commission by 
that date.
    (7) Ten copies of a term sheet or abbreviated term sheet sent or 
given in reliance upon Rule 434 under the Act (Sec. 230.434) shall be 
filed with the Commission pursuant to this paragraph no later than the 
second business day following the earlier of the date of determination 
of the offering price, or the date it is first used after effectiveness 
in connection with a public offering or sales, or transmitted by a means 
reasonably calculated to result in filing with the Commission by that 
date. In addition to the information required by

[[Page 563]]

paragraph (e) of this section, each copy of such term sheet or 
abbreviated term sheet shall include the information required by Rule 
434(e) (Sec. 230.434(e)).

Instruction 1: Notwithstanding Sec. 230.424 (b)(2) and (b)(5) above, a 
form of prospectus or prospectus supplement relating to an offering of 
mortgage-related securities on a delayed basis under 
Sec. 230.415(a)(1)(vii) or asset-backed securities on a delayed basis 
under Sec. 230.415(a)(1)(x) that is required to be filed pursuant to 
paragraph (b) of this section shall be filed with the Commission no 
later than the second business day following the date it is first used 
after effectiveness in connection with a public offering or sales, or 
transmitted by a means reasonably calculated to result in filing with 
the Commission by that date.
    Instruction 2: Notwithstanding paragraphs (b)(1), (b)(2), (b)(4) and 
(b)(5) of this section, a form of prospectus sent or given in reliance 
on Rule 434(c) (Sec. 230.434(c)) with respect to securities registered 
on Form S-3 or Form F-3 (Sec. 239.13 or Sec. 239.33 of this chapter), 
other than an abbreviated term sheet filed pursuant to paragraph (b)(7) 
of this section, shall be filed with the Commission on or prior to the 
date on which a confirmation is sent or given.

    (c) If a form of prospectus, other than one filed pursuant to 
paragraph (b)(1) or (b)(4) of this Rule, consists of a prospectus 
supplement attached to a form of prospectus that (1) previously had been 
filed or (2) was not required to be filed pursuant to paragraph (b) 
because it did not contain substantive changes from a prospectus that 
previously was filed, only the prospectus supplement need be filed under 
paragraph (b) of this rule, provided that the first page of each 
prospectus supplement includes a cross reference to the date(s) of the 
related prospectus and any prospectus supplements thereto that together 
constitute the prospectus required to be delivered by Section 5(b) of 
the Securities Act (15 U.S.C. 77e(b)) with respect to the securities 
currently being offered or sold. The cross reference may be set forth in 
longhand, provided it is legible.

    Note: Any prospectus supplement being filed separately that is 
smaller than a prospectus page should be attached to an 8\1/2\'' x 11'' 
sheet of paper.

    (d) Every prospectus consisting of a radio or television broadcast 
shall be reduced to writing. Five copies of every such prospectus shall 
be filed with the Commission in accordance with the requirements of this 
section.
    (e) Each copy of a form of prospectus filed under this rule shall 
contain in the upper right corner of the cover page the paragraph of 
this rule, including the subparagraph if applicable, under which the 
filing is made, and the file number of the registration statement to 
which the prospectus relates. The information required by this paragraph 
may be set forth in longhand, provided it is legible.
    (f) This rule shall not apply with respect to prospectuses of an 
investment company registered under the Investment Company Act of 1940 
or a business development company.

[14 FR 202, Jan. 14, 1949, as amended at 16 FR 8736, Aug. 29, 1951; 19 
FR 400, Jan. 22, 1954; 19 FR 6728, Oct. 20, 1954; 21 FR 1046, Feb. 15, 
1956; 52 FR 21260, June 5, 1987; 53 FR 3878, Feb. 10, 1988; 55 FR 23923, 
June 13, 1990; 56 FR 30054, July 1, 1991; 57 FR 48975, Oct. 29, 1992; 60 
FR 26615, May 17, 1995; 62 FR 39763, July 24, 1997]



Sec. 230.425  Filing of certain prospectuses and communications under Sec. 230.135 in connection with business combination transactions.

    (a) All written communications made in reliance on Sec. 230.165 are 
prospectuses that must be filed with the Commission under this section 
on the date of first use.
    (b) All written communications that contain no more information than 
that specified in Sec. 230.135 must be filed with the Commission on or 
before the date of first use except as provided in paragraph (d)(1) of 
this section. A communication limited to the information specified in 
Sec. 230.135 will not be deemed an offer in accordance with Sec. 230.135 
even though it is filed under this section.
    (c) Each prospectus or Sec. 230.135 communication filed under this 
section must identify the filer, the company that is the subject of the 
offering and the Commission file number for the related registration 
statement or, if that file number is unknown, the subject company's 
Exchange Act or Investment Company Act file number, in the upper right 
corner of the cover page.
    (d) Notwithstanding paragraph (a) of this section, the following 
need not be filed under this section:

[[Page 564]]

    (1) Any written communication that is limited to the information 
specified in Sec. 230.135 and does not contain new or different 
information from that which was previously publicly disclosed and filed 
under this section.
    (2) Any research report used in reliance on Sec. 230.137, 
Sec. 230.138 and Sec. 230.139;
    (3) Any confirmation described in Sec. 240.10b-10 of this chapter; 
and
    (4) Any prospectus filed under Sec. 230.424.

    Notes to Sec. 230.425: 1. File five copies of the prospectus or 
Sec. 230.135 communication if paper filing is permitted.
    2. No filing is required under Sec. 240.13e-4(c), Sec. 240.14a-
12(b), Sec. 240.14d-2(b), or Sec. 240.14d-9(a), if the communication is 
filed under this section. Communications filed under this section also 
are deemed filed under the other applicable sections.

[64 FR 61450, Nov. 10, 1999]



Sec. 230.427  Contents of prospectus used after nine months.

    There may be omitted from any prospectus used more than 9 months 
after the effective date of the registration statement any information 
previously required to be contained in the prospectus insofar as later 
information covering the same subjects, including the latest available 
certified financial statement, as of a date not more than 16 months 
prior to the use of the prospectus is contained therein.

(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. 
308(a)(2), 90 Stat. 57; secs. 3(b), 12, 13, 14, 15(d), 23(a), 48 Stat. 
882, 892, 894, 895, 901; secs. 203(a), 1, 3, 8, 49 Stat. 704, 1375, 
1377, 1379; sec. 202, 68 Stat. 686; secs. 4, 5, 6(d), 78 Stat. 569, 570-
574; secs. 1, 2, 3, 82 Stat. 454, 455; secs. 28(c), 1, 2, 3, 4, 5, 84 
Stat. 1435, 1497; sec. 105(b), 88 Stat. 1503; secs. 8, 9, 10, 89 Stat. 
117, 118, 119; sec. 308(b), 90 Stat 57; sec. 18, 89 Stat. 155; secs. 
202, 203, 204, 91 Stat. 1494, 1498-1500; sec. 20(a), 49 Stat. 833; sec. 
319, 53 Stat. 1173; sec. 38, 54 Stat. 841; 15 U.S.C. 77f, 77g, 77h, 77j, 
77s(a), 78c(b), 78l, 78m, 78n, 78o(d), 78w(a), 79t(a), 77sss(a), 80a-37)

[47 FR 11440, Mar. 16, 1982]



Sec. 230.428  Documents constituting a section 10(a) prospectus for Form S-8 registration statement; requirements relating to offerings of securities registered 
          on Form S-8.

    (a)(1) Where securities are to be offered pursuant to a registration 
statement on Form S-8 (Sec. 239.16b of this chapter), the following, 
taken together, shall constitute a prospectus that meets the 
requirements of section 10(a) of the Act:
    (i) The document(s), or portions thereof as permitted by paragraph 
(b)(1)(ii) of this section, containing the employee benefit plan 
information required by Item 1 of the Form;
    (ii) The statement of availability of registrant information, 
employee benefit plan annual reports and other information required by 
Item 2; and
    (iii) The documents containing registrant information and employee 
benefit plan annual reports that are incorporated by reference in the 
registration statement pursuant to Item 3.
    (2) The registrant shall maintain a file of the documents that, 
pursuant to paragraph (a) of this section, at any time are part of the 
section 10(a) prospectus, except for documents required to be 
incorporated by reference in the registration statement pursuant to Item 
3 of Form S-8. Each such document shall be included in the file until 
five years after it is last used as part of the Section 10(a) prospectus 
to offer or sell securities pursuant to the plan. With respect to 
documents containing specifically designated portions that constitute 
part of the section 10(a) prospectus pursuant to paragraph (b)(1)(ii) of 
this section, the entire document shall be maintained in the file. Upon 
request, the registrant shall furnish to the Commission or its staff a 
copy of any or all of the documents included in the file.
    (b) Where securities are offered pursuant to a registration 
statement on Form S-8:
    (1)(i) The registrant shall deliver or cause to be delivered, to 
each employee who is eligible to participate (or selected by the 
registrant to participate, in the case of a stock option or other plan 
with selective participation) in an employee benefit plan to which the 
registration statement relates, the information required by Part I of 
Form S-8. The information shall be in written form and shall be updated 
in writing in a timely manner to reflect any material changes during any 
period in which offers or sales are being made.

[[Page 565]]

When updating information is furnished, documents previously furnished 
need not be re-delivered, but the registrant shall furnish promptly 
without charge to each employee, upon written or oral request, a copy of 
all documents containing the plan information required by Part I that 
then constitute part of the section 10(a) prospectus.
    (ii) The registrant may designate an entire document or only 
portions of a document as constituting part of the section 10(a) 
prospectus. If the registrant designates only portions of a document as 
constituting part of the prospectus, rather than the entire document, a 
statement clearly identifying such portions, for example, by reference 
to section headings, section numbers, paragraphs or page numbers within 
the document must be included in a conspicuous place in the forepart of 
the document, or such portions must be specifically designated 
throughout the text of the document. Registrants shall not designate 
only words or sentences within a paragraph as part of a prospectus. 
Unless the portions of a document constituting part of the section 10(a) 
prospectus are clearly identified, the entire document shall constitute 
part of the prospectus.
    (iii) The registrant shall date any document constituting part of 
the section 10(a) prospectus or containing portions constituting part of 
the prospectus and shall include the following printed, stamped or typed 
legend in a conspicuous place in the forepart of the document, 
substituting the bracketed language as appropriate: ``This document 
[Specifically designated portions of this document] constitutes 
[constitute] part of a prospectus covering securities that have been 
registered under the Securities Act of 1933.''
    (iv) The registrant shall revise the document(s) containing the plan 
information sent or given to newly eligible participants pursuant to 
paragraph (b)(1)(i) of this section, if documents containing updating 
information would obscure the readability of the plan information.
    (2) The registrant shall deliver or cause to be delivered with the 
document(s) containing the information required by Part I of Form S-8, 
to each employee to whom such information is sent or given, a copy of 
any one of the following:
    (i) The registrant's annual report to security holders containing 
the information required by Rule 14a-3(b) (Sec. 240.14a-3(b) of this 
chapter) under the Securities Exchange Act of 1934 (Exchange Act) for 
its latest fiscal year;
    (ii) The registrant's annual report on Form 10-K and Form 10-KSB 
(Sec. 249.310 of this chapter), U5S (Sec. 259.5s of this chapter), 20-F 
(Sec. 249.220f of this chapter) or, in the case of registrants described 
in General Instruction A.(2) of Form 40-F, 40-F (Sec. 249.240f of this 
chapter) for its latest fiscal year;
    (iii) The latest prospectus filed pursuant to Rule 424(b) 
(Sec. 230.424(b) of this chapter) under the Act that contains audited 
financial statements for the registrant's latest fiscal year, Provided 
that the financial statements are not incorporated by reference from 
another filing, and Provided further that such prospectus contains 
substantially the information required by Rule 14a-3(b) or the 
registration statement was on Form SB-2 (Sec. 239.28 of this chapter) or 
F-1 (Sec. 239.31 of this chapter); or
    (iv) The registrant's effective Exchange Act registration statement 
on Form 10 and Form 10-SB (Sec. 249.210 of this chapter), 20-F or, in 
the case of registrants described in General Instruction A.(2) of Form 
40-F, 40-F containing audited financial statements for the registrant's 
latest fiscal year.

Instructions. 1. If a registrant has previously sent or given an 
employee a copy of any document specified in clauses (i)-(iv) of 
paragraph (b)(2) for the latest fiscal year, it need not be re-
delivered, but the registrant shall furnish promptly, without charge, a 
copy of such document upon written or oral request of the employee.
    2. If the latest fiscal year of the registrant has ended within 120 
days (or 190 days with respect to foreign private issuers) prior to the 
delivery of the documents containing the information specified by Part I 
of Form S-8, the registrant may deliver a document containing financial 
statements for the fiscal year preceding the last fiscal year, Provided 
that within the 120 or 190 day period a document containing financial 
statements for the latest fiscal year is furnished to each employee.

    (3) The registrant shall deliver or cause to be delivered promptly, 
without charge, to each employee to whom

[[Page 566]]

information is required to be delivered, upon written or oral request, a 
copy of the information that has been incorporated by reference pursuant 
to Item 3 of Form S-8 (not including exhibits to the information that is 
incorporated by reference unless such exhibits are specifically 
incorporated by reference into the information that the registration 
statement incorporates).
    (4) Where interests in a plan are registered, the registrant shall 
deliver or cause to be delivered promptly, without charge, to each 
employee to whom information is required to be delivered, upon written 
or oral request, a copy of the then latest annual report of the plan 
filed pursuant to Section 15(d) of the Exchange Act, whether on Form 11-
K (Sec. 249.311 of this chapter) or included as part of the registrant's 
annual report on Form 10-K and Form 10-KSB.
    (5) The registrant shall deliver or cause to be delivered to all 
employees participating in a stock option plan or plan fund that invests 
in registrant securities (and other plan participants who request such 
information orally or in writing) who do not otherwise receive such 
material, copies of all reports, proxy statements and other 
communications distributed to its security holders generally, provided 
that such material is sent or delivered no later than the time it is 
sent to security holders.
    (c) As used in this Rule, the term employee benefit plan is defined 
in Rule 405 of Regulation C (Sec. 230.405 of this chapter) and the term 
employee is defined in General Instruction A.1 of Form S-8.

[55 FR 23923, June 13, 1990, as amended at 57 FR 10614, Mar. 27, 1992]



Sec. 230.429  Prospectus relating to several registration statements.

    (a) Where a registrant has filed two or more registration 
statements, it may file a single prospectus in the latest registration 
statement in order to satisfy the requirements of the Act and the rules 
and regulations thereunder for that offering and any other offering(s) 
registered on the earlier registration statement(s). The combined 
prospectus in the latest registration statement must include all of the 
information that currently would be required in a prospectus relating to 
all offering(s) that it covers. The combined prospectus may be filed as 
part of the initial filing of the latest registration statement, in a 
pre-effective amendment to it or in a post-effective amendment to it.
    (b) Where a registrant relies on paragraph (a) of this section, the 
registration statement containing the combined prospectus shall act, 
upon effectiveness, as a post-effective amendment to any earlier 
registration statement whose prospectus has been combined in the latest 
registration statement. The registrant must identify any earlier 
registration statement to which the combined prospectus relates by 
setting forth the Commission file number at the bottom of the facing 
page of the latest registration statement.

[66 FR 8896, Feb. 5, 2001]



Sec. 230.430  Prospectus for use prior to effective date.

    (a) A form of prospectus filed as a part of the registration 
statement shall be deemed to meet the requirements of section 10 of the 
Act for the purpose of section 5(b)(1) thereof prior to the effective 
date of the registration statement, provided such form of prospectus 
contains substantially the information required by the Act and the rules 
and regulations thereunder to be included in a prospectus meeting the 
requirements of section 10(a) of the Act for the securities being 
registered, or contains substantially that information except for the 
omission of information with respect to the offering price, underwriting 
discounts or commissions, discounts or commissions to dealers, amount of 
proceeds, conversion rates, call prices, or other matters dependent upon 
the offering price. Every such form of prospectus shall be deemed to 
have been filed as a part of the registration statement for the purpose 
of section 7 of the Act.
    (b) A form of prospectus filed as part of a registration statement 
on Form N-1A (Sec. 239.15A and Sec. 274.11A of this chapter), Form N-2 
(Sec. 239.14 and Sec. 274.11a-1 of this chapter), Form N-3 (Sec. 239.17a 
and Sec. 274.11b of this chapter), Form N-4 (Sec. 239.17b and 
Sec. 274.11c of this chapter), or Form N-6 (Sec. 239.17c and 
Sec. 274.11d of this chapter) shall be deemed to meet the requirements 
of Section 10 of the

[[Page 567]]

Act (15 U.S.C. 77j) for the purpose of Section 5(b)(1) thereof (15 
U.S.C. 77e(b)(1)) prior to the effective date of the registration 
statement, provided that:
    (1) Such form of prospectus meets the requirements of paragraph (a) 
of this section; and
    (2) Such registration statement contains a form of Statement of 
Additional Information that is made available to persons receiving such 
prospectus upon written or oral request, and without charge, unless the 
form of prospectus contains the information otherwise required to be 
disclosed in the form of Statement of Additional Information. Every such 
form of prospectus shall be deemed to have been filed as part of the 
registration statement for the purpose of section 7 of the Act.

(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. 
308(a)(2), 90 Stat. 57; secs. 3(b), 12, 13, 14, 15(d), 23(a), 48 Stat. 
882, 892, 894, 895, 901; secs. 203(a), 1, 3, 8, 49 Stat. 704, 1375, 
1377, 1379; sec. 202, 68 Stat. 686; secs. 4, 5, 6(d), 78 Stat. 569, 570-
574; secs. 1, 2, 3, 82 Stat. 454, 455; secs. 28(c), 1, 2, 3, 4, 5, 84 
Stat. 1435, 1497; sec. 105(b), 88 Stat. 1503; secs. 8, 9, 10, 89 Stat. 
117, 118, 119; sec. 308(b), 90 Stat 57; sec. 18, 89 Stat. 155; secs. 
202, 203, 204, 91 Stat. 1494, 1498-1500; sec. 20(a), 49 Stat. 833; sec. 
319, 53 Stat. 1173; sec. 38, 54 Stat. 841; 15 U.S.C. 77f, 77g, 77h, 77j, 
77s(a), 78c(b), 78l, 78m, 78n, 78o(d), 78w(a), 79t(a), 77sss(a), 80a-37)

[47 FR 11440, Mar. 16, 1982, as amended at 57 FR 56834, Dec. 1, 1992; 67 
FR 19868, Apr. 23, 2002]



Sec. 230.430A  Prospectus in a registration statement at the time of effectiveness.

    (a) The form of prospectus filed as part of a registration statement 
that is declared effective may omit information with respect to the 
public offering price, underwriting syndicate (including any material 
relationships between the registrant and underwriters not named 
therein), underwriting discounts or commissions, discounts or 
commissions to dealers, amount of proceeds, conversion rates, call 
prices and other items dependent upon the offering price, delivery 
dates, and terms of the securities dependent upon the offering date; and 
such form of prospectus need not contain such information in order for 
the registration statement to meet the requirements of Section 7 of the 
Securities Act (15 U.S.C. 77g) for the purposes of Section 5 thereof (15 
U.S.C. 77e), Provided, That:
    (1) The securities to be registered are offered for cash;
    (2) The registrant furnishes the undertakings required by Item 
512(i) of Regulation S-K (Sec. 229.512(i) of this chapter); and
    (3) The information ommitted in reliance upon paragraph (a) from the 
form of prospectus filed as part of a registration statement that is 
declared effective is contained in a form of prospectus filed with the 
Commission pursuant to Rule 424(b) or Rule 497(h) under the Securities 
Act (Secs. 230.424(b) or 230.497(h) of this chapter); except that if 
such form of prospectus is not so filed by the later of fifteen business 
days after the effective date of the registration statement or fifteen 
business days after the effectiveness of a post-effective amendment 
thereto that contains a form of prospectus, or transmitted by a means 
reasonably calculated to result in filing with the Commission by that 
date, the information omitted in reliance upon paragraph (a) must be 
contained in an effective post-effective amendment to the registration 
statement.

Instruction to Paragraph (a): A decrease in the volume of securities 
offered or change in the bona fide estimate of the maximum offering 
price range from that indicated in the form of prospectus filed as part 
of a registration statement that is declared effective may be disclosed 
in the form of prospectus filed with the Commission pursuant to 
Sec. 230.424(b) or Sec. 230.497(h) under the Securities Act so long as 
the decrease in the volume or change in the price range would not 
materially change the disclosure contained in the registration statement 
at effectiveness. Notwithstanding the foregoing, any increase or 
decrease in volume (if the total dollar value of securities offered 
would not exceed that which was registered) and any deviation from the 
low or high end of the range may be reflected in the form of prospectus 
filed with the Commission pursuant to Rule 424(b)(1) 
(Sec. 230.424(b)(1)) or Rule 497(h) (Sec. 230.497(h)) if, in the 
aggregate, the changes in volume and price represent no more than a 20% 
change in the maximum aggregate offering price set forth in the 
``Calculation of Registration Fee'' table in the effective registration 
statement.


[[Page 568]]


    (b) The information omitted in reliance upon paragraph (a) from the 
form of prospectus filed as part of an effective registration statement, 
and contained in the form of prospectus filed with the Commission 
pursuant to Rule 424(b) or Rule 497(h) under the Securities Act 
(Secs. 230.424(b) or 230.497(h) of this chapter), shall be deemed to be 
a part of the registration statement as of the time it was declared 
effective.
    (c) When used prior to determination of the offering price of the 
securities, a form of prospectus relating to the securities offered 
pursuant to a registration statement that is declared effective with 
information omitted from the form of prospectus filed as part of such 
effective registration statement in reliance upon this Rule 430A need 
not contain information omitted pursuant to paragraph (a), in order to 
meet the requirements of Section 10 of the Securities Act (15 U.S.C. 
77j) for the purpose of section 5(b)(1) (15 U.S.C. 77e(b)(1)) thereof. 
This provision shall not limit the information required to be contained 
in a form of prospectus meeting the requirements of section 10(a) of the 
Act for the purposes of section 5(b)(2) thereof or exception (a) of 
Section 2(10) (15 U.S.C. 77b(10)) thereof.
    (d) This rule shall not apply to registration statements for 
securities to be offered by competitive bidding.
    (e) In the case of a registration statement filed on Form N-1A 
(Sec. 239.15A and Sec. 274.11A of this chapter), Form N-2 (Sec. 239.14 
and Sec. 274.11a-1 of this chapter), Form N-3 (Sec. 239.17a and 
Sec. 274.11b of this chapter), Form N-4 (Sec. 239.17b and Sec. 274.11c 
of this chapter), or Form N-6 (Sec. 239.17c and Sec. 274.11d of this 
chapter), the references to ``form of prospectus'' in paragraphs (a) and 
(b) of this section and the accompanying Note shall be deemed also to 
refer to the form of Statement of Additional Information filed as part 
of such a registration statement.

    Note: If information is omitted in reliance upon paragraph (a) from 
the form of prospectus filed as part of an effective registration 
statement, or effective post-effective amendment thereto, the registrant 
must ascertain promptly whether a form of prospectus transmitted for 
filing under Rule 424(b) of Rule 497(h) under the Securities Act 
actually was received for filing by the Commission and, in the event 
that it was not, promptly file such prospectus.

[52 FR 21261, June 5, 1987, as amended at 56 FR 48103, Sept. 24, 1991; 
57 FR 48976, Oct. 29, 1992; 57 FR 56834, Dec. 1, 1992; 60 FR 26616, May 
17, 1995; 67 FR 19869, Apr. 23, 2002]



Sec. 230.431  Summary prospectuses.

    (a) A summary prospectus prepared and filed (except a summary 
prospectus filed by an open-end management investment company registered 
under the Investment Company Act of 1940) as part of a registration 
statement in accordance with this section shall be deemed to be a 
prospectus permitted under section 10(b) of the Act (15 U.S.C. 77j(b)) 
for the purposes of section 5(b)(1) of the Act (15 U.S.C. 77e(b)(1)) if 
the form used for registration of the securities to be offered provides 
for the use of a summary prospectus and the following conditions are 
met:
    (1)(i) The registrant is organized under the laws of the United 
States or any State or Territory or the District of Columbia and has its 
principal business operations in the United States or its territories; 
or
    (ii) The registrant is a foreign private issuer eligible to use Form 
F-2 (Sec. 239.32 of this chapter);
    (2) The registrant has a class of securities registered pursuant to 
section 12(b) of the Securities Exchange Act of 1934 or has a class of 
equity securities registered pursuant to section 12(g) of that Act or is 
required to file reports pursuant to section 15(d) of that Act;
    (3) The registrant: (i) Has been subject to the requirements of 
section 12 or 15(d) of the Securities Exchange Act of 1934 and has filed 
all the material required to be filed pursuant to sections 13, 14 or 
15(d) of that Act for a period of at least thirty-six calendar months 
immediately preceding the filing of the registration statement; and (ii) 
has filed in a timely manner all reports required to be filed during the 
twelve calendar months and any portion of a month immediately preceding 
the filing of the registration statement and, if the registrant has used 
(during the twelve calendar months and any portion of a month 
immediately preceding the filing of the registration statement) Rule 
12b-25(b) under the Securities Exchange Act of 1934 (Sec. 240.12b-25 of

[[Page 569]]

this chapter) with respect to a report or portion of a report, that 
report or portion thereof has actually been filed within the time period 
prescribed by that Rule; and
    (4) Neither the registrant nor any of its consolidated or 
unconsolidated subsidiaries has, since the end of its last fiscal year 
for which certified financial statements of the registrant and its 
consolidated subsidiaries were included in a report filed pursuant to 
section 13(a) or 15(d) of the Securities Exchange Act of 1934: (i) 
failed to pay any dividend or sinking fund installment on preferred 
stock; or (ii) defaulted on any installment or installments on 
indebtedness for borrowed money, or on any rental on one or more long 
term leases, which defaults in the aggregate are material to the 
financial position of the registrant and its consolidated and 
unconsolidated subsidiaries, taken as a whole.
    (b) A summary prospectus shall contain the information specified in 
the instructions as to summary prospectuses in the form used for 
registration of the securities to be offered. Such prospectus may 
include any other information the substance of which is contained in the 
registration statement except as otherwise specifically provided in the 
instructions as to summary prospectuses in the form used for 
registration. It shall not include any information the substance of 
which is not contained in the registration statement except that a 
summary prospectus may contain any information specified in Rule 134(a) 
(Sec. 230.134(a)). No reference need be made to inapplicable terms and 
negative answers to any item of the form may be omitted.
    (c) All information included in a summary prospectus, other than the 
statement required by paragraph (e) of this section, may be expressed in 
such condensed or summarized form as may be appropriate in the light of 
the circumstances under which the prospectus is to be used. The 
information need not follow the numerical sequence of the items of the 
form used for registration. Every summary prospectus shall be dated 
approximately as of the date of its first use.
    (d) When used prior to the effective date of the registration 
statement, a summary prospectus shall be captioned a ``Preliminary 
Summary Prospectus'' and shall comply with the applicable requirements 
relating to a preliminary prospectus.
    (e) A statement to the following effect shall be prominently set 
forth in conspicuous print at the beginning or at the end of every 
summary prospectus:

``Copies of a more complete prospectus may be obtained from'' (Insert 
name(s), address(es) and telephone number(s)).


Copies of a summary prospectus filed with the Commission pursuant to 
paragraph (g) of this section may omit the names of persons from whom 
the complete prospectus may be obtained.
    (f) Any summary prospectus published in a newspaper, magazine or 
other periodical need only be set in type at least as large as 7 point 
modern type. Nothing in this rule shall prevent the use of reprints of a 
summary prospectus published in a newspaper, magazine, or other 
periodical, if such reprints are clearly legible.
    (g) Eight copies of every proposed summary prospectus shall be filed 
as a part of the registration statement, or as an amendment thereto, at 
least 5 days (exclusive of Saturdays, Sundays and holidays) prior to the 
use thereof, or prior to the release for publication by any newspaper, 
magazine or other person, whichever is earlier. The Commission may, 
however, in its discretion, authorize such use or publication prior to 
the expiration of the 5-day period upon a written request for such 
authorization. Within 7 days after the

[[Page 570]]

first use or publication thereof, 5 additional copies shall be filed in 
the exact form in which it was used or published.

(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. 
308(a)(2), 90 Stat. 57; secs. 3(b), 12, 13, 14, 15(d), 23(a), 48 Stat. 
882, 892, 894, 895, 901; secs. 203(a), 1, 3, 8, 49 Stat. 704, 1375, 
1377, 1379; sec. 202, 68 Stat. 686; secs. 4, 5, 6(d), 78 Stat. 569, 570-
574; secs. 1, 2, 3, 82 Stat. 454, 455; secs. 28(c), 1, 2, 3, 4, 5, 84 
Stat. 1435, 1497; sec. 105(b), 88 Stat. 1503; secs. 8, 9, 10, 89 Stat. 
117, 118, 119; sec. 308(b), 90 Stat 57; sec. 18, 89 Stat. 155; secs. 
202, 203, 204, 91 Stat. 1494, 1498-1500; sec. 20(a), 49 Stat. 833; sec. 
319, 53 Stat. 1173; sec. 38, 54 Stat. 841; 15 U.S.C. 77f, 77g, 77h, 77j, 
77s(a), 78c(b), 78l, 78m, 78n, 78o(d), 78w(a), 79t(a), 77sss(a), 80a-37; 
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. 
565-568, 569, 570-574; 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, 1499, 1500; secs. 8 30, 31(c), 
38(a), 54 Stat. 803, 836, 838, 841; 74 Stat. 201; 84 Stat. 1415; 15 
U.S.C. 77f, 77g, 77h, 77j, 77s(a), 78l, 78m, 78o(d), 78w(a), 80a-8, 80a-
29, 80a-30(c), 80a-37(a))

[47 FR 11440, Mar. 16, 1982, as amended at 47 FR 54770, Dec. 6, 1982; 63 
FR 13984, Mar. 23, 1998]



Sec. 230.432  Additional information required to be included in prospectuses relating to tender offers.

    Notwithstanding the provisions of any form for the registration of 
securities under the Act, any prospectus relating to securities to be 
offered in connection with a tender offer for, or a request or 
invitation for tenders of, securities subject to either Sec. 240.13e-4 
or section 14(d) of the Securities Exchange Act of 1934 (15 U.S.C. 
78n(d)) must include the information required by Sec. 240.13e-4(d)(1) or 
Sec. 240.14d-6(d)(1) of this chapter, as applicable, in all tender 
offers, requests or invitations that are published, sent or given to 
security holders.

[64 FR 61451, Nov. 10, 1999]



Sec. 230.434  Prospectus delivery requirements in firm commitment underwritten offerings of securities for cash.

    (a) Where securities are offered for cash in a firm commitment 
underwritten offering or investment grade debt securities are offered 
for cash on an agency basis under a medium term note program, and such 
securities are neither asset-backed securities nor structured 
securities, and the conditions described in paragraph (b) or paragraph 
(c) of this section are satisfied, then:
    (1) The prospectus subject to completion and the term sheet 
described in paragraph (b) of this section, taken together, and the 
prospectus subject to completion and the abbreviated term sheet 
described in paragraph (c) of this section, taken together, shall 
constitute prospectuses that meet the requirements of section 10(a) of 
the Act (15 U.S.C. 77j(a)) for purposes of section 5(b)(2) of the Act 
(15 U.S.C. 77e(b)(2)) and section 2(10(a) of the Act (15 U.S.C. 
77b(10)(a)); and
    (2) The section 10(a) prospectus described in paragraph (a)(1) of 
this section shall have:
    (i) Been sent or given prior to or at the same time that a 
confirmation is sent or given for purposes of section 2(10)(a) of the 
Act; and
    (ii) Accompanied or preceded the transmission of the securities for 
purpose of sale or for delivery after sale for purposes of Section 
5(b)(2) of the Act.
    (b) With respect to offerings of securities that are registered on a 
form other than Form S-3 or Form F-3 (Sec. 239.13 or Sec. 239.33 of this 
chapter), and with respect to offerings of securities by only those 
investment companies registered under the Investment Company Act of 1940 
(15 U.S.C. 80a-1 et seq.) that register their securities on Form N-2 
(Sec. 274.11a-1 of this chapter) or Form S-6 (Sec. 239.16 of this 
chapter), the following conditions are satisfied:
    (1) A prospectus subject to completion and any term sheet described 
in paragraph (b)(3) of this section, together or separately, are sent or 
given prior to or at the same time with the confirmation;

[[Page 571]]

    (2) Such prospectus subject to completion and term sheet, together, 
are not materially different from the prospectus in the registration 
statement at the time of its effectiveness or an effective post-
effective amendment thereto (including, in both, instances, information 
deemed to be a part of the registration statement at the time of 
effectiveness pursuant to Rule 430A(b) (Sec. 230.430A(b)); and
    (3) A term sheet under this paragraph (b) shall set forth all 
information material to investors with respect to the offering that is 
not disclosed in the prospectus subject to completion or the 
confirmation.
    (c) With respect to offerings of securities registered on Form S-3 
or Form F-3 (Sec. 239.13 or Sec. 239.33 of this chapter), the following 
conditions are satisfied.
    (1) A prospectus subject to completion and the abbreviated term 
sheet described in paragraph (c)(3) of this section, together or 
separately, are sent or given prior to or at the same time with the 
confirmation;
    (2) A form of prospectus that:
    (i) Discloses information previously omitted from the prospectus 
filed as part of an effective registration statement in reliance upon 
Rule 430A (Sec. 230.430A), to the extend not set forth in the 
abbreviated term sheet (as described in paragraph (c)(3) of this 
section), shall be filed pursuant to Rule 424(b) (Sec. 230.424(b)) on or 
prior to the date on which a confirmation is sent or given; or
    (ii) Discloses the public offering price, description of securities, 
to the extent not set forth in the abbreviated term sheet (as described 
in paragraph (c)(3) of this section), and specific method of 
distribution or similar matters shall be filed pursuant to Rule 424(b) 
(Sec. 230.424(b)) on or prior to the date on which a conformation is 
sent or given; and
    (3) The abbreviated term sheet under this paragraph (c) shall set 
forth, if not previously disclosed in the prospectus subject to 
completion or the registrant's Exchange Act filings incorporated by 
reference into the prospectus:
    (i) The description of securities required by Item 202 of 
Regulations S-K (Sec. 229.202 of this chapter) or by Items 9, 10 and 12 
of Form 20-F (Sec. 249.220f of this chapter) as applicable, or a fair 
and accurate summary thereof; and
    (ii) All material changes to the registrant's affairs required to be 
disclosed pursuant to ``Item 11 of Form S-3 or Item 5 of Form F-3 
(Sec. 239.13 or Sec. 239.33 of this chapter)'', as applicable.
    (d) Except in the case of offerings pursuant to Rule 415(a)(1)(x), 
(Sec. 230.415(a)(1)(x), the information contained in any term sheet or 
abbreviated term sheet described under this section shall be deemed to 
be a part of the registration statement as of the time such registration 
statement was declared effective. In the case of offerings pursuant to 
Rule 415(a)(1)(x) (Sec. 230.415(a)(1)(x)), the information contained in 
any term sheet or abbreviated term sheet described under this section 
shall be deemed to be a part of the registration statement as of the 
time such information is filed with the Commission.

Instruction: With respect to the obligation to file any form of 
prospectus, term sheet, or abbreviated term sheet used in reliance on 
this section, see Rule 424(b) (Sec. 230.424(b)) or Rule 497(h) 
(Sec. 230.497(h)).

    (e) Any term sheet or abbreviated term sheet described under this 
section shall, in the top center of the cover page thereof, state that 
such document is a supplement to a prospectus and identify that 
prospectus by issuer name and date; clearly identify that such document 
is a term sheet or abbreviated term sheet used in reliance on Rule 434; 
set forth the approximate date of first use of such document; and 
clearly identify the documents that, when taken together, constitute the 
Section 10(a) prospectus.
    (f) For purposes of this section, asset-backed securities shall mean 
asset-backed securities as defined in General Instruction 1.B.5. of Form 
S-3 (Sec. 239.13 of this chapter).
    (g) For purposes of this section, prospectus subject to completion 
shall mean any prospectus that is either a preliminary prospectus used 
in reliance on Rule 430 (Sec. 230.430), a prospectus omitting 
information in reliance upon Rule 430A (Sec. 230.430A), or a prospectus 
omitting information that is not yet known concerning a delayed offering 
pursuant to Rule 415(a)(i)(x) (Sec. 230.415(a)(1)(x))

[[Page 572]]

that is contained in a registration statement at the time of 
effectiveness or as subsequently revised.
    (h) For purposes of this section, structured securities shall mean 
securities whose cash flow characteristics depend upon one or more 
indices or that have embedded forwards or options or securities where an 
investor's investment return and the issuer's payment obligations are 
contingent on, or highly sensitive to, changes in the value of 
underlying assets, indices, interest rates or cash flows.
    (i) For purposes of this section, investment grade securities shall 
mean investment grade securities as defined in General Instruction 
I.B.2. of Form S-3 or Form F-3 (Sec. 239.13 or Sec. 239.33 of this 
chapter).
    (j) For the purposes of this section, a firm commitment underwritten 
offering shall include a firm commitment underwritten offering of 
securities by a closed-end company or by a unit investment trust 
registered under the Investment Company Act of 1940.

[60 FR 26616, May 17, 1995, as amended at 64 FR 53909, Oct. 5, 1999]

                            written consents



Sec. 230.436  Consents required in special cases.

    (a) If any portion of the report or opinion of an expert or counsel 
is quoted or summarized as such in the registration statement or in a 
prospectus, the written consent of the expert or counsel shall be filed 
as an exhibit to the registration statement and shall expressly state 
that the expert or counsel consents to such quotation or summarization.
    (b) If it is stated that any information contained in the 
registration statement has been reviewed or passed upon by any persons 
and that such information is set forth in the registration statement 
upon the authority of or in reliance upon such persons as experts, the 
written consents of such persons shall be filed as exhibits to the 
registration statement.
    (c) Notwithstanding the provisions of paragraph (b) of this section, 
a report on unaudited interim financial information (as defined in 
paragraph (d) of this section) by an independent accountant who has 
conducted a review of such interim financial information shall not be 
considered a part of a registration statement prepared or certified by 
an accountant or a report prepared or certified by an accountant within 
the meaning of sections 7 and 11 of the Act.
    (d) The term report on unaudited interim financial information shall 
mean a report which consists of the following:
    (1) A statement that the review of interim financial information was 
made in accordance with established professional standards for such 
reviews;
    (2) An identification of the interim financial information reviewed;
    (3) A description of the procedures for a review of interim 
financial information;
    (4) A statement that a review of interim financial information is 
substantially less in scope than an examination in accordance with 
generally accepted auditing standards, the objective of which is an 
expression of opinion regarding the financial statements taken as a 
whole, and, accordingly, no such opinion is expressed; and
    (5) A statement about whether the accountant is aware of any 
material modifications that should be made to the accompanying financial 
information so that it conforms with generally accepted accounting 
principles.
    (e) Where a counsel is named as having acted for the underwriters or 
selling security holders, no consent will be required by reason of his 
being named as having acted in such capacity.
    (f) Where the opinion of one counsel relies upon the opinion of 
another counsel, the consent of the counsel whose prepared opinion is 
relied upon need not be furnished.
    (g)(1) Notwithstanding the provisions of paragraphs (a) and (b) of 
this section, the security rating assigned to a class of debt 
securities, a class of convertible debt securities, or a class of 
preferred stock by a nationally recognized statistical rating 
organization, or with respect to registration statements on Form F-9 
(Sec. 239.39 of this chapter) by any other rating organization specified 
in the Instruction to paragraph (a)(2) of General Instruction I of Form 
F-9, shall not be considered a part of the

[[Page 573]]

registration statement prepared or certified by a person within the 
meaning of sections 7 and 11 of the Act.
    (2) For the purpose of paragraph (g)(1) of this section, the term 
nationally recognized statistical rating organization shall have the 
same meaning as used in Rule 15c3-1(c)(2)(vi)(F) (17 CFR 240.15c3-1 
(c)(2)(vi)(F)).

(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. 
308(a)(2), 90 Stat. 57; secs. 3(b), 12, 13, 14, 15(d), 23(a), 48 Stat. 
882, 892, 894, 895, 901; secs. 203(a), 1, 3, 8, 49 Stat. 704, 1375, 
1377, 1379; sec. 202, 68 Stat. 686; secs. 4, 5, 6(d), 78 Stat. 569, 570-
574; secs. 1, 2, 3, 82 Stat. 454, 455; secs. 28(c), 1, 2, 3, 4, 5, 84 
Stat. 1435, 1497; sec. 105(b), 88 Stat. 1503; secs. 8, 9, 10, 89 Stat. 
117, 118, 119; sec. 308(b), 90 Stat 57; sec. 18, 89 Stat. 155; secs. 
202, 203, 204, 91 Stat. 1494, 1498-1500; sec. 20(a), 49 Stat. 833; sec. 
319, 53 Stat. 1173; sec. 38, 54 Stat. 841; 15 U.S.C. 77f, 77g, 77h, 77j, 
77s(a), 78c(b), 78l, 78m, 78n, 78o(d), 78w(a), 79t(a), 77sss(a), 80a-37)

[47 FR 11441, Mar. 16, 1982, as amended at 58 FR 62030, Nov. 23, 1993]



Sec. 230.437  Application to dispense with consent.

    An application to the Commission to dispense with any written 
consent of an expert pursuant to section 7 of the act shall be made by 
the registrant and shall be supported by an affidavit or affidavits 
establishing that the obtaining of such consent is impracticable or 
involves undue hardship on the registrant. Such application shall be 
filed and the consent of the Commission shall be obtained prior to the 
effective date of the registration statement.

[Reg. C, 12 FR 4074, June 24, 1947]



Sec. 230.437a  Written consents.

    (a) This section applies only to registrants that:
    (1) Are not a ``blank check company'' as defined in 
Sec. 230.419(a)(2); and
    (2) Are filing a registration statement containing financial 
statements in which Arthur Andersen LLP (or a foreign affiliate of 
Arthur Andersen LLP) had been acting as the independent public 
accountant.
    (b) Notwithstanding any other Commission rule or regulation, every 
registrant eligible to rely on this section may dispense with the 
requirement for the registrant to file the written consent of Arthur 
Andersen LLP (or a foreign affiliate of Arthur Andersen LLP) as required 
by Section 7 of the Act (15 U.S.C. 77g) where:
    (1) The registrant has not already obtained the written consent that 
would be required if not for this section;
    (2) The registrant is not able to obtain the written consent after 
reasonable efforts; and
    (3) The registrant discloses clearly any limitations on recovery by 
investors posed by the lack of consent.

[67 FR 13537, Mar. 22, 2002]



Sec. 230.438  Consents of persons about to become directors.

    If any person who has not signed the registration statement is named 
therein as about to become a director, the written consent of such 
person shall be filed with the registration statement. Any such consent, 
however, may be omitted if there is filed with the registration 
statement a statement by the registrant, supported by an affidavit or 
affidavits, setting forth the reasons for such omission and establishing 
that the obtaining of such consent is impracticable or involves undue 
hardship on the registrant.

[Reg. C, 12 FR 4074, June 24, 1947]



Sec. 230.439  Consent to use of material incorporated by reference.

    (a) If the Act or the rules and regulations of the Commission 
require the filing of a written consent to the use of any material in 
connection with the registration statement, such consent shall be filed 
as an exhibit to the registration statement even though the material is 
incorporated therein by reference. Where the filing of a written consent 
is required with respect to material incorporated in the registration 
statement by reference, which is to be filed subsequent to the effective 
date of the registration statement, such consent shall be filed as an 
amendment to the registration statement no later than the date on which 
such material is filed with the Commission, unless express consent to 
incorporation by reference is contained in the material to be 
incorporated by reference.
    (b) Notwithstanding paragraph (a) of this section, any required 
consent may

[[Page 574]]

be incorporated by reference into a registration statement filed 
pursuant to Rule 462(b) under the Act (Sec. 230.462(b)) from a 
previously filed registration statement relating to that offering, 
provided that, the consent contained in the previously filed 
registration statement expressly provides for such incorporation.

[47 FR 11441, Mar. 16, 1982, as amended at 60 FR 26615, 26617, May 17, 
1995]



Secs. 230.445-230.447  [Reserved]

                      filings; fees; effective date



Sec. 230.455  Place of filing.

    All registration statements and other papers filed with the 
Commission shall be filed at its principal office, except for statements 
of Form SB-1 (Sec. 239.9 of this chapter) and Form SB-2 (Sec. 239.10 of 
this chapter). Registration statements on Form SB-1 or SB-2 may be filed 
with the Commission either at its principal office or at the 
Commission's regional or district offices as specified in General 
Instruction A to each of those forms, except that registration 
statements and post-effective amendments thereto on such forms that are 
filed pursuant to Rule 462(b) (Sec. 230.462(b)) and Rule 110(d) 
(Sec. 230.110(d)) shall be filed at the Commission's principal office. 
Such material may be filed by delivery to the Commission through the 
mails or otherwise; provided, however, that only registration statements 
and post-effective amendments thereto filed pursuant to Rule 462(b) 
(Sec. 230.462(b)) and Rule 110(d) (Sec. 230.110(d)) may be filed by 
means of facsimile transmission.

[58 FR 65542, Dec. 15, 1993, as amended at 60 FR 26617, May 17, 1995]



Sec. 230.456  Date of filing.

    The date on which any papers are actually received by the Commission 
shall be the date of filing thereof, if all the requirements of the act 
and the rules with respect to such filing have been complied with and 
the required fee paid. The failure to pay an insignificant amount of the 
required fee at the time of filing, as the result of a bona fide error, 
shall not be deemed to affect the date of filing.

[16 FR 8737, Aug. 29, 1951]



Sec. 230.457  Computation of fee.

    (a) If a filing fee based on a bona fide estimate of the maximum 
offering price, computed in accordance with this rule where applicable, 
has been paid, no additional filing fee shall be required as a result of 
changes in the proposed offering price. If the number of shares or other 
units of securities, or the principal amount of debt securities to be 
offered is increased by an amendment filed prior to the effective date 
of the registration statement, an additional filing fee, computed on the 
basis of the offering price of the additional securities, shall be paid. 
There will be no refund once the statement is filed.
    (b) A required fee shall be reduced in an amount equal to any fee 
paid with respect to such transaction pursuant to sections 13(e) and 
14(g) of the Securities Exchange Act of 1934 or any applicable provision 
of this section; the fee requirements under sections 13(e) and 14(g) 
shall be reduced in an amount equal to the fee paid the Commission with 
respect to a transaction under this section. No part of a filing fee is 
refundable.
    (c) Where securities are to be offered at prices computed upon the 
basis of fluctuating market prices, the registration fee is to be 
calculated upon the basis of the price of securities of the same class, 
as follows: 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 filing the 
registration statement.
    (d) Where securities are to be offered at varying prices based upon 
fluctuating values of underlying assets, the registration fee is to be 
calculated upon the basis of the market value of such assets as of a 
specified date within fifteen days prior to the date of filing, in 
accordance with the method to be used in calculating the daily offering 
price.
    (e) Where securities are to be offered to existing security holders 
and the portion, if any, not taken by such security holders is to be 
reoffered to the general public, the registration fee is

[[Page 575]]

to be calculated upon the basis of the proposed offering price to such 
security holders or the proposed reoffering price to the general public, 
whichever is higher.
    (f) Where securities are to be offered in exchange for other 
securities (except where such exchange results from the exercise of a 
conversion privilege) or in a reclassification or recapitalization which 
involves the substitution of a security for another security, a merger, 
a consolidation, or a similar plan of acquisition, the registration fee 
is to be calculated as follows:
    (1) Upon the basis of the market value of the securities to be 
received by the registrant or canceled in the exchange or transaction as 
established by the price of securities of the same class, as determined 
in accordance with paragraph (c) of this section.
    (2) If there is no market for the securities to be received by the 
registrant or cancelled in the exchange or transaction, the book value 
of such securities computed as of the latest practicable date prior to 
the date of filing the registration statement 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) If any cash is to be received by the registrant in connection 
with the exchange or transaction, the amount thereof shall be added to 
the value of the securities to be received by the registrant or 
cancelled as computed in accordance with (e) (1) or (2) of this section. 
If any cash is to be paid by the registrant in connection with the 
exchange or transaction, the amount thereof shall be deducted from the 
value of the securities to be received by the registrant in exchange as 
computed in accordance with (e) (1) or (2) of this section.
    (4) Securities to be offered directly or indirectly for certificates 
of deposit shall be deemed to be offered for the securities represented 
by the certificates of deposit.
    (5) If a filing fee is paid under this paragraph for the 
registration of an offering and the registration statement also covers 
the resale of such securities, no additional filing fee is required to 
be paid for the resale transaction.
    (g) Where securities are to be offered pursuant to warrants or other 
rights to purchase such securities and the holders of such warrants or 
rights may be deemed to be underwriters, as defined in section 2(11) of 
the Act, with respect to the warrants or rights or the securities 
subject thereto, the registration fee is to be calculated upon the basis 
of the price at which the warrants or rights or securities subject 
thereto are to be offered to the public. If such offering price cannot 
be determined at the time of filing the registration statement, the 
registration fee is to be calculated upon the basis of the highest of 
the following: (1) the price at which the warrants or rights may be 
exercised, if known at the time of filing the registration statement; 
(2) the offering price of securities of the same class included in the 
registration statement; or (3) the price of securities of the same 
class, as determined in accordance with paragraph (c) of this section. 
If the fee is to be calculated upon the basis of the price at which the 
warrants or rights may be exercised and they are exercisable over a 
period of time at progressively higher prices, the fee shall be 
calculated on the basis of the highest price at which they may be 
exercised. If the warrants or rights are to be registered for 
distribution in the same registration statement as the securities to be 
offered pursuant thereto, no separate registration fee shall be 
required.
    (h)(1) Where securities are to be offered pursuant to an employee 
benefit plan, the aggregate offering price and the amount of the 
registration fee shall be computed with respect to the maximum number of 
the registrant's securities issuable under the plan that are covered by 
the registration statement. If the offering price is not known, the fee 
shall be computed upon the basis of the price of securities of the same 
class, as determined in accordance with paragraph (c) of this section. 
In the case of an employee stock option plan, the aggregate offering 
price and the fee shall be computed upon the basis of the price at which 
the options may be exercised, or, if such price is not known, upon the 
basis of the price of securities

[[Page 576]]

of the same class, as determined in accordance with paragraph (c) of 
this section. If there is no market for the securities to be offered, 
the book value of such securities computed as of the latest practicable 
date prior to the date of filing the registration statement shall be 
used.
    (2) If the registration statement registers securities of the 
registrant and also registers interests in the plan constituting 
separate securities, no separate fee is required with respect to the 
plan interests.
    (3) Where a registration statement includes securities to be offered 
pursuant to an employee benefit plan and covers the resale of the same 
securities, no additional filing fee shall be paid with respect to the 
securities to be offered for resale. A filing fee determined in 
accordance with paragraph (c) of this section shall be paid with respect 
to any additional securities to be offered for resale.
    (i) Where convertible securities and the securities into which 
conversion is offered are registered at the same time, the registration 
fee is to be calculated on the basis of the proposed offering price of 
the convertible securities alone, except that if any additional 
consideration is to be received in connection with the exercise of the 
conversion privilege the maximum amount which may be received shall be 
added to the proposed offering price of the convertible securities.
    (j) Where securities are sold prior to the registration thereof and 
are subsequently registered for the purpose of making an offer of 
rescission of such sale or sales, the registration fee is to be 
calculated on the basis of the amount at which such securities were 
sold, except that where securities repurchased pursuant to such offer of 
rescission are to be reoffered to the general public at a price in 
excess of such amount the registration fee is to be calculated on the 
basis of the proposed reoffering price.
    (k) Notwithstanding the other provisions of this rule, the proposed 
maximum aggregate offering price of Depositary Shares evidenced by 
American Depositary Receipts shall, only for the purpose of calculating 
the registration fee, be computed upon the basis of the maximum 
aggregate fees or charges to be imposed in connection with the issuance 
of such receipts.
    (l) Notwithstanding the other provisions of this rule, the proposed 
maximum aggregate offering price of any put or call option which is 
traded on an exchange and registered by such exchange or a facility 
thereof or which is traded over the counter shall, for the purpose of 
calculating the registration fee, be computed upon the basis of the 
maximum aggregate fees or charges to be imposed by such registrant in 
connection with the issuance of such option.
    (m) Notwithstanding the other provisions of this rule, where the 
securities to be registered include (1) any note, draft, bill of 
exchange, or bankers' acceptance which meets all the conditions of 
section 3(a)(3) hereof, and (2) any note, draft, bill of exchange or 
bankers' acceptance which has a maturity at the time of issuance of not 
exceeding nine months exclusive of days of grace, or any renewal thereof 
the maturity date of which is likewise limited, but which otherwise does 
not meet the conditions of section 3(a)(3), the registration fee shall 
be calculated by taking one-fiftieth of 1 per centum of the maximum 
principal amount of only those securities not meeting the conditions of 
section 3(a)(3).
    (n) Where the securities to be offered are guarantees of other 
securities which are being registered concurrently, no separate fee for 
the guarantees shall be payable.
    (o) Where an issuer registers an offering of securities, the 
registration fee may be calculated on the basis of the maximum aggregate 
offering price of all the securities listed in the ``Calculation of 
Registration Fee'' table. The number of shares or units of securities 
need not be included in the ``Calculation of Registration Fee'' Table. 
If the maximum aggregate offering price increases prior to the effective 
date of the registration statement, a pre-effective amendment must be 
filed to increase the maximum dollar value being registered and the 
additional filing fee shall be paid.
    (p) Where all or a portion of the securities offered under a 
registration

[[Page 577]]

statement remain unsold after the offering's completion or termination, 
or withdrawal of the registration statement, the aggregate total dollar 
amount of the filing fee associated with those unsold securities 
(whether computed under Sec. 230.457(a) or (o)) may be offset against 
the total filing fee due for a subsequent registration statement or 
registration statements. The subsequent registration statement(s) must 
be filed within five years of the initial filing date of the earlier 
registration statement, and must be filed by the same registrant 
(including a successor within the meaning of Sec. 230.405), a majority-
owned subsidiary of that registrant, or a parent that owns more than 50 
percent of the registrant's outstanding voting securities. A note should 
be added to the ``Calculation of Registration Fee'' table in the 
subsequent registration statement(s) stating the dollar amount of the 
filing fee previously paid that is offset against the currently due 
filing fee, the file number of the earlier registration statement from 
which the filing fee is offset, and the name of the registrant and the 
initial filing date of that earlier registration statement.
    (q) Notwithstanding any other provisions of this section, no filing 
fee is required for the registration of an indeterminate amount of 
securities to be offered solely for market-making purposes by an 
affiliate of the registrant.

[47 FR 11442, Mar. 16, 1982, as amended at 48 FR 12347, Mar. 24, 1983; 
51 FR 2475, Jan. 17, 1986; 55 FR 23924, June 13, 1990; 57 FR 48976, Oct. 
29, 1992; 59 FR 21650, Apr. 26, 1994; 60 FR 26617, May 17, 1995; 66 FR 
8896, Feb. 5, 2001]



Sec. 230.459  Calculation of effective date.

    Saturdays, Sundays and holidays shall be counted in computing the 
effective date of registration statements under section 8(a) of the act. 
In the case of statements which become effective on the twentieth day 
after filing, the twentieth day shall be deemed to begin at the 
expiration of nineteen periods of 24 hours each from 5:30 p.m. eastern 
standard time or eastern daylight-saving time, whichever is in effect at 
the principal office of the Commission on the date of filing.

[Reg. C, 12 FR 4075, June 24, 1947]



Sec. 230.460  Distribution of preliminary prospectus.

    (a) Pursuant to the statutory requirement that the Commission in 
ruling upon requests for acceleration of the effective date of a 
registration statement shall have due regard to the adequacy of the 
information respecting the issuer theretofore available to the public, 
the Commission may consider whether the persons making the offering have 
taken reasonable steps to make the information contained in the 
registration statement conveniently available to underwriters and 
dealers who it is reasonably anticipated will be invited to participate 
in the distribution of the security to be offered or sold.
    (b)(1) As a minimum, reasonable steps to make the information 
conveniently available would involve the distribution, to each 
underwriter and dealer who it is reasonably anticipated will be invited 
to participate in the distribution of the security, a reasonable time in 
advance of the anticipated effective date of the registration statement, 
of as many copies of the proposed form of preliminary prospectus 
permitted by Rule 430 (Sec. 230.430) as appears to be reasonable to 
secure adequate distribution of the preliminary prospectus.
    (2) In the case of a registration statement filed by a closed-end 
investment company on Form N-2 (Sec. 239.14 and Sec. 274.11a-1 of this 
chapter), reasonable steps to make information conveniently available 
would involve distribution of a sufficient number of copies of the 
Statement of Additional Information required by Sec. 230.430(b) as it 
appears to be reasonable to secure their adequate distribution either to 
each underwriter or dealer who it is reasonably anticipated will be 
invited to participate in the distribution of the security, or to the 
underwriter, dealer or other source named on the cover page of the 
preliminary prospectus as being the person investors should contact in 
order to obtain the Statement of Additional Information.
    (c) The granting of acceleration will not be conditioned upon
    (1) The distribution of a preliminary prospectus in any state where 
such distribution would be illegal; or

[[Page 578]]

    (2) The distribution of a preliminary prospectus (i) in the case of 
a registration statement relating solely to securities to be offered at 
competitive bidding, provided the undertaking in Item 512(d)(1) of 
Regulation S-K (Sec. 229.512(d)(2) of this chapter) is included in the 
registration statement and distribution of prospectuses pursuant to such 
undertaking is made prior to the publication or distribution of the 
invitation for bids, or
    (ii) In the case of a registration statement relating to a security 
issued by a face-amount certificate company or a redeemable security 
issued by an open-end management company or unit investment trust if any 
other security of the same class is currently being offered or sold, 
pursuant to an effective registration statement by the issuer or by or 
through an underwriter, or
    (iii) In the case of an offering of subscription rights unless it is 
contemplated that the distribution will be made through dealers and the 
underwriters intend to make the offering during the stockholders' 
subscription period, in which case copies of the preliminary prospectus 
must be distributed to dealers prior to the effective date of the 
registration statement in the same fashion as is required in the case of 
other offerings through underwriters, or
    (iv) In the case of a registration statement pertaining to a 
security to be offered pursuant to an exchange offer or transaction 
described in Rule 145 (Sec. 230.145).

(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. 
308(a)(2), 90 Stat. 57; secs. 3(b), 12, 13, 14, 15(d), 23(a), 48 Stat. 
882, 892, 894, 895, 901; secs. 203(a), 1, 3, 8, 49 Stat. 704, 1375, 
1377, 1379; sec. 202, 68 Stat. 686; secs. 4, 5, 6(d), 78 Stat. 569, 570-
574; secs. 1, 2, 3, 82 Stat. 454, 455; secs. 28(c), 1, 2, 3, 4, 5, 84 
Stat. 1435, 1497; sec. 105(b), 88 Stat. 1503; secs. 8, 9, 10, 89 Stat. 
117, 118, 119; sec. 308(b), 90 Stat 57; sec. 18, 89 Stat. 155; secs. 
202, 203, 204, 91 Stat. 1494, 1498-1500; sec. 20(a), 49 Stat. 833; sec. 
319, 53 Stat. 1173; sec. 38, 54 Stat. 841; 15 U.S.C. 77f, 77g, 77h, 77j, 
77s(a), 78c(b), 78l, 78m, 78n, 78o(d), 78w(a), 79t(a), 77sss(a), 80a-37)

[47 FR 11443, Mar. 16, 1982, as amended at 57 FR 56834, Dec. 1, 1992]



Sec. 230.461  Acceleration of effective date.

    (a) Requests for acceleration of the effective date of a 
registration statement shall be made by the registrant and the managing 
underwriters of the proposed issue, or, if there are no managing 
underwriters, by the principal underwriters of the proposed issue, and 
shall state the date upon which it is desired that the registration 
statement shall become effective. Such requests may be made in writing 
or orally, provided that, if an oral request is to be made, a letter 
indicating that fact and stating that the registrant and the managing or 
principal underwriters are aware of their obligations under the Act must 
accompany the registration statement for a pre-effective amendment 
thereto) at the time of filing with the Commission. Written requests may 
be sent to the Commission by facsimile transmission. If, by reason of 
the expected arrangement in connection with the offering, it is to be 
requested that the registration statement shall become effective at a 
particular hour of the day, the Commission must be advised to that 
effect not later than the second business day before the day which it is 
desired that the registration statement shall become effective. A 
person's request for acceleration will be considered confirmation of 
such person's awareness of the person's obligations under the Act. Not 
later than the time of filing the last amendment prior to the effective 
date of the registration statement, the registrant shall inform the 
Commission as to whether or not the amount of compensation to be allowed 
or paid to the underwriters and any other arrangements among the 
registrant, the underwriters and other broker dealers participating in 
the distribution, as described in the registration statement, have been 
reviewed to the extent required by the National Association of 
Securities Dealers, Inc. and such Association has issued a statement 
expressing no objections to the compensation and other arrangements.
    (b) Having due regard to the adequacy of information respecting the 
registrant theretofore available to the public, to the facility with 
which the

[[Page 579]]

nature of the securities to be registered, their relationship to the 
capital structure of the registrant issuer and the rights of holders 
thereof can be understood, and to the public interest and the protection 
of investors, as provided in section 8(a) of the Act, it is the general 
policy of the Commission, upon request, as provided in paragraph (a) of 
this section, to permit acceleration of the effective date of the 
registration statement as soon as possible after the filing of 
appropriate amendments, if any. In determining the date on which a 
registration statement shall become effective, the following are 
included in the situations in which the Commission considers that the 
statutory standards of section 8(a) may not be met and may refuse to 
accelerate the effective date:
    (1) Where there has not been a bona fide effort to make the 
prospectus reasonably concise, readable, and in compliance with the 
plain English requirements of Rule 421(d) of Regulation C (17 CFR 
230.421(d)) in order to facilitate an understanding of the information 
in the prospectus.
    (2) Where the form of preliminary prospectus, which has been 
distributed by the issuer or underwriter, is found to be inaccurate or 
inadequate in any material respect, until the Commission has received 
satisfactory assurance that appropriate correcting material has been 
sent to all underwriters and dealers who received such preliminary 
prospectus or prospectuses in quantity sufficient for their information 
and the information of others to whom the inaccurate or inadequate 
material was sent.
    (3) Where the Commission is currently making an investigation of the 
issuer, a person controlling the issuer, or one of the underwriters, if 
any, of the securities to be offered, pursuant to any of the Acts 
administered by the Commission.
    (4) Where one or more of the underwriters, although firmly committed 
to purchase securities covered by the registration statement, is subject 
to and does not meet the financial responsibility requirements of Rule 
15c3-1 under the Securities Exchange Act of 1934 (Sec. 240.15c3-1 of 
this chapter). For the purposes of this paragraph underwriters will be 
deemed to be firmly committed even though the obligation to purchase is 
subject to the usual conditions as to receipt of opinions of counsel, 
accountants, etc., the accuracy of warranties or representations, the 
happening of calamities or the occurrence of other events the 
determination of which is not expressed to be in the sole or absolute 
discretion of the underwriters.
    (5) Where there have been transactions in securities of the 
registrant by persons connected with or proposed to be connected with 
the offering which may have artificially affected or may artificially 
affect the market price of the security being offered.
    (6) Where the amount of compensation to be allowed or paid to the 
underwriters and any other arrangements among the registrant, the 
underwriters and other broker dealers participating in the distribution, 
as described in the registration statement, if required to be reviewed 
by the National Association of Securities Dealers, Inc. (NASD), have 
been reviewed by the NASD and the NASD has not issued a statement 
expressing no objections to the compensation and other arrangements.
    (7) Where, in the case of a significant secondary offering at the 
market, the registrant, selling security holders and underwriters have 
not taken sufficient measures to insure compliance with Regulation M 
(Sec. Sec. 242.100 through 242.105 of this chapter.
    (c) Insurance against liabilities arising under the Act, whether the 
cost of insurance is borne by the registrant, the insured or some other 
person, will not be considered a bar to acceleration, unless the 
registrant is a registered investment company or a business development 
company and the cost of such insurance is borne by other than an insured 
officer or director of the registrant. In the case of such a registrant, 
the Commission may refuse to accelerate the effective date of the 
registration statement when the registrant is organized or administered 
pursuant to any instrument (including a contract for insurance against 
liabilities arising under the Act) that protects or purports to protect 
any director or officer of the company against

[[Page 580]]

any liability to the company or its security holders to which he or she 
would otherwise be subject by reason of willful misfeasance, bad faith, 
gross negligence or reckless disregard of the duties involved in the 
conduct of his or her office.

[47 FR 11444, Mar. 16, 1982, as amended at 58 FR 18146, Apr. 8, 1993; 60 
FR 26615, 26617, May 17, 1995; 62 FR 543, Jan. 3, 1997; 63 FR 6385, Feb. 
6, 1998]



Sec. 230.462  Immediate effectiveness of certain registration statements and post-effective amendments.

    (a) A registration statement on Form S-8 (Sec. 239.16b of this 
chapter) and a registration statement on Form S-3 (Sec. 239.13 of this 
chapter) or on Form F-3 (Sec. 239.33 of this chapter) for a dividend or 
interest reinvestment plan shall become effective upon filing with the 
Commission.
    (b) A registration statement and any post-effective amendment 
thereto shall become effective upon filing with the Commission if:
    (1) The registration statement is for registering additional 
securities of the same class(es) as were included in an earlier 
registration statement for the same offering and declared effective by 
the Commission;
    (2) The new registration statement is filed prior to the time 
confirmations are sent or given; and
    (3) The new registration statement registers additional securities 
in an amount and at a price that together represent no more than 20% of 
the maximum aggregate offering price set forth for each class of 
securities in the ``Calculation of Registration Fee'' table contained in 
such earlier registration statement.
    (c) If the prospectus contained in a post-effective amendment filed 
prior to the time confirmations are sent or given contains no 
substantive changes from or additions to the prospectus previously filed 
as part of the effective registration statement, other than price-
related information omitted from the registration statement in reliance 
on Rule 430A of the Act (Sec. 230.430A), such post-effective amendment 
shall become effective upon filing with the Commission.
    (d) A post-effective amendment filed solely to add exhibits to a 
registration statement shall become effective upon filing with the 
Commission.

[59 FR 21650, Apr. 26, 1994, as amended by 60 FR 26617, May 17, 1995; 62 
FR 39763, July 24, 1997]



Sec. 230.463  Report of offering of securities and use of proceeds therefrom.

    (a) Except as provided in this section, following the effective date 
of the first registration statement filed under the Act by an issuer, 
the issuer or successor issuer shall report the use of proceeds pursuant 
to Item 701 of Regulation S-B or S-K or Item 14(e) of Form 20-F, as 
applicable, on its first periodic report filed pursuant to Sections 
13(a) and 15(d) (15 U.S.C. 78m(a) and 78o(d)) of the Securities Exchange 
Act of 1934 after effectiveness, and thereafter on each of its 
subsequent periodic reports filed pursuant to Sections 13(a) and 15(d) 
of the Securities Exchange Act of 1934 through the later of disclosure 
of the application of all the offering proceeds or disclosure of the 
termination of the offering.
    (b) A successor issuer shall comply with paragraph (a) of this 
section only if a report of the use of proceeds is required with respect 
to the first effective registration statement of the predecessor issuer.
    (c) For purposes of this section:
    (1) The term offering proceeds shall not include any amount(s) 
received for the account(s) of any selling security holder(s).
    (2) The term application shall not include the temporary investment 
of proceeds by the issuer pending final application.
    (d) This section shall not apply to any effective registration 
statement for securities to be issued:
    (1) In a business combination described in Rule 145(a) 
(Sec. 230.145(a));
    (2) By an issuer which pursuant to a business combination described 
in Rule 145(a) has succeeded to another issuer that prior to such 
business combination had a registration statement become effective under 
the Act and on the date of such business combination was not subject to 
paragraph (a) of this section;

[[Page 581]]

    (3) Pursuant to an employee benefit plan;
    (4) Pursuant to a dividend or interest reinvestment plan;
    (5) As American depository receipts for foreign securities;
    (6) By any investment company registered under the Investment 
Company Act of 1940 and any issuer that has elected to be regulated as a 
business development company under sections 54 through 65 of the 
Investment Company Act of 1940 (15 U.S.C. 80a-53 through 80a-64);
    (7) By any public utility company or public utility holding company 
required to file reports with any State or Federal authority.
    (8) In a merger in which a vote or consent of the security holders 
of the company being acquired is not required pursuant to applicable 
state law; or
    (9) In an exchange offer for the securities of the issuer or another 
entity.

[46 FR 48142, Oct. 1, 1981, as amended at 50 FR 19001, May 6, 1985; 57 
FR 56834, Dec. 1, 1992; 62 FR 39763, July 24, 1997; 64 FR 53910, Oct. 5, 
1999]



Sec. 230.464  Effective date of post-effective amendments to registration statements filed on Form S-8 and on certain Forms S-3, S-4, F-2 and F-3.

    Provided. That, at the time of filing of each post-effective 
amendment with the Commission, the issuer continues to meet the 
requirements of filing on Form S-8 (Sec. 239.16b of this chapter); or on 
Form S-3, F-2 or F-3 (Secs. 239.13, 239.32 or 239.33 of this chapter) 
for a registration statement relating to a dividend or interest 
reinvestment plan; or in the case of a registration statement on Form S-
4 (Sec. 239.25 of this chapter) that there is continued compliance with 
General Instruction G of that Form:
    (a) The post-effective amendment shall become effective upon filing 
with the Commission: and
    (b) With respect to securities sold on or after the filing date 
pursuant to a prospectus which forms a part of a Form S-8 registration 
statement; or a Form S-3, F-2, or F-3 registration statement relating to 
a dividend or interest reinvestment plan; or a Form S-4 registration 
statement complying with General Instruction G of that Form and which 
has been amended to include or incorporate new full year financial 
statments or to comply with the provisions of section 10(a)(3) of the 
Act, the effective date of the registration statement shall be deemed to 
be the filing date of the post-effective amendment.

(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. 
565-568, 569, 570-574; 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, 1499, 1500; secs. 8 30, 31(c), 
38(a), 54 Stat. 803, 836, 838, 841; 74 Stat. 201; 84 Stat. 1415; 15 
U.S.C. 77f, 77g, 77h, 77j, 77s(a), 78l, 78m, 78o(d), 78w(a), 80a-8, 80a-
29, 80a-30(c), 80a-37(a))

[47 FR 54770, Dec. 6, 1982, as amended at 50 FR 19001, May 6, 1985; 61 
FR 30402, June 14, 1996 ]



Sec. 230.466  Effective date of certain registration statements on Form F-6.

    (a) A depositary that previously has filed a registration statement 
on Form F-6 (Sec. 239.36 of this chapter) may designate a date and time 
for a registration statement (including post-effective amendments) on 
Form F-6 to become effective and such registration statement shall 
become effective in accordance with such designation if the following 
conditions are met:
    (1) The depositary previously has filed a registration statement on 
Form F-6 (Sec. 239.36 of this chapter), which the Commission has 
declared effective, with identical terms of deposit, except for the 
number of foreign securities a Depositary Share represents, and the 
depositary so certifies; and
    (2) The designation of the effective date and time is set forth on 
the facing-page of the registration statement, or in any pre-effective 
amendment thereto. A pre-effective amendment containing such a 
designation properly made shall be deemed to have been filed with the 
consent of the Commission.
    (b)(1) The Commission may, in the manner and under the circumstances

[[Page 582]]

set forth in paragraph (b)(2) of this section, suspend the ability of a 
depositary to designate the date and time of effectiveness of a 
registration statement, and such suspension shall remain in effect until 
the Commission furnishes written notice to the depositary that the 
suspension has been terminated. Any suspension, so long as it is in 
effect, shall apply to any registration statement that has been filed 
but has not, at the time of such suspension, become effective and to any 
registration statement the depositary files after such suspension. Any 
such suspension applies only to the ability to designate the date and 
time of effectiveness under paragraph (a) of this section and does not 
otherwise affect the registration statement.
    (2) Any suspension under paragraph (b)(1) of this section becomes 
effective when the Commission furnishes written notice thereof to the 
depositary. The Commission may issue a suspension if it appears to the 
Commission:
    (i) That any registration statement containing a designation under 
this section is incomplete or inaccurate in any material respect, 
whether or not such registration has become effective, or
    (ii) That the depositary has not complied with any of the conditions 
of this section. The depositary may petition the Commission to review 
the suspension. The Commission will order a hearing on the matter if a 
request for such a hearing is included in the petition.

(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. 
565-568, 569, 570-574; 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, 1499, 1500; 15 U.S.C. 77f, 77g, 77h, 
77j, 77s(a), 78l, 78m, 78o(d), 78w(a))

[48 FR 12347, Mar. 24, 1983]



Sec. 230.467  Effectiveness of registration statements and post-effective amendments thereto made on Forms F-7, F-8, F-9, F-10 and F-80.

    (a) A registration statement on Form F-7, Form F-8 or Form F-80 
(Sec. 239.37, Sec. 239.38 or Sec. 239.41 of this chapter), and any 
amendment thereto, shall become effective upon filing with the 
Commission. A registration statement on Form F-9 or Form F-10 
(Sec. 239.39 or Sec. 239.40 of this chapter), and any amendment thereto, 
relating to an offering being made contemporaneously in the United 
States and Canada shall become effective upon filing with the 
Commission, unless designated as preliminary material on the Form.
    (b) Where no contemporaneous offering is being made in Canada, a 
registrant filing on Form F-9 or Form F-10 may designate on the facing 
page of the registration statement, or any amendment thereto, a date and 
time for such filing to become effective that is not earlier than seven 
calendar days after the date of filing with the Commission, and such 
registration statement or amendment shall become effective in accordance 
with such designation; provided, however, That such registration 
statement or amendment may become effective prior to seven calendar days 
after the date of filing with the Commission if the securities 
regulatory authority in the review jurisdiction issues a receipt or 
notification of clearance with respect thereto before such time elapses, 
in which case the registration statement or amendment shall become 
effective by order of the Commission as soon as practicable after 
receipt of written notification by the Commission from the registrant or 
the applicable Canadian securities regulatory authority of the issuance 
of such receipt or notification of clearance.

[56 FR 30054, July 1, 1991]

                         amendments; withdrawals



Sec. 230.470  Formal requirements for amendments.

    Except for telegraphic amendments filed pursuant to Rule 473 
(Sec. 230.473),

[[Page 583]]

amendments to a registration statement shall be filed under cover of an 
appropriate facing sheet, shall be numbered consecutively in the order 
in which filed, and shall indicate on the facing sheet the applicable 
registration form on which the amendment is prepared and the file number 
of the registration statement.

(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. 
308(a)(2), 90 Stat. 57; secs. 3(b), 12, 13, 14, 15(d), 23(a), 48 Stat. 
882, 892, 894, 895, 901; secs. 203(a), 1, 3, 8, 49 Stat. 704, 1375, 
1377, 1379; sec. 202, 68 Stat. 686; secs. 4, 5, 6(d), 78 Stat. 569, 570-
574; secs. 1, 2, 3, 82 Stat. 454, 455; secs. 28(c), 1, 2, 3, 4, 5, 84 
Stat. 1435, 1497; sec. 105(b), 88 Stat. 1503; secs. 8, 9, 10, 89 Stat. 
117, 118, 119; sec. 308(b), 90 Stat 57; sec. 18, 89 Stat. 155; secs. 
202, 203, 204, 91 Stat. 1494, 1498-1500; sec. 20(a), 49 Stat. 833; sec. 
319, 53 Stat. 1173; sec. 38, 54 Stat. 841; 15 U.S.C. 77f, 77g, 77h, 77j, 
77s(a), 78c(b), 78l, 78m, 78n, 78o(d), 78w(a), 79t(a), 77sss(a), 80a-37)

[47 FR 11445, Mar. 16, 1982]



Sec. 230.471  Signatures to amendments.

    (a) Except as provided in Rule 447 (Sec. 230.447) and in Rule 478 
(Sec. 230.478), every amendment to a registration statement shall be 
signed by the persons specified in section 6(a) of the Act. At least one 
copy of every amendment filed with the Commission shall be signed. 
Unsigned copies shall be conformed.
    (b) Where the Act or the rules 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 registrant for a period of 
five years. Upon request, the registrant shall furnish to the Commission 
or its staff a copy of any or all documents retained pursuant to this 
section.

(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. 
308(a)(2), 90 Stat. 57; secs. 3(b), 12, 13, 14, 15(d), 23(a), 48 Stat. 
882, 892, 894, 895, 901; secs. 203(a), 1, 3, 8, 49 Stat. 704, 1375, 
1377, 1379; sec. 202, 68 Stat. 686; secs. 4, 5, 6(d), 78 Stat. 569, 570-
574; secs. 1, 2, 3, 82 Stat. 454, 455; secs. 28(c), 1, 2, 3, 4, 5, 84 
Stat. 1435, 1497; sec. 105(b), 88 Stat. 1503; secs. 8, 9, 10, 89 Stat. 
117, 118, 119; sec. 308(b), 90 Stat 57; sec. 18, 89 Stat. 155; secs. 
202, 203, 204, 91 Stat. 1494, 1498-1500; sec. 20(a), 49 Stat. 833; sec. 
319, 53 Stat. 1173; sec. 38, 54 Stat. 841; 15 U.S.C. 77f, 77g, 77h, 77j, 
77s(a), 78c(b), 78l, 78m, 78n, 78o(d), 78w(a), 79t(a), 77sss(a), 80a-37)

[47 FR 11445, Mar. 16, 1982, as amended at 61 FR 30402, June 14, 1996]



Sec. 230.472  Filing of amendments; number of copies.

    (a) Except for telegraphic amendments filed pursuant to Rule 473 
(Sec. 230.473), there shall be filed with the Commission three complete, 
unmarked copies of every amendment, including exhibits and all other 
papers and documents filed as part of the amendment, and eight 
additional copies of such amendment at least five of which shall be 
marked to indicate clearly and precisely, by underlining or in some 
other appropriate manner, the changes effected in the registration 
statement by the amendment. Where the amendment to the registration 
statement incorporates into the prospectus documents which are required 
to be delivered with the prospectus in lieu of prospectus presentation, 
the eight additional copies shall be accompanied by eight copies of such 
documents. No other exhibits are required to accompany such additional 
copies.
    (b) Every amendment which relates to a prospectus shall include 
copies of the prospectus as amended. Each such copy of the amended 
prospectus shall be accompanied by a copy of the cross reference sheet 
required by Rule 481(a) (Sec. 230.481(a)), where applicable, if the 
amendment of the prospectus resulted in any change in the accuracy of 
the cross reference sheet previously filed. Notwithstanding the 
foregoing provisions of this paragraph, only copies of the changed pages 
of the prospectus,

[[Page 584]]

and the cross reference sheet if amended, need be included in an 
amendment filed pursuant to an undertaking referred to in Item 512(d) of 
Regulation S-K (Sec. 229.512(d) of this chapter).
    (c) Every amendment of a financial statement which is not included 
in the prospectus shall include copies of the financial statement as 
amended. Every amendment relating to a certified financial statement 
shall include the consent of the certifying accountant to the use of his 
certificate in connection with the amended financial statement in the 
registration statement or prospectus and to being named as having 
certified such financial statement.
    (d) Notwithstanding any other provision of this section, if a 
registration statement filed on Form S-8 (Sec. 239.16b of this chapter) 
is amended, there shall be filed with the Commission three complete, 
unmarked copies of every amendment, including exhibits and all other 
papers and documents filed as part of the amendment. Three additional, 
unmarked copies of such amendments shall be furnished to the Commission. 
No exhibits are required to accompany the additional copies of 
amendments to registration statements filed on Form S-8.
    (e) Notwithstanding any other provision of this section, if a post-
effective amendment is filed pursuant to Rule 462(b) (Sec. 230.462(b)) 
and Rule 110(d) (Sec. 230.110(d)), one copy of the complete post-
effective amendment, including exhibits and all other papers and 
documents filed as a part thereof shall be filed with the Commission. 
Such copy should not be bound and may contain facsimile versions of 
manual signatures in accordance with Rule 402(e) (Sec. 230.402(e)).

[47 FR 11445, Mar. 16, 1982, as amended at 55 FR 23924, June 13, 1990; 
60 FR 26618, May 17, 1995: 61 FR 30402, June 14, 1996]



Sec. 230.473  Delaying amendments.

    (a) An amendment in the following form filed with a registration 
statement, or as an amendment to a registration statement which has not 
become effective, shall be deemed, for the purpose of section 8(a) of 
the Act, to be filed on such date or dates as may be necessary to delay 
the effective date of such registration statement (1) until the 
registrant shall file a further amendment which specifically states as 
provided in paragraph (b) of this section that such registration 
statement shall thereafter become effective in accordance with section 
8(a) of the Act, or (2) until the registration statement shall become 
effective on such date as the Commission, acting pursuant to section 
8(a), may determine:

The registrant hereby amends this registration statement on such date or 
dates as may be necessary to delay its effective date until the 
registrant shall file a further amendment which specifically states that 
this registration statement shall thereafter become effective in 
accordance with section 8(a) of the Securities Act of 1933 or until the 
registration statement shall become effective on such date as the 
Commission acting pursuant to said section 8(a), may determine.

    (b) An amendment which for the purpose of paragraph (a)(1) of this 
section specifically states that a registration statement shall 
thereafter become effective in accordance with section 8(a) of the Act, 
shall be in the following form:

This registration statement shall hereafter become effective in 
accordance with the provisions of section 8(a) of the Securities Act of 
1933.

    (c) An amendment pursuant to paragraph (a) of this section which is 
filed with a registration statement shall be set forth on the facing 
page thereof following the calculation of the registration fee. Any such 
amendment filed after the filing of the registration statement, any 
amendment altering the proposed date of public sale of the securities 
being registered, or any amendment filed pursuant to paragraph (b) of 
this section may be made by telegram, letter or facsimile transmission. 
Each such telegraphic amendment shall be confirmed in writing within a 
reasonable time by the filing of a signed copy of the amendment. Such 
confirmation shall not be deemed an amendment.
    (d) No amendments pursuant to paragraph (a) of this section may be 
filed with a registration statement on Form F-7, F-8 or F-80 
(Sec. 239.37, Sec. 239.38 or Sec. 239.41 of this chapter); on Form F-9 
or F-10 (Sec. 239.39 or Sec. 239.40 of this chapter) relating to an 
offering being made contemporaneously in the United States

[[Page 585]]

and the registrant's home jurisdiction; on Form S-8 (Sec. 239.16b of 
this chapter) ; on Form S-3, F-2 or F-3 (Sec. 239.13, Sec. 239.32 or 
Sec. 239.33 of this chapter) relating to a dividend or interest 
reinvestment plan; or on Form S-4 (Sec. 239.25 of this chapter) 
complying with General Instruction G of that Form

[47 FR 11445, Mar. 16, 1982, as amended at 56 FR 30054, 30055, July 1, 
1991; 61 FR 30402, June 14, 1996]



Sec. 230.474  Date of filing of amendments.

    The date on which amendments are actually received by the Commission 
shall be the date of filing thereof, if all of the requirements of the 
act and the rules with respect to such filing have been complied with.

[16 FR 8737, Aug. 29, 1951]



Sec. 230.475  Amendment filed with consent of Commission.

    An application for the Commission's consent to the filing of an 
amendment with the effect provided in section 8(a) of the Act may be 
filed before or after or concurrently with the filing of the amendment. 
The application shall be signed and shall state fully the grounds upon 
which it is made. The Commission's consent shall be deemed to have been 
given and the amendment shall be treated as a part of the registration 
statement only when the Commission shall after the filing of such 
amendment enter an order to that effect.

[Reg. C, 12 FR 4075, June 24, 1947]



Sec. 230.475a  Certain pre-effective amendments deemed filed with the consent of the Commission.

    Amendments to a registration statement on Form F-2 (Sec. 239.32 of 
this chapter) relating to a dividend or interest reinvestment plan, or 
on Form S-4 (Sec. 239.25 of this chapter) complying with General 
Instruction G of that Form, filed prior to the effectiveness of such 
registration statement shall be deemed to have been filed with a consent 
of the Commission and shall accordingly be treated as part of the 
registration statement.

[59 FR 21650, Apr. 26, 1994]



Sec. 230.476  Amendment filed pursuant to order of Commission.

    An amendment filed prior to the effective date of a registration 
statement shall be deemed to have been filed pursuant to an order of the 
Commission within the meaning of section 8(a) of the act so as to be 
treated as a part of the registration statement only when the Commission 
shall after the filing of such amendment enter an order declaring that 
it has been filed pursuant to the Commission's previous order.

[Reg. C, 12 FR 4075, June 24, 1947]



Sec. 230.477  Withdrawal of registration statement or amendment.

    (a) Except as provided in paragraph (b) of this section, any 
registration statement or any amendment or exhibit thereto may be 
withdrawn upon application if the Commission, finding such withdrawal 
consistent with the public interest and the protection of investors, 
consents thereto.
    (b) Any application for withdrawal of a registration statement filed 
on Form F-2 (Sec. 239.32 of this chapter) relating to a dividend or 
interest reinvestment plan, or on Form S-4 (Sec. 239.25 of this chapter) 
complying with General Instruction G of that Form, and/or any pre-
effective amendment thereto, will be deemed granted upon filing if such 
filing is made prior to the effective date. Any other application for 
withdrawal of an entire registration statement made before the effective 
date of the registration statement will be deemed granted at the time 
the application is filed with the Commission unless, within 15 calendar 
days after the registrant files the application, the Commission notifies 
the registrant that the application for withdrawal will not be granted.
    (c) The registrant must sign any application for withdrawal and must 
state fully in it the grounds on which the registrant makes the 
application. The fee paid upon the filing of the registration statement 
will not be refunded to the registrant. The registrant must state in the 
application that no securities were sold in connection with the 
offering. If the registrant applies for withdrawal in anticipation of 
reliance on Sec. 230.155(c), the registrant

[[Page 586]]

must, without discussing any terms of the private offering, state in the 
application that the registrant may undertake a subsequent private 
offering in reliance on Sec. 230.155(c).
    (d) Any withdrawn document will remain in the Commission's public 
files, as well as the related request for withdrawal.

[47 FR 11445, Mar. 16, 1982, as amended at 47 FR 54770, Dec. 6, 1982; 50 
FR 19001, May 6, 1985; 59 FR 21650, Apr. 26, 1994; 66 FR 8897, Feb. 5, 
2001]



Sec. 230.478  Powers to amend or withdraw registration statement.

    All persons signing a registration statement shall be deemed, in the 
absence of a statement to the contrary, to confer upon the registrant, 
and upon the agent for service named in the registration statement, the 
following powers:
    (a) A power to amend the registration statement (1) by filing an 
amendment as provided in Sec. 230.473; (2) by filing any written 
consent; (3) by correcting typographical errors; (4) by reducing the 
amount of securities registered, pursuant to an undertaking contained in 
the registration statement.
    (b) A power to make application pursuant to Sec. 230.475 for the 
Commission's consent to the filing of an amendment.
    (c) A power to withdraw the registration statement or any amendment 
or exhibit thereto.
    (d) A power to consent to the entry of an order under section 8(b) 
of the act, waiving notice and hearing, such order being entered without 
prejudice to the right of the registrant thereafter to have the order 
vacated upon a showing to the Commission that the registration statement 
as amended is no longer incomplete or inaccurate on its face in any 
material respect.

[Reg. C, 12 FR 4076, June 24, 1947, as amended at 16 FR 8737, Aug. 29, 
1951]



Sec. 230.479  Procedure with respect to abandoned registration statements and post-effective amendments.

    When a registration statement, or a post-effective amendment to such 
a statement, has been on file with the Commission for a period of nine 
months and has not become effective the Commission may, in its 
discretion, proceed in the following manner to determine whether such 
registration statement or amendment has been abandoned by the 
registrant. If the registration statement has been amended, otherwise 
than for the purpose of delaying the effective date thereof, or if the 
post-effective amendment has been amended, the nine-month period shall 
be computed from the date of the latest such amendment.
    (a) A notice will be sent to the registrant, and to the agent for 
service named in the registration statement, by registered or certified 
mail, return receipt requested, addressed to the most recent addresses 
for the registrant and the agent for service reflected in the 
registration statement. Such notice will inform the registrant and the 
agent for service that the registration statement or amendment is out of 
date and must be either amended to comply with the applicable 
requirements of the Act and the rules and regulations thereunder or be 
withdrawn within 30 days after the date of such notice.
    (b) If the registrant or the agent for service fails to respond to 
such notice by filing a substantive amendment or withdrawing the 
registration statement and does not furnish a satisfactory explanation 
as to why it has not done so within such 30 days, the Commission may, 
where consistent with the public interest and the protection of 
investors, enter an order declaring the registration statement or 
amendment abandoned.
    (c) When such an order is entered by the Commission the papers 
comprising the registration statement or amendment will not be removed 
from the

[[Page 587]]

files of the Commission but an order shall be included in the file for 
the registration statement in the following manner: ``Declared abandoned 
by order dated ------.''

(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. 
308(a)(2), 90 Stat. 57; secs. 3(b), 12, 13, 14, 15(d), 23(a), 48 Stat. 
882, 892, 894, 895, 901; secs. 203(a), 1, 3, 8, 49 Stat. 704, 1375, 
1377, 1379; sec. 202, 68 Stat. 686; secs. 4, 5, 6(d), 78 Stat. 569, 570-
574; secs. 1, 2, 3, 82 Stat. 454, 455; secs. 28(c), 1, 2, 3, 4, 5, 84 
Stat. 1435, 1497; sec. 105(b), 88 Stat. 1503; secs. 8, 9, 10, 89 Stat. 
117, 118, 119; sec. 308(b), 90 Stat 57; sec. 18, 89 Stat. 155; secs. 
202, 203, 204, 91 Stat. 1494, 1498-1500; sec. 20(a), 49 Stat. 833; sec. 
319, 53 Stat. 1173; sec. 38, 54 Stat. 841; 15 U.S.C. 77f, 77g, 77h, 77j, 
77s(a), 78c(b), 78l, 78m, 78n, 78o(d), 78w(a), 79t(a), 77sss(a), 80a-37)

[47 FR 11446, Mar. 16, 1982]

          investment companies; business development companies

    Authority: Sections 230.480 to 230.485 issued under 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. 308(a)(2), 90 Stat. 
57; secs. 3(b), 12, 13, 14, 15(d), 23(a), 48 Stat. 882, 892, 894, 895, 
901; secs. 203(a), 1, 3, 8, 49 Stat. 704, 1375, 1377, 1379; sec. 202, 68 
Stat. 686; secs. 4, 5, 6(d), 78 Stat. 569, 570-574; secs. 1, 2, 3, 82 
Stat. 454, 455; secs. 28(c), 1, 2, 3, 4, 5, 84 Stat. 1435, 1497; sec. 
105(b), 88 Stat. 1503; secs. 8, 9, 10, 89 Stat. 117, 118, 119; sec. 
308(b), 90 Stat 57; sec. 18, 89 Stat. 155; secs. 202, 203, 204, 91 Stat. 
1494, 1498-1500; sec. 20(a), 49 Stat. 833; sec. 319, 53 Stat. 1173; sec. 
38, 54 Stat. 841; 15 U.S.C. 77f, 77g, 77h, 77j, 77s(a), 78c(b), 78l, 
78m, 78n, 78o(d), 78w(a), 79t(a), 77sss(a), 80a-37, unless otherwise 
noted.

    Source: Sections 230.480 to 230.485 appear at 47 FR 11446, Mar. 16, 
1982, unless otherwise noted.
    Note: The rules in this section of Regulation C (Secs. 230.480 to 
230.488 and Secs. 230.495 to 230.498) apply only to investment companies 
and business development companies. Section 230.489 applies to certain 
entities excepted from the definition of investment company by rules 
under the Investment Company Act of 1940. The rules in the rest of 
Regulation C (Secs. 230.400 to 230.479 and Secs. 230.490 to 230.494), 
unless the context specifically indicates otherwise, also apply to 
investment companies and business development companies. See 
Sec. 230.400.



Sec. 230.480  Title of securities.

    If a registration statement is prepared on a form available solely 
to investment companies registered under the Investment Company Act of 
1940, or a business development company which is selling or proposing to 
sell its securities pursuant to a registration statement which has been 
filed under the Act, 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 non-cumulative; 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 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. 230.481  Information required in prospectuses.

    Disclose the following in registration statements prepared on a form 
available solely to investment companies registered under the Investment 
Company Act of 1940 or in registration statements filed under the Act 
for a company that has elected to be regulated as a business development 
company under Sections 55 through 65 of the Investment Company Act (15 
U.S.C. 80a-54--80a-64):
    (a) Facing page. Indicate the approximate date of the proposed sale 
of the securities to the public.
    (b) Outside front cover page. If applicable, include the following 
in plain English as required by Sec. 230.421(d):
    (1) Commission legend. Provide a legend that indicates that the 
Securities and Exchange Commission has not approved or disapproved of 
the securities

[[Page 588]]

or passed upon the accuracy or adequacy of the disclosure in the 
prospectus and that any contrary representation is a criminal offense. 
The legend may be in one of the following or other clear and concise 
language:

    Example A: The Securities and Exchange Commission has not approved 
or disapproved these securities or passed upon the adequacy of this 
prospectus. Any representation to the contrary is a criminal offense.
    Example B: The Securities and Exchange Commission has not approved 
or disapproved these securities or determined if this prospectus is 
truthful or complete. Any representation to the contrary is a criminal 
offense.

    (2) ``Subject to Completion'' legend. (i) If a prospectus or 
Statement of Additional Information will be used before the effective 
date of the registration statement, include on the outside front cover 
page of the prospectus or Statement of Additional Information, a 
prominent statement that:
    (A) The information in the prospectus or Statement of Additional 
Information will be amended or completed;
    (B) A registration statement relating to these securities has been 
filed with the Securities and Exchange Commission;
    (C) The securities may not be sold until the registration statement 
becomes effective; and
    (D) In a prospectus, that the prospectus is not an offer to sell the 
securities and it is not soliciting an offer to buy the securities in 
any state where offers or sales are not permitted, or in a Statement of 
Additional Information, that the Statement of Additional Information is 
not a prospectus.
    (ii) The legend may be in the following language or other clear and 
understandable language:

    The information in this prospectus (or Statement of Additional 
Information) is not complete and may be changed. We may not sell these 
securities until the registration statement filed with the Securities 
and Exchange Commission is effective. This prospectus (or Statement of 
Additional Information) is not an offer to sell these securities and is 
not soliciting an offer to buy these securities in any state where the 
offer or sale is not permitted.

    (iii) In the case of a prospectus that omits pricing information 
under Sec. 230.430A, provide the information and legend in paragraph 
(b)(2) of this section if the prospectus or Statement of Additional 
Information is used before the initial public offering price is 
determined.
    (c) Table of contents. Include on either the outside front, inside 
front, or outside back cover page of the prospectus, a reasonably 
detailed table of contents. It must show the page number of the various 
sections or subdivisions of the prospectus. Include this table of 
contents immediately following the cover page in any prospectus 
delivered electronically.
    (d) Stabilization and other transactions. (1) Indicate on the front 
cover page of the prospectus if the underwriter has any arrangement with 
the issuer, such as an over-allotment option, under which the 
underwriter may purchase additional shares in connection with the 
offering, and state the amount of additional shares the underwriter may 
purchase under the arrangement. Provide disclosure in the prospectus 
that briefly describes any transaction that the underwriter intends to 
conduct during the offering that stabilizes, maintains, or otherwise 
affects the market price of the offered securities. Include information 
on stabilizing transactions, syndicate short covering transactions, 
penalty bids, or any other transactions that affect the offered 
security's price. Describe the nature of the transactions clearly and 
explain how the transactions affect the offered security's price. 
Identify the exchange or other market on which these transactions may 
occur. If true, disclose that the underwriter may discontinue these 
transactions at any time;
    (2) If the stabilizing began before the effective date of the 
registration statement, disclose in the prospectus the amount of 
securities bought, the prices at which they were bought and the period 
within which they were bought. In the event that Sec. 230.430A of this 
chapter is used, the prospectus filed under Sec. 230.497(h) or included 
in a post-effective amendment must contain information on the 
stabilizing transactions that took place before the determination of the 
public offering price shown in the prospectus; and

[[Page 589]]

    (3) If you are making a warrant or rights offering of securities to 
existing security holders and the securities not purchased by existing 
security holders are to be reoffered to the public, disclose in the 
prospectus used in connection with the reoffering:
    (i) The amount of securities bought in stabilization activities 
during the offering period and the price or range of prices at which the 
securities were bought;
    (ii) The amount of the offered securities subscribed for during the 
offering period;
    (iii) The amount of the offered securities subscribed for by the 
underwriters during the offering period;
    (iv) The amount of the offered securities sold during the offering 
period by the underwriters and the price or range of prices at which the 
securities were sold; and
    (v) The amount of the offered securities to be reoffered to the 
public and the public offering price.
    (e) Dealer prospectus delivery obligations. On the outside back 
cover page of the prospectus, advise dealers of their prospectus 
delivery obligation, including the expiration date specified by Section 
4(3) of the Act (15 U.S.C. 77d(3)) and Sec. 230.174. If the expiration 
date is not known on the effective date of the registration statement, 
include the expiration date in the copy of the prospectus filed under 
Sec. 230.497. This information need not be included if dealers are not 
required to deliver a prospectus under Sec. 230.174 or Section 24(d) of 
the Investment Company Act of 1940 (15 U.S.C. 80a-24). Use the following 
or other clear, plain language:

                  Dealer Prospectus Delivery Obligation

    Until (insert date), all dealers that effect transactions in these 
securities, whether or not participating in this offering, may be 
required to deliver a prospectus. This is in addition to the dealers' 
obligation to deliver a prospectus when acting as underwriters and with 
respect to their unsold allotments or subscriptions.

    (f) Electronic distribution. Where a prospectus is distributed 
through an electronic medium, issuers may satisfy legibility 
requirements applicable to printed documents, such as paper size, type 
size and font, bold-face type, italics and red ink, by presenting all 
required information in a format readily communicated to investors, and 
where indicated, in a manner reasonably calculated to draw investor 
attention to specific information.

[63 FR 6385, Feb. 6, 1998]



Sec. 230.482  Advertising by an investment company as satisfying requirements of section 10.

    (a) An advertisement or other sales material that is not a 
prospectus, or an advertisement or sales material excluded from the 
definition of prospectus by section 2(10) of the Act (15 U.S.C. 77b(10)) 
and related Sec. 230.134, will be deemed to be a prospectus under 
section 10(b) of the Act (15 U.S.C. 77j(b)) for the purpose of section 
5(b)(1) of the Act (15 U.S.C. 77e(b)(1)), if:
    (1) It is with respect to an investment company registered under the 
Investment Company Act of 1940 (1940 Act), or a business development 
company which is selling or proposing to sell its securities pursuant to 
a registration statement which has been filed under the Act,
    (2) It contains only information the substance of which is included 
in the section 10(a) prospectus,
    (3) It includes a conspicuous statement that:
    (i) Identifies a source from which an investor may obtain a 
prospectus containing more complete information about the investment 
company, which should be read carefully before investing; or
    (ii) If used with a profile under Sec. 230.498 (``Profile''), 
indicates that information is available in the Profile about the 
investment company, the procedures for investing in the investment 
company, and the availability of the investment company's prospectus.

    Note to Paragraph (a)(3): The fact that the statements included in 
the advertisement are included in the section 10(a) prospectus does not 
relieve the issuer, underwriter, or dealer of the obligation to ensure 
that the advertisement is not false or misleading.

    (4) It contains the statement required by Rule 481(b)(2) under the 
Securities Act (Sec. 230.481(b)(2) of this chapter) when used prior to 
effectiveness of the company's registration statement or, in

[[Page 590]]

the case of a registration statement that becomes effective omitting 
certain information from the prospectus contained in the registration 
statement in reliance upon Rule 430A under the Securities Act 
(Sec. 230.430A of this chapter), when used prior to the determination of 
the public offering price,
    (5) It does not contain and is not accompanied by any application by 
which a prospective investor may invest in the investment company, 
except that:
    (i) A prospectus meeting the requirements of section 10(a) of the 
Act (15 U.S.C. 77j(a)) by which a unit investment trust offers periodic 
payment plan certificates may contain a contract application although 
the prospectus includes another prospectus that, pursuant to this 
section, omits certain information required by section 10(a) of the Act, 
regarding investment companies in which the unit investment trusts 
invests; and
    (ii) It may be used with a Profile that includes, or is accompanied 
by, an application to purchase shares of the investment company as 
permitted under Sec. 230.498.
    (6) In the case of an advertisement containing performance data of 
an open-end management investment company or a separate account 
registered under the 1940 Act as a unit investment trust offering 
variable annuity contracts (trust account), it includes a legend 
disclosing that the performance data quoted represents past performance 
and that the investment return and principal value of an investment will 
fluctuate so that an investor's shares, when redeemed, may be worth more 
or less than their original cost; Provided, however, That an 
advertisement may omit legend disclosure pertaining to the fluctuation 
of the principal value of an investment in a money market fund. In 
addition, if a sales load or any other nonrecurring fee is charged, the 
advertisement must disclose the maximum amount of the load or fee; if 
the sales load or fee is not reflected, the advertisement must also 
disclose that the performance data does not reflect its deduction, and 
that, if reflected, the load or fees would reduce the performance 
quoted;

    Note to paragraph (a)(6): All advertisements made pursuant to this 
rule are subject to Rule 420 [17 CFR 230.420].

    (7)(i) In the case of an investment company that holds itself out to 
be a money market fund, it includes the following statement:

An investment in the Fund is not insured or guaranteed by the Federal 
Deposit Insurance Corporation or any other government agency. Although 
the Fund seeks to preserve the value of your investment at $1.00 per 
share, it is possible to lose money by investing in the Fund.

    (ii) A money market fund that does not hold itself out as 
maintaining a stable net asset value may omit the second sentence of the 
statement in (a)(7)(i) of this section.
    (b) An advertisement made pursuant to paragraph (a) of this section 
need not contain the statement required by Rule 481(b)(1) 
(Sec. 230.481(b)(1)).
    (c) An advertisement made pursuant to paragraph (a) of this section 
need not be filed as part of the registration statement filed under the 
Act.

    Note: These advertisements, unless filed with the NASD, are required 
to be filed inaccordance with the requirements of Rule 497 (17 CFR 
230.497).
    (d) In the case of a money market fund:
    (1) Any quotation of the money market fund's yield in an 
advertisement shall be based on the methods of computation prescribed in 
Form N-1A (Secs. 239.15A and 274.11A of this chapter), Form N-3 
(Secs. 239.17a and 274.11b of this chapter), or Form N-4 (Secs. 239.17b 
and 274.11c of this chapter) and may include:
    (i) A quotation of current yield that identifies the length of and 
the date of the last day in the base period used in computing that 
quotation; or
    (ii) A quotation of effective yield if it appears in the same 
advertisement as a quotation of current yield and each quotation relates 
to an identical base period and is presented with equal prominence; or
    (iii) A quotation or quotations of tax equivalent yield or tax 
equivalent effective yield if it appears in the same advertisement as a 
quotation of current yield and each quotation relates to the same base 
period as the quotation of current yield, is presented

[[Page 591]]

with equal prominence, and states the income tax rate used in the 
calculation.
    (2) Accompany any quotation of the money market fund's total return 
in an advertisement with a quotation of the money market fund's current 
yield under paragraph (d)(1)(i) of this section. Place the quotations of 
total return and current yield next to each other, in the same size 
print, and if there is a material difference between the quoted total 
return and the quoted current yield, include a statement that the yield 
quotation more closely reflects the current earnings of the money market 
fund than the total return quotation.
    (e) In the case of an open-end management investment company or a 
trust account (other than a money market fund referred to in paragraph 
(d) of this section), any quotation of the company's performance 
contained in an advertisement shall be limited to quotations of:
    (1) A current yield that--
    (i) Is based on the methods of computation prescribed in Form N-1A, 
N-3, or N-4;
    (ii) Is accompanied by quotations of total return as provided for in 
paragraph (e)(3) of this section;
    (iii) Is set out in no greater prominence than the required 
quotations of total return; and
    (iv) Identifies the length of and the date of the last day in the 
base period used in computing the quotation.
    (2) A tax equivalent yield that--
    (i) Is based on the methods of computation prescribed in Form N-1A, 
N-3, or N-4;
    (ii) Is accompanied by quotations of yield as provided for in 
paragraph (e)(1) of this section and total return as provided for in 
paragraph (e)(3) of this section;
    (iii) Is set out in no greater prominence than the required 
quotations of yield and total return;
    (iv) Relates to the same base period as the required quotation of 
yield; and
    (v) Identifies the length of and the date of the last day in the 
base period used in computing the quotation.
    (3) Average annual total return for one, five, and ten year periods; 
Provided, That if the company's registration statement under the 
Securities Act of 1933 (15 U.S.C. 77A et seq.) has been in effect for 
less than one, five, or ten years, the time period during which the 
registration statement was in effect is substituted for the period(s) 
otherwise prescribed; and Provided further, That such quotations--
    (i) Are based on the methods of computation prescribed in Form N-1A, 
N-3, or N-4;
    (ii) Are current to the most recent calendar quarter ended prior to 
the submission of the advertisement for publication;
    (iii) Are set out with equal prominence; and
    (iv) Identify the length of and the last day of the one, five, and 
ten year periods.
    (4) For an open-end management investment company, average annual 
total return (after taxes on distributions) and average annual total 
return (after taxes on distributions and redemption) for one, five, and 
ten year periods; Provided, That if the company's registration statement 
under the Securities Act of 1933 (15 U.S.C. 77a et seq.) has been in 
effect for less than one, five, or ten years, the time period during 
which the registration statement was in effect is substituted for the 
period(s) otherwise prescribed; and Provided further, That such 
quotations:
    (i) Are based on the methods of computation prescribed in Form N-1A;
    (ii) Are current to the most recent calendar quarter ended prior to 
the submission of the advertisement for publication;
    (iii) Are accompanied by quotations of total return as provided for 
in paragraph (e)(3) of this section;
    (iv) Include both average annual total return (after taxes on 
distributions) and average annual total return (after taxes on 
distributions and redemption);
    (v) Are set out with equal prominence and are set out in no greater 
prominence than the required quotations of total return; and
    (vi) Identify the length of and the last day of the one, five, and 
ten year periods; and
    (5) Any other historical measure of company performance (not subject 
to

[[Page 592]]

any prescribed method of computation) if such measurement:
    (i) Reflects all elements of return;
    (ii) Is accompanied by quotations of total return as provided for in 
paragraph (e)(3) of this section;
    (iii) In the case of any measure of performance adjusted to reflect 
the effect of taxes, is accompanied by quotations of total return as 
provided for in paragraph (e)(4) of this section;
    (iv) Is set out in no greater prominence than the required 
quotations of total return; and
    (v) Identifies the length of and the last day of the period for 
which performance is measured.
    (f) An advertisement for an open-end management investment company 
(other than a company that is permitted under Sec. 270.35d-1(a)(4) of 
this chapter to use a name suggesting that the company's distributions 
are exempt from federal income tax or from both federal and state income 
tax) that represents or implies that the company is managed to limit or 
control the effect of taxes on company performance shall accompany any 
quotation of the company's performance permitted by paragraph (e) of 
this section with quotations of total return as provided for in 
paragraph (e)(4) of this section.
    (g) All performance data contained in any advertisement must be as 
of the most recent practicable date considering the type of investment 
company and the media through which the data will be conveyed; Provided, 
however, That any advertisement containing total return quotations shall 
be considered to have complied with this provision if the total return 
quotations are current to the most recent calendar quarter ended prior 
to the submission of the advertisement for publication.

[47 FR 11446, Mar. 16, 1982, as amended at 48 FR 55725, Dec. 15, 1983; 
52 FR 21262, June 5, 1987; 53 FR 3879, Feb. 10, 1988; 53 FR 9768, Mar. 
25, 1988; 56 FR 8124, Feb. 27, 1991; 61 FR 24655, May 15, 1996; 62 FR 
64978, Dec. 9, 1997; 63 FR 13984, Mar. 23, 1998; 66 FR 9017, Apr. 16, 
2001]



Sec. 230.483  Exhibits for certain registration statements.

    If a registration statement is prepared on a form available solely 
to investment companies registered under the Investment Company Act of 
1940, or a business development company which is selling or proposing to 
sell its securities pursuant to a registration statement which has been 
filed under the Act, the following provisions apply:
    (a) Such registration statement shall contain an exhibit index, 
which should immediately precede the exhibits filed with such 
registration statement. The exhibit index shall indicate by handwritten, 
typed, printed or other legible form of notation in the manually signed 
original registration statement the page number in the sequential 
numbering system where such exhibit can be found. Where exhibits are 
incorporated by reference, this fact shall be noted in the exhibit index 
referred to in the preceding sentence. Further, the first page of the 
manually signed registration statement shall list the page in the filing 
where the exhibit index is located.
    (b) If any name is signed to the registration statement pursuant to 
a power of attorney, copies of such powers of attorney shall be filed as 
an exhibit to the registration statement. In addition, if the name of 
any officer signing on behalf of the registrant, or attesting the 
registrant's seal, is signed pursuant to a power of attorney, certified 
copies of a resolution of the registrant's board of directors 
authorizing such signature shall also be filed as an exhibit to the 
registration statement. A power of attorney that is filed with the 
Commission shall relate to a specific filing, an amendment thereto, or a 
related registration statement that is to be effective upon filing 
pursuant to Rule 462(b) (Sec. 230.462(b)) under the Act.
    (c)(1) All written consents are required to be filed as an exhibit 
to the registration statement, together with a list thereof. Such 
consents shall be dated and manually signed. Where the consent of an 
expert or counsel is contained in his report or opinion, a reference 
shall be made in the list to the report or opinion containing the 
consent.
    (2) In a registration statement filed pursuant to Rule 462(b) 
(Sec. 230.462(b)) by a closed-end company, any required consent may be 
incorporated by reference into the registration statement from a 
previously filed registration

[[Page 593]]

statement related to the offering, provided that the consent contained 
in the previously filed registration statement expressly provides for 
such incorporation. Any consent filed in a Rule 462(b) (Sec. 230.462(b)) 
registration statement may contain duplicated or facsimile versions of 
required signatures, and such signatures shall be considered manually 
filed for the purposes of the Act and the rules thereunder.
    (d) The registrant:
    (1) 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;
    (2) In any case where two or more indentures, contracts, frachises, 
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, 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 filing of copies of any documents so 
omitted; and
    (3) If an exhibit to a registration statement (other than an opinion 
or consent), filed in preliminary form, has been changed only (i) to 
insert information as to interest, dividend or conversion rates, 
redemption or conversion prices, purchase or offering prices, 
underwriters' or dealers' commission, names, addresses or participation 
of underwriters or similar matters, which information appears elsewhere 
in an amendment to the registration statement, or (ii) to correct 
typographical errors, insert signatures or make other similar immaterial 
changes, then, notwithstanding any contrary requirement of any rule or 
form, need not refile such exhibit as so amended; provided the 
registrant states in the amendment to the registration statement the 
basis provided by this rule for not refiling such exhibit. Any such 
incomplete exhibit may not, however, be incorporated by reference in any 
subsequent filing under any Act administered by the Commission.

[47 FR 11446, Mar. 16, 1982, as amended at 58 FR 14857, Mar. 18, 1993; 
59 FR 36261, July 15, 1994; 59 FR 67761, Dec. 30, 1994; 60 FR 26618, May 
17, 1995; 63 FR 13943, Mar. 23, 1998; 65 FR 24799, Apr. 27, 2000]



Sec. 230.484  Undertaking required in certain registration statements.

    If a registration statement is prepared on a form available solely 
to investment companies registered under the investment Company Act of 
1940, or a business development company which is selling or proposing to 
sell its securities pursuant to a registration statement which has been 
filed under the Act, if
    (a) Any acceleration is requested of the effective date of the 
registration statement pursuant to Rule 461 (Sec. 230.461), and
    (b)(1) Any provision or arrangement exists whereby the registrant 
may indemnify a director, officer or controlling person of the 
registrant against liabilities arising under the Act, or
    (2) The underwriting agreement contains provisions by which 
indemnification against such liabilities is given by the registrant to 
the underwriter or controlling persons of the underwriter and the 
director, officer or controlling person of the registrant is such an 
underwriter or controlling person thereof or a member of any firm which 
is an underwriter, and
    (3) The benefits of such indemnification are not waived by such 
persons; the registration statement shall include a brief description of 
the indemnification provisions and an undertaking in substantially the 
following form:

Insofar as indemnification for liability arising under the Securities 
Act of 1933 may be permitted to directors, officers and controlling 
persons of the registrant pursuant to the foregoing provisions, or 
otherwise, the registrant has been advised that in the opinion of the 
Securities and Exchange Commission such indemnification is against 
public policy as expressed in the Act and is, therefore, unenforceable. 
In the event that a claim for indemnification against such liabilities 
(other than the payment by the registrant of expenses incurred or paid 
by a director, officer or controlling person of the registrant in the

[[Page 594]]

successful defense of any action, suit or proceeding) is asserted by 
such director, officer or controlling person in connection with the 
securities being registered, the registrant will, unless in the opinion 
of its counsel the matter has been settled by controlling precedent, 
submit to a court of appropriate jurisdiction the question whether such 
indemnification by it is against public policy as expressed in the Act 
and will be governed by the final adjudication of such issue.



Sec. 230.485  Effective date of post-effective amendments filed by certain registered investment companies.

    (a) Automatic Effectiveness. (1) Except as otherwise provided in 
this section, a post-effective amendment to a registration statement 
filed by a registered open-end management investment company, unit 
investment trust or separate account as defined in section 2(a)(37) of 
the Investment Company Act of 1940 [15 USC 80a-2(a)(37)] shall become 
effective on the sixtieth day after the filing thereof, or a later date 
designated by the registrant on the facing sheet of the amendment, which 
date shall be no later than eighty days after the date on which the 
amendment is filed.
    (2) A post-effective amendment filed by a registered open-end 
management investment company for the purpose of adding a series shall 
become effective on the seventy-fifth day after the filing thereof or a 
later date designated by the registrant on the facing sheet of the 
amendment, which date shall be no later than ninety-five days after the 
date on which the amendment is filed.
    (3) The Commission, having due regard to the public interest and the 
protection of investors, may declare an amendment filed under this 
paragraph (a) effective on an earlier date.
    (b) Immediate Effectiveness. Except as otherwise provided in this 
section, a post-effective amendment to a registration statement filed by 
a registered open-end management investment company, unit investment 
trust or separate account as defined in section 2(a)(37) of the 
Investment Company Act of 1940 [15 USC 80a-2(a)(37)] shall become 
effective on the date upon which it is filed with the Commission, or a 
later date designated by the registrant on the facing sheet of the 
amendment, which date shall be not later than thirty days after the date 
on which the amendment is filed, except that a post-effective amendment 
including a designation of a new effective date pursuant to paragraph 
(b)(1)(iii) of this section shall become effective on the new effective 
date designated therein, Provided, that the following conditions are 
met:
    (1) It is filed for no purpose other than one or more of the 
following:
    (i) Bringing the financial statements up to date under section 
10(a)(3) of the Securities Act of 1933 [15 U.S.C. 77j(a)(3)] or Rules 3-
12 or 3-18 of Regulation S-X [17 CFR 210.3-12 and 210.3-18];
    (ii) Complying with an undertaking to file an amendment containing 
financial statements, which may be unaudited, within four to six months 
after the effective date of the registrant's registration statement 
under the Securities Act of 1933 [15 U.S.C. 77a et seq.];
    (iii) Designating a new effective date for a previously filed post-
effective amendment pursuant to paragraph (a) of this section, which has 
not yet become effective, Provided, that the new effective date shall be 
no earlier than the effective date designated in the previously filed 
amendment under paragraph (a) of this section and no later than thirty 
days after that date;
    (iv) Disclosing or updating the information required by Items 5 or 
6(a)(2) of Form N-1A [17 CFR 239.15A and 274.11A];
    (v) Making any non-material changes which the registrant deems 
appropriate;
    (vi) In the case of a separate account registered as a unit 
investment trust, to make changes in the disclosure in the unit 
investment trust's registration statement to reflect changes to 
disclosure in the registration statement of the investment company in 
which the unit investment trust invests all of its assets; and
    (vii) Any other purpose which the Commission shall approve.
    (2) The registrant represents that the amendment is filed solely for 
one or more of the purposes specified in paragraph (b)(1) of this 
section and that no material event requiring disclosure in the 
prospectus, other than one listed in paragraph (b)(1) of this section or 
one

[[Page 595]]

for which the Commission has approved a filing under paragraph 
(b)(1)(vii) of this section, has occurred since the latest of the 
following three dates:
    (i) the effective date of the registrant's registration statement;
    (ii) the effective date of its most recent post-effective amendment 
to its registration statement which included a prospectus; or
    (iii) the filing date of a post-effective amendment filed under 
paragraph (a) of this section which has not become effective.
    (3) The amendment recites on its facing sheet that the registrant 
proposes that the amendment will become effective under paragraph (b) of 
this section.
    (4) The representations of the registrant referred to in paragraph 
(b)(2) of this section shall be made by certification on the signature 
page of the post-effective amendment that the amendment meets all the 
requirements for effectiveness under paragraph (b) of this section. If 
counsel prepared or reviewed the post-effective amendment filed under 
paragraph (b) of this section, counsel shall furnish to the Commission 
at the time the amendment is filed a written representation that the 
amendment does not contain disclosures that would render it ineligible 
to become effective under paragraph (b) of this section.
    (c) Incomplete or Inaccurate Amendments; Suspension of Use of 
Paragraph (b) of this section. (1) No amendment shall become effective 
under paragraph (a) of this section if, prior to the effective date of 
the amendment, it should appear to the Commission that the amendment may 
be incomplete or inaccurate in any material respect, and the Commission 
furnishes to the registrant written notice that the effective date of 
the amendment is to be suspended. Following such action by the 
Commission, the registrant may file with the Commission at any time a 
petition for review of the suspension. The Commission will order a 
hearing on the matter if a request for such a hearing is included in the 
petition. If the Commission has suspended the effective date of an 
amendment, the amendment shall become effective on such date as the 
Commission may determine, having due regard to the public interest and 
the protection of investors.
    (2) The Commission may, in the manner and under the circumstances 
set forth in this paragraph (c)(2), suspend the ability of registrant to 
file a post-effective amendment under paragraph (b) of this section. The 
notice of such suspension shall be in writing and shall specify the 
period for which such suspension shall remain in effect. The Commission 
may issue a suspension if it appears to the Commission that a registrant 
which files a post-effective amendment under paragraph (b) of this 
section has not complied with the conditions of that paragraph. Any 
suspension under this paragraph (c)(2) shall become effective at such 
time as the Commission furnishes written notice thereof to the 
registrant. Any such suspension, so long as it is in effect, shall apply 
to any post-effective amendment that has been filed but has not, at the 
time of such suspension, become effective, and to any post-effective 
amendment that may be filed after the suspension. Any suspension shall 
apply only to the ability to file a post-effective amendment pursuant to 
paragraph (b) of this section and shall not otherwise affect any post-
effective amendment. Following this action by the Commission the 
registrant may file with the Commission at any time a petition for 
review of the suspension. The Commission will order a hearing on the 
matter if a request for a hearing is included in the petition.
    (d) Subsequent Amendments. (1) Except as provided in paragraph 
(d)(2) of this section, a post-effective amendment that includes a 
prospectus shall not become effective under paragraph (a) of this 
section if a subsequent post-effective amendment relating to the 
prospectus is filed before such amendment becomes effective.
    (2) A post-effective amendment that includes a prospectus shall 
become effective under paragraph (a) of this section notwithstanding the 
filing of a subsequent post-effective amendment relating to the 
prospectus, Provided, that the following conditions are met:
    (i) the subsequent amendment is filed under paragraph (b) of this 
section; and
    (ii) the subsequent amendment designates as its effective date 
either:

[[Page 596]]

    (A) the date on which the prior post-effective amendment was to 
become effective under paragraph (a) of this section; or
    (B) a new effective date designated under paragraph (b)(1)(iii) of 
this section.

In this case the prior post-effective amendment filed under paragraph 
(a) of this section and any prior post-effective amendment filed under 
paragraph (b) of this section shall also become effective on the new 
effective date designated under paragraph (b)(1)(iii) of this section.
    (3) Notwithstanding paragraphs (d)(1) and (d)(2) of this section, if 
another post-effective amendment relating to the same prospectus is 
filed under paragraph (a) of this section before the prior amendments 
filed pursuant to paragraphs (a) and (b) of this section have become 
effective, none of such prior amendments shall become effective under 
this section.
    (e) Certain Separate Accounts. For purposes of this section, a post-
effective amendment to a registration statement for an offering of 
securities by a registered open-end management investment company or 
unit investment trust as those terms are used in paragraphs (a), (b), 
and (e) of this section and as such amendments are referred to in 
paragraphs (c) and (d) of this section, shall include a post-effective 
amendment to an offering of securities by an insurance company funded 
through a separate account, as defined in section 2(a)(37) of the 
Investment Company Act of 1940 [15 U.S.C. 80a-2(a)(37)], where the 
separate account need not register under the Investment Company Act of 
1940 under section 3(c)(11) thereof [15 U.S.C. 80a-3(c)(11)].
    (f) Electronic Filers. When ascertaining the date of filing, 
electronic filers should not presume a registration statement has been 
accepted until notice of acceptance has been received from the 
Commission.
    Note: To determine the date of automatic effectiveness, the day 
following the filing date is the first day of the time period. For 
example, a post-effective amendment filed under paragraph (a) of this 
section on November 1 would become effective on December 31.

[59 FR 43464, Aug. 24, 1994, as amended at 62 FR 47938, Sept. 12, 1997; 
63 FR 13943, Mar. 23, 1998; 64 FR 27894, May 21, 1999]



Sec. 230.486  Effective date of post-effective amendments and registration statements filed by certain closed-end management investment companies.

    (a) Automatic Effectiveness. Except as otherwise provided in this 
section, a post-effective amendment to a registration statement, or a 
registration statement filed for the purpose of registering additional 
shares of common stock for which a registration statement filed on Form 
N-2 (Secs. 239.14 and 274.11a-1 of this chapter) is effective, filed by 
a registered closed-end management investment company or business 
development company which makes periodic repurchase offers under 
Sec. 270.23c-3 of this chapter, shall become effective on the sixtieth 
day after the filing thereof, or a later date designated by the 
registrant on the facing sheet of the amendment or registration 
statement, which date shall not be later than eighty days after the date 
on which the amendment or registration statement is filed, Provided, 
that the Commission, having due regard to the public interest and the 
protection of investors, may declare an amendment or registration 
statement filed under this paragraph (a) effective on an earlier date.
    (b) Immediate Effectiveness. Except as otherwise provided in this 
section, a post-effective amendment to a registration statement, or a 
registration statement for additional shares of common stock, filed by a 
registered closed-end management investment company or business 
development company which makes periodic repurchase offers under 
Sec. 270.23c-3 of this chapter, shall become effective on the date on 
which it is filed with the Commission, or a later date designated by the 
registrant on the facing sheet of the amendment or registration 
statement, which date shall be not later than thirty days after the date 
on which the amendment or registration statement is filed, except that a 
post-effective amendment including a designation of a new effective date 
under paragraph (b)(1)(iii) of

[[Page 597]]

this section shall become effective on the new effective date designated 
therein, Provided, that the following conditions are met:
    (1) It is filed for no purpose other than one or more of the 
following:
    (i) Registering additional shares of common stock for which a 
registration statement filed on Form N-2 (Secs. 239.14 and 274.11a-1 of 
this chapter) is effective;
    (ii) Bringing the financial statements up to date under section 
10(a)(3) of the Act [15 U.S.C. 77j(a)(3)] or rule 3-18 of Regulation S-X 
[17 CFR 210.3-18];
    (iii) Designating a new effective date for a previously filed post-
effective amendment or registration statement for additional shares 
under paragraph (a) of this section, which has not yet become effective, 
Provided, that the new effective date shall be no earlier than the 
effective date designated in the previously filed amendment or 
registration statement under paragraph (a) of this section and no later 
than thirty days after that date;
    (iv) Disclosing or updating the information required by Item 9c of 
Form N-2 [17 CFR 239.14 and 274.11a-1];
    (v) Making any non-material changes which the registrant deems 
appropriate; and
    (vi) Any other purpose which the Commission shall approve.
    (2) The registrant represents that the amendment is filed solely for 
one or more of the purposes specified in paragraph (b)(1) of this 
section and that no material event requiring disclosure in the 
prospectus, other than one listed in paragraph (b)(1) or one for which 
the Commission has approved a filing under paragraph (b)(1)(vi) of this 
section, has occurred since the latest of the following three dates:
    (i) the effective date of the registrant's registration statement;
    (ii) the effective date of its most recent post-effective amendment 
to its registration statement which included a prospectus; or
    (iii) the filing date of a post-effective amendment or registration 
statement filed under paragraph (a) of this section which has not become 
effective; and
    (3) The amendment or registration statement recites on the facing 
sheet thereof that the registrant proposes that the amendment or 
registration statement will become effective under paragraph (b) of this 
section.
    (4) The representations of the registrant referred to in paragraph 
(b)(2) of this section shall be made by certification on the signature 
page of the post-effective amendment or registration statement that the 
amendment or registration statement meets all of the requirements for 
effectiveness under paragraph (b) of this section. If counsel prepared 
or reviewed the post-effective amendment or registration statement filed 
under paragraph (b) of this section, counsel shall furnish to the 
Commission at the time the amendment or registration statement is filed 
a written representation that the amendment or registration statement 
does not contain disclosure which would render it ineligible to become 
effective under paragraph (b) of this section.
    (c) Incomplete or Inaccurate Amendments; Suspension of Use of 
Paragraph (b) of this section. (1) No amendment or registration 
statement shall become effective under paragraph (a) of this section if, 
prior to the effective date of the amendment or registration statement, 
it should appear to the Commission that the amendment or registration 
statement may be incomplete or inaccurate in any material respect, and 
the Commission furnishes to the registrant written notice that the 
effective date of the amendment or registration statement is to be 
suspended. Following such action by the Commission, the registrant may 
file with the Commission at any time a petition for review of the 
suspension. The Commission will order a hearing on the matter if a 
request for such a hearing is included in the petition. If the 
Commission has suspended the effective date of an amendment or 
registration statement, the amendment or registration statement shall 
become effective on such date as the Commission may determine, having 
due regard to the public interest and the protection of investors.
    (2) The Commission may, in the manner and under the circumstances 
set forth in this paragraph (c)(2), suspend the ability of a registrant 
to file a post-effective amendment or registration statement under 
paragraph (b) of

[[Page 598]]

this section. The notice of such suspension shall be in writing and 
shall specify the period for which such suspension shall remain in 
effect. The Commission may issue a suspension if it appears to the 
Commission that a registrant which files a post-effective amendment 
under paragraph (b) of this section has not complied with the conditions 
of that paragraph. Any suspension under this paragraph shall become 
effective at such time as the Commission furnishes written notice 
thereof to the company. Any such suspension, so long as it is in effect, 
shall apply to any post-effective amendment or registration statement 
that has been filed but has not, at the time of such suspension, become 
effective, and to any post-effective amendment or registration statement 
that may be filed after the suspension. Any suspension shall apply only 
to the ability to file a post-effective amendment or registration 
statement under paragraph (b) of this section and shall not otherwise 
affect any post-effective amendment or registration statement. Following 
this action by the Commission, the registrant may file with the 
Commission at any time a petition for review of the suspension. The 
Commission will order a hearing on the matter if a request for a hearing 
is included in the petition.
    (d) Subsequent Amendments. (1) Except as provided in paragraph 
(d)(2) of this section, a post-effective amendment or registration 
statement which includes a prospectus shall not become effective under 
paragraph (a) of this section if a subsequent post-effective amendment 
or registration statement relating to the prospectus is filed before 
such amendment or registration statement becomes effective.
    (2) A post-effective amendment or registration statement which 
includes a prospectus shall become effective under paragraph (a) of this 
section notwithstanding the filing of a subsequent post-effective 
amendment or registration statement relating to the prospectus, 
Provided, that the following conditions are met:
    (i) The subsequent amendment or registration statement is filed 
under paragraph (b) of this section; and
    (ii) The subsequent amendment or registration statement designates 
as its effective date either:
    (A) The date on which the prior post-effective amendment or 
registration statement was to become effective under paragraph (a) of 
this section or
    (B) A new effective date designated under paragraph (b)(1)(iii) of 
this section.

In this case the prior post-effective amendment or registration 
statement filed under paragraph (a) of this section and any prior post-
effective amendment or registration statement filed under paragraph (b) 
of this section shall also become effective on the new effective date 
designated under paragraph (b)(1)(iii) of this section.
    (3) Notwithstanding paragraphs (d)(1) and (d)(2) of this section, if 
another post-effective amendment or registration statement relating to 
the same prospectus is filed under paragraph (a) of this section before 
the prior amendments or registration statements filed under paragraphs 
(a) and (b) of this section have become effective, none of such prior 
amendments or registration statements shall become effective under this 
section.
    (e) Condition to Use of Paragraphs (a) or (b). A post-effective 
amendment or new registration statement shall not become effective under 
paragraphs (a) or (b) of this section unless within two years prior to 
the filing thereof a post-effective amendment or registration statement 
relating to the common stock of the registrant has become effective.
    (f) Electronic Filers. When ascertaining the date of filing, 
electronic filers should not presume a registration statement has been 
accepted until notice of acceptance has been received from the 
Commission.
    Note: To determine the date of automatic effectiveness, the day 
following the filing date is the first day of the time period. For 
example, a post-effective amendment filed under paragraph (a) of this 
section on November 1 would become effective on December 31.

[59 FR 43466, Aug. 24, 1994, as amended at 64 FR 27894, May 21, 1999]

[[Page 599]]



Sec. 230.487  Effectiveness of registration statements filed by certain unit investment trusts.

    (a)(1) A unit investment trust registered under the Investment 
Company Act of 1940 that files a registration statement pursuant to the 
Act in connection with the offering of the securities of a series of the 
unit investment trust, except the first series of such trust, may 
designate a date and time for such registration statement to become 
effective. If the registrant complies with the conditions set forth in 
paragraph (b) of this section, the registration statement shall become 
effective in accordance with such designation.
    (2) The registrant may designate the date and time of effectiveness 
in the registration statement or in any pre-effective amendment thereto. 
A pre-effective amendment to a registration statement with respect to 
which such a designation is properly made shall be deemed to have been 
filed with the consent of the Commission and shall accordingly be 
treated as part of the registration statement.
    (b) Availability of effectiveness of a registration statement in 
accordance with paragraph (a) of this section is conditioned upon 
compliance with the following:
    (1) The registrant is not engaged in the business of investing in 
securities issued by one or more open-end management investment 
companies;
    (2) The designation provided for in paragraph (a) of this section is 
set forth on the facing sheet of such registration statement or a pre-
effective amendment thereto;
    (3) The registrant identifies one or more previous series of the 
trust for which the effective date of the registration statement was 
determined by the Commission or its staff, and makes the following 
representations:
    (i) That the portfolio securities deposited in the series with 
respect to which the registration statement or pre-effective amendment 
is being filed do not differ materially in type or quality from those 
deposited in such previous series identified by the registrant; and
    (ii) That, except to the extent necessary to identify the specific 
portfolio securities deposited in, and to provide essential financial 
information for, the series with respect to which the registration 
statement or pre-effective amendment thereto is being filed, the 
registration statement or pre-effective amendment thereto does not 
contain disclosures that differ in any material respect from those 
contained in the registration statement of such previous series 
identified by the registrant;
    (4) The registrant represents that it has complied with rule 460 
under the Act (17 CFR 230.460);
    (5) The identification and representations provided for in 
paragraphs (b)(3) and (b)(4) of this section are made on the signature 
page of the registration statement or a pre-effective amendment thereto; 
and
    (6) If counsel prepared or reviewed such registration statement or a 
pre-effective amendment thereto, such counsel shall furnish to the 
Commission at the time the registration statement or pre-effective 
amendment thereto is filed a written representation that such 
registration statement or pre-effective amendment does not contain 
disclosures which would render such registration statement ineligible to 
become effective pursuant to paragraph (a) of this section.
    (c)(1) The Commission may, in the manner and under the circumstances 
set forth in paragraph (c)(2) of this section, suspend the ability of a 
unit investment trust to designate the date and time of effectiveness of 
a series of such trust. Any such suspension, so long as it is in effect, 
shall apply to any registration statement that has been filed but has 
not, at the time of such suspension, become effective, and to any 
registration statement with respect to any series of such trust that may 
be filed after such suspension. Any suspension shall apply only to the 
ability to designate the date and time of effectiveness pursuant to 
paragraph (a) of this section and shall not otherwise affect any 
registration statement.
    (2) Any suspension pursuant to paragraph (c)(1) of this section 
shall become effective at such time as the Commission furnishes written 
notice thereof to the company or the sponsor

[[Page 600]]

of the unit investment trust. The notice of such suspension shall be in 
writing and shall specify the period for which such suspension shall 
remain in effect. The Commission may issue such suspension if it appears 
to the Commission that any registration statement containing a 
designation pursuant to this section is incomplete or inaccurate in any 
material respect, whether or not such registration statement has become 
effective, or that the registrant has not complied with the conditions 
of this section. Following such action by the Commission, the registrant 
may file with the Commission at any time a petition for review of the 
suspension. The Commission will order a hearing on the matter if a 
request for a hearing is included in the petition.
    (d) When ascertaining the date of filing, electronic filers should 
not presume a registration statement has been accepted until notice of 
acceptance has been received from the Commission.

[47 FR 20294, May 12, 1982, as amended at 58 FR 14858, Mar. 18, 1993; 59 
FR 43467, Aug. 24, 1994; 64 FR 27894, May 21, 1999]



Sec. 230.488  Effective date of registration statements relating to securities to be issued in certain business combination transactions.

    (a) A registration statement filed on Form N-14 by a registered 
open-end management investment company for the purpose of registering 
securities to be issued in an exchange offer or other business 
combination transaction pursuant to Rule 145 under the Securities Act of 
1933 (15 U.S.C. 77a et seq.) shall become effective on the thirtieth day 
after the date upon which it is filed with the Commission, or such later 
date designated by the registrant on the facing sheet of the 
registration statement, which date shall be not later than fifty days 
after the date on which the registration statement is filed, unless the 
Commission having due regard to the public interest and the protection 
of investors declares such amendment effective on an earlier date, 
provided the following conditions are met:
    (1) Any prospectus filed as a part of the registration statement 
does not include disclosure relating to any other proposal to be acted 
on at a meeting of the shareholders of either company other than 
proposals related to an exchange offer, or a business combination 
transaction pursuant to Rule 145(a), and any other proposal relating to:
    (i) Uncontested election of directors,
    (ii) Ratification of the selection of accountants,
    (iii) The continuation of a current advisory contract,
    (iv) Increases in the number or amount of shares authorized to be 
issued by the registrant; and
    (v) Continuation of any current contract relating to the 
distribution of shares issued by the registrant; and
    (2) The registration statement recites on the facing sheet that the 
registrant proposes that the filing become effective pursuant to this 
rule.
    (b) No registration statement shall become effective pursuant to 
paragraph (a) of this section if, prior to the effective date of the 
registration statement, it should appear to the Commission that the 
registration statement may be incomplete or inaccurate in any material 
respect and the Commission furnishes to the registrant written notice 
that the effective date is to be suspended. Following such action by the 
Commission, the registrant may file with the Commission at any time a 
petition for review of the suspension. The Commission will order a 
hearing on the matter if a request for such a hearing is included in the 
petition. If the Commission has suspended the effective date of the 
registration statement, it shall become effective on such date as the 
Commission may determine, having due regard to the public interest and 
the protection of investors.
    (c) When ascertaining the date of filing, electronic filers should 
not presume a registration statement has been accepted until notice of 
acceptance has been received from the Commission.

[50 FR 48383, Nov. 25, 1985, as amended at 58 FR 14858, Mar. 18, 1993; 
59 FR 67761, Dec. 30, 1994]



Sec. 230.489  Filing of form by foreign banks and insurance companies and certain of their holding companies and finance subsidiaries.

    (a) The following foreign issuers shall file Form F-N [17 CFR 
239.43] under the

[[Page 601]]

Act appointing an agent for service of process when filing a 
registration statement under the Act:
    (1) A foreign issuer that is a foreign bank or foreign insurance 
company excepted from the definition of investment company by rule 3a-6 
(17 CFR 270.3a-6) under the Investment Company Act of 1940 (the ``1940 
Act'');
    (2) A foreign issuer that is a finance subsidiary of a foreign bank 
or foreign insurance company, as those terms are defined in rule 3a-6 
under the 1940 Act, if the finance subsidiary is excepted from the 
definition of investment company by rule 3a-5 [17 CFR 270.3a-5] under 
the 1940 Act; or
    (3) A foreign issuer that is excepted from the definition of 
investment company by rule 3a-1 (17 CFR 270.3a-1) under the 1940 Act 
because some or all of its majority-owned subsidiaries are foreign banks 
or insurance companies excepted from the definition of investment 
company by rule 3a-6 under the 1940 Act.
    (b) The requirements of paragraph (a) of this section shall not 
apply to:
    (1) A foreign issuer that has filed Form F-X (17 CFR 239.42) under 
the Securities Act of 1933 with respect to the securities being offered; 
and
    (2) A foreign issuer filing a registration statement relating to 
debt securities or non-voting preferred stock that has on file with the 
Commission a currently accurate Form N-6C9 (17 CFR 274.304, rescinded) 
under the 1940 Act.
    (c) Six copies of Form F-N, one of which shall be manually signed, 
shall be filed with the Commission at its principal office.

[56 FR 56299, Nov. 4, 1991]

  registration by foreign governments or political subdivisions thereof

    Source: Sections 230.490 to 230.494 contained in Regulation C, 12 FR 
4076, June 24, 1947, unless otherwise noted.



Sec. 230.490  Information to be furnished under paragraph (3) of Schedule B.

    Any issuer filing a registration statement pursuant to Schedule B of 
the act need not furnish the detailed information specified in paragraph 
(3) as to issues of outstanding funded debt the aggregate amount of 
which outstanding is less than 5 percent of the total funded debt 
outstanding and to be created by the security to be offered, provided 
the amount thereof is included in the statement of the total amount of 
funded debt outstanding and a statement is made as to the title, amount 
outstanding, rate of interest, and date of maturity of each such issue.



Sec. 230.491  Information to be furnished under paragraph (6) of Schedule B.

    Any foreign government filing a registration statement pursuant to 
Schedule B of the act need state, in furnishing the information required 
by paragraph (6), the names and addresses only of principal 
underwriters, namely, underwriters in privity of contract with the 
registrant, provided they are designated as principal underwriters and a 
brief statement is made as to the discounts and commissions to be 
received by subunderwriters or dealers.



Sec. 230.492  Omissions from prospectuses.

    In the case of a security for which a registration statement 
conforming to Schedule B is in effect, the following information, 
contained in the registration statement, may be omitted from any 
prospectus: Information in answer to paragraph (3) of the Schedule with 
respect to the amortization and retirement provisions for debt not being 
registered, and with respect to the provisions for the substitution of 
security for such debt; the addresses of underwriters in answer to 
paragraph (6); information in answer to paragraph (11); the addresses of 
counsel in answer to paragraph (12); the copy of any agreement or 
agreements required by paragraph (13); the agreement required by 
paragraph (14); and all information, whether contained in the 
registration statement itself or in any exhibit thereto, not required by 
Schedule B.

(Secs. 10(a)(4), 19(a), 48 Stat. 81, 85; sec. 209, 48 Stat. 908; 15 
U.S.C. 77(j)(a)(4), 77(s)(a))

[41 FR 12010, Mar. 23, 1976]



Sec. 230.493  Additional Schedule B disclosure and filing requirements.

    (a) The copy of the opinion or opinions of counsel required by 
paragraph (14) of Schedule B shall be filed either

[[Page 602]]

as a part of the registration statement as originally filed, or as an 
amendment to the registration statement.
    (b) A foreign government or political subdivision of a foreign 
government must file a registration statement submitted under Schedule B 
of the Act on the Commission's Electronic Data Gathering and Retrieval 
System (EDGAR) unless it has obtained a hardship exemption under 
Sec. 232.201 or Sec. 232.202 of this chapter (Regulation S-T).
    (c) A foreign government or political subdivision must disclose in 
its Schedule B registration statement:
    (1) That the Commission maintains an Internet site that contains 
reports and other information regarding issuers that file electronically 
with the Commission; and
    (2) The address for the Commission Internet site (http://
www.sec.gov). A foreign government or political subdivision filing on 
EDGAR is further encouraged to give its Internet address, if available.

[67 FR 36699, May 24, 2002]



Sec. 230.495  Preparation of registration statement.

    (a) A registration statement on Form N-1A (Sec. 239.15A and 
Sec. 274.11A of this chapter), Form N-2 (Sec. 239.14 and Sec. 274.11a-1 
of this chapter), Form N-3 (Sec. 239.17a and Sec. 274.11b of this 
chapter), Form N-4 (Sec. 239.17b and Sec. 274.11c of this chapter), or 
Form N-6 (Sec. 239.17c and Sec. 274.11d of this chapter), shall consist 
of the facing sheet of the applicable form; a prospectus containing the 
information called for by such form; the information, list of exhibits, 
undertakings and signatures required to be set forth in such form; 
financial statements and schedules; exhibits; and other information or 
documents filed as part of the registration statement; and all documents 
or information incorporated by reference in the foregoing (whether or 
not required to be filed).
    (b) All general instructions, instructions to items of the form, and 
instructions as to financial statements, exhibits, or prospectuses are 
to be omitted from the registration statement in all cases.
    (c) In the case of a registration statement filed on Form N-1A 
(Sec. 239.15A and Sec. 274.11A of this chapter), Form N-2 (Sec. 239.14 
and Sec. 274.11a-1 of this chapter), Form N-3 (Sec. 239.17a and 
Sec. 274.11b of this chapter), Form N-4 (Sec. 239.17b and Sec. 274.11c 
of this chapter), or Form N-6 (Sec. 239.17c and Sec. 274.11d of this 
chapter), Parts A and B shall contain the information called for by each 
of the items of the applicable Part, except that unless otherwise 
specified, no reference need be made to inapplicable items, and negative 
answers to any item may be omitted. Copies of Parts A and B may be filed 
as part of the registration statement in lieu of furnishing the 
information in item-and-answer form. Wherever such copies are filed in 
lieu of information in item-and-answer form, the text of the items of 
the form is to be omitted from the registration statement, as well as 
from Parts A and B, except to the extent provided in paragraph (d) of 
the section.
    (d) In the case of a registration statement filed on Form N-1A 
(Sec. 239.15A and Sec. 274.11A of this chapter), Form N-2 (Sec. 239.14 
and Sec. 274.11a-1 of this chapter), Form N-3 (Sec. 239.17a and 
Sec. 274.11b of this chapter), Form N-4 (Sec. 239.17b and Sec. 274.11c 
of this chapter), or Form N-6 (Sec. 239.17c and Sec. 274.11d of this 
chapter), where any item of those forms calls for information not 
required to be included in Parts A and B (generally Part C of such 
form), the text of such items, including the numbers and captions 
thereof, together with the answers thereto, shall be filed with Parts A 
or B under cover of the facing sheet of the form as part of the 
registration statement. However, the text of such items may be omitted, 
provided the answers are so prepared as to indicate the coverage of the 
item without the necessity of reference to the text of the item. If any 
such item is inapplicable, or the answer thereto is in the negative, a 
statement to that effect shall be made. Any financial statements not 
required to be included in Parts A and B shall also be filed as part of 
the registration statement proper, unless incorporated by reference 
pursuant to Sec. 230.411.
    (e) Electronic Filings. When ascertaining the date of filing, 
electronic filers should not presume a registration statement has been 
accepted

[[Page 603]]

until notice of acceptance has been received from the Commission.

(Securities Act of 1933)

[48 FR 37938, Aug. 22, 1983, as amended at 50 FR 26159, June 25, 1985; 
57 FR 56834, Dec. 1, 1992; 58 FR 14859, Mar. 18, 1993; 63 FR 13943, Mar. 
23, 1998; 64 FR 27894, May 21, 1999; 67 FR 19869, Apr. 23, 2002]



Sec. 230.496  Contents of prospectus and statement of additional information used after nine months.

    In the case of a registration statement filed on Form N-1A 
(Sec. 239.15A and Sec. 274.11A of this chapter), Form N-2 (Sec. 239.14 
and Sec. 274.11a-1 of this chapter), Form N-3 (Sec. 239.17a and 
Sec. 274.11b of this chapter), Form N-4 (Sec. 239.17b and Sec. 274.11c 
of this chapter), or Form N-6 (Sec. 239.17c and Sec. 274.11d of this 
chapter), there may be omitted from any prospectus or Statement of 
Additional Information used more than 9 months after the effective date 
of the registration statement any information previously required to be 
contained in the prospectus or the Statement of Additional Information 
insofar as later information covering the same subjects, including the 
latest available certified financial statements, as of a date not more 
than 16 months prior to the use of the prospectus or the Statement of 
Additional Information is contained therein.

[67 FR 19869, Apr. 23, 2002]



Sec. 230.497   Filing of investment company prospectuses--number of copies.

    (a) Five copies of every form of prospectus sent or given to any 
person prior to the effective date of the registration statement that 
varies from the form or forms of prospectus included in the registration 
statement filed pursuant to Sec. 230.402(a) shall be filed as part of 
the registration statement not later than the date that form of 
prospectus is first sent or given to any person, except that:
    (1) An investment company advertisement under Sec. 230.482 shall be 
filed under this paragraph (a) (but not as part of the registration 
statement) unless filed under paragraph (i) of this section; and
    (2) A profile under Sec. 230.498 shall be filed in accordance with 
paragraph (k) of this section and not as part of the registration 
statement.
    (b) Within 5 days after the effective date of a registration 
statement or the commencement of a public offering after the effective 
date of a registration statement, whichever occurs later, 10 copies of 
each form of prospectus used after the effective date in connection with 
such offering shall be filed with the Commission in the exact form in 
which it was used.
    (c) For investment companies filing on Form N-1A (Sec. 239.15A and 
Sec. 274.11A of this chapter), Form N-2 (Sec. 239.14 and Sec. 274.11a-1 
of this chapter), Form N-3 (Sec. 239.17a and Sec. 274.11b of this 
chapter), Form N-4 (Sec. 239.17b and Sec. 274.11c of this chapter), or 
Form N-6 (Sec. 239.17c and Sec. 274.11d of this chapter), within five 
days after the effective date of a registration statement or the 
commencement of a public offering after the effective date of a 
registration statement, whichever occurs later, ten copies of each form 
of prospectus and form of Statement of Additional Information used after 
the effective date in connection with such offering shall be filed with 
the Commission in the exact form in which it was used.
    (d) After the effective date of a registration statement no 
prospectus which purports to comply with section 10 of the Act and which 
varies from any form of prospectus filed pursuant to paragraph (b) or 
(c) of this rule shall be used until 10 copies thereof have been filed 
with, or mailed for filing to, the Commission.
    (e) For investment companies filing on Form N-1A (Sec. 239.15A and 
Sec. 274.11A of this chapter), Form N-2 (Sec. 239.14 and Sec. 274.11a-1 
of this chapter), Form N-3 (Sec. 239.17a and Sec. 274.11b of this 
chapter), Form N-4 (Sec. 239.17b and Sec. 274.11c of this chapter), or 
Form N-6 (Sec. 239.17c and Sec. 274.11d of this chapter), after the 
effective date of a registration statement, no prospectus that purports 
to comply with Section 10 of the Act (15 U.S.C. 77j) or Statement of 
Additional Information that varies from any form of prospectus or form 
of Statement of Additional Information filed pursuant to paragraph (c) 
of this section shall be used until five copies thereof have been filed 
with, or mailed for filing to the Commission.

[[Page 604]]

    (f) Every prospectus consisting of a radio or television broadcast 
shall be reduced in writing. Five copies of every such prospectus shall 
be filed with the Commission in accordance with the requirements of this 
section.
    (g) Each copy of a prospectus under this rule shall contain in the 
upper right hand corner of the cover page the paragraph of this rule 
under which the filing is made and the file number of the registration 
statement to which the prospectus relates. In addition, each investment 
company advertisement deemed to be a section 10(b) prospectus pursuant 
to Sec. 230.482 of this chapter shall contain in the upper right hand 
corner of the cover page the legend ``Rule 482 ad.'' The information 
required by this paragraph may be set forth in longhand, provided it is 
legible.
    (h)(1) No later than the second business day following the earlier 
of the date of the determination of the offering price or the date it is 
first used after effectiveness in connection with a public offering or 
sales, ten copies of every form of prospectus and Statement of 
Additional Information, where applicable, that discloses the information 
previously omitted from the prospectus filed as part of an effective 
registration statement in reliance upon Rule 430A under the Securities 
Act (Sec. 230.430A of this chapter) shall be filed with the Commission 
in the exact form in which it is used, or transmitted by a means 
reasonably calculated to result in filing with the Commission by that 
date.
    (2) Ten copies of each term sheet or abbreviated term sheet sent or 
given in reliance upon Rule 434 (Sec. 230.434) shall be filed with the 
Commission no later than the second business day following the earlier 
of the date of determination of the offering price, or the date it is 
first used after effectiveness in connection with a public offering or 
sales, or transmitted by a means reasonably calculated to result in 
filing with the Commission by that date.
    (i) An investment company advertisement deemed to be a section 10(b) 
prospectus pursuant to Sec. 230.482 of this chapter shall be considered 
to be filed with the Commission upon filing with a national securities 
association registered under Section 15A of the Securities Exchange Act 
of 1934 (15 U.S.C. 78o) that has adopted rules providing standards for 
the investment company advertising practices of its members and has 
established and implemented procedures to review that advertising.
    (j) In lieu of filing under paragraph (b) or (c) of this section, a 
registrant may file a certification that:
    (1) The form of prospectus and Statement of Additional Information 
that would have been filed under paragraph (b) or (c) of this section 
would not have differed from that contained in the most recent 
registration statement or amendment, and
    (2) The text of the most recent registration statement or amendment 
has been filed electronically.
    (k)(1) Profile filing requirements. A form of profile under 
Sec. 230.498 shall not be used unless:
    (i) The form of profile that has not been previously filed with the 
Commission is filed at least 30 days before the date that it is first 
sent or given to any person.
    (A) No additional filing is required during the 30-day period for 
changes (material or otherwise) to a form of profile filed under this 
paragraph if the changes are included in the definitive profile that is 
filed with the Commission under paragraph (k)(2)(ii) of this section.
    (B) The form of profile filed under this paragraph (k)(1)(i) can be 
used on the later of 30 days after the date of filing or, if the profile 
is filed in connection with an initial registration statement or a post-
effective amendment that adds a series of an investment company to a 
registration statement, or reflects changes to a prospectus included in 
a post-effective amendment filed to update a registration statement 
under Sec. 230.485, the date that the registration statement or post-
effective amendment becomes effective.
    (ii) A definitive form of a profile filed under paragraph (k)(1)(i) 
of this section is filed with the Commission no later than the fifth 
business day after the date that it is used.
    (iii) A form of profile that differs from any definitive form of 
profile that was filed under this paragraph (k) is filed with the 
Commission in definitive

[[Page 605]]

form no later than the fifth business day after the date that it is 
first used. This filing shall be made under one of the following 
according to the character of the change contained in the form of 
profile:
    (A) A form of profile that contains a material change to the 
information disclosed under Sec. 230.498 (c)(2) (i)-(iii); and
    (B) A form of profile that does not contain a material change to the 
information under Sec. 230.498 (c)(2) (i)-(iii).
    (2) Filing procedures. (i) Designate, at the top of the first page 
of any form of profile that is filed under this paragraph (k), the 
paragraph and sub-paragraph under which the profile is filed.
    (ii) Send two additional copies of the first definitive form of 
profile filed electronically under paragraph (k)(1)(ii) of this section 
to the Commission, in the primary form intended to be used for 
distribution to investors (e.g., paper, electronic media), by mail or 
other means reasonable calculated to result in receipt by the 
Commission, no later than the fifth business day after the date the 
profile is first sent or given to any person. Send copies to the 
following address: Office of Disclosure and Review, Division of 
Investment Management, U.S. Securities and Exchange Commission, 450 
Fifth St., NW., Mail Stop 5-6, Washington, DC 20549-6009. Note 
prominently that the submission is made in accordance with 
Sec. 230.497(k)(2) of Regulation C under the Securities Act. If the 
profile is distributed primarily on the Internet, supply, in lieu of 
copies, the electronic address (``URL'') of the profile page(s) in an 
exhibit to the electronic filing under this paragraph (k). Filers may 
fulfill the requirements of this paragraph by submitting with their 
definitive form of profile filed electronically under paragraph 
(k)(1)(ii) of this section an unofficial PDF copy of the profile in 
accordance with Sec. 232.104 of this chapter. This additional 
requirement will expire on June 1, 2000.

(Securities Act of 1933)

[48 FR 37939, Aug. 22, 1983, as amended at 50 FR 26160, June 25, 1985; 
52 FR 21262, June 5, 1987; 53 FR 3880, Feb. 10, 1988; 57 FR 56835, Dec. 
1, 1992; 58 FR 14859, Mar. 18, 1993; 60 FR 26618, May 17, 1995; 62 FR 
39763, July 24, 1997; 63 FR 13943, 13984, Mar. 23, 1998; 63 FR 19286, 
Apr. 17, 1998; 64 FR 27894, May 21, 1999; 67 FR 19869, Apr. 23, 2002]



Sec. 230.498   Profiles for certain open-end management investment companies.

    (a) Definitions. (1) A Fund means an open-end management investment 
company, or any series of such a company, that has, or is included in, 
an effective registration statement on Form N-1A (Secs. 274.11A and 
239.15A of this chapter) and that has a current prospectus under section 
10(a) of the Act (15 U.S.C. 77j(a)).
    (2) A Profile means a summary prospectus that is authorized under 
section 10(b) of the Act (15 U.S.C. 77j(b)) and section 24(g) of the 
Investment Company Act (15 U.S.C. 80a-24(g) for the purpose of section 
5(b)(1) of the Act (15 U.S.C. 77e(b)(1)).
    (b) General requirements. A Fund may provide a Profile to investors, 
which may include, or be accompanied by, an application that investors 
may use to purchase the Fund's shares, if the Profile contains the 
information required or not precluded by paragraph (c) of this section 
and does not incorporate any information by reference to another 
document.

Instructions to paragraph (b): 1. The Profile is intended to be a 
standardized summary of key information in the Fund's prospectus under 
section 10(b) of the Act. Additional information is available in the 
Fund's prospectus under section 10(a) of the Act, in the Fund's 
Statement of Additional Information under Form N-1A, and in the Fund's 
annual and semi-annual shareholder reports prepared in accordance with 
Sec. 270.30d-1. Funds may not use cross-references in the Profile to 
other Fund disclosure documents unless required or permitted by this 
rule. Funds should minimize cross-references and the use

[[Page 606]]

of footnotes within the Profile; cross-references and footnotes should 
generally be used only to promote a better understanding of the 
information about the Fund contained in the Profile.
    2. Provide clear and concise information in the Profile in a format 
designed to communicate the information effectively. Avoid excessive 
detail, technical or legal terms, and long sentences and paragraphs. 
Provide the information in the Profile using the plain English writing 
principles in Sec. 230.421(d).
    3. A Fund may use document design techniques intended to promote 
effective communication of the information in the Profile unless 
inconsistent with the requirements of this section.
    4. A Profile may describe more than one Fund or class of a Fund. A 
Profile that offers the securities of more than one Fund or class of a 
Fund does not need to repeat information that is the same for each Fund 
or class of Fund described in the Profile.
    5. File the Profile with the Commission as required by 
Sec. 230.497(k).

    (c) Specific requirements. (1) Include on the cover page of the 
Profile or at the beginning of the Profile:
    (i) The Fund's name and, at the Fund's option, the Fund's investment 
objective or the type of fund or class offered, or both;
    (ii) A statement identifying the document as a ``Profile,'' without 
using the term ``prospectus'';
    (iii) The approximate date of the Profile's first use;
    (iv) The following legend:

    This Profile summarizes key information about the Fund that is 
included in the Fund's prospectus. The Fund's prospectus includes 
additional information about the Fund, including a more detailed 
description of the risks associated with investing in the Fund that you 
may want to consider before you invest. You may obtain the prospectus 
and other information about the Fund at no cost by calling ---------- .

    (v) Provide a toll-free (or collect) telephone number that investors 
can use to obtain the prospectus and other information. The Fund may 
indicate, as applicable, that the prospectus and other information is 
available on the Fund's Internet site or by E-mail request. The Fund 
also may indicate, if applicable, that the prospectus and other 
information is available from a financial intermediary (such as a 
broker-dealer or bank) through which shares of the Fund may be purchased 
or sold.

Instruction to paragraph (c)(1)(v): When the Fund (or financial 
intermediary through which shares of the Fund may be purchased or sold) 
receives a request for the Fund's prospectus, the Fund's Statement of 
Additional Information, or the Fund's annual or semi-annual report, the 
Fund (or financial intermediary) must send the requested document within 
three business days of receipt of the request, by first-class mail or 
other means designed to ensure equally prompt delivery. Funds are 
encouraged to send other information requested by shareholders within 
the same period.

    (2) Provide the information required by paragraphs (c)(2) (i) 
through (ix) of this section in the order indicated:
    (i) Fund objectives/goals. Provide the information about the Fund's 
investment objectives or goals required by Item 2(a) of Form N-1A.
    (ii) Principal investment strategies of the Fund. Provide the 
information about the Fund's principal investment strategies required by 
Item 2(b) of Form N-1A. In addition, a Fund (other than a Fund that has 
not yet been required to deliver a semi-annual or annual report under 
Sec. 270.30d-1 of this chapter) must provide disclosure to the following 
effect:

    Additional information about the Fund's investments is available in 
the Fund's annual and semi-annual reports to shareholders. In the Fund's 
annual report you will find a discussion of the market conditions and 
investment strategies that significantly affected the Fund's performance 
during the last fiscal year. You may obtain either or both of these 
reports at no cost by calling --------------.

    (iii) Principal risks of investing in the Fund. Provide the 
narrative disclosure, bar chart, and table required by Item 2(c) of Form 
N-1A. Provide in the table the Fund's average annual total returns and, 
if applicable, yield as of the end of the most recent calendar quarter 
prior to the Profile's first use. Update the return information as of 
the end of each succeeding calendar quarter as soon as practicable after 
the completion of the quarter. Disclose the date of the return 
information adjacent to the table.

Instruction to paragraph (c)(2)(iii): A Fund may reflect the updated 
performance information in this section of the profile by affixing a 
label or sticker, or by other reasonable means.


[[Page 607]]


    (iv) Fees and expenses of the Fund. Include the fee table required 
by Item 3 of Form N-1A.
    (v) Investment adviser, sub-adviser(s) and portfolio manager(s) of 
the Fund. (A) Identify the Fund's investment adviser.
    (B) Identify the Fund's sub-adviser(s) (if any) except that:
    (1) A Fund need not identify a sub-adviser(s) whose sole 
responsibility for the Fund is limited to day-to-day management of the 
Fund's holdings of cash and cash equivalent instruments, unless the Fund 
is a money market fund or other Fund with a principal investment 
strategy of regularly holding cash and cash equivalent instruments.
    (2) A Fund having three or more sub-advisers, each of which manages 
a portion of the Fund's portfolio, need not identify each such sub-
adviser, except that the Fund must identify any sub-adviser that is (or 
is reasonably expected to be) responsible for the management of a 
significant portion of the Fund's net assets. For purposes of this 
paragraph (c)(2)(v)(B)(2), a significant portion of a Fund's net assets 
generally will be deemed to be 30% or more of the fund's net assets.
    (C) State the name and length of service of the person or persons 
employed by or associated with the Fund's investment adviser (or the 
Fund) who are primarily responsible for the day-to-day management of the 
Fund's portfolio and summarize each person's business experience for the 
last five years in accordance with the Instructions to Item 6(a)(2) of 
Form N-1A. A Fund with three or more such persons, each of whom is (or 
is reasonably expected to be) responsible for the management of a 
portion of the Fund's portfolio, need not identify each person, except 
that a Fund must identify and summarize the business experience for the 
last five years of each person who is (or is reasonably expected to be) 
responsible for the management of a significant portion of the Fund's 
net assets. For purposes of this paragraph (c)(2)(v)(C), a significant 
portion of a Fund's net assets generally will be deemed to be 30% or 
more of the Fund's net assets.
    (vi) Purchase of Fund shares. Disclose the Fund's minimum initial or 
subsequent investment requirements, the initial sales load (or other 
loads) to which the Fund's shares are subject, and, if applicable, the 
initial sales load breakpoints or waivers.
    (vii) Sale of Fund shares. Disclose that the Fund's shares are 
redeemable, identify the procedures for redeeming shares (e.g., on any 
business day by written request, telephone, or wire transfer), and 
identify any charges or sales loads that may be assessed upon redemption 
(including, if applicable, the existence of waivers of these charges).
    (viii) Fund distributions and tax information. Describe how 
frequently the Fund intends to make distributions and what options for 
reinvestment of distributions (if any) are available to investors. 
State, as applicable, that the Fund intends to make distributions that 
may be taxed as ordinary income or capital gains (which may be taxable 
at different rates depending on the length of time that the Fund holds 
its assets) or that the Fund intends to distribute tax-exempt income. If 
a Fund expects that its distributions, as a result of its investment 
objectives or strategies, primarily will consist of ordinary income or 
capital gains, provide disclosure to that effect. For a Fund that holds 
itself out as investing in securities generating tax-exempt income, 
provide, as applicable, a general statement to the effect that a portion 
of the Fund's distributions may be subject to federal income tax.
    (ix) Other services are available from the Fund. Provide a brief 
summary of services available to the Fund's shareholders (e.g., any 
exchange privileges or automated information services), unless otherwise 
disclosed in response to paragraphs (c)(2)(vi) through (viii) of this 
section.

Instruction to paragraph (c)(2)(ix): A Fund should disclose only those 
services that generally are available to typical investors in the Fund.

    (3) The Profile may include an application that a prospective 
investor can use to purchase the Fund's shares as long as the 
application explains with equal prominence that an investor has the 
option of purchasing shares of the Fund after reviewing the information 
in the Profile or after requesting and reviewing the Fund's prospectus 
(and

[[Page 608]]

other information) before making a decision about investing in the Fund.

Instruction to paragraph (c)(3): A Fund may include the application in a 
Profile or otherwise provide an application together with a Profile in 
any manner reasonably designed to alert investors that the application 
is to be considered along with the information about the Fund disclosed 
in the Profile.

    (d) Modified Profile for certain funds. (1) A Fund may modify or 
omit the information required by paragraphs (c)(2) (vi) through (ix) of 
this section for a Profile to be used for a Fund that is offered as an 
investment option for:
    (i) A defined contribution plan that meets the requirements for 
qualification under section 401(k) of the Internal Revenue Code (26 
U.S.C. 401(k));
    (ii) A tax-deferred arrangement under section 403(b) or 457 of the 
Internal Revenue Code (26 U.S.C. 403(b) and 457); and
    (iii) Variable contracts as defined in section 817(d) of the 
Internal Revenue Code (26 U.S.C. 817(d)).
    (2) A Fund that uses a Profile permitted under paragraph (d)(1) of 
this section may:
    (i) Alter the legend required by paragraph (c)(1)(iv) of this 
section to include a statement to the effect that the Profile is 
intended for use in connection with a defined contribution plan, another 
tax-deferred arrangement, or a variable contract, as applicable, and is 
not intended for use by other investors; and
    (ii) Modify other disclosure in a Profile consistent with offering 
the Fund as a specific investment option for a defined contribution 
plan, tax-deferred arrangement, or variable contract.
    (3) A Profile used under paragraph (d)(1)(i) or (ii), but not 
paragraph (d)(1)(iii), of this section may include, or be accompanied 
by, an enrollment form for the plan or arrangement. The enrollment form 
does not need to be filed with the Profile under Sec. 230.497.

[63 FR 13985, Mar. 23, 1998; 63 FR 19286, Apr. 17, 1998]

 Regulation D--Rules Governing the Limited Offer and Sale of Securities 
          Without Registration Under the Securities Act of 1933

    Authority: Sections 230.501 to 230.506 issued under secs. 3(b), 
4(2), 19(a), 19(c), 48 Stat. 75, 77, 85; sec. 209, 48 Stat. 908; c.122, 
59 Stat. 167; sec. 12, 78 Stat. 580; 84 Stat. 1480; sec. 308(a)(2), 90 
Stat. 57; sec. 18, 92 Stat. 275; sec. 2, 92 Stat. 962; secs. 505, 622, 
701, 94 Stat. 2291, 2292, 2294 15 U.S.C. 77c(b), 77d(2), 77s(a), 77s(c).

    Source: Sections 230.501 to 230.506 appear at 47 FR 11262, Mar. 16, 
1982, unless otherwise noted.

    Preliminary Notes: 1. The following rules relate to transactions 
exempted from the registration requirements of section 5 of the 
Securities Act of 1933 (the Act) (15 U.S.C. 77a et seq., as amended). 
Such transactions are not exempt from the antifraud, civil liability, or 
other provisions of the federal securities laws. Issuers are reminded of 
their obligation to provide such further material information, if any, 
as may be necessary to make the information required under this 
regulation, in light of the circumstances under which it is furnished, 
not misleading.
    2. Nothing in these rules obviates the need to comply with any 
applicable state law relating to the offer and sale of securities. 
Regulation D is intended to be a basic element in a uniform system of 
Federal-State limited offering exemptions consistent with the provisions 
of sections 18 and 19(c) of the Act. In those states that have adopted 
Regulation D, or any version of Regulation D, special attention should 
be directed to the applicable state laws and regulations, including 
those relating to registration of person who receive remuneration in 
connection with the offer and sale of securities, to disqualification of 
issuers and other persons associated with offerings based on state 
administrative orders or judgments, and to requirements for filings of 
notices of sales.
    3. Attempted compliance with any rule in Regulation D does not act 
as an exclusive election; the issuer can also claim the availability of 
any other applicable exemption. For instance, an issuer's failure to 
satisfy all the terms and conditions of Rule 506 shall not raise any 
presumption that the exemption provided by section 4(2) of the Act is 
not available.
    4. These rules are available only to the issuer of the securities 
and not to any affiliate of that issuer or to any other person for 
resales of the issuer's securities. The rules

[[Page 609]]

provide an exemption only for the transactions in which the securities 
are offered or sold by the issuer, not for the securities themselves.
    5. These rules may be used for business combinations that involve 
sales by virtue of rule 145(a) (17 CFR 230.145(a)) or otherwise.
    6. In view of the objectives of these rules and the policies 
underlying the Act, regulation D is not available to any issuer for any 
transaction or chain of transactions that, although in technical 
compliance with these rules, is part of a plan or scheme to evade the 
registration provisions of the Act. In such cases, registration under 
the Act is required.
    7. Securities offered and sold outside the United States in 
accordance with Regulation S need not be registered under the Act. See 
Release No. 33-6863. Regulation S may be relied upon for such offers and 
sales even if coincident offers and sales are made in accordance with 
Regulation D inside the United States. Thus, for example, persons who 
are offered and sold securities in accordance with Regulation S would 
not be counted in the calculation of the number of purchasers under 
Regulation D. Similarly, proceeds from such sales would not be included 
in the aggregate offering price. The provisions of this note, however, 
do not apply if the issuer elects to rely solely on Regulation D for 
offers or sales to persons made outside the United States.

[47 FR 11262, Mar. 16, 1982, as amended at 47 FR 54771, Dec. 6, 1982; 55 
FR 18322, May 2, 1990]



Sec. 230.501  Definitions and terms used in Regulation D.

    As used in Regulation D (Secs. 230.501-230.508), the following terms 
shall have the meaning indicated:
    (a) Accredited investor. Accredited investor shall mean any person 
who comes within any of the following categories, or who the issuer 
reasonably believes comes within any of the following categories, at the 
time of the sale of the securities to that person:
    (1) Any bank as defined in section 3(a)(2) of the Act, or any 
savings and loan association or other institution as defined in section 
3(a)(5)(A) of the Act whether acting in its individual or fiduciary 
capacity; any broker or dealer registered pursuant to section 15 of the 
Securities Exchange Act of 1934; any insurance company as defined in 
section 2(13) of the Act; any investment company registered under the 
Investment Company Act of 1940 or a business development company as 
defined in section 2(a)(48) of that Act; any Small Business Investment 
Company licensed by the U.S. Small Business Administration under section 
301(c) or (d) of the Small Business Investment Act of 1958; any plan 
established and maintained by a state, its political subdivisions, or 
any agency or instrumentality of a state or its political subdivisions, 
for the benefit of its employees, if such plan has total assets in 
excess of $5,000,000; any employee benefit plan within the meaning of 
the Employee Retirement Income Security Act of 1974 if the investment 
decision is made by a plan fiduciary, as defined in section 3(21) of 
such act, which is either a bank, savings and loan association, 
insurance company, or registered investment adviser, or if the employee 
benefit plan has total assets in excess of $5,000,000 or, if a self-
directed plan, with investment decisions made solely by persons that are 
accredited investors;
    (2) Any private business development company as defined in section 
202(a)(22) of the Investment Advisers Act of 1940;
    (3) Any organization described in section 501(c)(3) of the Internal 
Revenue Code, corporation, Massachusetts or similar business trust, or 
partnership, not formed for the specific purpose of acquiring the 
securities offered, with total assets in excess of $5,000,000;
    (4) Any director, executive officer, or general partner of the 
issuer of the securities being offered or sold, or any director, 
executive officer, or general partner of a general partner of that 
issuer;
    (5) Any natural person whose individual net worth, or joint net 
worth with that person's spouse, at the time of his purchase exceeds 
$1,000,000;
    (6) Any natural person who had an individual income in excess of 
$200,000 in each of the two most recent years or joint income with that 
person's spouse in excess of $300,000 in each of those years and has a 
reasonable expectation of reaching the same income level in the current 
year;
    (7) Any trust, with total assets in excess of $5,000,000, not formed 
for the specific purpose of acquiring the securities offered, whose 
purchase is directed by a sophisticated person as described in 
Sec. 230.506(b)(2)(ii); and

[[Page 610]]

    (8) Any entity in which all of the equity owners are accredited 
investors.
    (b) Affiliate. An affiliate of, or person affiliated with, a 
specified person shall mean 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.
    (c) Aggregate offering price. Aggregate offering price shall mean 
the sum of all cash, services, property, notes, cancellation of debt, or 
other consideration to be received by an issuer for issuance of its 
securities. Where securities are being offered for both cash and non-
cash consideration, the aggregate offering price shall be based on the 
price at which the securities are offered for cash. Any portion of the 
aggregate offering price attributable to cash received in a foreign 
currency shall be translated into United States currency at the currency 
exchange rate in effect at a reasonable time prior to or on the date of 
the sale of the securities. If securities are not offered for cash, the 
aggregate offering price shall be based on the value of the 
consideration as established by bona fide sales of that consideration 
made within a reasonable time, or, in the absence of sales, on the fair 
value as determined by an accepted standard. Such valuations of non-cash 
consideration must be reasonable at the time made.
    (d) Business combination. Business combination shall mean any 
transaction of the type specified in paragraph (a) of Rule 145 under the 
Act (17 CFR 230.145) and any transaction involving the acquisition by 
one issuer, in exchange for all or a part of its own or its parent's 
stock, of stock of another issuer if, immediately after the acquisition, 
the acquiring issuer has control of the other issuer (whether or not it 
had control before the acquisition).
    (e) Calculation of number of purchasers. For purposes of calculating 
the number of purchasers under Secs. 230.505(b) and 230.506(b) only, the 
following shall apply:
    (1) The following purchasers shall be excluded:
    (i) Any relative, spouse or relative of the spouse of a purchaser 
who has the same principal residence as the purchaser;
    (ii) Any trust or estate in which a purchaser and any of the persons 
related to him as specified in paragraph (e)(1)(i) or (e)(1)(iii) of 
this section collectively have more than 50 percent of the beneficial 
interest (excluding contingent interests);
    (iii) Any corporation or other organization of which a purchaser and 
any of the persons related to him as specified in paragraph (e)(1)(i) or 
(e)(1)(ii) of this section collectively are beneficial owners of more 
than 50 percent of the equity securities (excluding directors' 
qualifying shares) or equity interests; and
    (iv) Any accredited investor.
    (2) A corporation, partnership or other entity shall be counted as 
one purchaser. If, however, that entity is organized for the specific 
purpose of acquiring the securities offered and is not an accredited 
investor under paragraph (a)(8) of this section, then each beneficial 
owner of equity securities or equity interests in the entity shall count 
as a separate purchaser for all provisions of Regulation D 
(Secs. 230.501-230.508), except to the extent provided in paragraph 
(e)(1) of this section.
    (3) A non-contributory employee benefit plan within the meaning of 
Title I of the Employee Retirement Income Security Act of 1974 shall be 
counted as one purchaser where the trustee makes all investment 
decisions for the plan.
    (f) Executive officer. Executive officer shall mean the president, 
any vice president in charge of a principal business unit, division or 
function (such as sales, administration orfinance), any other officer 
who performs a policy making function, or any other person who performs 
similar policy making functions for the issuer. Executive officers of 
subsidiaries may be deemed executive officers of the issuer if they 
perform such policy making functions for the issuer.
    (g) Issuer. The definition of the term issuer in section 2(4) of the 
Act shall apply, except that in the case of a proceeding under the 
Federal Bankruptcy Code (11 U.S.C. 101 et seq.), the trustee or debtor 
in possession shall be considered the issuer in an offering under a plan 
or reorganization, if the securities are to be issued under the plan.

[[Page 611]]

    (h) Purchaser representative. Purchaser representative shall mean 
any person who satisfies all of the following conditions or who the 
issuer reasonably believes satisfies all of the following conditions:
    (1) Is not an affiliate, director, officer or other employee of the 
issuer, or beneficial owner of 10 percent or more of any class of the 
equity securities or 10 percent or more of the equity interest in the 
issuer, except where the purchaser is:
    (i) A relative of the purchaser representative by blood, marriage or 
adoption and not more remote than a first cousin;
    (ii) A trust or estate in which the purchaser representative and any 
persons related to him as specified in paragraph (h)(1)(i) or 
(h)(1)(iii) of this section collectively have more than 50 percent of 
the beneficial interest (excluding contingent interest) or of which the 
purchaser representative serves as trustee, executor, or in any similar 
capacity; or
    (iii) A corporation or other organization of which the purchaser 
representative and any persons related to him as specified in paragraph 
(h)(1)(i) or (h)(1)(ii) of this section collectively are the beneficial 
owners of more than 50 percent of the equity securities (excluding 
directors' qualifying shares) or equity interests;
    (2) Has such knowledge and experience in financial and business 
matters that he is capable of evaluating, alone, or together with other 
purchaser representatives of the purchaser, or together with the 
purchaser, the merits and risks of the prospective investment;
    (3) Is acknowledged by the purchaser in writing, during the course 
of the transaction, to be his purchaser representative in connection 
with evaluating the merits and risks of the prospective investment; and
    (4) Discloses to the purchaser in writing a reasonable time prior to 
the sale of securities to that purchaser any material relationship 
between himself or his affiliates and the issuer or its affiliates that 
then exists, that is mutually understood to be contemplated, or that has 
existed at any time during the previous two years, and any compensation 
received or to be received as a result of such relationship.
    Note 1: A person acting as a purchaser representative should 
consider the applicability of the registration and antifraud provisions 
relating to brokers and dealers under the Securities Exchange Act of 
1934 (Exchange Act) (15 U.S.C. 78a et seq., as amended) and relating to 
investment advisers under the Investment Advisers Act of 1940.
    Note 2: The acknowledgment required by paragraph (h)(3) and the 
disclosure required by paragraph (h)(4) of this section must be made 
with specific reference to each prospective investment. Advance blanket 
acknowledgment, such as for all securities transactions or all private 
placements, is not sufficient.
    Note 3: Disclosure of any material relationships between the 
purchaser representative or his affiliates and the issuer or its 
affiliates does not relieve the purchaser representative of his 
obligation to act in the interest of the purchaser.

[47 FR 11262, Mar. 16, 1982, as amended at 53 FR 7868, Mar. 10, 1988; 54 
FR 11372, Mar. 20, 1989]



Sec. 230.502  General conditions to be met.

    The following conditions shall be applicable to offers and sales 
made under Regulation D (Secs. 230.501-230.508):
    (a) Integration. All sales that are part of the same Regulation D 
offering must meet all of the terms and conditions of Regulation D. 
Offers and sales that are made more than six months before the start of 
a Regulation D offering or are made more than six months after 
completion of a Regulation D offering will not be considered part of 
that Regulation D offering, so long as during those six month periods 
there are no offers or sales of securities by or for the issuer that are 
of the same or a similar class as those offered or sold under Regulation 
D, other than those offers or sales of securities under an employee 
benefit plan as defined in rule 405 under the Act (17 CFR 230.405).

    Note: The term offering is not defined in the Act or in Regulation 
D. If the issuer offers or sells securities for which the safe harbor 
rule in paragraph (a) of this Sec. 230.502 is unavailable, the 
determination as to whether separate sales of securities are part of the 
same offering (i.e. are considered integrated) depends on the particular 
facts and circumstances. Generally, transactions otherwise meeting the 
requirements of an exemption will not be integrated with simultaneous 
offerings being made outside the

[[Page 612]]

United States in compliance with Regulation S. See Release No. 33-6863.
    The following factors should be considered in determining whether 
offers and sales should be integrated for purposes of the exemptions 
under Regulation D:
    (a) Whether the sales are part of a single plan of financing;
    (b) Whether the sales involve issuance of the same class of 
securities;
    (c) Whether the sales have been made at or about the same time;
    (d) Whether the same type of consideration is being received; and
    (e) Whether the sales are made for the same general purpose.

See Release 33-4552 (November 6, 1962) [27 FR 11316].

    (b) Information requirements--(1) When information must be 
furnished. If the issuer sells securities under Sec. 230.505 or 
Sec. 230.506 to any purchaser that is not an accredited investor, the 
issuer shall furnish the information specified in paragraph (b)(2) of 
this section to such purchaser a reasonable time prior to sale. The 
issuer is not required to furnish the specified information to 
purchasers when it sells securities under Sec. 230.504, or to any 
accredited investor.

    Note: When an issuer provides information to investors pursuant to 
paragraph (b)(1), it should consider providing such information to 
accredited investors as well, in view of the anti-fraud provisions of 
the federal securities laws.

    (2) Type of information to be furnished. (i) If the issuer is not 
subject to the reporting requirements of section 13 or 15(d) of the 
Exchange Act, at a reasonable time prior to the sale of securities the 
issuer shall furnish to the purchaser, to the extent material to an 
understanding of the issuer, its business and the securities being 
offered:
    (A) Non-financial statement information. If the issuer is eligible 
to use Regulation A (Sec. 230.251-263), the same kind of information as 
would be required in Part II of Form 1-A (Sec. 239.90 of this chapter). 
If the issuer is not eligible to use Regulation A, the same kind of 
information as required in Part I of a registration statement filed 
under the Securities Act on the form that the issuer would be entitled 
to use.
    (B) Financial statement information. (1) Offerings up to $2,000,000. 
The information required in Item 310 of Regulation S-B (Sec. 228.310 of 
this chapter), except that only the issuer's balance sheet, which shall 
be dated within 120 days of the start of the offering, must be audited.
    (2) Offerings up to $7,500,000. The financial statement information 
required in Form SB-2 (Sec. 239.10 of this chapter). If an issuer, other 
than a limited partnership, cannot obtain audited financial statements 
without unreasonable effort or expense, then only the issuer's balance 
sheet, which shall be dated within 120 days of the start of the 
offering, must be audited. If the issuer is a limited partnership and 
cannot obtain the required financial statements without unreasonable 
effort or expense, it may furnish financial statements that have been 
prepared on the basis of Federal income tax requirements and examined 
and reported on in accordance with generally accepted auditing standards 
by an independent public or certified accountant.
    (3) Offerings over $7,500,000. The financial statement as would be 
required in a registration statement filed under the Act on the form 
that the issuer would be entitled to use. If an issuer, other than a 
limited partnership, cannot obtain audited financial statements without 
unreasonable effort or expense, then only the issuer's balance sheet, 
which shall be dated within 120 days of the start of the offering, must 
be audited. If the issuer is a limited partnership and cannot obtain the 
required financial statements without unreasonable effort or expense, it 
may furnish financial statements that have been prepared on the basis of 
Federal income tax requirements and examined and reported on in 
accordance with generally accepted auditing standards by an independent 
public or certified accountant.
    (C) If the issuer is a foreign private issuer eligible to use Form 
20-F (Sec. 249.220f of this chapter), the issuer shall disclose the same 
kind of information required to be included in a registration statement 
filed under the Act on the form that the issuer would be entitled to 
use. The financial statements need be certified only to the extent 
required by paragraph (b)(2)(i) (B) (1), (2) or (3) of this section, as 
appropriate.

[[Page 613]]

    (ii) If the issuer is subject to the reporting requirements of 
section 13 or 15(d) of the Exchange Act, at a reasonable time prior to 
the sale of securities the issuer shall furnish to the purchaser the 
information specified in paragraph (b)(2)(ii)(A) or (B) of this section, 
and in either event the information specified in paragraph (b)(2)(ii)(C) 
of this section:
    (A) The issuer's annual report to shareholders for the most recent 
fiscal year, if such annual report meets the requirements of 
Sec. 240.14a-3 or 240.14c-3 under the Exchange Act, the definitive proxy 
statement filed in connection with that annual report, and, if requested 
by the purchaser in writing, a copy of the issuer's most recent Form 10-
K and Form 10-KSB (17 CFR 249.310) under the Exchange Act.
    (B) The information contained in an annual report on Form 10-K 
(Sec. 249.310 of this chapter) or 10-KSB (Sec. 249.310b of this chapter) 
under the Exchange Act or in a registration statement on Form S-1 
(Sec. 239.11 of this chapter), SB-1 (Sec. 239.9 of this chapter), SB-2 
(Sec. 239.10 of this chapter) or S-11 (Sec. 239.18 of this chapter) 
under the Act or on Form 10 (Sec. 249.210 of this chapter) or Form 10-SB 
(Sec. 249.210b of this chapter) under the Exchange Act, whichever filing 
is the most recent required to be filed.
    (C) The information contained in any reports or documents required 
to be filed by the issuer under sections 13(a), 14(a), 14(c), and 15(d) 
of the Exchange Act since the distribution or filing of the report or 
registration statement specified in paragraphs (b)(2)(ii) (A) or (B), 
and a brief description of the securities being offered, the use of the 
proceeds from the offering, and any material changes in the issuer's 
affairs that are not disclosed in the documents furnished.
    (D) If the issuer is a foreign private issuer, the issuer may 
provide in lieu of the information specified in paragraph (b)(2)(ii) (A) 
or (B) of this section, the information contained in its most recent 
filing on Form 20-F or Form F-1 (Sec. 239.31 of the chapter).
    (iii) Exhibits required to be filed with the Commission as part of a 
registration statement or report, other than an annual report to 
shareholders or parts of that report incorporated by reference in a Form 
10-K and Form 10-KSB report, need not be furnished to each purchaser 
that is not an accredited investor if the contents of material exhibits 
are identified and such exhibits are made available to a purchaser, upon 
his written request, a reasonable time prior to his purchase.
    (iv) At a reasonable time prior to the sale of securities to any 
purchaser that is not an accredited investor in a transaction under 
Sec. 230.505 or Sec. 230.506, the issuer shall furnish to the purchaser 
a brief description in writing of any material written information 
concerning the offering that has been provided by the issuer to any 
accredited investor but not previously delivered to such unaccredited 
purchaser. The issuer shall furnish any portion or all of this 
information to the purchaser, upon his written request a reasonable time 
prior to his purchase.
    (v) The issuer shall also make available to each purchaser at a 
reasonable time prior to his purchase of securities in a transaction 
under Sec. 230.505 or Sec. 230.506 the opportunity to ask questions and 
receive answers concerning the terms and conditions of the offering and 
to obtain any additional information which the issuer possesses or can 
acquire without unreasonable effort or expense that is necessary to 
verify the accuracy of information furnished under paragraph (b)(2) (i) 
or (ii) of this section.
    (vi) For business combinations or exchange offers, in addition to 
information required by Form S-4 (17 CFR 239.25), the issuer shall 
provide to each purchaser at the time the plan is submitted to security 
holders, or, with an exchange, during the course of the transaction and 
prior to sale, written information about any terms or arrangements of 
the proposed transactions that are materially different from those for 
all other security holders. For purposes of this subsection, an issuer 
which is not subject to the reporting requirements of section 13 or 
15(d) of the Exchange Act may satisfy the requirements of Part I.B. or 
C. of Form S-4 by compliance with paragraph (b)(2)(i) of this 
Sec. 230.502.
    (vii) At a reasonable time prior to the sale of securities to any 
purchaser that is not an accredited investor in a

[[Page 614]]

transaction under Sec. 230.505 or Sec. 230.506, the issuer shall advise 
the purchaser of the limitations on resale in the manner contained in 
paragraph (d)(2) of this section. Such disclosure may be contained in 
other materials required to be provided by this paragraph.
    (c) Limitation on manner of offering. Except as provided in 
Sec. 230.504(b)(1), neither the issuer nor any person acting on its 
behalf shall offer or sell the securities by any form of general 
solicitation or general advertising, including, but not limited to, the 
following:
    (1) Any advertisement, article, notice or other communication 
published in any newspaper, magazine, or similar media or broadcast over 
television or radio; and
    (2) Any seminar or meeting whose attendees have been invited by any 
general solicitation or general advertising;Provided, however, that 
publication by an issuer of a notice in accordance with Sec. 230.135c 
shall not be deemed to constitute general solicitation or general 
advertising for purposes of this section; Provided further, that, if the 
requirements of Sec. 230.135e are satisfied, providing any journalist 
with access to press conferences held outside of the United States, to 
meetings with issuer or selling security holder representatives 
conducted outside of the United States, or to written press-related 
materials released outside the United States, at or in which a present 
or proposed offering of securities is discussed, will not be deemed to 
constitute general solicitation or general advertising for purposes of 
this section.
    (d) Limitations on resale. Except as provided in Sec. 230.504(b)(1), 
securities acquired in a transaction under Regulation D shall have the 
status of securities acquired in a transaction under section 4(2) of the 
Act and cannot be resold without registration under the Act or an 
exemption therefrom. The issuer shall exercise reasonable care to assure 
that the purchasers of the securities are not underwriters within the 
meaning of section 2(11) of the Act, which reasonable care may be 
demonstrated by the following:
    (1) Reasonable inquiry to determine if the purchaser is acquiring 
the securities for himself or for other persons;
    (2) Written disclosure to each purchaser prior to sale that the 
securities have not been registered under the Act and, therefore, cannot 
be resold unless they are registered under the Act or unless an 
exemption from registration is available; and
    (3) Placement of a legend on the certificate or other document that 
evidences the securities stating that the securities have not been 
registered under the Act and setting forth or referring to the 
restrictions on transferability and sale of the securities.

While taking these actions will establish the requisite reasonable care, 
it is not the exclusive method to demonstrate such care. Other actions 
by the issuer may satisfy this provision. In addition, 
Sec. 230.502(b)(2)(vii) requires the delivery of written disclosure of 
the limitations on resale to investors in certain instances.

[47 FR 11262, Mar. 16, 1982, as amended at 47 FR 54771, Dec. 6, 1982; 53 
FR 7869, Mar. 11, 1988; 54 FR 11372, Mar. 20, 1989; 55 FR 18322, May 2, 
1990; 56 FR 30054, 30055, July 1, 1991; 57 FR 47409, Oct. 16, 1992; 58 
FR 26514, May 4, 1993; 59 FR 21650, Apr. 26, 1994; 62 FR 53954, Oct. 17, 
1997]



Sec. 230.503  Filing of notice of sales.

    (a) An issuer offering or selling securities in reliance on 
Sec. 230.504, Sec. 230.505 or Sec. 230.506 shall file with the 
Commission five copies of a notice on Form D (17 CFR 239.500) no later 
than 15 days after the first sale of securities.
    (b) One copy of every notice on Form D shall be manually signed by a 
person duly authorized by the issuer.
    (c) If sales are made under Sec. 230.505, the notice shall contain 
an undertaking by the issuer to furnish to the Commission, upon the 
written request of its staff, the information furnished by the issuer 
under Sec. 230.502(b)(2) to any purchaser that is not an accredited 
investor.
    (d) Amendments to notices filed under paragraph (a) of this section 
need only report the issuer's name and the information required by Part 
C and any material change in the facts from those set forth in Parts A 
and B.
    (e) A notice on Form D shall be considered filed with the Commission 
under paragraph (a) of this section.

[[Page 615]]

    (1) As of the date on which it is received at the Commission's 
principal office in Washington, DC; or
    (2) As of the date on which the notice is mailed by means of United 
States registered or certified mail to the Commission's principal office 
in Washington, DC, if the notice is delivered to such office after the 
date on which it is required to be filed.

[51 FR 36386, Oct. 10, 1986, as amended at 54 FR 11373, Mar. 20, 1989]



Sec. 230.504  Exemption for limited offerings and sales of securities not exceeding $1,000,000.

    (a) Exemption. Offers and sales of securities that satisfy the 
conditions in paragraph (b) of this Sec. 230.504 by an issuer that is 
not:
    (1) Subject to the reporting requirements of section 13 or 15(d) of 
the Exchange Act,;
    (2) An investment company; or
    (3) A development stage company that either has no specific business 
plan or purpose or has indicated that its business plan is to engage in 
a merger or acquisition with an unidentified company or companies, or 
other entity or person, shall be exempt from the provision of section 5 
of the Act under section 3(b) of the Act.
    (b) Conditions to be met. (1) General conditions. To qualify for 
exemption under this Sec. 230.504, offers and sales must satisfy the 
terms and conditions of Secs. 230.501 and 230.502 (a), (c) and (d), 
except that the provisions of Sec. 230.502 (c) and (d) will not apply to 
offers and sales of securities under this Sec. 230.504 that are made:
    (i) Exclusively in one or more states that provide for the 
registration of the securities, and require the public filing and 
delivery to investors of a substantive disclosure document before sale, 
and are made in accordance with those state provisions;
    (ii) In one or more states that have no provision for the 
registration of the securities or the public filing or delivery of a 
disclosure document before sale, if the securities have been registered 
in at least one state that provides for such registration, public filing 
and delivery before sale, offers and sales are made in that state in 
accordance with such provisions, and the disclosure document is 
delivered before sale to all purchasers (including those in the states 
that have no such procedure); or
    (iii) Exclusively according to state law exemptions from 
registration that permit general solicitation and general advertising so 
long as sales are made only to ``accredited investors'' as defined in 
Sec. 230.501(a).
    (2) The aggregate offering price for an offering of securities under 
this Sec. 230.504, as defined in Sec. 230.501(c), shall not exceed 
$1,000,000, less the aggregate offering price for all securities sold 
within the twelve months before the start of and during the offering of 
securities under this Sec. 230.504, in reliance on any exemption under 
section 3(b), or in violation of section 5(a) of the Securities Act.
    Note 1: The calculation of the aggregate offering price is 
illustrated as follows:
    If an issuer sold $900,000 on June 1, 1987 under this Sec. 230.504 
and an additional $4,100,000 on December 1, 1987 under Sec. 230.505, the 
issuer could not sell any of its securities under this Sec. 230.504 
until December 1, 1988. Until then the issuer must count the December 1, 
1987 sale towards the $1,000,000 limit within the preceding twelve 
months.
    Note 2: If a transaction under Sec. 230.504 fails to meet the 
limitation on the aggregate offering price, it does not affect the 
availability of this Sec. 230.504 for the other transactions considered 
in applying such limitation. For example, if an issuer sold $1,000,000 
worth of its securities on January 1, 1988 under this Sec. 230.504 and 
an additional $500,000 worth on July 1, 1988, this Sec. 230.504 would 
not be available for the later sale, but would still be applicable to 
the January 1, 1988 sale.

[57 FR 36473, Aug. 13, 1992, as amended at 61 FR 30402, June 14, 1996; 
64 FR 11094, Mar. 8, 1999]



Sec. 230.505  Exemption for limited offers and sales of securities not exceeding $5,000,000.

    (a) Exemption. Offers and sales of securities that satisfy the 
conditions in paragraph (b) of this section by an issuer that is not an 
investment company shall be exempt from the provisions of section 5 of 
the Act under section 3(b) of the Act.
    (b) Conditions to be met--(1) General conditions. To qualify for 
exemption under this section, offers and sales must satisfy the terms 
and conditions of Secs. 230.501 and 230.502.

[[Page 616]]

    (2) Specific conditions--(i) Limitation on aggregate offering price. 
The aggregate offering price for an offering of securities under this 
Sec. 230.505, as defined in Sec. 203.501(c), shall not exceed 
$5,000,000, less the aggregate offering price for all securities sold 
within the twelve months before the start of and during the offering of 
securities under this section in reliance on any exemption under section 
3(b) of the Act or in violation of section 5(a) of the Act.
    Note: The calculation of the aggregate offering price is illustrated 
as follows:
    Example 1: If an issuer sold $2,000,000 of its securities on June 1, 
1982 under this Sec. 230.505 and an additional $1,000,000 on September 
1, 1982, the issuer would be permitted to sell only $2,000,000 more 
under this Sec. 230.505 until June 1, 1983. Until that date the issuer 
must count both prior sales towards the $5,000,000 limit. However, if 
the issuer made its third sale on June 1, 1983, the issuer could then 
sell $4,000,000 of its securities because the June 1, 1982 sale would 
not be within the preceding twelve months.
    Example 2: If an issuer sold $500,000 of its securities on June 1, 
1982 under Sec. 230.504 and an additional $4,500,000 on December 1, 1982 
under this section, then the issuer could not sell any of its securities 
under this section until June 1, 1983. At that time it could sell an 
additional $500,000 of its securities.
    (ii) Limitation on number of purchasers. There are no more than or 
the issuer reasonably believes that there are no more than 35 purchasers 
of securities from the issuer in any offering under this section.
    (iii) Disqualifications. No exemption under this section shall be 
available for the securities of any issuer described in Sec. 230.262 of 
Regulation A, except that for purposes of this section only:
    (A) The term ``filing of the offering statement required by 
Sec. 230.252'' as used in Sec. 230.262(a), (b) and (c) shall mean the 
first sale of securities under this section;
    (B) The term ``underwriter'' as used in Sec. 230.262 (b) and (c) 
shall mean a person that has been or will be paid directly or indirectly 
remuneration for solicitation of purchasers in connection with sales of 
securities under this section; and
    (C) Paragraph (b)(2)(iii) of this section shall not apply to any 
issuer if the Commission determines, upon a showing of good cause, that 
it is not necessary under the circumstances that the exemption be 
denied. Any such determination shall be without prejudice to any other 
action by the Commission in any other proceeding or matter with respect 
to the issuer or any other person.

[47 FR 11262, Mar. 16, 1982, as amended at 54 FR 11373, Mar. 20, 1989; 
57 FR 36473, Aug. 13, 1992]



Sec. 230.506  Exemption for limited offers and sales without regard to dollar amount of offering.

    (a) Exemption. Offers and sales of securities by an issuer that 
satisfy the conditions in paragraph (b) of this section shall be deemed 
to be transactions not involving any public offering within the meaning 
of section 4(2) of the Act.
    (b) Conditions to be met--(1) General conditions. To qualify for an 
exemption under this section, offers and sales must satisfy all the 
terms and conditions of Secs. 230.501 and 230.502.
    (2) Specific Conditions--(i) Limitation on number of purchasers. 
There are no more than or the issuer reasonably believes that there are 
no more than 35 purchasers of securities from the issuer in any offering 
under this section.

    Note: See Sec. 230.501(e) for the calculation of the number of 
purchasers and Sec. 230.502(a) for what may or may not constitute an 
offering under this section.

    (ii) Nature of purchasers. Each purchaser who is not an accredited 
investor either alone or with his purchaser representative(s) has such 
knowledge and experience in financial and business matters that he is 
capable of evaluating the merits and risks of the prospective 
investment, or the issuer reasonably believes immediately prior to 
making any sale that such purchaser comes within this description.

[47 FR 11262, Mar. 6, 1982, as amended at 54 FR 11373, Mar. 20, 1989]



Sec. 230.507  Disqualifying provision relating to exemptions under Secs. 230.504, 230.505 and 230.506.

    (a) No exemption under Sec. 230.505, Sec. 230.505 or Sec. 230.506 
shall be available for an issuer if such issuer, any of its predecessors 
or affiliates have been

[[Page 617]]

subject to any order, judgment, or decree of any court of competent 
jurisdiction temporarily, preliminary or permanently enjoining such 
person for failure to comply with Sec. 230.503.
    (b) Paragraph (a) of this section shall not apply if the Commission 
determines, upon a showing of good cause, that it is not necessary under 
the circumstances that the exemption be denied.

[54 FR 11374, Mar. 20, 1989]



Sec. 230.508  Insignificant deviations from a term, condition or requirement of Regulation D.

    (a) A failure to comply with a term, condition or requirement of 
Sec. 230.504, Sec. 230.505 or Sec. 230.506 will not result in the loss 
of the exemption from the requirements of section 5 of the Act for any 
offer or sale to a particular individual or entity, if the person 
relying on the exemption shows:
    (1) The failure to comply did not pertain to a term, condition or 
requirement directly intended to protect that particular individual or 
entity; and
    (2) The failure to comply was insignificant with respect to the 
offering as a whole, provided that any failure to comply with paragraph 
(c) of Sec. 230.502, paragraph (b)(2) of Sec. 230.504, paragraphs 
(b)(2)(i) and (ii) of Sec. 230.505 and paragraph (b)(2)(i) of 
Sec. 230.506 shall be deemed to be significant to the offering as a 
whole; and
    (3) A good faith and reasonable attempt was made to comply with all 
applicable terms, conditions and requirements of Sec. 230.504, 
Sec. 230.505 or Sec. 230.506.
    (b) A transaction made in reliance on Sec. 230.504, Sec. 230.505 or 
Sec. 230.506 shall comply with all applicable terms, conditions and 
requirements of Regulation D. Where an exemption is established only 
through reliance upon paragraph (a) of this section, the failure to 
comply shall nonetheless be actionable by the Commission under section 
20 of the Act.

[54 FR 11374, Mar. 20, 1989, as amended at 57 FR 36473, Aug. 13, 1992]

  Regulation E--Exemption for Securities of Small Business Investment 
                                Companies

    Authority: Sections 230.601 to 230.610a issued under sec. 19, 48 
Stat. 85, as amended; 15 U.S.C. 77s.

    Source: Sections 230.601 to 230.610a appear at 23 FR 10484, Dec. 30, 
1958, unless otherwise noted.

    Cross Reference: For regulations of Small Business Administration 
under the Small Business Investment Act of 1958, see 13 CFR, Chapter I.



Sec. 230.601  Definitions of terms used in Secs. 230.601 to 230.610a.

    As used in Secs. 230.601 to 230.610a, the following terms shall have 
the meaning indicated:
    Act. The term Act refers to the Securities Act of 1933 unless 
specifically stated otherwise.
    Affiliate. An affiliate of an issuer is a person controlling, 
controlled by or under common control with such issuer. An individual 
who controls an issuer is also an affiliate of such issuer.
    Notification. The term notification means the notification required 
by Sec. 230.604.
    Offering Circular. The term offering circular means the offering 
circular required by Sec. 230.605.
    State. A State is any State, Territory or insular possession of the 
United States, or the District of Columbia.
    Underwriter. The term underwriter shall have the meaning given in 
section 2(11) of the Act.



Sec. 230.602  Securities exempted.

    (a) Except as hereinafter provided in this rule, securities issued 
by any small business investment company which is registered under the 
Investment Company Act of 1940, or any closed-end investment company 
that has elected to be regulated as a business development company under 
the Investment Company Act of 1940 or has notified the Commission that 
it intends to elect to be regulated as a business development company 
pursuant to section 54 of the Investment Company Act of 1940, will be 
exempt from registration under the Securities Act of

[[Page 618]]

1933, subject to the terms and conditions of Secs. 230.601 to 230.610a. 
As used in this paragraph, the term small business investment company 
means any company which is licensed as a small business investment 
company under the Small Business Investment Act of 1958 or which has 
received the preliminary approval of the Small Business Administration 
and has been notified by the Administration that it may submit a license 
application. As used in this paragraph, the term business development 
company means any closed-end investment company which meets the 
definitional requirements of section 2(a)(48) (A) and (B) of the 
Investment Company Act of 1940 (15 U.S.C. 80a-2(a)(48)).
    (b) No exemption under Secs. 230.601 to 230.610a shall be available 
for the securities of any issuer if such issuer or any of its 
affiliates:
    (1) Has filed a registration statement which is the subject of any 
proceeding or examination under section 8 of the Act, or is the subject 
of any refusal order or stop order entered thereunder within five years 
prior to the filing of the notification;
    (2) Is subject to pending proceedings under Sec. 230.610 or any 
similar rule adopted under section 3(b) of the Act, or to an order 
entered thereunder within five years prior to the filing of such 
notification;
    (3) Has been convicted within five years prior to the filing of such 
notification of any crime or offense involving the purchase or sale of 
securities;
    (4) Is subject to any order, judgment or decree of any court of 
competent jurisdiction, entered within five years prior to the filing of 
such notification, temporarily or permanently restraining or enjoining 
such person from engaging in or continuing any conduct or practice in 
connection with the purchase or sale of securities;
    (5) Is subject to pending proceedings under section 8(e) of the 
Investment Company Act of 1940 or to any suspension or revocation order 
issued thereunder;
    (6) Is subject to an injunction issued pursuant to section 35(d) of 
the Investment Company Act of 1940; or
    (7) Is subject to a U.S. Post Office fraud order.
    (c) No exemption under Secs. 230.601 to 230.610a shall be available 
for the securities of any issuer, if any of its directors, officers or 
principal security holders, any investment adviser or any underwriter of 
the securities to be offered, or any partner, director or officer of any 
such investment advisor or underwriter:
    (1) Has been convicted within ten years prior to the filing of the 
notification of any crime or offense involving the purchase or sale of 
any security or arising out of such person's conduct as an underwriter, 
broker, dealer or investment adviser;
    (2) Is temporarily or permanently restrained or enjoined by any 
court from engaging in or continuing any conduct or practice in 
connection with the purchase or sale of any security or arising out of 
such person's conduct as an underwriter, broker, dealer or investment 
adviser;
    (3) Is subject to an order of the Commission entered pursuant to 
section 15(b) or 15A(1) of the Securities Exchange Act of 1934; has been 
found by the Commission to be a cause of any such order which is still 
in effect; or is subject to an order of the Commission entered pursuant 
to section 203 (d) or (e) of the Investment Advisers Act of 1940;
    (4) Is suspended or has been expelled from membership in a national 
securities dealers association or a national securities exchange for 
conduct inconsistent with just and equitable principles of trade; or
    (5) Is subject to a U.S. Post Office fraud order.
    (d) No exemption under Secs. 230.601 to 230.610a shall be available 
for the securities of any issuer if any underwriter of such securities, 
or any director, officer or partner of any such underwriter was, or was 
named as, an underwriter of any securities:
    (1) Covered by any registration statement which is the subject of 
any proceeding or examination under section 8 of the Act, or is the 
subject of any refusal order or stop order entered thereunder within 
five years prior to the filing of the notification; or
    (2) Covered by any filing which is subject to pending proceedings 
under Sec. 230.610 or any similar rule adopted

[[Page 619]]

under section 3(b) of the Act, or to an order entered thereunder within 
five years prior to the filing of such notification.
    (e) Paragraph (b), (c) or (d) of this section shall not apply to the 
securities of any issuer if the Commission determines, upon a showing of 
good cause, that it is not necessary under the circumstances that the 
exemption be denied. Any such determination by the Commission shall be 
without prejudice to any other action by the Commission in any other 
proceeding or matter with respect to the issuer or any other person.

(Secs. 3(b) and 3(c) Securities Act of 1933 (15 U.S.C. 77c (b) and (c)); 
sec. 38, Investment Company Act of 1940 (15 U.S.C. 80a-37))

[23 FR 10484, Dec. 30, 1958, as amended at 49 FR 35344, Sept. 7, 1984]



Sec. 230.603  Amount of securities exempted.

    (a) The aggregate offering price of all of the following securities 
of the issuer shall not exceed $5,000,000:
    (1) All securities presently being offered under Secs. 230.601 to 
230.610a, or specified in the notification as proposed to be so offered;
    (2) All securities previously sold pursuant to an offering under 
Secs. 230.601 to 230.610a, commenced within one year prior to the 
commencement of the proposed offering; and
    (3) All securities sold in violation of section 5(a) of the Act 
within one year prior to the commencement of the proposed offering.

Notwithstanding the foregoing, the aggregate offering price of all 
securities so offered or sold on behalf of any one person other than the 
issuer shall not exceed $100,000, except that this limitation shall not 
apply if the securities are to be offered on behalf of the estate of a 
deceased person within two years after the death of such person.
    (b) The aggregate offering price of securities, which have a 
determinable market value shall be computed upon the basis of such 
market value as determined from transactions or quotations on a 
specified date within 15 days prior to the date of filing the 
notification, or the offering price to the public, whichever is higher: 
Provided, That the aggregate gross proceeds actually received from the 
public shall not exceed the maximum aggregate offering price permitted 
in the particular case by paragraph (a) of this section.
    (c) In computing the amount of securities which may be offered under 
Secs. 230.601 to 230.610a, there need not be included unsold securities 
the offering of which has been withdrawn with the consent of the 
Commission by amending the pertinent notification to reduce the amount 
stated therein as proposed to be offered.

(15 U.S.C. 77c; secs. 3(b) and 3(c), Securities Act of 1933 (15 U.S.C. 
77c (b) and (c)); sec. 38, Investment Company Act of 1940 (15 U.S.C. 
80a-37))

[23 FR 10484, Dec. 30, 1958, as amended at 36 FR 7050, Apr. 14, 1971; 49 
FR 35344, Sept. 7, 1984]



Sec. 230.604  Filing of notification on Form   1-E.

    (a) At least 10 days (Saturdays, Sundays and holidays excluded) 
prior to the date on which the initial offering or sale of any 
securities is to be made under Secs. 230.601 to 230.610a, there shall be 
filed with the Commission four copies of a notification on Form 1-E. The 
Commission may, however, in its discretion, authorize the commencement 
of the offering or sale prior to the expiration of such 10-day period 
upon a written request for such authorization.
    (b) The notification shall be signed by the issuer and each person, 
other than the issuer, for whose account any of the securities are to be 
offered. If the notification is signed by any person on behalf of any 
other person, evidence of authority to sign on behalf of such other 
person shall be filed with the notification, except where an officer of 
the issuer signs on behalf of the issuer.
    (c) Any amendment to the notification shall be signed in the same 
manner as the original notification. Four copies of such amendment shall 
be filed with the Commission at least 10 days prior to any offering or 
sale of the securities subsequent to the filing of such amendment, or 
such shorter period as the Commission, in its discretion, may authorize 
upon a written request for such authorization.
    (d) A notification or any exhibit or other document filed as a part 
thereof may be withdrawn upon application

[[Page 620]]

unless the notification is subject to an order under Sec. 230.610 at the 
time the application is filed or becomes subject to such an order within 
15 days (Saturdays, Sundays and holidays excluded) thereafter: Provided, 
That a notification may not be withdrawn after any of the securities 
proposed to be offered thereunder have been sold. Any such application 
shall be signed in the same manner as the notification.

(Secs. 3(b) and 3(c), Securities Act of 1933 (15 U.S.C. 77c (b) and 
(c)); sec. 38, Investment Company Act of 1940 (15 U.S.C. 80a-37))

[23 FR 10484, Dec. 30, 1958, as amended at 37 FR 1471, Jan. 29, 1972; 49 
FR 35344, Sept. 7, 1984; 61 FR 49959, Sept. 24, 1996]



Sec. 230.605  Filing and use of the offering circular.

    (a) Except as provided in paragraphs (b) or (f) of this rule and in 
Sec. 230.606:
    (1) No written offer of securities of any issuer shall be made under 
Secs. 230.601 to 230.610a unless an offering circular containing the 
information specified in Schedule A or Schedule B, as appropriate, is 
concurrently given or has previously been given to the person to whom 
the offer is made, or has been sent to such person under such 
circumstances that it would normally have been received by him at or 
prior to the time of such written offer; and
    (2) No securities of such issuer shall be sold under Secs. 230.601 
to 230.610a unless such an offering circular is given to the person to 
whom the securities were sold, or is sent to such person under such 
circumstances that it would normally be received by him, with or prior 
to any confirmation of the sale, or prior to the payment by him of all 
or any part of the purchase price of the securities, whichever first 
occurs.
    (b) Any written advertisement or other written communication, or any 
radio or television broadcast, which states from whom an offering 
circular may be obtained and in addition contains no more than the 
following information may be published, distributed or broadcast at or 
after the commencement of the public offering to any person prior to 
sending or giving such person a copy of such circular:
    (1) The name of the issuer of such security;
    (2) The title of the security, the amount being offered, and the 
per-unit offering price to the public; and
    (3) The identity of the general type of business of the issuer.
    (c)(1) The offering circular may be printed, mimeographed, 
lithographed or typewritten, or prepared by any similar process which 
will result in clearly legible copies. If printed, it shall be set in 
roman type at least as large as ten-point modern type, except that 
financial statements and other statistical or tabular matter may be set 
in roman type at least as large as eight-point modern type. All type 
shall be leaded at least two points.
    (2) Where an offering circular is distributed through an electronic 
medium, issuers may satisfy legibility requirements applicable to 
printed documents by presenting all required information in a format 
readily communicated to investors.
    (d) If the offering is not completed within nine months from the 
date of the offering circular, a revised offering circular shall be 
prepared, filed and used in accordance with Secs. 230.601 to 230.610a as 
for an original offering circular. In no event shall an offering 
circular be used which is false or misleading in light of the 
circumstances then existing.
    (e) Four copies of the offering circular required by this section, 
which is to be used at the commencement of the offering, shall be filed 
with the notification at the time such notification is filed and shall 
be deemed a part thereof. If the offering circular is thereafter revised 
or amended, four copies of such revised or amended circular shall be 
filed as an amendment to the notification at least 10 days prior to its 
use, or such shorter period as the Commission may, in its discretion, 
authorize upon a written request for such authorization.
    (f) An offering circular filed pursuant to paragraph (e) may be 
distributed prior to the expiration of the 10-day waiting periods for 
offerings provided for in Sec. 230.604 (a) and (c) and paragraph (e) of 
this section and such distribution may be accompanied or followed by 
oral offers related thereto, provided the conditions in paragraphs 
(f)(1) through (f)(4) are met. For the purposes of this

[[Page 621]]

section, any offering circular distributed prior to the expiration of 
the ten day waiting period is called a Preliminary Offering Circular. 
Such Preliminary Offering Circular may be used to meet the requirements 
of paragraph (a)(2) of this section, provided that if a Preliminary 
Offering Circular is inaccurate or inadequate in any material respect, a 
revised Preliminary Offering Circular or an offering circular of the 
type referred to in paragraph (f)(4) shall be furnished to all persons 
to whom the securities are to be sold at least 48 hours prior to the 
mailing of any confirmation of sale to such persons, or shall be sent to 
such persons under such circumstances that it would normally be received 
by them 48 hours prior to their receipt of confirmation of the sale.
    (1) Such Preliminary Offering Circular contains substantially the 
information required by this section to be included in an offering 
circular, or contains substantially that information except for the 
omission of information with respect to the offering price, underwriting 
discounts or commissions, discounts or commissions to dealers, amount of 
proceeds, conversion rates, call prices, or other matters dependent upon 
the offering price.
    (2) The outside front cover page of the Preliminary Offering 
Circular shall bear the caption ``Preliminary Offering Circular,'' the 
date of its issuance, and the following statement which shall run along 
the left hand margin of the page and printed perpendicular to the text, 
in boldface type at least as large as that used generally in the body of 
such offering circular:

A notification pursuant to Regulation E relating to these securities has 
been filed with the Securities and Exchange Commission. Information 
contained in this Preliminary Offering Circular is subject to completion 
or amendment. These securities may not be sold nor may offers to buy be 
accepted prior to the time an offering circular which is not designated 
as a Preliminary Offering Circular is delivered. This Preliminary 
Offering Circular shall not constitute an offer to sell or the 
solicitation of an offer to buy nor shall there be any sales of these 
securities in any state in which such offer, solicitation or sale would 
be unlawful prior to registration or qualification under the securities 
laws of any such state.

    (3) The Preliminary Offering Circular relates to a proposed public 
offering of securities that is to be sold by or through one or more 
underwriters which are broker-dealers registered under section 15 of the 
Securities Exchange Act of 1934, each of which has furnished a signed 
Consent and Certification in the form prescribed as a condition to the 
use of such offering circular;
    (4) An offering circular contains all of the information specified 
in Schedule A or Schedule B (17 CFR 230.610a) and which is not 
designated as a Preliminary Offering Circular is furnished with or prior 
to delivery of the confirmation of sale to any person who has been 
furnished with a Preliminary Offering Circular pursuant to this 
paragraph.

(Secs. 3(b) and 3(c), Securities Act of 1933 (15 U.S.C. 77c (b) and 
(c)); sec. 38, Investment Company Act of 1940 (15 U.S.C. 80a-37))

[23 FR 10484, Dec. 30, 1958, as amended at 49 FR 35344, Sept. 7, 1984; 
61 FR 24655, May 15, 1996]



Sec. 230.606  Offering not in excess of $100,000.

    No offering circular need be filed or used in connection with an 
offering of securities under Secs. 230.601 to 230.610a if the aggregate 
offering price of all securites of the issuer offered or sold without 
the use of such an offering circular does not exceed $100,000 computed 
in accordance with Sec. 230.603, Provided, The following conditions are 
met:
    (a) There shall be filed as an exhibit to the notification four 
copies of a statement setting forth the information (other than 
financial statements) required by Schedule A or Schedule B to be set 
forth in an offering circular.
    (b) No advertisement, article or other communication published in 
any newspaper, magazine or other periodical and no radio or television 
broadcast in regard to the offering shall contain more than the 
following information:
    (1) The name of the issuer of such security;
    (2) The title of the security, amount offered, and the per-unit 
offering price to the public;
    (3) The identity of the general type of business of the issuer; and

[[Page 622]]

    (4) By whom orders will be filled or from whom further information 
may be obtained.

(Secs. 3(b) and 3(c), Securities Act of 1933 (15 U.S.C. 77c (b) and 
(c)); sec. 38, Investment Company Act of 1940 (15 U.S.C. 80a-37))

[23 FR 10484, Dec. 30, 1958, as amended at 49 FR 35344, Sept. 7, 1984]



Sec. 230.607  Sales material to be filed.

    Four copies of each of the following communications prepared or 
authorized by the issuer or anyone associated with the issuer, any of 
its affiliates or any principal underwriter for use in connection with 
the offering of any securities under Secs. 230.601 to 230.610a shall be 
filed with the Commission at least five days (exclusive of Saturdays, 
Sundays and holidays) prior to any use thereof, or such shorter period 
as the Commission, in its discretion, may authorize:
    (a) Every advertisement, article or other communication proposed to 
be published in any newspaper, magazine or other periodical;
    (b) The script of every radio or television broadcast; and
    (c) Every letter, circular or other written communication proposed 
to be sent, given or otherwise communicated to more than ten persons.



Sec. 230.608  Prohibition of certain statements.

    No offering circular or other written or oral communication used in 
connection with any offering under Secs. 230.601 to 230.610a shall 
contain any language stating or implying that the Commission has in any 
way passed upon the merits of, or given approval to, guaranteed or 
recommended the securities offered or the terms of the offering or has 
determined that the securities are exempt from registration, or has made 
any finding that the statements in any such offering circular or other 
communication are accurate or complete.



Sec. 230.609  Reports of sales hereunder.

    Within 30 days after the end of each six-month period following the 
date of the original offering circular, or of the statement required by 
Sec. 230.606, the issuer or other person for whose account the 
securities are offered shall file with the Commission four copies of a 
report on Form 2-E \1\ containing the information called for by that 
form. A final report shall be made upon completion or termination of the 
offering and may be made prior to the end of the six-month period in 
which the last sale is made.
---------------------------------------------------------------------------

    \1\ Filed as part of original document.
---------------------------------------------------------------------------



Sec. 230.610  Suspension of exemption.

    (a) The Commission may, at any time after the filing of a 
notification, enter an order temporarily suspending the exemption, if it 
has reason to believe that:
    (1) No exemption is available under Secs. 230.601 to 230.610a for 
the securities purported to be offered hereunder or any of the terms or 
conditions of Secs. 230.601 to 230.610a have not been complied with, 
including failure to file any report as required by Sec. 230.609.
    (2) The notification, the offering circular or any other sales 
literature contains any untrue statement of a material fact or omits 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;
    (3) The offering is being made or would be made in violation of 
section 17 of the Act;
    (4) Any event has occurred after the filing of the notification 
which would have rendered the exemption hereunder unavailable if it has 
occurred prior to such filing;
    (5) Any person specified in paragraph (b) of Sec. 230.602 has been 
indicted for any crime or offense of the character specified in 
paragraph (b)(3) thereof, or any proceeding has been initiated for the 
purpose of enjoining any such person from engaging in or continuing any 
conduct or practice of the character specified in paragraph (b)(4);
    (6) Any person specified in paragraph (c) of Sec. 230.602 has been 
indicted for any crime or offense of the character specified in 
paragraph (c)(1) thereof, or any proceeding has been initiated for the 
purpose of enjoining any such person from engaging in or continuing any 
conduct or practice of the character specified in paragraph (c)(2); or
    (7) The issuer or any officer, director or underwriter has failed to 
cooperate,

[[Page 623]]

or has obstructed or refused to permit the making of an investigation by 
the Commission in connection with any offering made or proposed to be 
made hereunder.
    (b) Upon the entry of an order under paragraph (a) of this section, 
the Commission will promptly give notice to the persons on whose behalf 
the notification was filed (1) that such order has been entered, 
together with a brief statement of the reasons for the entry of the 
order, and (2) that the Commission, upon receipt of a written request 
within 30 days after the entry of such order, will, within 20 days after 
the receipt of such request, set the matter down for hearing at a place 
to be designated by the Commission. If no hearing is requested and none 
is ordered by the Commission, the order shall become permanent on the 
thirtieth day after its entry and shall remain in effect unless or until 
it is modified or vacated by the Commission. Where a hearing is 
requested or is ordered by the Commission, the Commission will, after 
notice of an opportunity for such hearing, either vacate the order or 
enter an order permanently suspending the exemption.
    (c) The Commission may at any time after notice of and opportunity 
for hearing, enter an order permanently suspending the exemption for any 
reason upon which it could have entered a temporary suspension order 
under paragraph (a) of this section. Any such order shall remain in 
effect until vacated by the Commission.
    (d) All notices required by this part shall be given to the person 
or persons on whose behalf the notification was filed by personal 
service, registered or certified mail or confirmed telegraphic notice at 
the addresses of such persons given in the notification.

[23 FR 10484, Dec. 30, 1958, as amended at 29 FR 16982, Dec. 11, 1964]



Sec. 230.610a  Schedule A: Contents of offering circular for small business investment companies; Schedule B: Contents of offering circular for business 
          development companies.

Schedule A--Contents of Offering Circular for Small Business Investment 
                                Companies

                          General Instructions

    1. The information in the offering circular should be organized to 
make it easier to understand the organization and operation of the 
company. The required information need not be in any particular order, 
except that Items 1 and 2 must be the first and second items in the 
offering circular.
    2. The offering circular, including the cover page, may contain more 
information than is called for by this Schedule, provided that it is not 
incomplete, inaccurate, or misleading. Also, the additional information 
should not, by its nature, quantity, or manner of presentation, obscure 
or impede understanding of required information.

                           Item 1. Cover Page

    The cover page of the offering circular shall include the following 
information:
    (a) The name of the issuer;
    (b) The mailing address of the issuer's principal executive offices 
including the zip code and the issuer's telephone number;
    (c) The date of the offering circular;
    (d) A list of the type and amount of securities offered (e.g., if 
the securities offered include redemption or conversion features, so 
state);
    (e) The following statement in capital letters printed in boldface 
roman type at least as large as ten-point modern type and at least two 
points leaded:

``THESE SECURITIES ARE OFFERED PURSUANT TO AN EXEMPTION FROM 
REGISTRATION WITH THE SECURITIES AND EXCHANGE COMMISSION; HOWEVER, THE 
COMMISSION HAS NOT MADE AN INDEPENDENT DETERMINATION THAT THE SECURITIES 
BEING OFFERED ARE EXEMPT FROM REGISTRATION. THE SECURITIES AND EXCHANGE 
COMMISSION DOES NOT PASS UPON THE MERITS OF OR GIVE ITS APPROVAL TO ANY 
SECURITIES OFFERED OR THE TERMS OF THE OFFERING, NOR DOES IT PASS UPON 
THE ACCURACY OR COMPLETENESS OF ANY OFFERING CIRCULAR OR OTHER SELLING 
LITERATURE.''


[[Page 624]]


    (f) The name of the underwriter or underwriters, if applicable;
    (g) A cross-reference to the place in the offering circular 
discussing the material risks involved in purchasing the securities, 
printed in bold-face roman type at least as high as ten-point modern 
type and at least two points leaded;
    (h) The approximate date when the proposed sale to the public will 
begin; and
    (i) The information called for by the following table shall be 
given, in substantially the tabular form indicated, on the outside front 
cover page of the offering circular as to all securities being offered 
(estimate, if necessary):

------------------------------------------------------------------------
                                               Underwriting  Proceeds to
                                    Offering     discounts    issuer or
                                    price to        and         other
                                     public     commissions    persons
------------------------------------------------------------------------
Per share or other unit basis...  ...........  ............  ...........
Total...........................  ...........  ............  ...........
------------------------------------------------------------------------

    If the securities are to be offered on a best efforts basis, the 
cover page should set forth the termination date, if any, of the 
offering, any minimum required sale, and any arrangements to place the 
funds received in an escrow, trust, or similar arrangement. The 
following tabular presentation of the total maximum and minimum 
securities to be offered should be combined with the table required 
above:

------------------------------------------------------------------------
                                               Underwriting  Proceeds to
                                    Offering     discounts    issuer or
                                    price to        and         other
                                     public     commissions    persons
------------------------------------------------------------------------
Total Minimum...................  ...........  ............  ...........
Total Maximum...................  ...........  ............  ...........
------------------------------------------------------------------------

                              Instructions

    1. The term commissions shall include all cash, securities, 
contracts, or anything else of value, paid, to be set aside, disposed 
of, or understandings with or for the benefit of any other persons in 
which any underwriter is interested, made in connection with the sale of 
such security.
    2. Only commissions paid by the issuer in cash are to be indicated 
in the table. Commissions paid by other persons or any form of non-cash 
compensation shall be briefly identified in a note to the table with a 
cross-reference to a more complete description elsewhere in the offering 
circular.
    3. If the securities are not to be offered for cash, state the basis 
upon which the offering is to be made.
    4. (a) If it is impracticable to state the price to the public, 
briefly state the method by which the price is to be determined.
    (b) Any finder's fees or similar payments must be disclosed in a 
note to the table with a reference to a more complete discussion in the 
offering circular.
    (c) The amount of the expenses of the offering borne by the issuer, 
including underwriting expenses to be borne by the issuer, should be 
disclosed in a note to the table.
    5. If any of the securities are to be offered for the account of any 
security holder, state the identity of each selling security holder, the 
amount owned by him, the amount offered for his account and the amount 
to be owned after the offering.

                  Item 2. General Description of Issuer

    (a) Concisely discuss the organization and operation or proposed 
operation of the issuer. Include the following:
    (i) Basic identifying information, including:
    (A) The date and form of organization of the issuer and the name of 
the state under whose laws it is organized;
    (B) A brief description of the nature of a small business investment 
company; and
    (C) The classification and subclassification of the issuer as 
specified in sections 4 and 5 of the Investment Company Act of 1940.
    (ii) A concise description of the investment objectives and policies 
of the issuer, including:
    (A) If those objectives may be changed without a vote of the holders 
of the majority of the voting securities, a brief statement to that 
effect; and
    (B) A brief discussion of how the issuer proposes to achieve its 
objectives, including:
    (1) The types of securities (for example, bonds, convertible 
debentures, preferred stocks, common stocks) in which it may invest, and 
the proportion of the assets which may be invested in each such type of 
security;
    (2) If the issuer proposes to have a policy of concentrating in a 
particular industry or group of industries, identification of such 
industry or industries. (Concentration, for purposes of this item, is 
deemed to be 25% or more of the value of the issuer's total assets 
invested or proposed to be invested in a particular industry or group of 
industries).
    (C) A concise description of any other policies of the issuer that 
may not be changed without the vote of the majority of the outstanding 
voting securities, including those policies which the issuer deems to be 
fundamental within the meaning of Section 8(b) of the Investment Company 
Act of 1940.
    (D) A concise description of those significant investment policies 
or techniques (such as investing for control or management or investing 
in other investment companies) that are not described pursuant to 
subparagraphs (B) or (C) above that issuer employs or has the current 
intention of employing in the foreseeable future.


[[Page 625]]


    Note: If the effect of a policy is to prohibit a particular 
practice, or, if the policy permits a particular practice but the issuer 
has not employed that practice within the past year and has no current 
intention of doing so in the foreseeable future, do not include 
disclosure as to that policy.

    (b) Discuss briefly the principal risk factors associated with 
investment in the issuer, including factors peculiar to the issuer as 
well as those generally attendant to investment in a small business 
investment company with investment policies and objectives similar to 
the issuer.

                      Item 3. Plan of Distribution

    (a) If the securities are to be offered through underwriters, give 
the names of the principal underwriters, and state the amounts 
underwritten by each. Identify each underwriter having a material 
relationship to the issuer and state the nature of the relationship. 
State briefly the nature of the underwriters' obligation to take the 
securities.
    (b) State briefly the discounts and commissions to be allowed or 
paid to dealers, including all cash, securities, contracts or other 
consideration to be received by any dealer in connection with the sale 
of the securities.
    (c) If finder's fees are to be paid, identify the finder, the nature 
of the services rendered and the nature of any relationship between the 
finder and the issuer, its officers, directors, promoters, principal 
stockholders and underwriters (including any affiliates thereof). If a 
finder is not registered with the Commission as a broker or dealer, 
disclose that fact.
    (d) Outline briefly the plan of distribution of any securities being 
issued which are to be offered through the selling efforts of brokers or 
dealers or otherwise than through underwriters.
    (e)(1) Describe any arrangements for the return of funds to 
subscribers if all of the securities to be offered are not sold; if 
there are no such arrangements, so state.
    (2) If there will be material delay in the payment of the proceeds 
of the offering by the underwriter to the issuer, the nature of the 
delay and the effects on the issuer should be briefly described.

      Item 4. Management and Certain Security Holders of the Issuer

    (a) Give the full names and complete addresses of all directors, 
officers, members of any advisory board of the issuer and any person who 
owns more than 5 percent of any class of securities of the issuer (other 
than the Small Business Administration if the issuer is a small business 
investment company as defined in Sec. 230.602(a) of this chapter).
    (b) Identify each person who as of a specified date no more than 30 
days prior to the date of filing of this registration statement, 
controls the issuer as specified in section 2(a)(9) of the Investment 
Company Act of 1940.
    (c) Give the business experience over the last five years of any 
person named in (a) above who is or is expected to be significantly 
involved in the investment decisions of the issuer or in providing 
advisory services, direction or control of portfolio companies of the 
issuer.
    (d) State the aggregate annual remuneration of each of the three 
highest-paid persons who are officers or directors of the issuer and all 
officers and directors as a group during the issuer's last fiscal year. 
State the number of persons in the group referred to above without 
naming them.
    (e) Describe all direct and indirect interests (by security holdings 
or otherwise) of each person named in (a) above (i) in the issuer and 
(ii) in any material transactions within the past two years or in any 
material proposed transaction to which the issuer was or is to be a 
party. Include the cost to such persons of any assets or services for 
which any payment by or for the account of the issuer has been or is to 
be made.
    (f) Provide, if applicable, for each investment adviser of the 
issuer as defined in section 2(a)(20) of the Investment Company Act of 
1940:
    (i) The name and address of the investment adviser and a brief 
description of its experience as an investment adviser, and, if the 
investment adviser is controlled by another person, the name of that 
person and the general nature of its business. (If the investment 
adviser is subject to more than one level of control, it is sufficient 
to give the name of the ultimate control person.)
    (ii) A brief description of the services provided by the investment 
adviser. (If, in addition to providing investment advice, the investment 
adviser or persons employed by or associated with the investment adviser 
are, subject to the authority of the board of directors, responsible for 
overall management of issuer's business affairs, it is sufficient to 
state that fact in lieu of listing all services provided.)
    (iii) A brief description of the investment adviser's compensation. 
(If the issuer has been in operation for a full fiscal year, provide the 
compensation paid to the adviser for the most recent fiscal year as a 
percentage of average net assets. No further information is required in 
response to this Item if the adviser is paid on the basis of a 
percentage of net assets and if the issuer has neither changed 
investment advisers nor changed the basis on which the adviser was 
compensated during the most recent fiscal year. If the fee is paid in 
some manner other than on the basis of average net assets, briefly 
describe the basis of payment. If the registrant has not been in 
operation for a full fiscal

[[Page 626]]

year, state generally what the investment adviser's fee will be as a 
percentage of average net assets, including any breakpoints, but it is 
not necessary to include precise details as to how the fee is computed 
or paid.)

                       Item 5. Portfolio Companies

    Furnish the following information, in the tabular form indicated, 
with respect to the portfolio companies of the issuer, as of a specified 
date within 90 days prior to the date of filing the notification with 
the Commission pursuant to an offering of securities under Regulation E.

------------------------------------------------------------------------
                                          Title of      Number of shares
 Name and address    Nature of its       securities       or amount of
   of portfolio        principal           owned,            loan to
    companies           business        controlled or       portfolio
                                       held by issuer       companies
------------------------------------------------------------------------
 
------------------------------------------------------------------------


------------------------------------------------------------------------
 Percentage of class of
   securities owned,                                Percentage of total
 controlled or held by            Value             value of portfolio
         issuer                                          companies
------------------------------------------------------------------------
 
------------------------------------------------------------------------

                              Instructions

    1. Provide the city and state for address of portfolio companies.
    2. State the value as of date of balance sheet required under Item 
7.

               Item 6. Capital Stock and Other Securities

    (a) Describe concisely the nature and most significant attributes of 
the security being offered, including: (i) a brief discussion of voting 
rights; (ii) restrictions, if any, on the right freely to retain or 
dispose of such security; (iii) conversion rights, if applicable; and 
(iv) and any material obligations or potential liability associated with 
ownership of such security (not including risks).
    (b) If the rights of holders of such security may be modified 
otherwise than by a vote of majority or more of the shares outstanding, 
voting as a class, so state and explain briefly.
    (c) If issuer has any other classes of securities outstanding (other 
than bank borrowings or borrowings that are not senior securities under 
Section 18(g) of the Investment Company Act of 1940 identify them and 
state whether they have any preference over the security being offered.
    (d) Describe briefly the issuer's policy with respect to dividends 
and distributions, including any options shareholders may have as to the 
receipt of such dividends and distributions.
    (e) Describe briefly the tax consequences to investors of an 
investment in the securities being offered. Such description should not 
include detailed discussions of applicable law. If the issuer intends to 
qualify for treatment under Subchapter M, it is sufficient, in the 
absence of special circumstances, to state briefly that in that case: 
(1) the issuer will distribute all of its net income and gains to 
shareholders and that such distributions are taxable income or capital 
gains; (ii) shareholders may be proportionately liable for taxes on 
income and gains of the issuer but that shareholders not subject to tax 
on their income will not be required to pay tax on amounts distributed 
to them; and that (iii) the issuer will inform shareholders of the 
amount and nature of such income or gains.
    (f) Where there is a material disparity between the public offering 
price and the effective cash cost to officers, directors, promoters and 
affiliated persons for shares acquired by them in a transaction during 
the past three years, or which they have a right to acquire, there 
should be included a comparison of the public contribution under the 
proposed public offering and the effective cash contribution of such 
persons. In such cases, and in other instances where the extent of the 
dilution makes it appropriate, the following shall be given: (1) the net 
tangible book value per share before and after the distribution; (2) the 
amount of the increase in such net tangible book value per share 
attributable to the cash payment made by purchasers of the shares being 
offered; and (3) the amount of the immediate dilution from the public 
offering price which will be absorbed by such purchasers.

                      Item 7. Financial Statements

    Furnish appropriate financial statements of the issuer as required 
below. Such statements shall be prepared in accordance with generally 
accepted accounting principles and practices. The statements required 
for the issuer's latest fiscal year shall be certified by an independent 
public accountant or certified public accountant in accordance with 
Regulation S-X if the issuer has filed or is required to file with the 
Commission certified financial statements for such fiscal year; the 
statements filed for the period or periods preceding such latest year 
need not be certified.
    (a) A blance sheet as of a date within 90 days prior to the date of 
filing the notification with the Commission.
    (b) A profit and loss or income statement for each of the last two 
fiscal years and for any subsequent period up to the date of the balance 
sheet furnished pursuant to (a) above.

[[Page 627]]

   Schedule B: Contents of Offering Circular for Business Development 
                                Companies

                          General Instructions.

    Same as General Instructions to Schedule A.

    Item 1. Same as Item 1 of Schedule A.

                  Item 2. General Description of Issuer

    (a) Concisely discuss the organization and operation or proposed 
operation of the issuer. Include the following:
    (i) Basic identifying information, including:
    (A) The date and form of organization of the issuer and the name of 
the state under the laws of which it is organized; and
    (B) A brief description of the nature of a business development 
company.

    Note: A business development company having a wholly-owned small 
business investment company subsidiary should disclose how the 
subsidiary is regulated, e.g., as an investment company registered under 
the Investment Company Act of 1940, and what percentage of the parent 
company's assets are, or are expected to be, invested in the subsidiary. 
The business development company should also describe the small business 
investment company's operations, including any material difference in 
investment policies between the business development company and its 
small business investment company subsidiary.

    (ii) A concise description of the investment objectives and policies 
of the issuer, including:
    (A) If those objectives may be changed without a vote of the holders 
of the majority of the voting securities, a brief statement to that 
effect; and
    (B) A brief discussion of how the issuer proposes to achieve such 
objectives, including:
    (1) The types of securities (for example, bonds, convertible 
debentures, preferred stocks, common stock) in which it may invest, 
indicating the proportion of the assets which may be invested in each 
such type of security;
    (2) The issuer proposes to have a policy of concentrating in a 
particular industry or group of industries, identification of such 
industry or industries. (Concentration, for purposes of this item, is 
deemed to be 25% or more of the value of the issuer's total assets 
invested or proposed to be invested in a particular industry or group of 
industries).
    (3) In companies for the purpose of exercising control or 
management;
    (4) The policy with respect to any assets that are not required to 
be invested in eligible portfolio companies or other companies 
qualifying under section 55 of the Investment Company Act of 1940;
    (5) The policy with respect to rendering significant managerial 
assistance to eligible portfolio companies or other companies qualifying 
under section 55 of the Investment Company Act of 1940;
    (6) The policy with respect to investing as part of a group.
    (C) Identification of any other policies of the issuer that may not 
be changed without the vote of the majority of the outstanding voting 
securities, including the policy not to withdraw its election as a 
business development company without approval by the majority of the 
outstanding voting securities.
    (D) A concise description of those significant investment policies 
or techniques (such as investing for control or management) that are not 
described pursuant to subparagraphs (B) or (C) above that the issuer 
employs or has the current intention of employing in the forseeable 
future.
    (b) Discuss briefly the principal risk factors associated with 
investment in the issuer, including factors peculiar to the issuer as 
well as those generally attendant to investment in a business 
development company with investment policies and objectives similar to 
the issuer.
    Item 3. Same as Item 3 of Schedule A.
    Item 4. Same as Item 4 of Schedule A.
    Item 5. Same as Item 5 of Schedule A.
    Item 6. Same as Item 6 of Schedule A.
    Item 7. Same as Item 7 of Schedule A.

(Secs. 3(b) and 3(c), Securities Act of 1933 (15 U.S.C. 77c (b) and 
(c)); sec. 38, Investment Company Act of 1940 (15 U.S.C. 80a-37))

[49 FR 35345, Sept. 7, 1984]



Secs. 230.651--230.656  [Reserved]



Sec. 230.701  Exemption for offers and sales of securities pursuant to certain compensatory benefit plans and contracts relating to compensation.

    Preliminary Notes: 1. This section relates to transactions exempted 
from the registration requirements of section 5 of the Act (15 U.S.C. 
77e). These transactions are not exempt from the antifraud, civil 
liability, or other provisions of the federal securities laws. Issuers 
and persons acting on their behalf have an obligation to provide 
investors with disclosure adequate to satisfy the antifraud provisions 
of the federal securities laws.
    2. In addition to complying with this section, the issuer also must 
comply with any applicable state law relating to the offer and sale of 
securities.
    3. An issuer that attempts to comply with this section, but fails to 
do so, may claim any other exemption that is available.

[[Page 628]]

    4. This section is available only to the issuer of the securities. 
Affiliates of the issuer may not use this section to offer or sell 
securities. This section also does not cover resales of securities by 
any person. This section provides an exemption only for the transactions 
in which the securities are offered or sold by the issuer, not for the 
securities themselves.
    5. The purpose of this section is to provide an exemption from the 
registration requirements of the Act for securities issued in 
compensatory circumstances. This section is not available for plans or 
schemes to circumvent this purpose, such as to raise capital. This 
section also is not available to exempt any transaction that is in 
technical compliance with this section but is part of a plan or scheme 
to evade the registration provisions of the Act. In any of these cases, 
registration under the Act is required unless another exemption is 
available.

    (a) Exemption. Offers and sales made in compliance with all of the 
conditions of this section are exempt from section 5 of the Act (15 
U.S.C. 77e).
    (b) Issuers eligible to use this section. (1) General. This section 
is available to any issuer that is not subject to the reporting 
requirements of section 13 or 15(d) of the Securities Exchange Act of 
1934 (the ``Exchange Act'') (15 U.S.C. 78m or 78o(d)) and is not an 
investment company registered or required to be registered under the 
Investment Company Act of 1940 (15 U.S.C. 80a-1 et seq.).
    (2) Issuers that become subject to reporting. If an issuer becomes 
subject to the reporting requirements of section 13 or 15(d) of the 
Exchange Act (15 U.S.C. 78m or 78o(d)) after it has made offers 
complying with this section, the issuer may nevertheless rely on this 
section to sell the securities previously offered to the persons to whom 
those offers were made.
    (3) Guarantees by reporting companies. An issuer subject to the 
reporting requirements of section 13 or 15(d) of the Exchange Act (15 
U.S.C. 78m, 78o(d)) may rely on this section if it is merely 
guaranteeing the payment of a subsidiary's securities that are sold 
under this section.
    (c) Transactions exempted by this section. This section exempts 
offers and sales of securities (including plan interests and guarantees 
pursuant to paragraph (d)(2)(ii) of this section) under a written 
compensatory benefit plan (or written compensation contract) established 
by the issuer, its parents, its majority-owned subsidiaries or majority-
owned subsidiaries of the issuer's parent, for the participation of 
their employees, directors, general partners, trustees (where the issuer 
is a business trust), officers, or consultants and advisors, and their 
family members who acquire such securities from such persons through 
gifts or domestic relations orders. This section exempts offers and 
sales to former employees, directors, general partners, trustees, 
officers, consultants and advisors only if such persons were employed by 
or providing services to the issuer at the time the securities were 
offered. In addition, the term ``employee'' includes insurance agents 
who are exclusive agents of the issuer, its subsidiaries or parents, or 
derive more than 50% of their annual income from those entities.
    (1) Special requirements for consultants and advisors. This section 
is available to consultants and advisors only if:
    (i) They are natural persons;
    (ii) They provide bona fide services to the issuer, its parents, its 
majority-owned subsidiaries or majority-owned subsidiaries of the 
issuer's parent; and
    (iii) The services are not in connection with the offer or sale of 
securities in a capital-raising transaction, and do not directly or 
indirectly promote or maintain a market for the issuer's securities.
    (2) Definition of ``Compensatory Benefit Plan.'' For purposes of 
this section, a compensatory benefit plan is any purchase, savings, 
option, bonus, stock appreciation, profit sharing, thrift, incentive, 
deferred compensation, pension or similar plan.
    (3) Definition of ``Family Member.'' For purposes of this section, 
family member includes any child, stepchild, grandchild, parent, 
stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, 
mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-
law, or sister-in-law, including adoptive relationships, any person 
sharing the employee's household (other than a tenant or employee), a 
trust in which these persons have more than fifty percent of the 
beneficial interest, a foundation in which these persons (or the 
employee) control the management of

[[Page 629]]

assets, and any other entity in which these persons (or the employee) 
own more than fifty percent of the voting interests.
    (d) Amounts that may be sold. (1) Offers. Any amount of securities 
may be offered in reliance on this section. However, for purposes of 
this section, sales of securities underlying options must be counted as 
sales on the date of the option grant.
    (2) Sales. The aggregate sales price or amount of securities sold in 
reliance on this section during any consecutive 12-month period must not 
exceed the greatest of the following:
    (i) $1,000,000;
    (ii) 15% of the total assets of the issuer (or of the issuer's 
parent if the issuer is a wholly-owned subsidiary and the securities 
represent obligations that the parent fully and unconditionally 
guarantees), measured at the issuer's most recent balance sheet date (if 
no older than its last fiscal year end); or
    (iii) 15% of the outstanding amount of the class of securities being 
offered and sold in reliance on this section, measured at the issuer's 
most recent balance sheet date (if no older than its last fiscal year 
end).
    (3) Rules for calculating prices and amounts. (i) Aggregate sales 
price. The term aggregate sales price means the sum of all cash, 
property, notes, cancellation of debt or other consideration received or 
to be received by the issuer for the sale of the securities. Non-cash 
consideration must be valued by reference to bona fide sales of that 
consideration made within a reasonable time or, in the absence of such 
sales, on the fair value as determined by an accepted standard. The 
value of services exchanged for securities issued must be measured by 
reference to the value of the securities issued. Options must be valued 
based on the exercise price of the option.
    (ii) Time of the calculation. With respect to options to purchase 
securities, the aggregate sales price is determined when an option grant 
is made (without regard to when the option becomes exercisable). With 
respect to other securities, the calculation is made on the date of 
sale. With respect to deferred compensation or similar plans, the 
calculation is made when the irrevocable election to defer is made.
    (iii) Derivative securities. In calculating outstanding securities 
for purposes of paragraph (d)(2)(iii) of this section, treat the 
securities underlying all currently exercisable or convertible options, 
warrants, rights or other securities, other than those issued under this 
exemption, as outstanding. In calculating the amount of securities sold 
for other purposes of paragraph (d)(2) of this section, count the amount 
of securities that would be acquired upon exercise or conversion in 
connection with sales of options, warrants, rights or other exercisable 
or convertible securities, including those to be issued under this 
exemption.
    (iv) Other exemptions. Amounts of securities sold in reliance on 
this section do not affect ``aggregate offering prices'' in other 
exemptions, and amounts of securities sold in reliance on other 
exemptions do not affect the amount that may be sold in reliance on this 
section.
    (e) Disclosure that must be provided. The issuer must deliver to 
investors a copy of the compensatory benefit plan or the contract, as 
applicable. In addition, if the aggregate sales price or amount of 
securities sold during any consecutive 12-month period exceeds $5 
million, the issuer must deliver the following disclosure to investors a 
reasonable period of time before the date of sale:
    (1) If the plan is subject to the Employee Retirement Income 
Security Act of 1974 (``ERISA'') (29 U.S.C. 1104-1107), a copy of the 
summary plan description required by ERISA;
    (2) If the plan is not subject to ERISA, a summary of the material 
terms of the plan;
    (3) Information about the risks associated with investment in the 
securities sold pursuant to the compensatory benefit plan or 
compensation contract; and
    (4) Financial statements required to be furnished by Part F/S of 
Form 1-A (Regulation A Offering Statement) (Sec. 239.90 of this chapter) 
under Regulation A (Secs. 230.251 through 230.263). Foreign private 
issuers as defined in Sec. 230.405 must provide a reconciliation

[[Page 630]]

to generally accepted accounting principles in the United States (U.S. 
GAAP) if their financial statements are not prepared in accordance with 
U.S. GAAP (Item 17 of Form 20-F (Sec. 249.220f of this chapter)). The 
financial statements required by this section must be as of a date no 
more than 180 days before the sale of securities in reliance on this 
exemption.
    (5) If the issuer is relying on paragraph (d)(2)(ii) of this section 
to use its parent's total assets to determine the amount of securities 
that may be sold, the parent's financial statements must be delivered. 
If the parent is subject to the reporting requirements of section 13 or 
15(d) of the Exchange Act (15 U.S.C. 78m or 78o(d)), the financial 
statements of the parent required by Rule 10-01 of Regulation S-X 
(Sec. 210.10-01 of this chapter) and Item 310 of Regulation S-B 
(Sec. 228.310 of this chapter), as applicable, must be delivered.
    (6) If the sale involves a stock option or other derivative 
security, the issuer must deliver disclosure a reasonable period of time 
before the date of exercise or conversion. For deferred compensation or 
similar plans, the issuer must deliver disclosure to investors a 
reasonable period of time before the date the irrevocable election to 
defer is made.
    (f) No integration with other offerings. Offers and sales exempt 
under this section are deemed to be a part of a single, discrete 
offering and are not subject to integration with any other offers or 
sales, whether registered under the Act or otherwise exempt from the 
registration requirements of the Act.
    (g) Resale limitations. (1) Securities issued under this section are 
deemed to be ``restricted securities'' as defined in Sec. 230.144.
    (2) Resales of securities issued pursuant to this section must be in 
compliance with the registration requirements of the Act or an exemption 
from those requirements.
    (3) Ninety days after the issuer becomes subject to the reporting 
requirements of section 13 or 15(d) of the Exchange Act (15 U.S.C. 78m 
or 78o(d)), securities issued under this section may be resold by 
persons who are not affiliates (as defined in Sec. 230.144) in reliance 
on Sec. 230.144, without compliance with paragraphs (c), (d), (e) and 
(h) of Sec. 230.144, and by affiliates without compliance with paragraph 
(d) of Sec. 230.144.

[64 FR 11101, Mar. 8, 1999, as amended at 64 FR 61498, Nov. 12, 1999]



Secs. 230.702(T)-230.703(T)  [Reserved]

   Exemptions for Cross-Border Rights Offerings, Exchange Offers and 
                          Business Combinations

    Source: Sections 230.800 to 230.802 appear at 64 FR 61400, unless 
otherwise noted.

           General Notes to Secs. 230.800, 230.801 and 230.802

    1. Sections 230.801 and 230.802 relate only to the applicability of 
the registration provisions of the Act (15 U.S.C. 77e) and not to the 
applicability of the anti-fraud, civil liability or other provisions of 
the federal securities laws.
    2. The exemptions provided by Sec. 230.801 and Sec. 230.802 are not 
available for any securities transaction or series of transactions that 
technically complies with Sec. 230.801 and Sec. 230.802 but are part of 
a plan or scheme to evade the registration provisions of the Act.
    3. An issuer who relies on Sec. 230.801 or an offeror who relies on 
Sec. 230.802 must still comply with the securities registration or 
broker-dealer registration requirements of the Securities Exchange Act 
of 1934 (15 U.S.C. 78a et seq.) and any other applicable provisions of 
the federal securities laws.
    4. An issuer who relies on Sec. 230.801 or an offeror who relies on 
Sec. 230.802 must still comply with any applicable state laws relating 
to the offer and sale of securities.
    5. Attempted compliance with Sec. 230.801 or Sec. 230.802 does not 
act as an exclusive election; an issuer making an offer or sale of 
securities in reliance on Sec. 230.801 or Sec. 230.802 may also rely on 
any other applicable exemption from the registration requirements of the 
Act.
    6. Section 230.801 and Sec. 230.802 provide exemptions only for the 
issuer of the securities and not for any affiliate of that issuer or for 
any other person for resales of the issuer's securities. These sections 
provide exemptions only for the transaction in which the issuer or other 
person offers or sells the securities, not for the securities 
themselves. Securities acquired in a Sec. 230.801 or Sec. 230.802 
transaction may be resold in the United States only if they are 
registered under the Act or an exemption from registration is available.
    7. Unregistered offers and sales made outside the United States will 
not affect contemporaneous offers and sales made in compliance with 
Sec. 230.801 or Sec. 230.802. A transaction that complies with 
Sec. 230.801 or Sec. 230.802

[[Page 631]]

will not be integrated with offerings exempt under other provisions of 
the Act, even if both transactions occur at the same time.
    8. Securities acquired in a rights offering under Sec. 230.801 are 
``restricted securities'' within the meaning of Sec. 230.144(a)(3) to 
the same extent and proportion that the securities held by the security 
holder as of the record date for the rights offering were restricted 
securities. Likewise, securities acquired in an exchange offer or 
business combination subject to Sec. 230.802 are ``restricted 
securities'' within the meaning of Sec. 230.144(a)(3) to the same extent 
and proportion that the securities tendered or exchanged by the security 
holder in that transaction were restricted securities.
    9. Section 230.801 does not apply to a rights offering by an 
investment company registered or required to be registered under the 
Investment Company Act of 1940 (15 U.S.C. 80a-1 et seq.), other than a 
registered closed-end investment company. Section 230.802 does not apply 
to exchange offers or business combinations by an investment company 
registered or required to be registered under the Investment Company Act 
of 1940 (15 U.S.C. 80a-1 et seq.), other than a registered closed-end 
investment company.



Sec. 230.800  Definitions for Secs. 230.800, 230.801 and 230.802.

    The following definitions apply in Secs. 230.800, 230.801 and 
230.802.
    (a) Business combination. Business combination means a statutory 
amalgamation, merger, arrangement or other reorganization requiring the 
vote of security holders of one or more of the participating companies. 
It also includes a statutory short form merger that does not require a 
vote of security holders.
    (b) Equity security. Equity security means the same as in 
Sec. 240.3a11-1 of this chapter, but for purposes of this section only 
does not include:
    (1) Any debt security that is convertible into an equity security, 
with or without consideration;
    (2) Any debt security that includes a warrant or right to subscribe 
to or purchase an equity security;
    (3) Any such warrant or right; or
    (4) Any put, call, straddle, or other option or privilege that gives 
the holder the option of buying or selling a security but does not 
require the holder to do so.
    (c) Exchange offer. Exchange offer means a tender offer in which 
securities are issued as consideration.
    (d) Foreign private issuer. Foreign private issuer means the same as 
in Sec. 230.405 of Regulation C.
    (e) Foreign subject company. Foreign subject company means any 
foreign private issuer whose securities are the subject of the exchange 
offer or business combination.
    (f) Home jurisdiction. Home jurisdiction means both the jurisdiction 
of the foreign subject company's (or in the case of a rights offering, 
the foreign private issuer's) incorporation, organization or chartering 
and the principal foreign market where the foreign subject company's (or 
in the case of a rights offering, the issuer's) securities are listed or 
quoted.
    (g) Rights offering. Rights offering means offers and sales for cash 
of equity securities where:
    (1) The issuer grants the existing security holders of a particular 
class of equity securities (including holders of depositary receipts 
evidencing those securities) the right to purchase or subscribe for 
additional securities of that class; and
    (2) The number of additional shares an existing security holder may 
purchase initially is in proportion to the number of securities he or 
she holds of record on the record date for the rights offering. If an 
existing security holder holds depositary receipts, the proportion must 
be calculated as if the underlying securities were held directly.
    (h) U.S. holder. U.S. holder means any security holder resident in 
the United States. To determine the percentage of outstanding securities 
held by U.S. holders:
    (1) Calculate percentage of outstanding securities held by U.S. 
holders as of the record date for a rights offering, or 30 days before 
the commencement of an exchange offer or the solicitation for a business 
combination.
    (2) Include securities underlying American Depositary Shares 
convertible or exchangeable into the securities that are the subject of 
the tender offer when calculating the number of subject securities 
outstanding, as well as the number held by U.S. holders. Exclude from 
the calculations other types of securities that are convertible or 
exchangeable into the securities that are

[[Page 632]]

the subject of the exchange offer, business combination or rights 
offering, such as warrants, options and convertible securities. Exclude 
from those calculations securities held by persons who hold more than 10 
percent of the subject securities in an exchange offer, business 
combination or rights offering, or that are held by the offeror in an 
exchange offer or business combination;
    (3) Use the method of calculating record ownership in Rule 12g3-2(a) 
under the Exchange Act (Sec. 240.12g3-2(a) of this chapter), except that 
your inquiry as to the amount of securities represented by accounts of 
customers resident in the United States may be limited to brokers, 
dealers, banks and other nominees located in the United States, the 
subject company's jurisdiction of incorporation or that of each 
participant in a business combination, and the jurisdiction that is the 
primary trading market for the subject securities, if different from the 
subject company's jurisdiction of incorporation;
    (4) If, after reasonable inquiry, you are unable to obtain 
information about the amount of securities represented by accounts of 
customers resident in the United States, you may assume, for purposes of 
this provision, that the customers are residents of the jurisdiction in 
which the nominee has its principal place of business.
    (5) Count securities as owned by U.S. holders when publicly filed 
reports of beneficial ownership or information that is otherwise 
provided to you indicates that the securities are held by U.S. 
residents.
    (i) United States. United States means the United States of America, 
its territories and possessions, any State of the United States, and the 
District of Columbia.



Sec. 230.801  Exemption in connection with a rights offering.

    A rights offering is exempt from the provisions of Section 5 of the 
Act (15 U.S.C. 77e), so long as the following conditions are satisfied:
    (a) Conditions.--(1) Eligibility of issuer. The issuer is a foreign 
private issuer on the date the securities are first offered to U.S. 
holders.
    (2) Limitation on U.S. ownership. U.S. holders hold no more than 10 
percent of the outstanding class of securities that is the subject of 
the rights offering (as determined under the definition of ``U.S. 
holder'' in Sec. 230.800(h)).
    (3) Equal treatment. The issuer permits U.S. holders to participate 
in the rights offering on terms at least as favorable as those offered 
the other holders of the securities that are the subject of the offer. 
The issuer need not, however, extend the rights offering to security 
holders in those states or jurisdictions that require registration or 
qualification.
    (4) Informational documents. (i) If the issuer publishes or 
otherwise disseminates an informational document to the holders of the 
securities in connection with the rights offering, the issuer must 
furnish that informational document, including any amendments thereto, 
in English, to the Commission on Form CB (Sec. 239.800 of this chapter) 
by the first business day after publication or dissemination. If the 
issuer is a foreign company, it must also file a Form F-X (Sec. 239.42 
of this chapter) with the Commission at the same time as the submission 
of Form CB to appoint an agent for service in the United States.
    (ii) The issuer must disseminate any informational document to U.S. 
holders, including any amendments thereto, in English, on a comparable 
basis to that provided to security holders in the home jurisdiction.
    (iii) If the issuer disseminates by publication in its home 
jurisdiction, the issuer must publish the information in the United 
States in a manner reasonably calculated to inform U.S. holders of the 
offer.
    (5) Eligibility of securities. The securities offered in the rights 
offering are equity securities of the same class as the securities held 
by the offerees in the United States directly or through American 
Depositary Receipts.
    (6) Limitation on transferability of rights. The terms of the rights 
prohibit transfers of the rights by U.S. holders except in accordance 
with Regulation S (Sec. 230.901 through Sec. 230.905).
    (b) Legends. The following legend or an equivalent statement in 
clear, plain

[[Page 633]]

language, to the extent applicable, appears on the cover page or other 
prominent portion of any informational document the issuer disseminates 
to U.S. holders:

    This rights offering is made for the securities of a foreign 
company. The offer is subject to the disclosure requirements of a 
foreign country that are different from those of the United States. 
Financial statements included in the document, if any, have been 
prepared in accordance with foreign accounting standards that may not be 
comparable to the financial statements of United States companies.
    It may be difficult for you to enforce your rights and any claim you 
may have arising under the federal securities laws, since the issuer is 
located in a foreign country, and some or all of its officers and 
directors may be residents of a foreign country. You may not be able to 
sue the foreign company or its officers or directors in a foreign court 
for violations of the U.S. securities laws. It may be difficult to 
compel a foreign company and its affiliates to subject themselves to a 
U.S. court's judgment.



Sec. 230.802  Exemption for offerings in connection with an exchange offer or business combination for the securities of foreign private issuers.

    Offers and sales in any exchange offer for a class of securities of 
a foreign private issuer, or in any exchange of securities for the 
securities of a foreign private issuer in any business combination, are 
exempt from the provisions of section 5 of the Act (15 U.S.C. 77e), if 
they satisfy the following conditions:
    (a) Conditions to be met.--(1) Limitation on U.S. ownership. Except 
in the case of an exchange offer or business combination that is 
commenced during the pendency of a prior exchange offer or business 
combination made in reliance on this paragraph, U.S. holders of the 
foreign subject company must hold no more than 10 percent of the 
securities that are the subject of the exchange offer or business 
combination (as determined under the definition of ``U.S. holder'' in 
Sec. 230.800(h)). In the case of a business combination in which the 
securities are to be issued by a successor registrant, U.S. holders may 
hold no more than 10 percent of the class of securities of the successor 
registrant, as if measured immediately after completion of the business 
combination.
    (2) Equal treatment. The issuer must permit U.S. holders to 
participate in the exchange offer or business combination on terms at 
least as favorable as those offered any other holder of the subject 
securities. The issuer, however, need not extend the offer to security 
holders in those states or jurisdictions that require registration or 
qualification, except that the issuer must offer the same cash 
alternative to security holders in any such state that it has offered to 
security holders in any other state or jurisdiction.
    (3) Informational documents. (i) If the issuer publishes or 
otherwise disseminates an informational document to the holders of the 
subject securities in connection with the exchange offer or business 
combination, the issuer must furnish that informational document, 
including any amendments thereto, in English, to the Commission on Form 
CB (Sec. 239.800 of this chapter) by the first business day after 
publication or dissemination. If the bidder is a foreign company, it 
must also file a Form F-X (Sec. 239.42 of this chapter) with the 
Commission at the same time as the submission of Form CB to appoint an 
agent for service in the United States.
    (ii) The issuer must disseminate any informational document to U.S. 
holders, including any amendments thereto, in English, on a comparable 
basis to that provided to security holders in the foreign subject 
company's home jurisdiction.
    (iii) If the issuer disseminates by publication in its home 
jurisdiction, the issuer must publish the information in the United 
States in a manner reasonably calculated to inform U.S. holders of the 
offer.
    (b) Legends. The following legend or an equivalent statement in 
clear, plain language, to the extent applicable, must be included on the 
cover page or other prominent portion of any informational document the 
offeror publishes or disseminates to U.S. holders:

    This exchange offer or business combination is made for the 
securities of a foreign company. The offer is subject to disclosure 
requirements of a foreign country that are different from those of the 
United States. Financial statements included in the document, if any, 
have been prepared in accordance with foreign accounting standards that

[[Page 634]]

may not be comparable to the financial statements of United States 
companies.
    It may be difficult for you to enforce your rights and any claim you 
may have arising under the federal securities laws, since the issuer is 
located in a foreign country, and some or all of its officers and 
directors may be residents of a foreign country. You may not be able to 
sue a foreign company or its officers or directors in a foreign court 
for violations of the U.S. securities laws. It may be difficult to 
compel a foreign company and its affiliates to subject themselves to a 
U.S. court's judgment.
    You should be aware that the issuer may purchase securities 
otherwise than under the exchange offer, such as in open market or 
privately negotiated purchases.

    (c) Presumption for certain offers. For exchange offers conducted by 
persons other than the issuer of the subject securities or its 
affiliates, the issuer of the subject securities will be presumed to be 
a foreign private issuer and U.S. holders will be presumed to hold 10 
percent or less of the outstanding subject securities, unless:
    (1) The exchange offer is made pursuant to an agreement with the 
issuer of the subject securities;
    (2) The aggregate trading volume of the subject class of securities 
on all national securities exchanges in the United States, on the Nasdaq 
market or on the OTC market, as reported to the NASD, over the 12-
calendar-month period ending 30 days before commencement of the offer, 
exceeds 10 percent of the worldwide aggregate trading volume of that 
class of securities over the same period;
    (3) The most recent annual report or annual information filed or 
submitted by the issuer with securities regulators of the home 
jurisdiction or with the Commission indicates that U.S. holders hold 
more than 10 percent of the outstanding subject class of securities; or
    (4) The offeror knows, or has reason to know, that U.S. ownership 
exceeds 10 percent of the subject securities.

 Regulation S--Rules Governing Offers and Sales Made Outside the United 
      States Without Registration Under the Securities Act of 1933

    Source: Sections 230.901 to 230.904 appear at 55 FR 18322, May 2, 
1990, unless otherwise noted.
    Preliminary Notes: 1. The following rules relate solely to the 
application of Section 5 of the Securities Act of 1933 (the Act) [15 
U.S.C. 77e] and not to antifraud or other provisions of the federal 
securities laws.
    2. In view of the objective of these rules and the policies 
underlying the Act, Regulation S is not available with respect to any 
transaction or series of transactions that, although in technical 
compliance with these rules, is part of a plan or scheme to evade the 
registration provisions of the Act. In such cases, registration under 
the Act is required.
    3. Nothing in these rules obviates the need for any issuer or any 
other person to comply with the securities registration or broker-dealer 
registration requirements of the Securities Exchange Act (the Exchange 
Act), whenever such requirements are applicable.
    4. Nothing in these rules obviates the need to comply with any 
applicable state law relating to the offer and sale of securities.
    5. Attempted compliance with any rule in Regulation S does not act 
as an exclusive election; a person making an offer or sale of securities 
may also claim the availability of any applicable exemption from the 
registration requirements of the Act. The availability of the Regulation 
S safe harbor to offers and sales that occur outside of the United 
States will not be affected by the subsequent offer and sale of these 
securities into the United States or to U.S. persons during the 
distribution compliance period, as long as the subsequent offer and sale 
are made pursuant to registration or an exemption therefrom under the 
Act.
    6. Regulation S is available only for offers and sales of securities 
outside the United States. Securities acquired overseas, whether or not 
pursuant to Regulation S, may be resold in the United States only if 
they are registered under the Act or an exemption from registration is 
available.
    7. Nothing in these rules precludes access by journalists for 
publications with a general circulation in the United States to offshore 
press conferences, press releases and meetings with company press 
spokespersons in which an offshore offering or tender offer is 
discussed, provided that the information is made available to the 
foreign and United States press generally and is not intended to induce 
purchases of securities by persons in the United States or tenders of 
securities by United States holders in the case of exchange offers. 
Where applicable, issuers and bidders may also look to Sec. 230.135e and 
Sec. 240.14d-1(c) of this chapter.
    8. The provisions of this Regulation S shall not apply to offers and 
sales of securities issued by open-end investment companies or unit 
investment trusts registered or required to be registered or closed-end 
investment companies required to be registered, but not registered, 
under the Investment Company

[[Page 635]]

Act of 1940 [15 U.S.C. 80a-1 et seq.] (the 1940 Act).

[55 FR 18322, May 2, 1990, as amended at 62 FR 53954, Oct. 17, 1997; 63 
FR 9642, Feb. 25, 1998]



Sec. 230.901  General statement.

    For the purposes only of section 5 of the Act (15 U.S.C. Sec. 77e), 
the terms offer, offer to sell, sell, sale, and offer to buy shall be 
deemed to include offers and sales that occur within the United States 
and shall be deemed not to include offers and sales that occur outside 
the United States.



Sec. 230.902  Definitions.

    As used in Regulation S, the following terms shall have the meanings 
indicated.
    (a) Debt securities. ``Debt securities'' of an issuer is defined to 
mean any security other than an equity security as defined in 
Sec. 230.405, as well as the following:
    (1) Non-participatory preferred stock, which is defined as non-
convertible capital stock, the holders of which are entitled to a 
preference in payment of dividends and in distribution of assets on 
liquidation, dissolution, or winding up of the issuer, but are not 
entitled to participate in residual earnings or assets of the issuer; 
and
    (2) Asset-backed securities, which are securities of a type that 
either:
    (i) Represent an ownership interest in a pool of discrete assets, or 
certificates of interest or participation in such assets (including any 
rights designed to assure servicing, or the receipt or timeliness of 
receipt by holders of such assets, or certificates of interest or 
participation in such assets, of amounts payable thereunder), provided 
that the assets are not generated or originated between the issuer of 
the security and its affiliates; or
    (ii) Are secured by one or more assets or certificates of interest 
or participation in such assets, and the securities, by their terms, 
provide for payments of principal and interest (if any) in relation to 
payments or reasonable projections of payments on assets meeting the 
requirements of paragraph (a)(2)(i) of this section, or certificates of 
interest or participations in assets meeting such requirements.
    (iii) For purposes of paragraph (a)(2) of this section, the term 
``assets'' means securities, installment sales, accounts receivable, 
notes, leases or other contracts, or other assets that by their terms 
convert into cash over a finite period of time.
    (b) Designated offshore securities market. ``Designated offshore 
securities market'' means:
    (1) The Eurobond market, as regulated by the International 
Securities Market Association; the Alberta Stock Exchange; the Amsterdam 
Stock Exchange; the Australian Stock Exchange Limited; the Bermuda Stock 
Exchange; the Bourse de Bruxelles; the Copenhagen Stock Exchange; the 
European Association of Securities Dealers Automated Quotation; the 
Frankfurt Stock Exchange; the Helsinki Stock Exchange; The Stock 
Exchange of Hong Kong Limited; the Irish Stock Exchange; the Istanbul 
Stock Exchange; the Johannesburg Stock Exchange; the London Stock 
Exchange; the Bourse de Luxembourg; the Mexico Stock Exchange; the Borsa 
Valori di Milan; the Montreal Stock Exchange; the Oslo Stock Exchange; 
the Bourse de Paris; the Stock Exchange of Singapore Ltd.; the Stockholm 
Stock Exchange; the Tokyo Stock Exchange; the Toronto Stock Exchange; 
the Vancouver Stock Exchange; the Warsaw Stock Exchange and the Zurich 
Stock Exchange; and
    (2) Any foreign securities exchange or non-exchange market 
designated by the Commission. Attributes to be considered in determining 
whether to designate an offshore securities market, among others, 
include:
    (i) Organization under foreign law;
    (ii) Association with a generally recognized community of brokers, 
dealers, banks, or other professional intermediaries with an established 
operating history;
    (iii) Oversight by a governmental or self-regulatory body;
    (iv) Oversight standards set by an existing body of law;
    (v) Reporting of securities transactions on a regular basis to a 
governmental or self-regulatory body;
    (vi) A system for exchange of price quotations through common 
communications media; and

[[Page 636]]

    (vii) An organized clearance and settlement system.
    (c) Directed selling efforts. (1) ``Directed selling efforts'' means 
any activity undertaken for the purpose of, or that could reasonably be 
expected to have the effect of, conditioning the market in the United 
States for any of the securities being offered in reliance on this 
Regulation S (Sec. 230.901 through Sec. 230.905, and Preliminary Notes). 
Such activity includes placing an advertisement in a publication ``with 
a general circulation in the United States'' that refers to the offering 
of securities being made in reliance upon this Regulation S.
    (2) Publication ``with a general circulation in the United States'':
    (i) Is defined as any publication that is printed primarily for 
distribution in the United States, or has had, during the preceding 
twelve months, an average circulation in the United States of 15,000 or 
more copies per issue; and
    (ii) Will encompass only the U.S. edition of any publication 
printing a separate U.S. edition if the publication, without considering 
its U.S. edition, would not constitute a publication with a general 
circulation in the United States.
    (3) The following are not ``directed selling efforts'':
    (i) Placing an advertisement required to be published under U.S. or 
foreign law, or under rules or regulations of a U.S. or foreign 
regulatory or self-regulatory authority, provided the advertisement 
contains no more information than legally required and includes a 
statement to the effect that the securities have not been registered 
under the Act and may not be offered or sold in the United States (or to 
a U.S. person, if the advertisement relates to an offering under 
Category 2 or 3 (paragraph (b)(2) or (b)(3)) in Sec. 230.903) absent 
registration or an applicable exemption from the registration 
requirements;
    (ii) Contact with persons excluded from the definition of ``U.S. 
person'' pursuant to paragraph (k)(2)(vi) of this section or persons 
holding accounts excluded from the definition of ``U.S. person'' 
pursuant to paragraph (k)(2)(i) of this section, solely in their 
capacities as holders of such accounts;
    (iii) A tombstone advertisement in any publication with a general 
circulation in the United States, provided:
    (A) The publication has less than 20% of its circulation, calculated 
by aggregating the circulation of its U.S. and comparable non-U.S. 
editions, in the United States;
    (B) Such advertisement contains a legend to the effect that the 
securities have not been registered under the Act and may not be offered 
or sold in the United States (or to a U.S. person, if the advertisement 
relates to an offering under Category 2 or 3 (paragraph (b)(2) or 
(b)(3)) in Sec. 230.903) absent registration or an applicable exemption 
from the registration requirements; and
    (C) Such advertisement contains no more information than:
    (1) The issuer's name;
    (2) The amount and title of the securities being sold;
    (3) A brief indication of the issuer's general type of business;
    (4) The price of the securities;
    (5) The yield of the securities, if debt securities with a fixed 
(non-contingent) interest provision;
    (6) The name and address of the person placing the advertisement, 
and whether such person is participating in the distribution;
    (7) The names of the managing underwriters;
    (8) The dates, if any, upon which the sales commenced and concluded;
    (9) Whether the securities are offered or were offered by rights 
issued to security holders and, if so, the class of securities that are 
entitled or were entitled to subscribe, the subscription ratio, the 
record date, the dates (if any) upon which the rights were issued and 
expired, and the subscription price; and
    (10) Any legend required by law or any foreign or U.S. regulatory or 
self-regulatory authority;
    (iv) Bona fide visits to real estate, plants or other facilities 
located in the United States and tours thereof conducted for a 
prospective investor by an issuer, a distributor, any of their 
respective affiliates or a person acting on behalf of any of the 
foregoing;
    (v) Distribution in the United States of a foreign broker-dealer's 
quotations

[[Page 637]]

by a third-party system that distributes such quotations primarily in 
foreign countries if:
    (A) Securities transactions cannot be executed between foreign 
broker-dealers and persons in the United States through the system; and
    (B) The issuer, distributors, their respective affiliates, persons 
acting on behalf of any of the foregoing, foreign broker-dealers and 
other participants in the system do not initiate contacts with U.S. 
persons or persons within the United States, beyond those contacts 
exempted under Sec. 240.15a-6 of this chapter; and
    (vi) Publication by an issuer of a notice in accordance with 
Sec. 230.135 or Sec. 230.135c.
    (vii) Providing any journalist with access to press conferences held 
outside of the United States, to meetings with the issuer or selling 
security holder representatives conducted outside the United States, or 
to written press-related materials released outside the United States, 
at or in which a present or proposed offering of securities is 
discussed, if the requirements of Sec. 230.135e are satisfied.
    (d) Distributor. ``Distributor'' means any underwriter, dealer, or 
other person who participates, pursuant to a contractual arrangement, in 
the distribution of the securities offered or sold in reliance on this 
Regulation S (Sec. 230.901 through Sec. 230.905, and Preliminary Notes).
    (e) Domestic issuer/Foreign issuer. ``Domestic issuer'' means any 
issuer other than a ``foreign government'' or ``foreign private issuer'' 
(both as defined in Sec. 230.405). ``Foreign issuer'' means any issuer 
other than a ``domestic issuer.''
    (f) Distribution compliance period. ``Distribution compliance 
period'' means a period that begins when the securities were first 
offered to persons other than distributors in reliance upon this 
Regulation S (Sec. 230.901 through Sec. 230.905, and Preliminary Notes) 
or the date of closing of the offering, whichever is later, and 
continues until the end of the period of time specified in the relevant 
provision of Sec. 230.903, except that:
    (1) All offers and sales by a distributor of an unsold allotment or 
subscription shall be deemed to be made during the distribution 
compliance period;
    (2) In a continuous offering, the distribution compliance period 
shall commence upon completion of the distribution, as determined and 
certified by the managing underwriter or person performing similar 
functions;
    (3) In a continuous offering of non-convertible debt securities 
offered and sold in identifiable tranches, the distribution compliance 
period for securities in a tranche shall commence upon completion of the 
distribution of such tranche, as determined and certified by the 
managing underwriter or person performing similar functions; and
    (4) That in a continuous offering of securities to be acquired upon 
the exercise of warrants, the distribution compliance period shall 
commence upon completion of the distribution of the warrants, as 
determined and certified by the managing underwriter or person 
performing similar functions, if requirements of Sec. 230.903(b)(5) are 
satisfied.
    (g) Offering restrictions. ``Offering restrictions'' means:
    (1) Each distributor agrees in writing:
    (i) That all offers and sales of the securities prior to the 
expiration of the distribution compliance period specified in Category 2 
or 3 (paragraph (b)(2) or (b)(3)) in Sec. 230.903, as applicable, shall 
be made only in accordance with the provisions of Sec. 230.903 or 
Sec. 230.904; pursuant to registration of the securities under the Act; 
or pursuant to an available exemption from the registration requirements 
of the Act; and
    (ii) For offers and sales of equity securities of domestic issuers, 
not to engage in hedging transactions with regard to such securities 
prior to the expiration of the distribution compliance period specified 
in Category 2 or 3 (paragraph (b)(2) or (b)(3)) in Sec. 230.903, as 
applicable, unless in compliance with the Act; and
    (2) All offering materials and documents (other than press releases) 
used in connection with offers and sales of the securities prior to the 
expiration of the distribution compliance period specified in Category 2 
or 3 (paragraph

[[Page 638]]

(b)(2) or (b)(3)) in Sec. 230.903, as applicable, shall include 
statements to the effect that the securities have not been registered 
under the Act and may not be offered or sold in the United States or to 
U.S. persons (other than distributors) unless the securities are 
registered under the Act, or an exemption from the registration 
requirements of the Act is available. For offers and sales of equity 
securities of domestic issuers, such offering materials and documents 
also must state that hedging transactions involving those securities may 
not be conducted unless in compliance with the Act. Such statements 
shall appear:
    (i) On the cover or inside cover page of any prospectus or offering 
circular used in connection with the offer or sale of the securities;
    (ii) In the underwriting section of any prospectus or offering 
circular used in connection with the offer or sale of the securities; 
and
    (iii) In any advertisement made or issued by the issuer, any 
distributor, any of their respective affiliates, or any person acting on 
behalf of any of the foregoing. Such statements may appear in summary 
form on prospectus cover pages and in advertisements.
    (h) Offshore transaction. (1) An offer or sale of securities is made 
in an ``offshore transaction'' if:
    (i) The offer is not made to a person in the United States; and
    (ii) Either:
    (A) At the time the buy order is originated, the buyer is outside 
the United States, or the seller and any person acting on its behalf 
reasonably believe that the buyer is outside the United States; or
    (B) For purposes of:
    (1) Section 230.903, the transaction is executed in, on or through a 
physical trading floor of an established foreign securities exchange 
that is located outside the United States; or
    (2) Section 230.904, the transaction is executed in, on or through 
the facilities of a designated offshore securities market described in 
paragraph (b) of this section, and neither the seller nor any person 
acting on its behalf knows that the transaction has been pre-arranged 
with a buyer in the United States.
    (2) Notwithstanding paragraph (h)(1) of this section, offers and 
sales of securities specifically targeted at identifiable groups of U.S. 
citizens abroad, such as members of the U.S. armed forces serving 
overseas, shall not be deemed to be made in ``offshore transactions.''
    (3) Notwithstanding paragraph (h)(1) of this section, offers and 
sales of securities to persons excluded from the definition of ``U.S. 
person'' pursuant to paragraph (k)(2)(vi) of this section or persons 
holding accounts excluded from the definition of ``U.S. person'' 
pursuant to paragraph (k)(2)(i) of this section, solely in their 
capacities as holders of such accounts, shall be deemed to be made in 
``offshore transactions.''
    (i) Reporting issuer. ``Reporting issuer'' means an issuer other 
than an investment company registered or required to register under the 
1940 Act that:
    (1) Has a class of securities registered pursuant to Section 12(b) 
or 12(g) of the Exchange Act (15 U.S.C. 78l(b) or 78l(g)) or is required 
to file reports pursuant to Section 15(d) of the Exchange Act (15 U.S.C. 
78o(d)); and
    (2) Has filed all the material required to be filed pursuant to 
Section 13(a) or 15(d) of the Exchange Act (15 U.S.C. 78m(a) or 78o(d)) 
for a period of at least twelve months immediately preceding the offer 
or sale of securities made in reliance upon this Regulation S 
(Sec. 230.901 through Sec. 230.905, and Preliminary Notes) (or for such 
shorter period that the issuer was required to file such material).
    (j) Substantial U.S. market interest. (1) ``Substantial U.S. market 
interest'' with respect to a class of an issuer's equity securities 
means:
    (i) The securities exchanges and inter-dealer quotation systems in 
the United States in the aggregate constituted the single largest market 
for such class of securities in the shorter of the issuer's prior fiscal 
year or the period since the issuer's incorporation; or
    (ii) 20 percent or more of all trading in such class of securities 
took place in, on or through the facilities of securities exchanges and 
inter-dealer quotation systems in the United States

[[Page 639]]

and less than 55 percent of such trading took place in, on or through 
the facilities of securities markets of a single foreign country in the 
shorter of the issuer's prior fiscal year or the period since the 
issuer's incorporation.
    (2) ``Substantial U.S. market interest'' with respect to an issuer's 
debt securities means:
    (i) Its debt securities, in the aggregate, are held of record (as 
that term is defined in Sec. 240.12g5-1 of this chapter and used for 
purposes of paragraph (j)(2) of this section) by 300 or more U.S. 
persons;
    (ii) $1 billion or more of: The principal amount outstanding of its 
debt securities, the greater of liquidation preference or par value of 
its securities described in Sec. 230.902(a)(1), and the principal amount 
or principal balance of its securities described in Sec. 230.902(a)(2), 
in the aggregate, is held of record by U.S. persons; and
    (iii) 20 percent or more of: The principal amount outstanding of its 
debt securities, the greater of liquidation preference or par value of 
its securities described in Sec. 230.902(a)(1), and the principal amount 
or principal balance of its securities described in Sec. 230.902(a)(2), 
in the aggregate, is held of record by U.S. persons.
    (3) Notwithstanding paragraph (j)(2) of this section, substantial 
U.S. market interest with respect to an issuer's debt securities is 
calculated without reference to securities that qualify for the 
exemption provided by Section 3(a)(3) of the Act (15 U.S.C. 77c(a)(3)).
    (k) U.S. person. (1) ``U.S. person'' means:
    (i) Any natural person resident in the United States;
    (ii) Any partnership or corporation organized or incorporated under 
the laws of the United States;
    (iii) Any estate of which any executor or administrator is a U.S. 
person;
    (iv) Any trust of which any trustee is a U.S. person;
    (v) Any agency or branch of a foreign entity located in the United 
States;
    (vi) Any non-discretionary account or similar account (other than an 
estate or trust) held by a dealer or other fiduciary for the benefit or 
account of a U.S. person;
    (vii) Any discretionary account or similar account (other than an 
estate or trust) held by a dealer or other fiduciary organized, 
incorporated, or (if an individual) resident in the United States; and
    (viii) Any partnership or corporation if:
    (A) Organized or incorporated under the laws of any foreign 
jurisdiction; and
    (B) Formed by a U.S. person principally for the purpose of investing 
in securities not registered under the Act, unless it is organized or 
incorporated, and owned, by accredited investors (as defined in 
Sec. 230.501(a)) who are not natural persons, estates or trusts.
    (2) The following are not ``U.S. persons'':
    (i) Any discretionary account or similar account (other than an 
estate or trust) held for the benefit or account of a non-U.S. person by 
a dealer or other professional fiduciary organized, incorporated, or (if 
an individual) resident in the United States;
    (ii) Any estate of which any professional fiduciary acting as 
executor or administrator is a U.S. person if:
    (A) An executor or administrator of the estate who is not a U.S. 
person has sole or shared investment discretion with respect to the 
assets of the estate; and
    (B) The estate is governed by foreign law;
    (iii) Any trust of which any professional fiduciary acting as 
trustee is a U.S. person, if a trustee who is not a U.S. person has sole 
or shared investment discretion with respect to the trust assets, and no 
beneficiary of the trust (and no settlor if the trust is revocable) is a 
U.S. person;
    (iv) An employee benefit plan established and administered in 
accordance with the law of a country other than the United States and 
customary practices and documentation of such country;
    (v) Any agency or branch of a U.S. person located outside the United 
States if:
    (A) The agency or branch operates for valid business reasons; and
    (B) The agency or branch is engaged in the business of insurance or 
banking and is subject to substantive insurance

[[Page 640]]

or banking regulation, respectively, in the jurisdiction where located; 
and
    (vi) The International Monetary Fund, the International Bank for 
Reconstruction and Development, the Inter-American Development Bank, the 
Asian Development Bank, the African Development Bank, the United 
Nations, and their agencies, affiliates and pension plans, and any other 
similar international organizations, their agencies, affiliates and 
pension plans.
    (l) United States. ``United States'' means the United States of 
America, its territories and possessions, any State of the United 
States, and the District of Columbia.

[63 FR 9642, Feb. 25, 1998]



Sec. 230.903  Offers or sales of securities by the issuer, a distributor, any of their respective affiliates, or any person acting on behalf of any of the 
          foregoing; conditions relating to specific securities.

    (a) An offer or sale of securities by the issuer, a distributor, any 
of their respective affiliates, or any person acting on behalf of any of 
the foregoing, shall be deemed to occur outside the United States within 
the meaning of Sec. 230.901 if:
    (1) The offer or sale is made in an offshore transaction;
    (2) No directed selling efforts are made in the United States by the 
issuer, a distributor, any of their respective affiliates, or any person 
acting on behalf of any of the foregoing; and
    (3) The conditions of paragraph (b) of this section, as applicable, 
are satisfied.
    (b) Additional conditions--(1) Category 1. No conditions other than 
those set forth in Sec. 230.903(a) apply to securities in this category. 
Securities are eligible for this category if:
    (i) The securities are issued by a foreign issuer that reasonably 
believes at the commencement of the offering that:
    (A) There is no substantial U.S. market interest in the class of 
securities to be offered or sold (if equity securities are offered or 
sold);
    (B) There is no substantial U.S. market interest in its debt 
securities (if debt securities are offered or sold);
    (C) There is no substantial U.S. market interest in the securities 
to be purchased upon exercise (if warrants are offered or sold); and
    (D) There is no substantial U.S. market interest in either the 
convertible securities or the underlying securities (if convertible 
securities are offered or sold);
    (ii) The securities are offered and sold in an overseas directed 
offering, which means:
    (A) An offering of securities of a foreign issuer that is directed 
into a single country other than the United States to the residents 
thereof and that is made in accordance with the local laws and customary 
practices and documentation of such country; or
    (B) An offering of non-convertible debt securities of a domestic 
issuer that is directed into a single country other than the United 
States to the residents thereof and that is made in accordance with the 
local laws and customary practices and documentation of such country, 
provided that the principal and interest of the securities (or par 
value, as applicable) are denominated in a currency other than U.S. 
dollars and such securities are neither convertible into U.S. dollar-
denominated securities nor linked to U.S. dollars (other than through 
related currency or interest rate swap transactions that are commercial 
in nature) in a manner that in effect converts the securities to U.S. 
dollar-denominated securities.
    (iii) The securities are backed by the full faith and credit of a 
foreign government; or
    (iv) The securities are offered and sold to employees of the issuer 
or its affiliates pursuant to an employee benefit plan established and 
administered in accordance with the law of a country other than the 
United States, and customary practices and documentation of such 
country, provided that:
    (A) The securities are issued in compensatory circumstances for bona 
fide services rendered to the issuer or its affiliates in connection 
with their businesses and such services are not rendered in connection 
with the offer or sale of securities in a capital-raising transaction;

[[Page 641]]

    (B) Any interests in the plan are not transferable other than by 
will or the laws of descent or distribution;
    (C) The issuer takes reasonable steps to preclude the offer and sale 
of interests in the plan or securities under the plan to U.S. residents 
other than employees on temporary assignment in the United States; and
    (D) Documentation used in connection with any offer pursuant to the 
plan contains a statement that the securities have not been registered 
under the Act and may not be offered or sold in the United States unless 
registered or an exemption from registration is available.
    (2) Category 2. The following conditions apply to securities that 
are not eligible for Category 1 (paragraph (b)(1)) of this section and 
that are equity securities of a reporting foreign issuer, or debt 
securities of a reporting issuer or of a non-reporting foreign issuer.
    (i) Offering restrictions are implemented;
    (ii) The offer or sale, if made prior to the expiration of a 40-day 
distribution compliance period, is not made to a U.S. person or for the 
account or benefit of a U.S. person (other than a distributor); and
    (iii) Each distributor selling securities to a distributor, a 
dealer, as defined in section 2(a)(12) of the Act (15 U.S.C. 
77b(a)(12)), or a person receiving a selling concession, fee or other 
remuneration in respect of the securities sold, prior to the expiration 
of a 40-day distribution compliance period, sends a confirmation or 
other notice to the purchaser stating that the purchaser is subject to 
the same restrictions on offers and sales that apply to a distributor.
    (3) Category 3. The following conditions apply to securities that 
are not eligible for Category 1 or 2 (paragraph (b)(1) or (b)(2)) of 
this section:
    (i) Offering restrictions are implemented;
    (ii) In the case of debt securities:
    (A) The offer or sale, if made prior to the expiration of a 40-day 
distribution compliance period, is not made to a U.S. person or for the 
account or benefit of a U.S. person (other than a distributor); and
    (B) The securities are represented upon issuance by a temporary 
global security which is not exchangeable for definitive securities 
until the expiration of the 40-day distribution compliance period and, 
for persons other than distributors, until certification of beneficial 
ownership of the securities by a non-U.S. person or a U.S. person who 
purchased securities in a transaction that did not require registration 
under the Act;
    (iii) In the case of equity securities:
    (A) The offer or sale, if made prior to the expiration of a one-year 
distribution compliance period, is not made to a U.S. person or for the 
account or benefit of a U.S. person (other than a distributor); and
    (B) The offer or sale, if made prior to the expiration of a one-year 
distribution compliance period, is made pursuant to the following 
conditions:
    (1) The purchaser of the securities (other than a distributor) 
certifies that it is not a U.S. person and is not acquiring the 
securities for the account or benefit of any U.S. person or is a U.S. 
person who purchased securities in a transaction that did not require 
registration under the Act;
    (2) The purchaser of the securities agrees to resell such securities 
only in accordance with the provisions of this Regulation S 
(Sec. 230.901 through Sec. 230.905, and Preliminary Notes), pursuant to 
registration under the Act, or pursuant to an available exemption from 
registration; and agrees not to engage in hedging transactions with 
regard to such securities unless in compliance with the Act;
    (3) The securities of a domestic issuer contain a legend to the 
effect that transfer is prohibited except in accordance with the 
provisions of this Regulation S (Sec. 230.901 through Sec. 230.905, and 
Preliminary Notes), pursuant to registration under the Act, or pursuant 
to an available exemption from registration; and that hedging 
transactions involving those securities may not be conducted unless in 
compliance with the Act;
    (4) The issuer is required, either by contract or a provision in its 
bylaws, articles, charter or comparable document, to refuse to register 
any transfer

[[Page 642]]

of the securities not made in accordance with the provisions of this 
Regulation S (Sec. 230.901 through Sec. 230.905, and Preliminary Notes), 
pursuant to registration under the Act, or pursuant to an available 
exemption from registration; provided, however, that if the securities 
are in bearer form or foreign law prevents the issuer of the securities 
from refusing to register securities transfers, other reasonable 
procedures (such as a legend described in paragraph (b)(3)(iii)(B)(3) of 
this section) are implemented to prevent any transfer of the securities 
not made in accordance with the provisions of this Regulation S; and
    (iv) Each distributor selling securities to a distributor, a dealer 
(as defined in section 2(a)(12) of the Act (15 U.S.C. 77b(a)(12)), or a 
person receiving a selling concession, fee or other remuneration, prior 
to the expiration of a 40-day distribution compliance period in the case 
of debt securities, or a one-year distribution compliance period in the 
case of equity securities, sends a confirmation or other notice to the 
purchaser stating that the purchaser is subject to the same restrictions 
on offers and sales that apply to a distributor.
    (4) Guaranteed securities. Notwithstanding paragraphs (b)(1) through 
(b)(3) of this section, in offerings of debt securities fully and 
unconditionally guaranteed as to principal and interest by the parent of 
the issuer of the debt securities, only the requirements of paragraph 
(b) of this section that are applicable to the offer and sale of the 
guarantee must be satisfied with respect to the offer and sale of the 
guaranteed debt securities.
    (5) Warrants. An offer or sale of warrants under Category 2 or 3 
(paragraph (b)(2) or (b)(3)) of this section also must comply with the 
following requirements:
    (i) Each warrant must bear a legend stating that the warrant and the 
securities to be issued upon its exercise have not been registered under 
the Act and that the warrant may not be exercised by or on behalf of any 
U.S. person unless registered under the Act or an exemption from such 
registration is available;
    (ii) Each person exercising a warrant is required to give:
    (A) Written certification that it is not a U.S. person and the 
warrant is not being exercised on behalf of a U.S. person; or
    (B) A written opinion of counsel to the effect that the warrant and 
the securities delivered upon exercise thereof have been registered 
under the Act or are exempt from registration thereunder; and
    (iii) Procedures are implemented to ensure that the warrant may not 
be exercised within the United States, and that the securities may not 
be delivered within the United States upon exercise, other than in 
offerings deemed to meet the definition of ``offshore transaction'' 
pursuant to Sec. 230.902(h), unless registered under the Act or an 
exemption from such registration is available.

[63 FR 9645, Feb. 25, 1998]



Sec. 230.904  Offshore resales.

    (a) An offer or sale of securities by any person other than the 
issuer, a distributor, any of their respective affiliates (except any 
officer or director who is an affiliate solely by virtue of holding such 
position), or any person acting on behalf of any of the foregoing, shall 
be deemed to occur outside the United States within the meaning of 
Sec. 230.901 if:
    (1) The offer or sale are made in an offshore transaction;
    (2) No directed selling efforts are made in the United States by the 
seller, an affiliate, or any person acting on their behalf; and
    (3) The conditions of paragraph (b) of this section, if applicable, 
are satisfied.
    (b) Additional conditions. (1) Resales by dealers and persons 
receiving selling concessions. In the case of an offer or sale of 
securities prior to the expiration of the distribution compliance period 
specified in Category 2 or 3 (paragraph (b)(2) or (b)(3)) of 
Sec. 230.903, as applicable, by a dealer, as defined in Section 2(a)(12) 
of the Act (15 U.S.C. 77b(a)(12)), or a person receiving a selling 
concession, fee or other remuneration in respect of the securities 
offered or sold:
    (i) Neither the seller nor any person acting on its behalf knows 
that the

[[Page 643]]

offeree or buyer of the securities is a U.S. person; and
    (ii) If the seller or any person acting on the seller's behalf knows 
that the purchaser is a dealer, as defined in Section 2(a)(12) of the 
Act (15 U.S.C. 77b(a)(12)), or is a person receiving a selling 
concession, fee or other remuneration in respect of the securities sold, 
the seller or a person acting on the seller's behalf sends to the 
purchaser a confirmation or other notice stating that the securities may 
be offered and sold during the distribution compliance period only in 
accordance with the provisions of this Regulation S (Sec. 230.901 
through Sec. 230.905, and Preliminary Notes); pursuant to registration 
of the securities under the Act; or pursuant to an available exemption 
from the registration requirements of the Act.
    (2) Resales by certain affiliates. In the case of an offer or sale 
of securities by an officer or director of the issuer or a distributor, 
who is an affiliate of the issuer or distributor solely by virtue of 
holding such position, no selling concession, fee or other remuneration 
is paid in connection with such offer or sale other than the usual and 
customary broker's commission that would be received by a person 
executing such transaction as agent.

[63 FR 9646, Feb. 25, 1998]



Sec. 230.905  Resale limitations.

    Equity securities of domestic issuers acquired from the issuer, a 
distributor, or any of their respective affiliates in a transaction 
subject to the conditions of Sec. 230.901 or Sec. 230.903 are deemed to 
be ``restricted securities'' as defined in Sec. 230.144. Resales of any 
of such restricted securities by the offshore purchaser must be made in 
accordance with this Regulation S (Sec. 230.901 through Sec. 230.905, 
and Preliminary Notes), the registration requirements of the Act or an 
exemption therefrom. Any ``restricted securities,'' as defined in 
Sec. 230.144, that are equity securities of a domestic issuer will 
continue to be deemed to be restricted securities, notwithstanding that 
they were acquired in a resale transaction made pursuant to Sec. 230.901 
or Sec. 230.904.

[63 FR 9647, Feb. 25, 1998]

 Regulation CE--Coordinated Exemptions for Certain Issues of Securities 
                         Exempt Under State Law



Sec. 230.1001  Exemption for transactions exempt from qualification under Sec. 25102(n) of the California Corporations Code.

    Preliminary Notes: (1) Nothing in this section is intended to be or 
should be construed as in any way relieving issuers or persons acting on 
behalf of issuers from providing disclosure to prospective investors 
necessary to satisfy the antifraud provisions of the federal securities 
laws. This section only provides an exemption from the registration 
requirements of the Securities Act of 1933 (``the Act'') [15 U.S.C. 77a 
et seq.].
    (2) Nothing in this section obviates the need to comply with any 
applicable state law relating to the offer and sales of securities.
    (3) Attempted compliance with this section does not act as an 
exclusive election; the issuer also can claim the availability of any 
other applicable exemption.
    (4) This exemption is not available to any issuer for any 
transaction which, while in technical compliance with the provision of 
this section, is part of a plan or scheme to evade the registration 
provisions of the Act. In such cases, registration under the Act is 
required.

    (a) Exemption. Offers and sales of securities that satisfy the 
conditions of paragraph (n) of Sec. 25102 of the California Corporations 
Code, and paragraph (b) of this section, shall be exempt from the 
provisions of Section 5 of the Securities Act of 1933 by virtue of 
Section 3(b) of that Act.
    (b) Limitation on and computation of offering price. The sum of all 
cash and other consideration to be received for the securities shall not 
exceed $5,000,000, less the aggregate offering price for all other 
securities sold in the same offering of securities, whether pursuant to 
this or another exemption.
    (c) Resale limitations. Securities issued pursuant to this 
Sec. 230.1001 are deemed to be ``restricted securities'' as defined in 
Securities Act Rule 144 [Sec. 230.144]. Resales of such securities must 
be made in compliance with the registration requirements of the Act or 
an exemption therefrom.

[61 FR 21359, May 9, 1996]

[[Page 644]]

PART 231--INTERPRETATIVE RELEASES RELATING TO THE SECURITIES ACT OF 1933 
              AND GENERAL RULES AND REGULATIONS THEREUNDER

----------------------------------------------------------------------------------------------------------------
                                                      Release
                      Subject                           No.         Date            Fed. Reg. Vol. and page
----------------------------------------------------------------------------------------------------------------
Partial text of letter of Chief of Securities              45  Sept. 22, 1933  11 FR 10947.
 Division of Federal Trade Commission relating to
 section 11(e)(2).
Letter of Federal Trade Commission relating to             70    Nov. 6, 1933  11 FR 10948.
 offers of sale prior to the effective date of the
 registration statement.
Opinion of Federal Trade Commission relating to            86   Dec. 13, 1933      Do.
 registration of stock issued by certain mortgage
 loan companies.
Extracts from letters of Federal Trade Commission          97   Dec. 28, 1933  11 FR 10949.
 relating to applications of various sections of
 the Act.
Extract from letter of Federal Trade Commission           131   Mar. 13, 1934  11 FR 10951.
 discussing availability of a ``broker's
 exemption'' to the customer of the broker.
Statement by Federal Trade Commission discussing          185   June 20, 1934      Do.
 the amendment of the Securities Act to include
 fractional undivided interests in oil, gas or
 other mineral rights in the definition of security.
Statement by Federal Trade Commission relating to         201   July 20, 1934  11 FR 10952.
 the availability of an exemption from registration
 where a secondary distribution involves sales
 outside the State of incorporation.
Letter of General Counsel discussing factors to be        285   Jan. 24, 1935      Do.
 considered in determining the availability of the
 exemption from registration provided by the second
 clause of section 4(1).
Letter of General Counsel discussing the                  312   Mar. 15, 1935  11 FR 10953.
 availability of an exemption from registration for
 securities issued in exchange for other securities
 where terms of the issuance and exchange are
 subject to approval by a State public utility
 commission.
Letter of General Counsel discussing availability         401   June 18, 1935      Do.
 of an exemption from registration for collateral
 trust notes.
Letter of General Counsel discussing distribution         464   Aug. 19, 1935      Do.
 by statistical service of bulletins and circulars
 describing securities for which registration
 statements have been filed.
Letter of General Counsel discussing the                  538   Oct. 26, 1935  11 FR 10955.
 availability of an exemption from registration for
 the issuance of securities under deposit
 agreements where solicitations under the
 agreements were begun prior to the effective date
 of the registration requirements of the Securities
 Act.
Letter of General Counsel discussing the                  603   Dec. 16, 1935      Do.
 availability of exemption from registration of the
 second clause of section 4(1).
Letters of General Counsel discussing application         646    Feb. 3, 1936  11 FR 10956.
 of section 3(a)(9).
Letter by General Counsel discussing circulation by       802    May 23, 1936  11 FR 10957.
 underwriters and dealers of summaries of
 information contained in registration statements
 prior to the effective date of such statements.
Letter of General Counsel discussing the                  828    June 4, 1936      Do.
 application of section 5(b)(2).
Opinion of the Director of the Division of Forms          874    July 2, 1936      Do.
 and Regulations relating to Rule 821(a) (17 CFR
 230.821(a)).
Letter of General Counsel discussing whether a sale       929   July 29, 1936      Do.
 of a security is involved in the payment of a
 dividend.
Letter of General Counsel discussing solicitation        1256    Feb. 9, 1937  11 FR 10958.
 by financial and security houses of brokerage
 orders for the purchase of securities prior to the
 effective date of a registration statement for
 such securities.
Opinion of the Director of the Division of Forms         1376    Apr. 7, 1937      Do.
 and Regulations discussing the definition of
 ``parent'' as used in various forms under
 Securities Act of 1933 and Securities Exchange Act
 of 1934.
Letter of General Counsel discussing nature of           1459    May 29, 1937      Do.
 exemption from registration provided by section
 3(a)(11).
Opinion of the Director of the Division of Forms         1503   July 12, 1937  11 FR 10959.
 and Regulations relating to Rule 821(a) (17 CFR
 230.821(a)).
Letter of the Director of the Division of Forms and      1580   Oct. 19, 1937  11 FR 10961.
 Regulations relating to Rule 821(a) (17 CFR
 230.821(a)).
Opinion of General Counsel relating to Rule 142 (17      1862   Dec. 14, 1938  11 FR 10962.
 CFR 230.142).
Letter of General Counsel concerning the services        1934    Apr. 5, 1939  11 FR 10963.
 of former employees of the Commission in
 connection with matters with which such employees
 became familiar during their course of employment
 with the Commission.
Letter of General Counsel relating to sections           2029    Aug. 8, 1939  11 FR 10953.
 3(a)(9) and 4(1).
Statement of Commission policy with respect to the       2340   Aug. 23, 1940  11 FR 10964.
 acceleration of the effective date of registration
 statements.
Opinion of General Counsel concerning the                2623   July 25, 1941      Do.
 application of the third clause of section 4(1) in
 various situations.
Extract from letter of Director of the Corporation       2899    Feb. 5, 1943  11 FR 10965.
 Finance Division.
Opinion of Director of the Trading and Exchange          2955   Nov. 16, 1943      Do.
 Division relating to the violation of the anti-
 fraud provisions of the Securities Act by
 manipulation of prices of securities not
 registered on a national securities exchange.

[[Page 645]]

 
Opinion of Director of the Trading and Exchange          2956   Nov. 11, 1943      Do.
 Division relating to the violation of the anti-
 fraud provisions of the Securities Act in cases of
 a ``syndicate account'' while members of the
 syndicate or selling group are engaged in the
 retail distribution of such security.
Statement of the Commission relating to the anti-        2997    June 1, 1944      Do.
 fraud provisions of section 17(a) of the
 Securities Act of 1933 and sections 10(b) and
 15(c)(1) of the Securities Exchange Act of 1934.
Opinion of Chief Counsel to the Corporation Finance      3000    June 7, 1944  11 FR 10965.
 Division relating to section 3(a)(10).
Opinion of Chief Counsel to the Corporation Finance      3011   Aug. 28, 1944  11 FR 10966.
 Division relating to section 3(a)(10).
Statement by Commission relating to section              3038    Jan. 4, 1945      Do.
 3(a)(10).
Opinion of Director of the Trading and Exchange          3043    Feb. 5, 1945      Do.
 Division relating to section 206 of the Investment
 Advisers Act of 1940, section 17(a) of the
 Securities Act of 1933, and sections 10(b) and
 15(c)(1) of the Securities Exchange Act of 1934.
Statement of Commission policy as to acceleration        3055    Apr. 7, 1945      Do.
 of the effective date of a registration statement
 where a selling stockholder does not bear his
 equitable proportion of the expense of
 registration.
Statement of Commission policy as to the                 3061   Apr. 30, 1945      Do.
 acceleration of the effective date of a
 registration statement in cases where an
 inadequate ``red herring'' prospectus has been
 issued.
Statement by Commission with respect to                  3115   Jan. 24, 1946  11 FR 10967.
 representations that the Commission has approved
 the price of a security offered to the public
 under a registration statement.
Statements of the Commission accompanying adoption       3177   Dec. 30, 1946  11 FR 14726.
 of Sec.  230.131 (Rule 131).
Letter of the Director of the Corporation Finance        3210    Apr. 9, 1947  12 FR 2513.
 Division regarding registration under the
 Securities Act of 1933 of certain warrants.
Opinion of General Counsel relating to ``when-           3343    May 24, 1949  14 FR 2831.
 issued'' trading.
Statement of the Commission relating to Sec.             3399    Dec. 6, 1950  15 FR 8965.
 230.220(i) of this chapter.
Opinion of the General Counsel relating to the use       3411   Apr. 18, 1951  16 FR 3387.
 of ``hedge clauses'' by brokers, dealers,
 investment advisers, and others.
Statements of the Commission respecting purpose of       3453    Oct. 1, 1952  17 FR 8900.
 Sec.  230.132 (Rule 132); respecting acceleration
 of identifying statements and proposed
 prospectuses pursuant to Sec.  230.131 and Sec.
 230.132 (Rules 131 and 132); and respecting
 acceleration policy where there has been no bona
 fide effort to prepare a reasonably concise and
 readable prospectus.
Statement of the Commission relating to publication      3844    Oct. 4, 1957  22 FR 8359.
 of information prior to or after the effective
 date of a registration statement.
Statement of the Commission concerning the               3846    Oct. 8, 1957  22 FR 8361.
 interpretation and application of Sec.  230.133
 (Rule 133).
Statement of the Commission regarding trading            3890   Jan. 21, 1958  23 FR 498.
 stamps.
Statement of the Commission regarding public             3892   Jan. 31, 1958  23 FR 840.
 offerings of investment contracts providing for
 the acquisition, sale or servicing of mortgages or
 deeds of trust.
Statement of the Commission as to the applicability      4298   Nov. 18, 1960  25 FR 12177.
 of the Federal securities laws to real estate
 investment trusts.
Statement of the Commission concerning                   4412  Sept. 20, 1961  26 FR 9158.
 interpretation of section 39(a)(3) of the
 Securities Act of 1933.
Statement of the Commission concerning exemption         4434    Dec. 6, 1961  26 FR 11896.
 for local offerings from registration.
Statement of the Commission concerning standards of      4445    Feb. 2, 1962  27 FR 1251.
 conduct for registered broker-dealers in the
 distribution of unregistered securities.
Statement of the Commission in regard to the wide        4458    Mar. 1, 1962  27 FR 2312.
 variation of certificates used by independent
 accountants in their registration statements
 concerning verification of inventories (income
 statements) of prior years in first audits.
Statement of the Commission in regard to the             4475   Apr. 13, 1962  27 FR 3990.
 increase of time between the filing and the
 effective dates of a substantial volume of
 registration statements and suggested assistance
 to issuers, counsels, and others preparing
 registration statements to remedy this delay.
Statement of the Commission cautioning broker-           4476   Apr. 16, 1962  27 FR 3991.
 dealers about violating the anti-fraud provisions
 of the Federal securities laws when making short
 sales in which they delay effecting the covering
 transaction to acquire the security.
Opinion of the Commission that ``Equity Funding'',       4491    May 22, 1962  27 FR 5190.
 ``Secured Funding'', or ``Life Funding''
 constitutes an investment contract and when
 publicly offered is required to be registered
 under the Securities Act of 1933.
Statement of the Commission regarding limitations        4552    Nov. 6, 1962  27 FR 11316.
 of the availability of so-called ``private
 offering exemption.''.
Statement of the Commission showing circumstances        4566   Dec. 28, 1962  28 FR 276.
 in 7 cases where profits in real estate
 transactions were not earned at time transactions
 were recorded but that the sales were designed to
 create the illusion of profits or value as a basis
 for the sales of securities.
Commission's publication of policies and practices       4666    Feb. 7, 1964  29 FR 2490.
 of its Division of Corporation Finance to be used
 as guide for preparation and filing of
 registration statements.

[[Page 646]]

 
Statement of the Commission explaining the               4697    May 28, 1964  29 FR 7317.
 operation of section 5 of the Securities Act of
 1933 in the offer and sale of securities by
 underwriters and dealers prior to and after the
 filing of a registration statement.
Statement of the Commission re applicability of          4708    July 9, 1964  29 FR 9828.
 Securities Act of 1933 to offerings of securities
 outside the U.S. and re applicability of section
 15(a) of the Securities Exchange Act of 1934 to
 foreign underwriters as part of program of
 Presidential Task Force to reduce U.S. balance of
 payments deficit and protect U.S. gold reserves.
Letter of Chief Counsel of Division of Corporation       4709   July 14, 1964  29 FR 9827.
 Finance recommending against proposed amendment to
 Rule 134 under the Securities Act of 1933 (17 CFR
 230.134) with specific interpretations valuable to
 would be users of ``tombstone'' advertisements.
Summary and interpretation by the Commission of          4725  Sept. 14, 1964  29 FR 13455.
 amendments to the Securities Act of 1933 and
 Securities Exchange Act of 1934 as contained in
 the Securities Acts Amendments of 1964.
Statement of the Commission re the registration of       4790   July 13, 1965  30 FR 9059.
 securities purchased through employee stock
 purchase plans and warning that plans not subject
 to registration should be limited to securities of
 reliable companies.
Opinion and statement of the Commission in regard        4811    Dec. 7, 1965  30 FR 15420.
 to proper reporting of deferred income taxes
 arising from installment sales.
Statement of the Commission to clarify the meaning       4817   Jan. 19, 1966  31 FR 1005.
 of ``beneficial ownership of securities'' as
 relates to beneficial ownership of securities held
 by family members.
Restatement (superseding Release No. 4669) of the        4818   Jan. 21, 1966  31 FR 2544.
 Commission alerting the financial community to the
 limitations of Rule 154 (17 CFR 230.154) under the
 Securities Act of 1933.
Statement of the Commission setting the date of May      4819   Feb. 14, 1966  31 FR 3175.
 1, 1966 after which filings must reflect
 beneficial ownership of securities held by family
 members.
Request by the Commission to issuers to use              4844    Aug. 5, 1966  31 FR 10667.
 language that can be understood readily by
 employees in prospectuses for securities
 registered under the Securities Act of 1933 on
 Form S-8 (17 CFR 239.16b).
Statement of the Commission prepared in conjunction      4877    Aug. 8, 1967  32 FR 11705.
 with Maryland, Virginia, and District of Columbia
 authorities re applicability of Federal Securities
 Laws as to registration requirements and antifraud
 provisions in real estate syndications.
Opinions of the Commission on the acceleration of        4910   June 18, 1968  33 FR 10086.
 the effective date of a registration statement
 under the Securities Act of 1933 and on the
 clearance of proxy material such as convertible
 preferred shares considered residual securities in
 determining earnings per share applicable to
 common stock.
Statement of the Commission to alert prospective         4913    July 5, 1968  33 FR 10134.
 borrowers obtaining loans for real estate
 development about recent fraudulent schemes.
Statement of the Commission clarifying that              4923  Sept. 16, 1968  33 FR 14545.
 industrial revenue bonds sold under Rule 131 (17
 CFR 230.131) and Rule 3b-5 (17 CFR 240.3b-5) are
 not effected if acquired and paid for by the
 underwriters on or before December 31, 1968.
Statement of the Commission setting forth certain        4934   Nov. 21, 1968  33 FR 17900.
 procedures for the staff of its Division of
 Corporation Finance to adopt in order to expedite
 the filing of registration statements.
Statement of the Director of the Commission's         IC-5554    Dec. 3, 1968  33 FR 18576.
 Division of Corporate Regulation re the filing of
 supplements to investment company prospectuses
 under the Securities Act of 1933 as a result of
 changes in stock exchange rules effective December
 5, 1968 relating to ``customer-directed give ups''.
Guides for preparation and filing of registration        4936    Dec. 9, 1968  33 FR 18617.
 statements under the Securities Act of 1933.
Letter of Chief Counsel of Division of Corporate         4940   Dec. 23, 1968  34 FR 382.
 Regulation setting forth the Commission's
 interpretation as to references to certain
 financial services in ``Tombstone'' advertisements.
Statement of the Commission setting forth emergency      4955   Mar. 12, 1969  34 FR 5547.
 procedures adopted by the Division of Corporate
 Regulation to expedite processing of registration
 statements, amendments, and proxy statements.
Proposed guide for prospective registrants re the        4959    Apr. 7, 1969  34 FR 6575.
 use of misleading names.
Declaration of the Commission that prior delivery        4968   Apr. 24, 1969  34 FR 7235.
 of preliminary prospectus to underwriters and
 dealers will accelerate the effective date of a
 registration statement.
Policy of Commission's Division of Corporation           4970     May 1, 1969  34 FR 7613.
 Finance to send only one letter of comments re
 registration statement to the issuer or its
 counsel and one to the principal underwriter or
 its counsel if there are underwriters.
Statement of the Commission cautioning brokers and       4982    July 2, 1969  34 FR 11581.
 dealers with respect to effecting transactions of
 ``spin offs'' and ``shell corporations''.
Commission's proposed guide for prospectuses             5001   Aug. 27, 1969  34 FR 14125.
 relating to public offering of interests in oil
 and gas drilling programs to assist issuers in
 preparing registration statements and to help
 investors in understanding and analysis.

[[Page 647]]

 
Proposed guide for prospective registrants re the        5005  Sept. 17, 1969  34 FR 15245.
 use of misleading names adopted unchanged.
Interpretations by the Commission re the                 5009    Oct. 7, 1969  34 FR 16870.
 publication of information prior to or after
 filing of a registration statement, and also re
 its proposal to amend Rule 174 to change effective
 date restrictions of the existing prospectus
 delivery requirements.
Commission's statement about publicity concerning        5016   Oct. 20, 1969  34 FR 17433.
 the petroleum discoveries on the North Slope of
 Alaska.
Commission's warning statement re sale and               5018    Nov. 4, 1969  34 FR 18160.
 distribution of whisky warehouse receipts.
The Commission's views re preparation of                 5036   Jan. 19, 1970  35 FR 1233.
 prospectuses relating to public offerings of
 interests in oil and gas programs are represented
 by Guide No. 55 set forth here and in Securities
 Act Release No. 4936 rather than the proposed
 guide in Securities Act Release No. 5001.
Conclusion by the Commission that a registration         5049   Feb. 17, 1970  35 FR 4121.
 statement will be considered defective under the
 1933 Act when the certificate does not meet the
 requirements of 17 CFR 210.2-02 because the
 accountant qualifies his opinion due to doubt as
 to whether the company will continue as a going
 concern.
Publication of the Commission's guidelines re            5068   June 23, 1970  35 FR 12103.
 applicability of Federal securities laws to offer
 and sale outside the U.S. of shares of registered
 open-end investment companies.
Statement of the Commission reminding reporting          5092   Oct. 15, 1970  35 FR 16733.
 companies of obligation re Commission's rules to
 file reports on a timely basis.
Publication by the Commission of a registration          5094   Oct. 21, 1970  35 FR 16919.
 guide relating to the interest of legal counsel
 and experts in the registrant.
Commission's Guide No. 58 requiring disclosure in        5102   Nov. 12, 1970  35 FR 17990.
 prospectus of address and telephone number of the
 registrant's principal executive offices.
Commission's statement re exemption of certain           5103    Nov. 6, 1970  35 FR 17990.
 industrial revenue bonds from registration, etc.
 requirements in view of amendment of Securities
 Act of 1933 and of Securities Exchange Act of 1934
 by ``section 401'' (PL 91-373).
Commission's views relating to important questions       5120   Dec. 23, 1970  35 FR 19986.
 re the accounting by registered investment
 companies for investment securities in their
 financial statements and in the periodic
 computations of net asset value for the purpose of
 pricing their shares.
Commission's statement setting forth its policy on       5121   Dec. 30, 1970  36 FR 1525.
 use of legends and stop-transfer instructions as
 evidence of nonpublic offering.
Publication of the Commission's procedure to be          5127   Jan. 25, 1971  36 FR 2600.
 followed if requests are to be met for no action
 or interpretative letters and responses thereto to
 be made available for public use.
Interpretations of the Commission in regard to           5133   Feb. 18, 1971  36 FR 4483.
 requirements for registration statements and
 reports concerning information requested re
 description of business, summary of operations,
 and financial statements.
Third in a series of statements by the Commission        5137    Apr. 2, 1971  36 FR 7897.
 on problems arising under PL 91-547 re
 registration and regulation of insurance company
 separate accounts used as funding vehicles for
 certain employee stock bonus, pension and profit
 sharing plans.
Statement of the Commission warning the public        34-9143   Apr. 12, 1971  36 FR 8238.
 about novel unsecured debt securities which appear
 to invite unwarranted comparisons with bank
 savings accounts, savings and loan association
 accounts, and bank time deposit certificates.
Statement of the Commission prohibiting the              5158   June 16, 1971  36 FR 11918.
 reduction of fixed charges by amounts representing
 interest or investment income or gains on
 retirement of debt in registration statements or
 reports filed with the Commission.
Statement of the Commission calling attention to         5170   July 19, 1971  36 FR 13989.
 requirements in its forms and rules under the
 Securities Act of 1933 and the Securities and
 Exchange Act of 1934 for disclosure of legal
 proceedings and descriptions of registrant's
 business as these requirements relate to material
 matters involving the environment and civil rights.
Commission's authorization of publication of             5171   July 20, 1971  36 FR 13915.
 amended Registration Guide No. 8 which sets forth
 the policy of the Commission's Division of
 Corporation Finance with respect to pictorial or
 graphic representations in prospectives.
Commission's policy requiring the inclusion in           5176   Aug. 10, 1971  36 FR 15527.
 financial statements of the ratio of earnings to
 fixed charges for the total enterprise in
 equivalent prominence with the ratio for the
 registrant or registrant and consolidated
 subsidiaries.
Commission's guidelines for release of information       5180   Aug. 16, 1971  36 FR 16506.
 by issuers whose securities are ``in
 registration''.
Policy of Commission's Division of Corporation           5196  Sept. 27, 1971  36 FR 19362.
 Finance to defer processing registration
 statements and amendments filed under the
 Securities Act of 1933 by issuers whose reports
 are delinquent until such reports are brought up
 to date.
Publication by the Commission of a registration          5209    Nov. 8, 1971  36 FR 22013.
 guide relating to ``insurance premium funding''
 programs.

[[Page 648]]

 
Commission's statement concerning applicability of       5211   Nov. 30, 1971  36 FR 23289.
 securities laws to multilevel distributorships and
 other business opportunities offered through
 pyramid sales plans.
Commission's statement concerning offering and sale      5226   Jan. 14, 1972  37 FR 600.
 of securities in nonpublic offerings and
 applicability of antifraud provisions of
 securities acts.
Commission's statement of procedures followed by         5231    Mar. 2, 1972  37 FR 4327.
 the staff of its Division of Corporation Finance
 in examining registration statements; request to
 issuers to follow certain procedures to expedite
 registration.
Commission endorses the establishment by all             5237    Apr. 5, 1972  37 FR 6850.
 publicly held companies of audit committees
 composed of outside directors.
Applicability of Commission's policy statement on        5250    May 18, 1972  37 FR 9988.
 the future structure of securities markets to
 selection of brokers and payment of commissions by
 institutional managers.
Commission's statement and policy on misleading pro      5255    June 9, 1972  37 FR 11559.
 rata stock distributions to shareholders.
Commission's guidelines prepared by the Division of      5259   June 29, 1972  37 FR 12790.
 Corporate Regulation for use in preparing and
 filing registration statements for open-end and
 closed-end management investment companies on
 Forms S-4 and S-5.
Commission's guidelines on independence of               5270   June 19, 1972  37 FR 14294.
 certifying accountants; example cases and
 Commission's conclusions.
Commission's guides for preparation and filing of        5278    Aug. 9, 1972  37 FR 15986.
 registration statements.
Commission's procedures for processing post              5305  Sept. 29, 1972  37 FR 20317.
 effective amendments filed by all registered
 investment companies.
Interpretations of rules concerning underwriters by      5306   Oct. 31, 1972  37 FR 23180.
 the Commission's Corporate Finance Division.
Commission's decisions on recommendations of             5310    Mar. 1, 1973  38 FR 5457.
 advisory committee regarding commencement of
 enforcement proceedings and termination of staff
 investigations.
Commission's interpretation of risk-sharing test in      5312    Oct. 5, 1972  37 FR 20937.
 pooling of interest accounting.
Commission's statement that short-selling                5323   Oct. 25, 1972  37 FR 22796.
 securities prior to offering date is a possible
 violation of antifraud and antimanipulative laws.
Commission reaffirms proper accounting treatment to      5333   Dec. 13, 1972  37 FR 26516.
 be followed by a lessee when the lessor is created
 as a conduit for debt financing.
Commission's statement to builders and sellers of        5347   Jan. 18, 1973  38 FR 1735.
 condominiums of their obligations under the
 Securities Act.
Amendment of previous interpretation (AS-130) of         5348   Jan. 18, 1973  38 FR 1734.
 risk-sharing test in pooling-of-interest
 accounting.
Commission's policy on the use of ``sales                5359   Mar. 19, 1973  38 FR 7220.
 literature'' in Investment Company prospectuses.
Commission's findings on disclosure of projections       5362   Mar. 19, 1973  38 FR 7220.
 of future economic performance by issuers of
 publicly traded securities.
Commission's views on reporting cash flow and other      5377   Apr. 11, 1973  38 FR 9158.
 related data.
Commission's guidelines on advertising and sales         5382   Apr. 18, 1973  38 FR 9587.
 practices in connection with offers and sales of
 securities involving Condominium Units and other
 Units in real estate development.
Commission's guidelines on preparation and filing        5396   June 29, 1973  38 FR 17200.
 of registration statements.
Commission's statement on obligations of                 5398   June 29, 1973  38 FR 17201.
 underwriters with respect to discretionary
 accounts.
Commission's statement calling attention to              5403    July 3, 1973  38 FR 17715.
 requirements for completing and filing of Form 144.
Commission expresses concern with failure of             5492   July 10, 1973  38 FR 18366.
 issuers to timely and properly file periodic and
 current reports.
Commission's statement on exceptions for filing          5413   Aug. 16, 1973  38 FR 22121.
 registration statements for variable life
 insurance contracts.
Commission's conclusions as to certain problems          5416  Sept. 10, 1973  38 FR 24635.
 relating to the effect of treasury stock
 transactions on accounting for business
 combinations.
Commission requests comments on Accounting Series        5429   Oct. 17, 1973  38 FR 28819.
 Release No. 146.
Statement by the Commission on disclosure of the         5447   Jan. 10, 1974  39 FR 1511.
 impact of possible fuel shortages on the
 operations of issuers.
Commission's statement on disclosure of inventory        5449   Jan. 17, 1974  39 FR 2085.
 profits reflected in income in periods of rising
 prices.
Commission views on disclosure of illegal campaign       5466   Mar. 19, 1974  39 FR 10237.
 contributions.
Commission views and positions with respect to Rule      5463   Mar. 22, 1974  39 FR 10891.
 145 and related matters.
Commission's statement of policy and                    5416A   Apr. 25, 1974  39 FR 14588.
 interpretations.
Commission's views on business combinations              5510   July 23, 1974  39 FR 26719.
 involving open-end investment companies.
Commission's guidelines for filings related to           5511   July 23, 1974  39 FR 26720.
 extractive reserves and natural gas supplies.
Commission's practices on reporting of natural gas       5504   July 30, 1974  39 FR 27556.
 reserve estimates.
Commission's revised position concerning dividend        5515    Aug. 8, 1974  39 FR 28520.
 reinvestment plans.
Commission's guidelines for registration and             5520   Sept. 3, 1974  39 FR 31894.
 reporting.
Commission's requirements for financial statements.      5528   Oct. 11, 1974  39 FR 36578.

[[Page 649]]

 
Letters of the Division of Corporation Finance with      5552    Jan. 9, 1975  40 FR 1695.
 respect to certain proposed arrangements for the
 sale of gold bullion.
Commission's examples of unusual risks and               5551   Jan. 15, 1975  40 FR 2678.
 uncertainties.
Commission's statement on disclosure problems            5558   Feb. 12, 1975  40 FR 6483.
 relating to LIFO accounting.
Commission's guidelines on Accounting Series             5590   June 30, 1975  40 FR 27441.
 Release No. 148.
Statements of Investment Policies of Money Market        5639   Nov. 21, 1975  40 FR 54241.
 Funds Relating to Industry Concentration.
Publication of guide for preparation of                  5692   Apr. 26, 1976  41 FR 17374.
 registration statements relating to interests in
 real estate limited partnerships.
Standards for disclosure; oil and gas reserve......      5706    May 28, 1976  41 FR 21764.
Guides for statistical disclosure by bank holding        5735  Sept. 14, 1976  41 FR 39010.
 companies.
Registration statements (not including post-             5738  Sept. 14, 1976  41 FR 39013.
 effective amendments).                                         Oct. 26, 1976  41 FR 46851.
Guide for preparation of registration statements         5745    Oct. 1, 1976  41 FR 43398.
 relating to interests in real estate limited
 partnerships.
Guides for preparation and filing of registration        5791   Dec. 28, 1976  41 FR 56306.
 statements.                                             6049    Apr. 3, 1979  44 FR 21567.
Commission amends the general instructions to a          5821   Apr. 15, 1977  42 FR 22139.
 short form registration statement.
Recission of certain accounting....................      5835   June 15, 1977  42 FR 33282.
Withdrawal of undertaking required of investment         5854   Aug. 12, 1977  42 FR 42196.
 companies.
Industry segment determination.....................      5910    Mar. 3, 1978  43 FR 9599.
Application of registration requirements to certain      5927   Apr. 24, 1978  43 FR 18163.
 tender offers and the application of tender offer
 provisions to certain cash-option mergers.
Guide for reports or memoranda concerning                5929    May 12, 1978  43 FR 20484.
 registrants.
Prospectus delivery requirements in special              5985    Oct. 4, 1978  43 FR 47492;
 offerings to mutual fund shareholders.                                        43 FR 52022.
Guides for disclosure of projections of future           5992    Nov. 7, 1978  43 FR 53246.
 economic performance.
Commission's statement regarding disclosure of           6001   Nov. 29, 1978  43 FR 57596.
 impact of Wage and Price Standards for 1979 on the
 operations of issuers.
Withdrawal of statement of policy on investment          6047   Mar. 28, 1979  44 FR 21007.
 company sales literature.
General statement of policy regarding exemptive          6051    Apr. 5, 1979  44 FR 21626.
 provisions relating to annuity and insurance
 contracts.
Commission recommends certain techniques in              6090   July 11, 1979  44 FR 43466.
 drafting trust indentures to the attention of
 persons registering offerings of debt securities
 under the Securities Act of 1933.
Resales of restricted and other securities.........      6099    Aug. 2, 1979  44 FR 46752.
Environmental disclosure requirements..............      6130  Sept. 27, 1979  44 FR 56924.
No action position respecting public offerings of        6136   Oct. 16, 1979  44 FR 61941.
 debt securities registered on Form S-18 without
 qualification of an indenture under the Trust
 Indenture Act.
Disclosure of management remuneration by certain         6157   Nov. 29, 1979  44 FR 70130.
 foreign private issuers.
Pooled income funds................................      6175   Jan. 10, 1980  45 FR 3258.
Employee benefit plans; interpretation of statute..      6188    Feb. 1, 1980  45 FR 8962.
Effect of credit controls on the operations of           6200   Mar. 14, 1980  45 FR 17954.
 certain registered investment companies including
 money market funds.
Amendments to guides for statistical disclosure by       6221    July 8, 1980  45 FR 47140.
 bank holding companies.
Amendments to annual report form, related forms,         6231   Sept. 2, 1980  45 FR 63644.
 rules, regulations and guides; integration of
 Securities' Acts Disclosure System.
Uniform instructions as to financial statements--        6234   Sept. 2, 1980  45 FR 63692.
 regulation S-X.
Delayed offerings by foreign governments or              6240  Sept. 10, 1980  45 FR 72644.
 political subdivisions thereof.
Procedures utilized by the division of corporation       6253   Oct. 28, 1980  45 FR 72644.
 finance for rendering informal advice.
Simplified form of trust indenture.................      6279    Jan. 8, 1981  46 FR 3500.
Employee benefit plans.............................      6281   Jan. 15, 1981  46 FR 8446.
Option and option-related transactions during            6297    Mar. 6, 1981  46 FR 16670.
 underwritten offerings.
Issuance of ``Retail Repurchase Agreements'' by          6351  Sept. 25, 1981  46 FR 48637.
 Banks and Savings and Loan Associations.
Effect of Revenue Ruling 81-225 on Issuers and           6352  Sept. 28, 1981  46 FR 48640.
 Holders of Certain Variable Annuity Contracts.
Recission of Guides and Redesignation of Industry        6384    Mar. 3, 1982  47 FR 11480.
 Guides.
Revisions to the Division of Corporation Finance's       6405    June 3, 1982  47 FR 25122.
 Guide 5 and Amendment of Related Disclosure
 Provisions.
Continuous and Delayed Offerings by Foreign              6424   Sept. 2, 1982  47 FR 39809.
 Governments or Political Subdivisions thereof.
Supplemental disclosures of oil and gas producing        6444   Dec. 15, 1982  47 FR 57914.
 activities.
Regulation D.......................................      6455    Mar. 3, 1983  48 FR 10045.
Revision of Financial Statement Requirements and         6458    Mar. 7, 1983  48 FR 11113.
 Industry Guide Disclosure for Bank Holding
 Companies.
Revision of Industry Guide Disclosures for Bank          6478   Aug. 11, 1983  48 FR 37613.
 Holding Companies.
Public Statements by Corporate Representatives.....      6504   Jan. 13, 1984  49 FR 2469.
Rules and Guide for Disclosures Concerning Reserves      6559   Nov. 27, 1984  49 FR 47594.
 for Unpaid Claims and Claim Adjustment Expenses of
 Property-Casualty Underwriters.
Securities Issued or Guaranteed by United States         6661  Sept. 29, 1986  51 FR 34462.
 Branches or Agencies of Foreign Banks.

[[Page 650]]

 
Amendments to Industry Guide Disclosures by Bank         6677    Dec. 3, 1986  51 FR 43594.
 Holding Companies.
Statement of the Commission Regarding Disclosure         6791    Aug. 1, 1988  53 FR 29226.
 Obligations of Companies Affected by the
 Government's Defense Contract Procurement Inquiry
 and Related Issues.
Statement of the Commission Regarding Disclosure by      6815    Feb. 1, 1989  54 FR 5600.
 Issuers of Interests in Publicly Offered Commodity
 Pools.
Management's Discussion and Analysis of Financial        6835    May 18, 1989  54 FR 22427.
 Condition and Results of Operations; Certain
 Investment Company Disclosures.
Limited Partnership Reorganizations and Public           6900   June 17, 1991  56 FR 28986.
 Offerings of Limited Partnership Interests.
Acceptability in Financial Statements of an              6906   July 29, 1991  56 FR 37000.
 Accounting Standard Permitting the Return of a
 Nonaccrual Loan to Accrual Status After a Partial
 Charge-off.
Statement of the Commission Regarding Disclosure         7049    Mar. 9, 1994  59 FR 12758.
 Obligations of Municipal Securities Issuers and
 Others.
Amendment of Interpretation Regarding Substantive        7060    May 12, 1994  59 FR 26109.
 Repossession of Collateral.
Problematic Practices Under Regulation S...........      7190   July 27, 1995  60 FR 35666.
Use of Electronic Media for Delivery Purposes......      7233    Oct. 6, 1995  60 FR 53467.
Use of Electronic Media by Broker-Dealers..........      7288    May 15, 1996  61 FR 24651.
Use of Internet Web Sites to Offer Securities,           7516   Mar. 27, 1998  63 FR 14813.
 Solicit Securities Transactions, or Advertise
 Investment Services Offshore.
Disclosure of Year 2000 Issues and Consequences by       7558    Aug. 4, 1998  63 FR 41404.
 Public Companies, Investment Advisers, Investment
 Companies, and Municipal Securities Issuers.
Use of Electronic Media............................      7856   Apr. 28, 2000  65 FR 25843.
Exemption From Section 101(c)(1) of the Electronic       7877   July 27, 2000  65 FR 47284.
 Signatures in Global and National Commerce Act for
 Registered Investment Companies.
Application of the Electronic Signatures in Global       7985   June 14, 2001  66 FR 33176.
 and National Commerce Act to Record Retention
 Requirements Pertaining to Issuers.
Calculation of Average Weekly Trading Volume.......     8005A  Sept. 27, 2001  66 FR 49274
Commission Guidance and Rules to Trading in              8107   June 21, 2002  67 FR 43246
 Security Future Products.
----------------------------------------------------------------------------------------------------------------



PART 232--REGULATION S-T--GENERAL RULES AND REGULATIONS FOR ELECTRONIC FILINGS--Table of Contents




                                 General

Sec.
232.10  Application of part 232.
232.11  Definitions of terms used in part 232.
232.12  Business hours of the Commission.
232.13  Date of filing; adjustment of filing date.
232.14  Paper filings not accepted without exemption.

                     Electronic Filing Requirements

232.100  Persons and entities subject to mandated electronic filing.
232.101  Mandated electronic submissions and exceptions.
232.102  Exhibits.
232.103  Liability for transmission errors or omissions in documents 
          filed via EDGAR.
232.104  Unofficial PDF copies included in an electronic submission.
232.105  Limitation on use of HTML documents and hypertext links.
232.106  Prohibition against electronic submissions containing 
          executable code.

                           Hardship Exemptions

232.201  Temporary hardship exemption.
232.202  Continuing hardship exemption.

                  Preparation of Electronic Submissions

232.301  EDGAR Filer Manual.
232.302  Signatures.
232.303  Incorporation by reference.
232.304  Graphic, image, audio and video material.
232.305  Number of characters per line; tabular and columnar 
          information.
232.306  Foreign language documents and symbols.
232.307  Bold face type.
232.308  Type size and font; legibility.
232.309  Paper size; binding; sequential numbering; number of copies.
232.310  Marking changed material.
232.311  Documents submitted in paper under cover of Form SE.
232.401--232.402  [Reserved]

                             EDGAR Functions

232.501  Modular submissions and segmented filings.

             Foreign Private Issuers and Foreign Governments

232.600--232.903  [Reserved]

    Authority: 15 U.S.C. 77f, 77g, 77h, 77j, 77s(a), 77sss(a), 78c(b), 
78l, 78m, 78n, 78o(d), 78w(a), 78ll(d), 79t(a), 80a-8, 80a-29, 80a-30 
and 80a-37.
    Section 232.302 is also issued under secs. 3(a) and 302, Pub.L. No. 
107-204, 116 Stat. 745.

    Source: 58 FR 14670, Mar. 18, 1993, unless otherwise noted.

[[Page 651]]

                                 General



Sec. 232.10  Application of part 232.

    (a) This part, in conjunction with the EDGAR Filer Manual and the 
electronic filing provisions of applicable rules, regulations and forms, 
shall govern the electronic submission of documents filed or otherwise 
submitted to the Commission and shall be controlling for an electronic 
format document in the manner and respects provided in this part.
    (b) Each registrant, third party, or agent must file in paper format 
a Form ID (Secs. 239.63, 249.446, 259.602, 269.7 and 274.402 of this 
chapter), the uniform application for access codes to file on EDGAR, 
before beginning to file electronically.

    Note: The Commission strongly urges any person or entity about to 
become subject to the disclosure and filing requirements of the federal 
securities laws to submit a Form ID well in advance of the first 
required filing, including a registration statement relating to an 
initial public offering, in order to facilitate electronic filing on a 
timely basis.

[58 FR 14670, Mar. 18, 1993, as amended at 62 FR 36456, July 8, 1997; 64 
FR 27894, May 21, 1999]



Sec. 232.11  Definition of terms used in part 232.

    Unless otherwise specifically provided, the terms used in Regulation 
S-T (part 232 of this chapter) have the same meanings as in the federal 
securities laws and the rules, regulations and forms promulgated 
thereunder. In addition, the following definitions of terms apply 
specifically to electronic format documents and shall apply wherever 
they appear in laws, rules, regulations and forms governing such 
documents, unless the context otherwise specifies:
    Animated graphics. The term animated graphics means text or images 
that do not remain static but that may move when viewed in a browser.
    ASCII document. The term ASCII document means an electronic text 
document with contents limited to American Standard Code for Information 
Interchange (ASCII) characters and that is tagged with Standard 
Generalized Mark Up Language (SGML) tags in the format required for 
ASCII/SGML documents by the EDGAR Filer Manual.
    Business development company. The term business development company 
has the meaning set forth in section 2(a)(48) of the Investment Company 
Act.
    Direct transmission. The term direct transmission means the 
transmission of one or more electronic submissions via a telephonic 
communication session.
    Disruptive code. The term disruptive code means any active content 
or other executable code, or any program or set of electronic computer 
instructions inserted into a computer, operating system, or program that 
replicates itself or that actually or potentially modifies or in any way 
alters, damages, destroys or disrupts the file content or the operation 
of any computer, computer file, computer database, computer system, 
computer network or software, and as otherwise set forth in the EDGAR 
Filer Manual.
    EDGAR. The term EDGAR (Electronic Data Gathering, Analysis, and 
Retrieval) means the computer system for the receipt, acceptance, review 
and dissemination of documents submitted in electronic format.
    EDGAR Filer Manual. The term EDGAR Filer Manual means the current 
version of the manual prepared by the Commission setting out the 
technical format requirements for an electronic submission.

    Note: See Rule 301 of Regulation S-T (Sec. 232.301).

    Electronic document. The term electronic document means the portion 
of an electronic submission separately tagged as an individual document 
in the format required by the EDGAR Filer Manual.
    Electronic filer. The term electronic filer means a person or an 
entity that submits filings electronically pursuant to Rules 100 and 101 
of Regulation S-T (Secs. 232.100 and 232.101, respectively).
    Electronic filing. The term electronic filing means one or more 
electronic documents filed under the federal securities laws that are 
transmitted or delivered to the Commission in electronic format.
    Electronic format. The term electronic format means the computerized 
format

[[Page 652]]

of a document prepared in accordance with the EDGAR Filer Manual.
    Electronic submission. The term electronic submission means any 
document, such as a filing, correspondence, or modular submission, or 
any discrete set of documents, transmitted or delivered to the 
Commission in electronic format.
    Exchange Act. The term Exchange Act means the Securities Exchange 
Act of 1934.
    Executable code. The term executable code means instructions to a 
computer to carry out operations that use features beyond the viewer's, 
reader's, or Internet browser's native ability to interpret and display 
HTML, PDF, and static graphic files. Such code may be in binary (machine 
language) or in script form. Executable code includes disruptive code.
    Header information. The term header information means information 
designated by the EDGAR Filer Manual to precede the text of each 
electronic submission and document submitted therewith via EDGAR that 
identifies characteristics of the submission and documents in order to 
facilitate electronic processing by the EDGAR system.
    HTML document. The term HTML document means an electronic text 
document tagged with HyperText Markup Language tags in the format 
required by the EDGAR Filer Manual.
    Hypertext links or hyperlinks. The term hypertext links or 
hyperlinks means the representation of an Internet address in a form 
that an Internet browser application can recognize as an Internet 
address.
    Investment Company Act. The term Investment Company Act means the 
Investment Company Act of 1940.
    Modular submission. The term modular submission means an electronic 
submission that contains one or more documents, or portions of a 
document, submitted for storage in the non-public EDGAR data storage 
area for purposes of subsequent inclusion in one or more electronic 
filings pursuant to Rule 501(a) of Regulation S-T (Sec. 232.501(a)).
    Official filing. The term official filing means any filing that is 
received and accepted by the Commission, regardless of filing medium and 
exclusive of header information, tags and any other technical 
information required in an electronic filing.
    Original. The term original, when used or implied in the securities 
laws, rules, regulations or forms, includes the writing itself or any 
counterpart intended to have the same effect by a person executing or 
issuing it. If data are stored in a computer or similar device, any 
printout or other output readable by sight, shown to reflect the data 
accurately, is an original.
    Paper format. The term paper format means a paper document.
    Public Utility Act. The term Public Utility Act means the Public 
Utility Holding Company Act of 1935.
    Registrant. The term registrant means an issuer of securities for 
which a Securities Act registration statement is required to be filed 
and/or an issuer of securities with respect to which an Exchange Act 
registration statement or report is required to be filed and/or an 
investment company required to file an Investment Company Act 
registration statement or report.
    Securities Act. The term Securities Act means the Securities Act of 
1933.
    Segmented Filing. The term segmented filing means an electronic 
format document assembled from segments previously submitted to the non-
public EDGAR data storage for one-time inclusion in an electronic filing 
pursuant to Rule 501(b) of Regulation S-T (Sec. 232.501(b)).
    Tag. The term tag means an identifier that highlights specific 
information to EDGAR that is in the format required by the EDGAR Filer 
Manual.
    Third party filer. The term third party filer means any person or 
entity that files documents with the Commission with respect to another 
entity.
    Trust Indenture Act. The term Trust Indenture Act means the Trust 
Indenture Act of 1939.
    Unofficial PDF copy. The term unofficial PDF copy means an optional 
copy of an electronic document that may be included in an EDGAR 
submission tagged as a Portable Document Format document in the format 
required by

[[Page 653]]

the EDGAR Filer Manual and submitted in accordance with Rule 104 of 
Regulation S-T (Sec. 232.104).

[58 FR 14670, Mar. 18, 1993, as amended at 62 FR 36456, July 8, 1997; 64 
FR 27894, May 21, 1999; 65 FR 24800, Apr. 27, 2000]



Sec. 232.12  Business hours of the Commission.

    (a) General. 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 is currently in 
effect, provided that hours for the filing of documents pursuant to the 
Acts 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 cartridge. Filers may 
submit paper documents filed with or otherwise furnished to the 
Commission, as well as electronic filings and submissions on magnetic 
cartridge under cover of Form ET (Secs. 239.62, 249.445, 259.601, 269.6 
and 274.401 of this chapter), 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. Filers may file submissions on magnetic cartridge 
either at the address indicated in paragraph (a) of this section or at 
the Commission's Operations Center, 6432 General Green Way, Alexandria, 
VA 22312-2413.
    (c) Submissions by direct transmission. Electronic filings and other 
documents may be submitted by direct transmission, via dial-up modem or 
Internet, 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 14670, Mar. 18, 1993; 58 FR 21349, Apr. 21, 1993, as amended at 
59 FR 67761, Dec. 30, 1994; 65 FR 24800, Apr. 27, 2000; 65 FR 24800, 
Apr. 27, 2000]



Sec. 232.13  Date of filing; adjustment of filing date.

    (a) General. (1) Except as provided in paragraph (b) of this 
section, the business day on which a filing is received by the 
Commission shall be the date of filing thereof, if:
    (i) All requirements of the Acts and rules applicable to such filing 
have been complied with;
    (ii) The filing conforms to the applicable technical standards 
regarding electronic format in the EDGAR Filer Manual; and
    (iii) With respect to Securities Act filings, including filings 
under section 24(f) of the Investment Company Act (15 U.S.C. 80a-24(f)), 
the required fee payment has been confirmed, provided that the failure 
to pay an insignificant amount of the fee at the time of the filing, as 
a result of a bona fide error, shall not affect the date of filing.
    (2) If the conditions of paragraph (a)(1) of this section are 
otherwise satisfied, all filings submitted by direct transmission 
commencing on or before 5:30 p.m. Eastern Standard Time or Eastern 
Daylight Saving Time, whichever is currently in effect, shall be deemed 
filed on the same business day, and all filings submitted by direct 
transmission commencing after 5:30 p.m. Eastern Standard Time or Eastern 
Daylight Saving Time, whichever is currently in effect, shall be deemed 
filed as of the next business day.
    (3) Notwithstanding paragraph (a)(2) of this section, any 
registration statement or any post-effective amendment thereto filed 
pursuant to Rule 462(b) (Sec. 230.462(b) of this chapter) by direct 
transmission commending on or before 10 p.m. Eastern Standard Time or 
Eastern Daylight Savings Time, whichever is currently in effect, shall 
be deemed filed on the same business day.

    Note: Electronic filings that have an automatic or immediate 
effective date must be deemed filed, as provided in paragraph (a) of 
this section, before any waiting period for automatic effectiveness 
commences or before the filing becomes immediately effective, whichever 
applies.

    (b) Adjustment of the filing date. If an electronic filer in good 
faith attempts to file a document with the Commission in a timely manner 
but the filing is delayed due to technical difficulties beyond the 
electronic filer's control, the electronic filer may request an 
adjustment of the filing date of such document. The Commission, or the 
staff

[[Page 654]]

acting pursuant to delegated authority, may grant the request if it 
appears that such adjustment is appropriate and consistent with the 
public interest and the protection of investors.
    (c) Payment of fees. Fees required with respect to a filing that is 
submitted electronically shall be paid in accordance with the procedures 
set forth in Instructions for Filing Fees--Rule 3a of the Commission's 
Informal and Other Procedures (Sec. 202.3a of this chapter).

    Note: All filing fees paid by electronic filers must be submitted to 
the lockbox depository, as provided in Rule 3a, including those 
pertaining to documents filed in paper pursuant to a hardship exemption.

    (d) Where the Commission's rules, schedules and forms provide that a 
document must be filed on the same day it is published, furnished, sent 
or given to security holders or others, an electronic filer may file the 
document with the Commission electronically before or on the date the 
document is published, furnished, sent or given, or if such publication 
or distribution does not occur during the official business hours of the 
Commission, as soon as practicable on the next business day. Any 
associated time periods shall be calculated on the basis of the 
publication or distribution date (as applicable), and not on the basis 
of the date of filing.

[58 FR 14670, Mar. 18, 1993, as amended at 59 FR 67761, Dec. 30, 1994; 
60 FR 26618, May 17, 1995; 62 FR 47938, Sept. 12, 1997; 64 FR 61451, 
Nov. 10, 1999]



Sec. 232.14  Paper filings not accepted without exemption.

    The Commission will not accept in paper format any filing required 
to be submitted electronically under Rules 100 and 101 of Regulation S-T 
(Secs. 232.100 and 232.101 respectively), unless the filing satisfies 
the requirements for a temporary or continuing hardship exemption under 
Rule 201 or 202 of Regulation S-T (Secs. 232.201 or 232.202 
respectively).

[62 FR 58649, Oct. 30, 1997]

                     Electronic Filing Requirements



Sec. 232.100  Persons and entities subject to mandated electronic filing.

    The following persons or entities shall be subject to the electronic 
filing requirements of this part 232:
    (a) Registrants whose filings are subject to review by the Division 
of Corporation Finance;
    (b) Registrants whose filings are subject to review by the Division 
of Investment Management; and
    (c) Any party (including natural persons) that files a document 
jointly with, or as a third party filer with respect to, a registrant 
that is subject to mandated electronic filing requirements.

[62 FR 36456, July 8, 1997, as amended at 67 FR 36699, May 24, 2002]



Sec. 232.101  Mandated electronic submissions and exceptions.

    (a) Mandated electronic submissions. (1) The following filings, 
including any related correspondence and supplemental information, 
except as otherwise provided, shall be submitted in electronic format:
    (i) Registration statements and prospectuses filed pursuant to the 
Securities Act (15 U.S.C. 77a, et seq.) or registration statements filed 
pursuant to Sections 12(b) or 12(g) of the Exchange Act (15 U.S.C. 
78l(b) or (g));
    (ii) Statements and applications filed with the Commission pursuant 
to the Trust Indenture Act (15 U.S.C. 77aaa et seq.), other than 
applications for exemptive relief filed pursuant to section 304 (15 
U.S.C. 77ddd) and section 310 (15 U.S.C. 77jjj) of that Act;
    (iii) Statements, reports and schedules filed with the Commission 
pursuant to section 13, 14, or 15(d) of the Exchange Act (15 U.S.C. 78m, 
78n, and 78o(d)), and proxy materials required to be furnished for the 
information of the Commission in connection with annual reports on Form 
10-K (Sec. 249.310 of this chapter) or Form 10-KSB (Sec. 249.310b of 
this chapter) filed pursuant to section 15(d) of the Exchange Act;

    Note 1. Electronic filers filing Schedules 13D and 13G with respect 
to foreign private issuers should include in the submission

[[Page 655]]

header all zeroes (i.e., 00-0000000) for the IRS tax identification 
number because the EDGAR system requires an IRS number tag to be 
inserted for the subject company as a prerequisite to acceptance of the 
filing.
    Note 2. Foreign private issuers must file or submit their Form 6-K 
reports (Sec. 249.306 of this chapter) in electronic format, except as 
otherwise permitted by paragraphs (b)(1) and (b)(7) of this section.

    (iv) Documents filed with the Commission pursuant to sections 8, 17, 
20, 23(c), 24(e), 24(f), and 30 of the Investment Company Act (15 U.S.C. 
80a-8, 80a-17, 80a-20, 80a-23(c), 80a-24(e), 80a-24(f) and 80a-29); 
provided, however, that submissions under section 6(c) or 17(g) of that 
Act (15 U.S.C. 80a-6(c) or 80a-17(g), or documents related to 
applications for exemptive relief under any section of that Act, shall 
not be made in electronic format;
    (v) Documents filed with the Commission pursuant to the Public 
Utility Act (15 U.S.C. 79a et seq.);
    (vi) Form CB (Secs. 239.800 and 249.480 of this chapter) filed or 
submitted under Sec. 230.801 or 230.802 of this chapter or Sec. 240.13e-
4(h)(8), 240.14d-1(c), or 240.14e-2(d) of this chapter if the party 
filing or submitting the Form CB is subject to the reporting 
requirements of Section 13 or 15(d) of the Exchange Act (15 U.S.C. 78m 
or 78o(d));
    (vii) Form F-X (Sec. 239.42 of this chapter) except as otherwise 
provided by Sec. 232.101(b)(9); and
    (viii) Form F-N (Sec. 239.43 of this chapter) filed by foreign banks 
and insurance companies and certain of their holding companies and 
finance subsidiaries under Sec. 230.489 of this chapter.
    (2) The following amendments to filings, including any related 
correspondence and supplemental information except as otherwise 
provided, shall be submitted as follows:
    (i) Any amendment to a filing by or relating to a registrant 
required to file electronically, including any amendment to a paper 
filing, shall be submitted in electronic format;
    (ii) The first electronic amendment to a paper format Schedule 13D 
(Sec. 240.13d-101 of this chapter) or Schedule 13G (Sec. 240.13d-102 of 
this chapter), shall restate the entire text of the Schedule 13D or 13G, 
but previously filed paper exhibits to such Schedules are not required 
to be restated electronically. See Rule 102 (Sec. 232.102) regarding 
amendments to exhibits previously filed in paper format. Notwithstanding 
the foregoing, if the sole purpose of filing the first electronic 
Schedule 13D or 13G amendment is to report a change in beneficial 
ownership that would terminate the filer's obligation to report, the 
amendment need not include a restatement of the entire text of the 
Schedule being amended.
    (3) Supplemental information shall be submitted in electronic format 
except as provided in paragraph (c)(2) of this section. The information 
shall be stored in the non-public EDGAR data storage area as 
correspondence. Supplemental information that is submitted in electronic 
format shall not be returned.

    Note: Failure to submit a required electronic filing pursuant to 
this paragraph (a), as well as any required confirming electronic copy 
of a paper filing made in reliance on a hardship exemption, as provided 
in Rules 201 and 202 of Regulation S-T (Secs. 232.201 and 232.202), will 
result in ineligibility to use Forms S-2, S-3, S-8, F-2 and F-3 (see 
Secs. 239.12, 239.13, 239.16b, 239.32 and 239.33 of this chapter, 
respectively), restrict incorporation by reference of the document 
submitted in paper (see Rule 303 of Regulation S-T (Sec. 232.303)), or 
toll certain time periods associated with tender offers (see Rule 13e-
4(f)(12) (Sec. 240.13e-4(f)(12) of this chapter) and Rule 14e-1(e) 
(Sec. 240.14e-1(e) of this chapter)).

    (b) Permitted electronic submissions. The following documents may be 
submitted to the Commission in electronic format, at the option of the 
electronic filer:
    (1) Annual reports to security holders furnished for the information 
of the Commission under Sec. 240.14a-3(c) of this chapter or 
Sec. 240.14c-3(b) of this chapter, under the requirements of Form 10-K 
or Form 10-KSB (Secs. 249.310 or 249.310b of this chapter) filed by 
registrants under Exchange Act Section 15(d) (15 U.S.C. 78o(d)), or by 
foreign private issuers filed on Form 6-K (Sec. 249.306 of this chapter) 
under Sec. 240.13a-16 of this chapter or Sec. 240.15d-16 of this 
chapter;
    (2) Notices of exempt solicitation furnished for the information of 
the Commission pursuant to Rule 14a-6(g) (Sec. 240.14a-6(g) of this 
chapter) and notices of exempt preliminary roll-up communications 
furnished for the information of the Commission pursuant

[[Page 656]]

to Rule 14a-6(n) (Sec. 240.14a-6(n) of this chapter);
    (3) Form 11-K (Sec. 249.311 of this chapter). Registrants who 
satisfy their Form 11-K filing obligations by filing amendments to Forms 
10-K or 10-KSB, as provided by Rule 15d-21 (Sec. 240.15d-21 of this 
chapter), also may choose to file such amendments in paper or electronic 
format;
    (4) Forms 3, 4 and 5 (Secs. 249.103, 249.104 and 249.105 of this 
chapter);
    (5) Form 144 (Sec. 239.144 of this chapter), where the issuer of the 
securities is subject to the reporting requirements of Section 13 or 
15(d) of the Exchange Act (15 U.S.C. 78m or 78o(d), respectively);
    (6) Periodic reports and reports with respect to distributions of 
primary obligations filed by:
    (i) The International Bank for Reconstruction and Development under 
Section 15(a) of the Bretton Woods Agreements Act (22 U.S.C. 286k-1(a)) 
and Part 285 of this chapter;
    (ii) The Inter-American Development Bank under Section 11(a) of the 
Inter-American Development Bank Act (22 U.S.C. 283h(a)) and Part 286 of 
this chapter;
    (iii) The Asian Development Bank under Section 11(a) of the Asian 
Development Bank Act (22 U.S.C. 285h(a)) and Part 287 of this chapter;
    (iv) The African Development Bank under Section 9(a) of the African 
Development Bank Act (22 U.S.C. 290i-9(a)) and Part 288 of this chapter;
    (v) The International Finance Corporation under Section 13(a) of the 
International Finance Corporation Act (22 U.S.C. 282k(a)) and Part 289 
of this chapter; and
    (vi) The European Bank for Reconstruction and Development under 
Section 9(a) of the European Bank for Reconstruction and Development Act 
(22 U.S.C. 290l-7(a)) and Part 290 of this chapter;
    (7) A report or other document submitted by a foreign private issuer 
under cover of Form 6-K (Sec. 249.306 of this chapter) that the issuer 
must furnish and make public under the laws of the jurisdiction in which 
the issuer is incorporated, domiciled or legally organized (the foreign 
private issuer's ``home country''), or under the rules of the home 
country exchange on which the issuer's securities are traded, as long as 
the report or other document is not a press release, is not required to 
be and has not been distributed to the issuer's security holders, and, 
if discussing a material event, has already been the subject of a Form 
6-K or other Commission filing or submission on EDGAR;
    (8) Form CB (Secs. 239.800 and 249.480 of this chapter) if the party 
filing or submitting the Form CB is not subject to the reporting 
requirements of Section 13 or 15(d) of the Exchange Act (15 U.S.C. 78m 
or 78o(d));
    (9) Form F-X (Sec. 239.42 of this chapter) if:
    (i) The party filing or submitting a Form CB (Secs. 239.800 and 
249.480 of this chapter) is not subject to the reporting requirements of 
Section 13 or Section 15(d) of the Exchange Act (15 U.S.C. 78m or 15 
U.S.C. 78o(d)); or
    (ii) Filed by a Canadian issuer when qualifying an offering 
statement pursuant to the provisions of Regulation A (Secs. 230.251-
230.263 of this chapter); and
    (10) Form 25 (Sec. 249.25 of this chapter).
    (c) Documents to be submitted in paper only. The following shall not 
be submitted in electronic format:
    (1)(i) Confidential treatment requests and the information with 
respect to which confidential treatment is requested;
    (ii) Preliminary proxy materials and information statements with 
respect to a matter specified in Item 14 of Schedule 14A (Sec. 240.14a-
101 of this chapter) for which confidential treatment has been requested 
in the manner prescribed by Rule 14a-6(e)(2) (Sec. 240.14a-6(e)(2) of 
this chapter) or Rule 14c-5(d)(2) (Sec. 240.14c-5(d)(2) of this 
chapter);
    (2) Supplemental information, if the submitter requests that the 
information be protected from public disclosure under the Freedom of 
Information Act (5 U.S.C. 552) pursuant to a request for confidential 
treatment under Rule 83 (Sec. 200.83 of this chapter) or if the 
submitter requests that the information be returned after staff review 
and the information is of the type typically returned by the staff 
pursuant to Rule 418(b) of Regulation C (Sec. 230.418(b) of this 
chapter) or Rule 12b-4 of Regulation 12B (Sec. 240.12b-4 of this 
chapter);

[[Page 657]]

    (3) Shareholder proposals and all related correspondence submitted 
pursuant to Rule 14a-8 of the Exchange Act (Sec. 240.14a-8 of this 
chapter);
    (4) No-action and interpretive letter requests (Sec. 200.81 of this 
chapter and 15 U.S.C. 78l(h));
    (5) Applications for exemptive relief filed pursuant to Sections 304 
and 310 of the Trust Indenture Act;
    (6) Filings relating to offerings exempt from registration under the 
Securities Act, including filings made pursuant to Regulation A 
(Secs. 230.251-230.263 of this chapter), Regulation D (Secs. 230.501-
230.506 of this chapter) and Regulation E (Secs. 230.601-230.610a of 
this chapter), as well as filings on Form 144 (Sec. 239.144 of this 
chapter) where the issuer of the securities is not subject to the 
reporting requirements of section 13 or 15(d) of the Exchange Act (15 
U.S.C. 78m or 78o(d), respectively);
    (7) Promotional and Sales Material submitted pursuant to Securities 
Act Industry Guide 5 (Sec. 229.801(e) of this chapter) or otherwise 
supplementally furnished for review by the staff of the Division of 
Corporation Finance; and sales literature submitted under Rule 24b-2 of 
the Investment Company Act (Sec. 270.24b-2 of this chapter);
    (8) Documents and symbols in a foreign language (see Rule 306 of 
Regulation S-T (Sec. 232.306));
    (9) Exchange Act filings submitted to the Division of Market 
Regulation, except for Form 25 (Sec. 249.25 of this chapter).
    (10) Documents relating to investigations and litigation submitted 
pursuant to the Subpart D of Part 201 of this chapter;
    (11) Submissions under Sections 6(c), 17(g), and 33 of the 
Investment Company Act (15 U.S.C. 80a-6(c), 80a-17(g), and 80a-32) and 
documents related to applications for exemptive relief under any section 
of the Act;
    (12) Annual Reports to Security Holders furnished by Public Utility 
Holding Companies under Exhibit A to Form U5S (Sec. 259.5s of this 
chapter) or under rule 29 (Sec. 250.29 of this chapter);
    (13) Reports to State Commissions, if furnished by Public Utility 
Holding Companies under Exhibit E to Form U5S (Sec. 259.5s of this 
chapter);
    (14) Maps furnished by Public Utility Holding Companies under 
Exhibits E to Forms U5B and U-1 (Secs. 259.5b and 259.101 of this 
chapter);
    (15) Annual reports filed with the Commission by indenture trustees 
pursuant to Section 313 of the Trust Indenture Act (15 U.S.C. 77mmm); 
and
    (16) Applications for an exemption from Exchange Act reporting 
obligations filed pursuant to Section 12(h) of the Exchange Act (15 
U.S.C. 78l(h)).

[58 FR 14670, Mar. 18, 1993; 58 FR 26383, May 3, 1993, as amended at 59 
FR 67761, Dec. 30, 1994; 60 FR 32824, June 23, 1995; 60 FR 57684, Nov. 
17, 1995; 61 FR 67202, Dec. 20, 1996; 62 FR 36456, July 8, 1997; 62 FR 
39763, July 24, 1997; 64 FR 2849, Jan. 19, 1999; 64 FR 19471, Apr. 21, 
1999; 64 FR 27894, May 21, 1999; 67 FR 36699, May 24, 2002]



Sec. 232.102  Exhibits.

    (a) Exhibits to an electronic filing that have not previously been 
filed with the Commission shall be filed in electronic format, absent a 
hardship exemption. Previously filed exhibits, whether in paper or 
electronic format, may be incorporated by reference into an electronic 
filing to the extent permitted by Sec. 228.10(f) and Sec. 229.10(d) of 
this chapter, Rule 411 under the Securities Act (Sec. 230.411 of this 
chapter), Rule 12b-23 or 12b-32 under the Exchange Act (Sec. 240.12b-23 
or Sec. 240.12b-32 of this chapter), Rule 22 under the Public Utility 
Holding Company Act (Sec. 250.22 of this chapter), Rules 0-4, 8b-23, and 
8b-32 under the Investment Company Act (Sec. 270.0-4, Sec. 270.8b-23 and 
Sec. 270.8b-32 of this chapter) and Rule 303 of Regulation S-T 
(Sec. 232.303). An electronic filer may, at its option, restate in 
electronic format an exhibit incorporated by reference that originally 
was filed in paper format.

    Note to Paragraph a: Exhibits to a Commission schedule filed 
pursuant to Section 13 or 14(d) of the Exchange Act may be filed in 
paper under cover of Form SE where such exhibits previously were filed 
in paper (prior to a registrant's becoming subject to mandated 
electronic filing or pursuant to a hardship exemption) and are required 
to be refiled pursuant to the schedule's general instructions. See Rule 
311(b) of Regulation S-T (17 CFR 232.311(b)).

    (b) Amendments to all exhibits shall be filed in electronic format, 
absent a hardship exemption.

[[Page 658]]

    (c) Notwithstanding any other provision of this section, an 
electronic filer shall, upon amendment, restate in electronic format its 
articles of incorporation, by-laws or investment advisory agreement (in 
the case of a registered investment company or a business development 
company).
    (d) Each electronic filing requiring exhibits shall contain an 
exhibit index, which should immediately precede the exhibits filed with 
the document. The index shall list each exhibit filed. Whenever an 
exhibit is filed in paper pursuant to a temporary or continuing hardship 
exemption, the letter ``P'' shall be placed next to the listed exhibit 
in the exhibit index to reflect that the exhibit was filed in paper 
pursuant to such exemption. Whenever an electronic confirming copy of an 
exhibit is filed pursuant to a hardship exemption (Sec. 232.201 or 
Sec. 232.202(d)), the exhibit index should specify where the confirming 
electronic copy can be located; in addition, the designation ``CE'' 
(confirming electronic) should be placed next to the listed exhibit in 
the exhibit index.
    (e) Notwithstanding the provisions of paragraphs (a) through (d) of 
this section, any incorporation by reference by a registered investment 
company or a business development company must relate only to documents 
that have been filed in electronic format, unless the document has been 
filed in paper under a hardship exemption (Sec. 232.201 or 232.202) and 
any required confirming copy has been submitted.
    (f) Persons submitting filings electronically under the Public 
Utility Act shall not be subject to paragraph (c) of this section.

[58 FR 14670, Mar. 18, 1993, as amended at 59 FR 67762, Dec. 30, 1994; 
60 FR 32824, June 23, 1995; 62 FR 36457, July 8, 1997; 64 FR 27894, May 
21, 1999]



Sec. 232.103  Liability for transmission errors or omissions in documents filed via EDGAR.

    An electronic filer shall not be subject to the liability and anti-
fraud provisions of the federal securities laws with respect to an error 
or omission in an electronic filing resulting solely from electronic 
transmission errors beyond the control of the filer, where the filer 
corrects the error or omission by the filing of an amendment in 
electronic format as soon as reasonably practicable after the electronic 
filer becomes aware of the error or omission.

[65 FR 24800, Apr. 27, 2000]



Sec. 232.104  Unofficial PDF copies included in an electronic submission.

    (a) An electronic submission may include one unofficial PDF copy of 
each electronic document contained within that submission, tagged in the 
format required by the EDGAR Filer Manual.
    (b) Except as provided in paragraphs (c) and (f) of this section, 
each unofficial PDF copy must be substantively equivalent to its 
associated electronic document contained in the electronic submission. 
An unofficial PDF copy may contain graphic and image material (but not 
animated graphics, or audio or video material), notwithstanding the fact 
that its HTML or ASCII document counterpart may not contain such 
material but instead may contain a fair and accurate narrative 
description or tabular representation of any omitted graphic or image 
material.
    (c) If a filer omits an unofficial PDF copy from, or submits one or 
more flawed unofficial PDF copies in, the electronic submission of an 
official filing, the filer may add or resubmit an unofficial PDF copy by 
electronically submitting an amendment to the filing to which it 
relates. The amendment must include an explanatory note that the purpose 
of the amendment is to add or to correct an unofficial PDF copy.
    (1) If such an amendment is filed, the official amendment may 
consist solely of the cover page (or first page of the document), the 
explanatory note, and the signature page and exhibit index (where 
appropriate). The corresponding unofficial copy must include the 
complete text of the official filing document for which the amendment is 
being submitted.
    (2) If the amendment is being filed to add or resubmit an unofficial 
PDF copy of one or more exhibits, the submission may consist of the 
following: the official filing--consisting of the cover page (or first 
page of the document), the explanatory note, the signature page

[[Page 659]]

(where appropriate), the exhibit index, and a separate electronic 
exhibit document for each exhibit for which an unofficial PDF copy is 
being submitted--and the corresponding unofficial PDF copy of each 
exhibit document. However, the text of the official exhibit document 
need not repeat the text of the exhibit; that document may contain only 
the following legend:

RESUBMITTED TO ADD/REPLACE UNOFFICIAL PDF COPY OF EXHIBIT.

    (d) An unofficial PDF copy is not filed for purposes of section 11 
of the Securities Act (15 U.S.C. 77k), section 18 of the Exchange Act 
(15 U.S.C. 78r), section 16 of the Public Utility Act (15 U.S.C. 79p), 
section 323 of the Trust Indenture Act (15 U.S.C. 77www), or section 
34(b) of the Investment Company Act (15 U.S.C. 80a-33(b)), or otherwise 
subject to the liabilities of such sections, and is not part of any 
registration statement to which it relates. An unofficial PDF copy is, 
however, subject to all other civil liability and anti-fraud provisions 
of the above Acts or other laws.
    (e) Unofficial PDF copies that are prospectuses are subject to 
liability under Section 12 of the Securities Act (15 U.S.C. 77l).
    (f) An unofficial PDF copy of a correspondence document contained in 
an electronic submission need not be substantively equivalent to that 
correspondence document.

[64 FR 27895, May 21, 1999, as amended at 65 FR 24800, Apr. 27, 2000]



Sec. 232.105  Limitation on use of HTML documents and hypertext links.

    (a) Electronic filers must submit the following documents in ASCII: 
Form N-SAR (Sec. 274.101 of this chapter) and Form 13F (Sec. 249.325 of 
this chapter). Notwithstanding the provisions of this section, 
electronic filers may submit exhibits to Form N-SAR in HTML.
    (b) Electronic filers may not include in any HTML document hypertext 
links to sites, locations, or documents outside the HTML document, 
except to links to officially filed documents within the current 
submission and to documents previously filed electronically and located 
in the EDGAR database on the Commission's public web site (www.sec.gov). 
Electronic filers also may include within an HTML document hypertext 
links to different sections within that single HTML document.
    (c) If a filer includes an external hypertext link within a filed 
document, the information contained in the linked material will not be 
considered part of the document for determining compliance with 
reporting obligations, but the inclusion of the link will cause the 
filer to be subject to the civil liability and antifraud provisions of 
the federal securities laws with reference to the information contained 
in the linked material.

[65 FR 24800, Apr. 27, 2000]



Sec. 232.106  Prohibition against electronic submissions containing executable code.

    (a) Electronic submissions must not contain executable code. 
Attempted submissions identified as containing executable code will be 
suspended, unless the executable code is contained only in one or more 
PDF documents, in which case the submission will be accepted but the PDF 
document(s) containing executable code will be deleted and not 
disseminated.
    (b) If an electronic submission has been accepted, and the 
Commission staff later determines that the accepted submission contains 
executable code, the staff may delete from the EDGAR system the entire 
accepted electronic submission or any document contained in the accepted 
electronic submission. The Commission staff may direct the electronic 
filer to resubmit electronically replacement document(s) or a 
replacement submission in its entirety, in compliance with this 
provision and the EDGAR Filer Manual.

    Note to Sec. 232.106: A violation of this section or the relevant 
EDGAR Filer Manual section also may be a violation of the Computer Fraud 
and Abuse Act of 1986, as amended, and other statutes and laws.

[64 FR 27895, May 21, 1999]

[[Page 660]]

                           Hardship Exemptions



Sec. 232.201  Temporary hardship exemption.

    (a) If an electronic filer experiences unanticipated technical 
difficulties preventing the timely preparation and submission of an 
electronic filing, the electronic filer may file the subject filing, 
under cover of Form TH (Secs. 239.65, 249.447, 259.604, 269.10 and 
274.404 of this chapter), in paper format no later than one business day 
after the date on which the filing was to be made.
    (1) A microfiche copy of the paper format document shall be the 
official filing of the registrant for purposes of the federal securities 
laws.
    (2) The following legend shall be set forth in capital letters on 
the cover page of the paper format document:

IN ACCORDANCE WITH RULE 201 OF REGULATION S-T, THIS (specify document) 
IS BEING FILED IN PAPER PURSUANT TO A TEMPORARY HARDSHIP EXEMPTION

    (3) Signatures to the paper format document may be in typed form 
rather than manual format. See Rule 302 of Regulation S-T 
(Sec. 232.302). All other requirements relating to paper format filings 
shall be satisfied.
    (4) If the exemption pertains to a document filed pursuant to 
section 13(a) or 15(d) of the Exchange Act (15 U.S.C. 78m and 78o(d)) or 
section 30 of the Investment Company Act and the paper format document 
is filed in the manner specified in paragraph (a) of this section, the 
filing shall be deemed to have been filed by its required due date.
    Note: 1. Where a temporary hardship exemption relates to an exhibit 
only, the paper format exhibit shall be filed under cover of Form SE 
(Secs. 239.64, 249.444, 259.603, 269.8, and 274.403 of this chapter).
    2. Filers unable to submit a report within a prescribed time period 
because of electronic difficulties shall comply with the provisions of 
this section and shall not use Form 12b-25 (Sec. 249.322 of this 
chapter) as a notification of late filing.

    (b) An electronic format copy of the filed paper format document 
shall be submitted to the Commission within six business days of filing 
the paper format document. The electronic format version shall contain 
the following statement in capital letters at the top of the first page 
of the document:

THIS DOCUMENT IS A COPY OF THE (specify document) FILED ON (date) 
PURSUANT TO A RULE 201 TEMPORARY HARDSHIP EXEMPTION

    Note 1: Failure to submit the confirming electronic copy of a paper 
filing made in reliance on the temporary hardship exemption, as required 
in paragraph (b) of this section, will result in ineligibility to use 
Forms S-2, S-3, S-8, F-2 and F-3 (see Secs. 239.12, 239.13, 239.16b, 
239.32 and 239.33 of this section, respectively), restrict incorporation 
by reference of the document submitted in paper (see Rule 303 of 
Regulation S-T (Sec. 232.303)), and toll certain time periods associated 
with tender offers (see Rule 13e-4(f)(12) (Sec. 240.13e-4(f)(12) of this 
chapter) and Rule 14e-1(e) (Sec. 240.14e-1(e) of this chapter).
    Note 2: If the exemption relates to an exhibit only, the requirement 
to submit a confirming electronic copy shall be satisfied by refiling 
the exhibit in electronic format in an amendment to the filing to which 
it relates. The confirming copy tag should not be used. The amendment 
should note that the purpose of the amendment is to add an electronic 
copy of an exhibit previously filed in paper pursuant to a temporary 
hardship exemption.

[58 FR 14670, Mar. 18, 1993, as amended at 62 FR 36457, July 8, 1997]



Sec. 232.202  Continuing hardship exemption.

    (a) An electronic filer may apply in writing for a continuing 
hardship exemption if all or part of a filing or group of filings 
otherwise to be filed in electronic format cannot be so filed without 
undue burden or expense. Such written application shall be made at least 
ten business days prior to the required due date of the filing(s) or the 
proposed filing date, as appropriate, or within such shorter period as 
may be permitted. The written application shall contain the information 
set forth in paragraph (b) of this section.
    (1) The application shall not be deemed granted until the applicant 
is notified by the Commission or the staff.
    (2) If the Commission, or the staff acting pursuant to delegated 
authority, denies the application for a continuing hardship exemption, 
the electronic filer shall file the required document in electronic 
format on the required due date or the proposed filing date or such 
other date as may be permitted.

[[Page 661]]

    (3) If the Commission, or the staff acting pursuant to delegated 
authority, determines that the grant of the exemption is appropriate and 
consistent with the public interest and the protection of investors and 
so notifies the applicant, the electronic filer shall follow the 
procedures set forth in paragraph (c) of this section.
    (b) The request for the continuing hardship exemption shall include, 
but not be limited to, the following:
    (1) The reason(s) that the necessary hardware and software is not 
available without unreasonable burden and expense;
    (2) The burden and expense involved to employ alternative means to 
make the electronic submission; and/or
    (3) The reasons for not submitting electronically the document or 
group of documents, as well as justification for the requested time 
period.
    (c) If the request is granted, the electronic filer shall submit the 
document or group of documents for which the continuing hardship 
exemption is granted in paper format on the required due date specified 
in the applicable form, rule or regulation, or the proposed filing date, 
as appropriate. The following legend shall be placed in capital letters 
at the top of the cover page of the paper format document(s):

IN ACCORDANCE WITH RULE 202 OF REGULATION S-T, THIS (specify document) 
IS BEING FILED IN PAPER PURSUANT TO A CONTINUING HARDSHIP EXEMPTION

    (d) If a continuing hardship exemption is granted for a limited time 
period, the grant may be conditioned upon the filing of the document or 
group of documents that is the subject of the exemption in electronic 
format upon the expiration of the period for which the exemption is 
granted. The electronic format version shall contain the following 
statement in capital letters at the top of the first page of the 
document:

THIS DOCUMENT IS A COPY OF THE (specify document) FILED ON (DATE) 
PURSUANT TO A RULE 202(d) CONTINUING HARDSHIP EXEMPTION.

    Note 1: Where a continuing hardship exemption is granted with 
respect to an exhibit only, the paper format exhibit shall be filed 
under cover of Form SE (Secs. 239.64, 249.444, 259.603, 269.8 and 
274.403 of this chapter).
    Note 2: If the exemption relates to an exhibit only and a confirming 
electronic copy of the exhibit is required to be submitted, the exhibit 
should be refiled in electronic format in an amendment to the filing to 
which it relates. The confirming copy tag should not be used. The 
amendment should note that the purpose of the amendment is to add an 
electronic copy of an exhibit previously filed in paper pursuant to a 
continuing hardship exemption.
    Note 3: Failure to submit a required confirming electronic copy of a 
paper filing made in reliance on a continuing hardship exemption granted 
pursuant to paragraph (d) of this section will result in ineligibility 
to use Forms S-2, S-3, S-8, F-2 and F-3 (see, Secs. 239.12, 239.13, 
239.16b, 239.32 and 239.33, respectively), restrict incorporation by 
reference of the document submitted in paper (see Rule 303 of Regulation 
S-T (Sec. 232.303), and toll certain time periods associated with tender 
offers (see Rule 13e-4(f)(12) (Sec. 240.13e-4(f)(12)) and Rule 14e-1(e) 
(Sec. 240.14e-1(e))).

[58 FR 14670, Mar. 18, 1993, as amended at 62 FR 36457, July 8, 1997]

                  Preparation of Electronic Submissions



Sec. 232.301  EDGAR Filer Manual.

    Filers must prepare electronic filings in the manner prescribed by 
the EDGAR Filer Manual, promulgated by the Commission, which sets out 
the technical formatting requirements for electronic submissions. The 
requirements for filers using modernized EDGARLink are set forth in 
EDGAR Filer Manual (Release 8.0), Volume I--Modernized EDGARLink, dated 
September 2001. Additional provisions applicable to Form N-SAR filers 
are set forth in EDGAR Filer Manual (Release 7.0), Volume II--N-SAR 
Supplement, dated July 2001. All of these provisions have been 
incorporated by reference into the Code of Federal Regulations, which 
action was approved by the Director of the Federal Register in 
accordance with 5 U.S.C. 552(a) and 1 CFR Part 51. You must comply with 
these requirements in order for documents to be timely received and 
accepted. You can obtain paper copies of the EDGAR Filer Manual from the 
following address: Public Reference Room, U.S. Securities and Exchange 
Commission, 450 5th Street, NW, Washington, DC 20549-0102 or by calling 
Thomson Financial

[[Page 662]]

Corp at (800) 638-8241. Electronic format copies are available on the 
Commission's Web Site. The address for the Filer Manual is . You can also photocopy 
the document at the Office of the Federal Register, 800 North Capitol 
Street, NW, Suite 700, Washington, DC.

[66 FR 49830, Oct. 1, 2001]



Sec. 232.302  Signatures.

    (a) Required signatures to, or within, any electronic submission 
(including, without limitation, signatories within the certifications 
required by Secs. 240.13a-14, 240.15d-14 and 270.30a-2 of this chapter) 
must be in typed form rather than manual format. Signatures in an HTML 
document that are not required may, but are not required to, be 
presented in an HTML graphic or image file within the electronic filing, 
in compliance with the formatting requirements of the EDGAR Filer 
Manual. When used in connection with an electronic filing, the term 
``signature'' means an electronic entry in the form of a magnetic 
impulse or other form of computer data compilation of any letters or 
series of letters or characters comprising a name, executed, adopted or 
authorized as a signature. Signatures are not required in unofficial PDF 
copies submitted in accordance with Sec. 232.104.
    (b) Each signatory to an electronic filing (including, without 
limitation, each signatory to the certifications required by 
Secs. 240.13a-14, 240.15d-14 and 270.30a-2 of this chapter) shall 
manually sign a signature page or other document authenticating, 
acknowledging or otherwise adopting his or her signature that appears in 
typed form within the electronic filing. Such document shall be executed 
before or at the time the electronic filing is made and shall be 
retained by the filer for a period of five years. Upon request, an 
electronic filer shall furnish to the Commission or its staff a copy of 
any or all documents retained pursuant to this section.
    (c) Where the Commission's rules require a registrant to furnish to 
a national securities exchange or national securities association paper 
copies of a document filed with the Commission in electronic format, 
signatures to such paper copies may be in typed form.

[58 FR 14670, Mar. 18, 1993, as amended at 59 FR 67762, Dec. 30, 1994; 
64 FR 27895, May 21, 1999; 65 FR 24800, Apr. 27, 2000; 67 FR 57287, 
Sept. 9, 2002]



Sec. 232.303  Incorporation by reference.

    (a) The following documents shall not be incorporated by reference 
into an electronic filing:
    (1) Any document filed in paper in violation of mandated electronic 
filing requirements;
    (2) Any document filed in paper pursuant to a hardship exemption for 
which a required confirming electronic copy has not been submitted.
    (3) For a registered investment company or a business development 
company, documents that have not been filed in electronic format, unless 
the document has been filed in paper under a hardship exemption 
(Sec. 232.201 or 232.202 of this chapter) and any required confirming 
copy has been submitted.
    (b) If a filer incorporates by reference into an electronic filing 
any portion of an annual or quarterly report to security holders, it 
must also file the portion of the annual or quarterly report to security 
holders in electronic format as an exhibit to the filing, as required by 
Regulation S-K Item 601(b)(13) (Sec. 229.601(b)(13) of this chapter) and 
Regulation S-B Item 601(b)(13) (Sec. 228.601(b)(13) of this chapter). If 
a foreign private issuer incorporates by reference into an electronic 
filing any portion of an annual or other report to security holders, or 
of a Form 6-K report (Sec. 249.306 of this chapter) filed or submitted 
in paper, it also must file the incorporated portion in electronic 
format as an exhibit to the filing. The requirements of this paragraph 
do not apply to incorporation by reference by an investment company from 
an annual or quarterly report to security holders.

[58 FR 14670, Mar. 18, 1993, as amended at 59 FR 67762, Dec. 30, 1994; 
62 FR 36457, July 8, 1997; 64 FR 27895, May 21, 1999; 65 FR 24800, Apr. 
27, 2000; 67 FR 36700, May 24, 2002]

[[Page 663]]



Sec. 232.304  Graphic, image, audio and video material.

    (a) If a filer includes graphic, image, audio or video material in a 
document delivered to investors and others that is not reproduced in an 
electronic filing, the electronically filed version of that document 
must include a fair and accurate narrative description, tabular 
representation or transcript of the omitted material. Such descriptions, 
representations or transcripts may be included in the text of the 
electronic filing at the point where the graphic, image, audio or video 
material is presented in the delivered version, or they may be listed in 
an appendix to the electronic filing. Immaterial differences between the 
delivered and electronically filed versions, such as pagination, color, 
type size or style, or corporate logo need not be described.

    Note to paragraph (a): If the omitted graphic, image, audio or video 
material includes data, filers must include a tabular representation or 
other appropriate representation of that data in the electronically 
filed version of the document.

    (b)(1) The graphic, image, audio and video material in the version 
of a document delivered to investors and others is deemed part of the 
electronic filing and subject to the civil liability and anti-fraud 
provisions of the federal securities laws.
    (2) Narrative descriptions, tabular representations or transcripts 
of graphic, image, audio and video material included in an electronic 
filing or appendix thereto also are deemed part of the filing. However, 
to the extent such descriptions, representations or transcripts 
represent a good faith effort to fairly and accurately describe omitted 
graphic, image, audio or video material, they are not subject to the 
civil liability and anti-fraud provisions of the federal securities 
laws.
    (c) An electronic filer must retain for a period of five years a 
copy of each publicly distributed document, in the format used, that 
contains graphic, image, audio or video material where such material is 
not included in the version filed with the Commission. The five-year 
period shall commence as of the filing date, or the date that appears on 
the document, whichever is later. Upon request, an electronic filer 
shall furnish to the Commission or its staff a copy of any or all of the 
documents contained in the file.
    (d) For electronically filed ASCII documents, the performance graph 
that is to appear in registrant proxy and information statements 
relating to annual meetings of security holders (or special meetings or 
written consents in lieu of such meetings) at which directors will be 
elected, as required by Item 402(l) of Regulation S-K (Sec. 229.402(l) 
of this chapter), and the line graph that is to appear in registrant 
annual reports to security holders or prospectuses, as required by 
paragraph (b) of Item 5 of Form N-1A (Sec. 274.11A of this chapter), 
must be furnished to the Commission by presenting the data in tabular or 
chart form within the electronic ASCII document, in compliance with 
paragraph (a) of this section and the formatting requirements of the 
EDGAR Filer Manual.
    (e) Notwithstanding the provisions of paragraphs (a) through (d) of 
this section, electronically filed HTML documents must present the 
following information in an HTML graphic or image file within the 
electronic submission in compliance with the formatting requirements of 
the EDGAR Filer Manual: the performance graph that is to appear in 
registrant proxy and information statements relating to annual meetings 
of security holders (or special meetings or written consents in lieu of 
such meetings) at which directors will be elected, as required by Item 
402(l) of Regulation S-K (Sec. 229.402(l) of this chapter); the line 
graph that is to appear in registrant annual reports to security holders 
or prospectuses, as required by paragraph (b) of Item 5 of Form N-1A 
(Sec. 274.11A of this chapter); and any other graphic material required 
by rule or form to be filed with the Commission. Filers may, but are not 
required to, submit any other graphic material in an HTML document by 
presenting the data in an HTML graphic or image file within the 
electronic filing, in compliance with the formatting requirements of the 
EDGAR Filer Manual. However, filers may not present in a graphic or 
image file information such as text or tables that users must be able to 
search and/or download into spreadsheet form

[[Page 664]]

(e.g., financial statements); filers must present such material as text 
in an ASCII document or as text or an HTML table in an HTML document.
    (f) Electronic filers may not include animated graphics in any EDGAR 
document.

[58 FR 14670, Mar. 18, 1993, as amended at 59 FR 67762, Dec. 30, 1994; 
61 FR 24655, May 15, 1996; 62 FR 36458, July 8, 1997; 63 FR 13944, Mar. 
23, 1998; 64 FR 27895, May 21, 1999; 65 FR 24800, Apr. 27, 2000]



Sec. 232.305  Number of characters per line; tabular and columnar information.

    (a) The narrative portion of a document shall not exceed 80 
characters per line, including blank spaces, and shall not be presented 
in multi-column newspaper format. Non-narrative information (e.g., 
financial statements) may be presented in tabular or columnar format and 
may exceed 80 positions only if it is tagged as specified in the EDGAR 
Filer Manual. In no event shall information presented in tabular or 
columnar format exceed 132 positions wide.
    (b) Paragraph (a) of this section does not apply to HTML documents.

[58 FR 14670, Mar. 18, 1993, as amended at 64 FR 27896, May 21, 1999]



Sec. 232.306  Foreign language documents and symbols.

    (a) All electronic filings and submissions must be in the English 
language, except as otherwise provided by paragraph (d) of this section. 
If a filing or submission requires the inclusion of a document that is 
in a foreign language, a party must submit instead a fair and accurate 
English translation of the foreign language document in accordance with 
Sec. 230.403(c) or Sec. 240.12b-12(d) of this chapter, except as 
otherwise provided by paragraph (c) of this section. Alternatively, if 
the foreign language document is an exhibit or attachment to a filing or 
submission subject to review by the Division of Corporation Finance, a 
party may provide a fair and accurate English summary of the foreign 
language document if permitted by Sec. 230.403(c)(3) or Sec. 240.12b-
12(d)(3) of this chapter.
    (b) When including an English summary or English translation of a 
foreign language document in an electronic filing or submission, a party 
may also submit a copy of the unabridged foreign language document in 
paper under cover of Form SE (Secs. 239.64, 249.444, 259.603, 269.8, and 
274.403 of this chapter) in accordance with Sec. 232.311 of this 
chapter. A filer must provide a copy of any foreign language document 
upon the request of Commission staff.
    (c) A foreign government or its political subdivision must 
electronically file a fair and accurate English translation, if 
available, of its latest annual budget as presented to its legislative 
body, as Exhibit B to Form 18 (Sec. 249.218 of this chapter) or Exhibit 
(c) to Form 18-K (Sec. 249.318 of this chapter). If no English 
translation is available, a foreign government or political subdivision 
must submit a copy of the foreign language version of its latest annual 
budget in paper under cover of Form SE (Secs. 239.64, 249.444, 259.603, 
269.8, and 274.403 of this chapter).
    (d) A Canadian issuer may file an HTML document, as defined in 
Sec. 232.11 of this chapter, that contains text in both French and 
English if the issuer included the French text to comply with the 
requirements of the Canadian securities administrator or other Canadian 
authority, and the French text is in an exhibit to or part of:
    (1) A registration statement on Form F-7, F-8, F-9, F-10, or F-80 
(Secs. 239.37, 239.38, 239.39, 239.40, and 239.41 of this chapter);
    (2) A registration statement or annual report on Form 40-F 
(Sec. 249.240f of this chapter); or
    (3) A Schedule 13E-4F (Sec. 240.13e-102 of this chapter), Schedule 
14D-1F (Sec. 240.14d-102), or Schedule 14D-9F (Sec. 240.14d-103).
    (e) Foreign currency denominations must be expressed in words or 
letters in the English language rather than representative symbols, 
except that HTML documents may include any representative foreign 
currency symbols that the EDGAR Filer Manual specifies. The limitations 
of this paragraph do not apply to unofficial PDF copies

[[Page 665]]

submitted in accordance with Rule 104 of Regulation S-T (Sec. 232.104).

[58 FR 14670, Mar. 18, 1993; 58 FR 21349, Apr. 21, 1993, as amended at 
59 FR 67762, Dec. 30, 1994; 64 FR 27896, May 21, 1999; 67 FR 36700, May 
24, 2002]



Sec. 232.307  Bold face type.

    (a) Provisions requiring presentation of information in bold face 
type shall be satisfied in an electronic format document by presenting 
such information in capital letters.
    (b) Paragraph (a) of this section does not apply to HTML documents.

[62 FR 36458, July 8, 1997, as amended at 64 FR 27896, May 21, 1999]



Sec. 232.308  Type size and font; legibility.

    Provisions relating to type size, font and other legibility 
requirements shall not apply to electronic format documents.



Sec. 232.309  Paper size; binding; sequential numbering; number of copies.

    (a) Requirements as to paper size, binding, and sequential page 
numbering shall not apply to electronic format documents.
    (b) An electronic format document, submitted in the manner 
prescribed by the EDGAR Filer Manual, shall satisfy any requirement that 
more than one copy of such document be filed with or provided to the 
Commission.



Sec. 232.310  Marking changed material.

    Provisions requiring the marking of changed materials are satisfied 
in ASCII and HTML documents by inserting the tag  before 
and the tag  following a paragraph containing changed 
material. HTML documents may be marked to show changed materials within 
paragraphs. Financial statements and notes thereto need not be marked 
for changed material.

[64 FR 27896, May 21, 1999]



Sec. 232.311  Documents submitted in paper under cover of Form SE.

    Form SE (Secs. 239.64, 249.444, 259.603, 269.8, and 274.403 of this 
chapter) shall be filed as a paper cover sheet to the following 
documents submitted to the Commission in paper:
    (a) Exhibits filed in paper pursuant to a hardship exemption shall 
be filed under cover of Form SE. See Rules 201 and 202 of Regulation S-T 
(Secs. 232.201 and 232.202).
    (b) Exhibits to a Commission schedule filed pursuant to Section 13 
or 14(d) of the Exchange Act may be filed in paper under cover of Form 
SE where such exhibits previously were filed in paper (prior to a 
registrant's becoming subject to mandated electronic filing or pursuant 
to a hardship exemption) and are required to be refiled pursuant to the 
schedule's general instructions.
    (c) Annual Reports to Security Holders furnished by Public Utility 
Holding Companies as Exhibit A to Form U5S (Sec. 259.5s of this chapter) 
or under rule 29 (Sec. 250.29 of this chapter) shall be filed in paper 
under cover of Form SE.
    (d) Reports to State Commissions, if furnished by Public Utility 
Holding Companies as Exhibit E to Form U5S (Sec. 259.5s of this 
chapter), shall be filed in paper under cover of Form SE.
    (e) Maps furnished by Public Utility Holding Companies under 
Exhibits E to Forms U5B and U-1(Sec. 259.5b and 259.101 of this chapter) 
shall be filed in paper under cover of Form SE.
    (f) A party may submit a copy of an unabridged foreign language 
document in paper under cover of Form SE if the electronic filing or 
submission includes an English summary or English translation of the 
foreign language document in accordance with Sec. 232.306(b) or if 
permitted by the applicable form.
    (g) A foreign government or political subdivision that is not filing 
in electronic format an English translation of its latest annual budget 
submitted as Exhibit B to Form 18 (Sec. 249.218 of this chapter) or 
Exhibit (c) to Form 18-K (Sec. 249.318 of this chapter) must file a copy 
of the foreign language version of its latest annual budget in paper 
under cover of Form SE in accordance with Sec. 232.306(c) of this 
chapter.
    (h) The Form SE shall be submitted in the following manner:
    (1) If the subject of a temporary hardship exemption is an exhibit 
only, the exhibit shall be filed under cover of Form SE no later than 
one business day after the date the exhibit was to be filed 
electronically.

[[Page 666]]

    (2) An exhibit filed pursuant to a continuing hardship exemption, or 
any other document filed in paper under cover of Form SE (other than an 
exhibit filed pursuant to a temporary hardship exemption), as allowed by 
paragraphs (a) through (g) of this section, may be filed up to six 
business days prior to, or on the date of filing of, the electronic 
format document to which it relates but shall not be filed after such 
filing date. If a paper document is submitted in this manner, 
requirements that the document be filed with, provided with or accompany 
the electronic filing shall be satisfied.
    (i) Any requirements as to delivery or furnishing the information to 
persons other than the Commission shall not be affected by this section.
    (j) Computational materials filed as an exhibit to Form 8-K 
(Sec. 249.308) by issuers of an ``asset-backed security,'' as that term 
is defined in General Instruction I.B.5 of Form S-3 (Sec. 239.13 of this 
chapter).

[58 FR 14670, Mar. 18, 1993, as amended at 59 FR 67763, Dec. 30, 1994; 
61 FR 30402, June 14, 1996; 62 FR 36458, July 8, 1997; 65 FR 24801, Apr. 
27, 2000; 67 FR 36700, May 24, 2002]



Secs. 232.401-232.402  [Reserved]

                             EDGAR Functions



Sec. 232.501  Modular submissions and segmented filings.

    An electronic filer may use the following procedures to submit 
information to the EDGAR system for subsequent inclusion in an 
electronic filing:
    (a) Modular submissions. (1) One or more electronic format documents 
may be submitted for storage in the non-public EDGAR data storage area 
as a modular submission for subsequent inclusion in one or more 
electronic submissions.
    (2) An electronic filer shall be permitted a maximum of ten modular 
submissions in the non-public EDGAR data storage area at any time, not 
to exceed a total of one megabyte of digital information. If an 
electronic filer attempts to submit a modular filing which would cause 
either of these limits to be exceeded, EDGAR will suspend the modular 
submission and notify the electronic filer by electronic mail. After six 
business days, the modular submission held in suspense will be deleted 
from the system.
    (3) A modular submission may be corrected or amended only by 
resubmitting the entire modular submission.
    (b) Segmented filings. (1) Segments of a document intended to become 
an electronic filing may be submitted to the non-public EDGAR data 
storage area for assembly as a segmented filing.
    (2) Segments shall be submitted no more than six business days in 
advance of the anticipated filing date and are not limited in number or 
size. They may be submitted from several geographic locations by more 
than one filing entity. Segments may be included in only one electronic 
filing. Once used, segments will be removed from the non-public EDGAR 
data storage area. The assembly of segments into a segmented filing 
shall be effected pursuant to the applicable provisions of the EDGAR 
Filer Manual. If segments are not prepared in accordance with the EDGAR 
Filer Manual, the filing will not be constructed. The filing date of a 
segmented filing shall be the date upon which the filing is assembled 
and satisfies the requirements of Rule 13(a) of Regulation S-T 
(Sec. 232.13(a)).
    (3) Segments may be corrected or amended only by resubmitting the 
entire segment.
    (c) A modular submission or segment shall not:
    (1) be publicly available;
    (2) Be deemed filed with the Commission for purposes of Securities 
Act section 11 (15 U.S.C. 77k), Exchange Act section 18 (15 U.S.C. 78r), 
Public Utility Act section 16 (15 U.S.C. 79p), Trust Indenture Act 
section 323 (15 U.S.C. 77www), or Investment Company Act section 34(b) 
(15 U.S.C. 80a-33(b)) prior to its inclusion in a filing; or
    (3) Be deemed to constitute an official filing prior to its 
inclusion in a filing under the federal securities laws. Once a modular 
submission or segment has been included in an electronic filing, the 
liability and anti-fraud provisions of the Securities Act, the Exchange 
Act, the Trust Indenture Act,

[[Page 667]]

the Public Utility Act and the Investment Company Act shall apply to the 
electronic filing.

[58 FR 14670, Mar. 18, 1993; 58 FR 21349, Apr. 21, 1993, as amended at 
65 FR 24801, Apr. 27, 2000]

             Foreign Private Issuers and Foreign Governments



Secs. 232.600-232.903  [Reserved]



PART 239--FORMS PRESCRIBED UNDER THE SECURITIES ACT OF 1933--Table of Contents




Sec.
239.0-1  Availability of forms.

              Subpart A--Forms for Registration Statements

239.4-239.8  [Reserved]
239.9  Form SB-1, optional form for the registration of securities to be 
          sold to the public by certain small business issuers.
239.10  Form SB-2, optional form for the registration of securities to 
          be sold to the public by small business issuers.
239.11  Form S-1, registration statement under the Securities Act of 
          1933.
239.12  Form S-2, for registration under the Securities Act of 1933 of 
          securities of certain issuers.
239.13  Form S-3, for registration under the Securities Act of 1933 of 
          securities of certain issuers offered pursuant to certain 
          types of transactions.
239.14  Form N-2, for closed-end management investment companies 
          registered on Form N-8A.
239.15  Form N-1, for open-end management investment companies 
          registered on Form N-8A.
239.15A  Form N-1A, registration statement of open-end management 
          investment companies.
239.16  Form S-6, for unit investment trusts registered on Form N-8B-2.
239.16b  Form S-8, for registration under the Securities Act of 1933 of 
          securities to be offered to employees pursuant to employee 
          benefit plans.
239.17  [Reserved]
239.17a  Form N-3, registration statement for separate accounts 
          organized as management investment companies.
239.17b  Form N-4, registration statement for separate accounts 
          organized as unit investment trusts.
239.17c  Form N-6, registration statement for separate accounts 
          organized as unit investment trusts that offer variable life 
          insurance policies.
239.18  Form S-11, for registration under the Securities Act of 1933 of 
          securities of certain real estate companies.
239.19  [Reserved]
239.20  Form S-20, for standardized options.
239.23  Form N-14, for the registration of securities issued in business 
          combination transactions by investment companies and business 
          development companies.
239.24  Form N-5, form for registration of small business investment 
          company under the Securities Act of 1933 and the Investment 
          Company Act of 1940.
239.25  Form S-4, for the registration of securities issued in business 
          combination transactions.
239.26-239.30  [Reserved]
239.31  Form F-1, registration statement under the Securities Act of 
          1933 for securities of certain foreign private issuers.
239.32  Form F-2, for registration under the Securities Act of 1933 for 
          securities of certain foreign private issuers.
239.33  Form F-3, for registration under the Securities Act of 1933 of 
          securities of certain foreign private issuers offered pursuant 
          to certain types of transactions.
239.34  Form F-4, for registration of securities of foreign private 
          issuers issued in certain business combination transactions.
239.35  [Reserved]
239.36  Form F-6, for registration under the Securities Act of 1933 of 
          depositary shares evidenced by American Depositary Receipts.
239.37  Form F-7, for registration under the Securities Act of 1933 of 
          securities of certain Canadian issuers offered for cash upon 
          the exercise of rights granted to existing securityholders.
239.38  Form F-8, for registration under the Securities Act of 1933 of 
          securities of certain Canadian issuers to be issued in 
          exchange offers or a business combination.
239.39  Form F-9, for registration under the Securities Act of 1933 of 
          certain investment grade debt or investment grade preferred 
          securities of certain Canadian issuers.
239.40  Form F-10, for registration under the Securities Act of 1933 of 
          securities of certain Canadian issuers.
239.41  Form F-80, for registration under the Securities Act of 1933 of 
          securities of certain Canadian issuers to be issued in 
          exchange offers or a business combination.
239.42  Form F-X, for appointment of agent for service of process and 
          undertaking for issuers registering securities on Form F-8, F-
          9, F-10, or F-80 (Secs. 239.38, 239.39, 239.40, or 239.41 of 
          this chapter) or registering securities or filing periodic 
          reports on Form 40-F (Sec. 249.240f of this chapter), or by 
          any issuer or other non-U.S. person filing tender offer 
          documents on Schedule 13E-4F, 14D-1F or 14D-9F

[[Page 668]]

          (Secs. 240.13e-102, 240.14d-102 or 240.14d-103 of this 
          chapter), by any non-U.S. person acting as trustee with 
          respect to securities registered on Form F-7 (Sec. 239.37 of 
          this chapter), F-8, F-9, F-10, F-80 or SB-2 (Sec. 239.10 of 
          this chapter), or by a Canadian issuer qualifying an offering 
          statement pursuant to Regulation A (Sec. 230.251 et seq.) on 
          Form 1-A (Sec. 239.90 of this chapter), or registering 
          securities on Form SB-2.
239.43  Form F-N, appointment of agent for service of process by foreign 
          banks and foreign insurance companies and certain of their 
          holding companies and finance subsidiaries making public 
          offerings of securities in the United States.
239.44-239.61  [Reserved]
239.62  Form ET, transmittal form for electronic format documents on 
          magnetic tape or diskette to be filed on the EDGAR system.
239.63  Form ID, uniform application for access codes to file on EDGAR.
239.64  Form SE, form for submission of paper format exhibits by 
          electronic filers.
239.65  Form TH, Notification of reliance on temporary hardship 
          exemption.

                Subpart B--Forms Pertaining to Exemptions

239.90  Form 1-A, offering statement under Regulation A.
239.91  Form 2-A, report pursuant to Rule 257 of Regulation A.
239.92-239.143  [Reserved]
239.144  Form 144, for notice of proposed sale of securities pursuant to 
          Sec. 230.144 of this chapter.
239.145-239.199  [Reserved]
239.200  Form 1-E, notification under Regulation E.
239.201  Form 2-E, report of sales pursuant to Rule 609 of Regulation E.
239.202-239.300  [Reserved]
239.500  Form D, notice of sales of securities under Regulation D and 
          section 4(6) of the Securities Act of 1933.
239.701  [Reserved]
239.800  Form CB, report of sales of securities in connection with an 
          exchange offer or a rights offering.

    Authority: 15 U.S.C. 77f, 77g, 77h, 77j, 77s, 77z-2, 77sss, 78c, 
78l, 78m, 78n, 78o(d), 78u-5, 78w(a), 78ll(d), 79e, 79f, 79g, 79j, 79l, 
79m, 79n, 79q, 79t, 80a-8, 80a-24, 80a-26, 80a-29, 80a-30, and 80a-37, 
unless otherwise noted.
Sections 239.31, 239.32 and 239.33 are also issued under 15 U.S.C. 78l, 
78m, 78o, 78w, 80a-8, 80a-29, 80a-30, 80a-37 and 12 U.S.C. 241.
    Secs. 239.62, 239.63 and 239.64 also issued under secs. 6, 7, 8, 10 
and 19(a) of the Securities Act (15 U.S.C. 77f, 77g, 77h, 77j, 77s(a)); 
secs. 3(b), 12, 13, 14, 15(d) and 23(a) of the Exchange Act (15 U.S.C. 
78c(b), 78l, 78m, 78n, 78o(d), 78w(a)); secs. 5, 6, 7, 10, 12, 13, 14, 
17 and 20 of the Holding Company Act (15 U.S.C. 79e, 79f, 79g, 79j, 79l, 
79m, 79n, 79q and 79t); sec. 319(a) of the Trust Indenture Act (15 
U.S.C. 77sss(a)) and secs. 8, 24, 30 and 38 of the Investment Company 
Act (15 U.S.C. 80a-8, 80a-29 and 80a-37).

    Source: 33 FR 18991, Dec. 20, 1968, unless otherwise noted.

    Editorial Note: Nomenclature changes to part 239 appear at 57 FR 
36501, Aug. 13, 1992.



Sec. 239.0-1  Availability of forms.

    (a) This part identifies and describes the forms prescribed for use 
under the Securities Act of 1933.
    (b) Any person may obtain a copy of any form prescribed for use in 
this part by written request to the Securities and Exchange Commission, 
450 Fifth Street, N.W., Washington, D.C. 20549. Any persons may inspect 
the forms at this address and at the Commission's regional and district 
offices. (See Sec. 200.11 of this chapter for the addresses of SEC 
regional and district offices.)

[46 FR 17757, Mar. 20, 1981, as amended at 47 FR 26820, June 22, 1982; 
59 FR 5945, Feb. 9, 1994]



              Subpart A--Forms for Registration Statements



Secs. 239.4--239.8  [Reserved]



Sec. 239.9  Form SB-1, optional form for the registration of securities to be sold to the public by certain small business issuers.

    Small business issuers, as defined in Rule 405 (17 CFR 230.405 of 
this chapter), may use this form to register up to $10,000,000 of 
securities to be sold for cash, if they have not registered more than 
$10,000,000 in securities offerings in any continuous 12-month period, 
including the transaction being registered. In calculating the 
$10,000,000 ceiling, issuers should include all offerings which were 
registered under the Securities Act, other than any amounts registered 
on Form S-8 (Sec. 239.16b).

[58 FR 26515, May 4, 1993]

    Editorial Note: For Federal Register citations affecting Form SB-1, 
see the List of CFR Sections Affected, which appears in the Finding Aids 
section of the printed volume and on GPO Access.

[[Page 669]]



Sec. 239.10  Form SB-2, optional form for the registration of securities to be sold to the public by small business issuers.

    Small business issuers defined in Rule 405 (17 CFR 230.405 of this 
chapter) may use this form to register securities to be sold for cash. 
For further information concerning eligibility toward this form see Item 
10(a) of Regulation S-B (17 CFR 228.10 et seq.)

[57 FR 36473, Aug. 13, 1992]

    Editorial Note: For Federal Register citations affecting Form SB-2, 
see the List of CFR Sections Affected, which appears in the Finding Aids 
section of the printed volume and on GPO Access.



Sec. 239.11  Form S-1, registration statement under the Securities Act of 1933.

    This form shall be used for registration under the Securities Act of 
1933 of securities of all issuers for which no other form is authorized 
or prescribed, except that this form shall not be used for securities of 
foreign governments or political subdivisions thereof.

(Secs. 7, 10, 19(a), 48 Stat. 78, 81, 85; secs. 205, 209, 48 Stat. 906, 
908; sec. 8, 68 Stat. 685; 15 U.S.C. 77g, 77j, 77s(a); secs. 12, 13, 14, 
15(d), 23, 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, 
5, 6, 10, 78 Stat. 565-568, 569, 570-574, 88a; secs. 1, 2, 3, 82 Stat. 
454, 455; secs. 1, 2, 3-5, 28(c), 84 Stat. 1435, 1479; sec. 105(b), 88 
Stat. 1503; secs. 8, 9, 10, 18, 89 Stat. 117, 118, 119, 155 (15 U.S.C. 
78l, 78m, 78n, 78o(d), 1979))

    Editorial Note: For Federal Register citations affecting Form S-1, 
see the List of CFR Sections Affected, which appears in the Finding Aids 
section of the printed volume and on GPO Access.



Sec. 239.12  Form S-2, for registration under the Securities Act of 1933 of securities of certain issuers.

    This form may be used for registration of securities under the 
Securities Act of 1933 which are offered or to be offered in any 
transaction other than an exchange offer for securities of another 
person by any registrant which meets the following conditions:
    (a) The registrant is organized under the laws of the United States 
or any State or Territory or the District of Columbia and has its 
principal business operations in the United States or its territories;
    (b) The registrant has a class of securities registered pursuant to 
section 12(b) of the Securities Exchange Act of 1934 (Exchange Act) or 
has a class of equity securities registered pursuant to section 12(g) of 
the Exchange Act or is required to file reports pursuant to section 
15(d) of the Exchange Act;
    (c) The registrant:
    (1) Has been subject to the requirements of section 12 of 15(d) of 
the Exchange Act and has filed all the material required to be filed 
pursuant to section 13, 14 or 15(d) for a period of at least thirty-six 
calendar months immediately preceding the filing of the registration 
statement on this Form; and
    (2) Has filed in a timely manner all reports required to be filed 
during the twelve calendar months and any portion of a month immediately 
preceding the filing of the registration statement and, if the 
registrant has used (during the twelve calendar months and any portion 
of a month immediately preceding the filing of the registration 
statement) Rule 12b-25(b) (Sec. 240.12b-25(b) of this chapter) under the 
Exchange Act with respect to a report or a portion of a report, that 
report or portion thereof has actually been filed within the time period 
prescribed by that rule; and
    (d) Neither the registrant nor any of its consolidated or 
unconsolidated subsidiaries have, since the end of their last fiscal 
year for which certified financial statements of the registrant and its 
consolidated subsidiaries were included in a report filed pursuant to 
section 13(a) or 15(d) of the Exchange Act:
    (1) Failed to pay any dividend or sinking fund installment on 
preferred stock; or
    (2) Defaulted (i) on any installment or installments on indebtedness 
for borrowed money, or (ii) on any rental on one or more long term 
leases, which defaults in the aggregate are material to the financial 
position of the registrant and its consolidated and unconsolidated 
subsidiaries, taken as a whole.
    (e) A foreign issuer, other than a foreign government, which 
satisfies all of the above provisions of these registrant

[[Page 670]]

eligibility requirements except the provisions in paragraph (a) of this 
section relating to organization and principal business shall be deemed 
to have met these registration eligibility requirements provided that 
such foreign issuer files the same reports with the Commission under 
section 13(a) or 15(d) of the Exchange Act as a domestic registrant 
pursuant to paragraph (c) of this section.
    (f) If a registrant is a successor registrant it shall be deemed to 
have met conditions in paragraphs (a), (b), (c) and (d) of this section 
if:
    (1) Its predecessor and it, taken together, do so, provided that the 
succession was primarily for the purpose of changing the state of 
incorporation of the predecessor of forming a holding company and that 
the assets and liabilities of the successor at the time of succession 
were substantially the same as those of the predecessor; or
    (2) All predecessors met the conditions at the time of succession 
and the registrant has continued to do so since the succession.
    (g) If a registrant is a majority-owned subsidiary which does not 
itself meet the conditions of the eligibility requirements, it shall 
nevertheless be deemed to have met such conditions if its parent meets 
the conditions and if the parent fully guarantees the securities being 
registered as to principal and interest. Note: In such an instance the 
parent-guarantor is the issuer of a separate security consisting of the 
guarantee which must be concurrently registered but may be registered on 
the same registration statement as are the guaranteed securities.
    (h) Electronic filings. In addition to satisfying the foregoing 
conditions of this section, a registrant subject to the electronic 
filing requirements of Rule 101 of Regulation S-T (Sec. 232.101 of this 
chapter) shall have filed with the Commission:
    (1) all required electronic filings, including confirming electronic 
copies of documents submitted in paper pursuant to a temporary hardship 
exemption as provided in Rule 201 of Regulation S-T (Sec. 232.201 of 
this chapter); and
    (2) all Financial Data Schedules required to be submitted pursuant 
to Item 601(c) of Regulation S-K (Sec. 229.601(c) of this chapter) and 
Item 601(c) of Regulation S-B (Sec. 228.601(c) of this chapter).

[47 FR 11451, Mar. 16, 1982, as amended at 56 FR 30055, July 1, 1991; 58 
FR 14678, Mar. 18, 1993]

    Editorial Note: For Federal Register citations affecting Form S-2, 
see the List of CFR Sections Affected, which appears in the Finding Aids 
section of the printed volume and on GPO Access.



Sec. 239.13  Form S-3, for registration under the Securities Act of 1933 of securities of certain issuers offered pursuant to certain types of transactions.

    This form may be used by any registrant which meets the requirements 
of paragraph (a) of this section (Registrant Requirements) for the 
registration of securities under the Securities Act of 1933 (Securities 
Act) which are offered in any transaction specified in paragraph (b) of 
this section (Transaction Requirements), provided that the requirements 
applicable to the specified transaction are met. With respect to 
majority-owned subsidiaries, see paragraph (c) below.
    (a) Registrant requirements. Registrants must meet the following 
conditions in order to use this Form for registration under the 
Securities Act of securities offered in the transactions specified in 
paragraph (b) of this section:
    (1) The registrant is organized under the laws of the United States 
or any State or Territory or the District of Columbia and has its 
principal business operations in the United States or its territories.
    (2) The registrant has a class of securities registered pursuant to 
section 12(b) of the Securities Exchange Act of 1934 (Exchange Act) or a 
class of equity securities registered pursuant to section 12(g) of the 
Exchange Act or is required to file reports pursuant to section 15(d) of 
the Exchange Act;
    (3) The registrant: (i) Has been subject to the requirements of 
section 12 or 15(d) of the Exchange Act and has filed all the material 
required to be filed pursuant to sections 13, 14 or 15(d) for a period 
of at least twelve calendar

[[Page 671]]

months immediately preceding the filing of the registration statement on 
this Form; and
    (ii) Has filed in a timely manner all reports required to be filed 
during the twelve calendar months and any portion of a month immediately 
preceding the filing of the registration statement and, if the 
registrant has used (during the twelve calendar months and any portion 
of a month immediately preceding the filing of the registration 
statement) Rule 12b-25(b) (Sec. 240.12b-25(b) of this chapter) under the 
Exchange Act with respect to a report or a portion of a report, that 
report or portion thereof has actually been filed within the time period 
prescribed by the Rule; and
    (4) The provisions of paragraphs (a)(2) and (a)(3)(i) of this 
section do not apply to any registered offerings of investment grade 
asset-backed securities as defined in paragraph (b)(5) of this section.
    (5) Neither the registrant nor any of its consolidated or 
unconsolidated subsidiaries have, since the end of the last fiscal year 
for which certified financial statements of the registrant and its 
consolidated subsidiaries were included in a report filed pursuant to 
section 13(a) or 15(d) of the Exchange Act: (i) Failed to pay any 
dividend or sinking fund installment on preferred stock; or (ii) 
defaulted (A) on any installment or installments on indebtedness for 
borrowed money, or (B) on any rental on one or more long term leases, 
which defaults in the aggregate are material to the financial position 
of the registrant and its consolidated and unconsolidated subsidiaries, 
taken as a whole.
    (6) A foreign issuer, other than a foreign government, which 
satisfies all of the above provisions of these registrant eligibility 
requirements except the provisions in paragraph (a)(1) of this section 
relating to organization and principal business shall be deemed to have 
met these registrant eligibility requirements provided that such foreign 
issuer files the same reports with the Commission under section 13(a) or 
15(d) of the Exchange Act as a domestic registrant pursuant to paragraph 
(a)(3) of this section.
    (7) If the registrant is a successor registrant, it shall be deemed 
to have met conditions in paragraph (a)(1), (2), (3), and (5) of this 
section if:
    (i) its predecessor and it, taken together, do so, provided that the 
succession was primarily for the purpose of changing the state of 
incorporation of the predecessor or forming a holding company and that 
the assets and liabilities of the successor at the time of succession 
were substantially the same as those of the predecessor; or
    (ii) If all predecessors met the conditions at the time of 
succession and the registrant has continued to do so since the 
succession.
    (8) Electronic filings. In addition to satisfying the foregoing 
conditions, a registrant subject to the electronic filing requirements 
of Rule 101 of Regulation S-T (Sec. 232.101 of this chapter) shall have 
filed with the Commission:
    (i) All required electronic filings, including confirming electronic 
copies of documents submitted in paper pursuant to a temporary hardship 
exemption as provided in Rule 201 of Regulation S-T (Sec. 232.201 of 
this chapter); and
    (ii) All Financial Data Schedules required to be submitted pursuant 
to Item 601(c) of Regulation S-K (Sec. 229.601(c) of this chapter) and 
Item 601(c) of Regulation S-B (Sec. 228.601(c) of this chapter).
    (b) Transaction requirements. Security offerings meeting any of the 
following conditions and made by registrants meeting the Registrant 
Requirements above may be registered on this Form:
    (1) Primary and secondary offerings by certain registrants. 
Securities to be offered for cash by or on behalf of a registrant, or 
outstanding securities to be offered for cash for the account of any 
person other than the registrant, including securities acquired by 
standby underwriters in connection with the call or redemption by the 
registrant of warrants or a class of convertible securities; provided 
that the aggregate market value of the voting and non-voting common 
equity held by non-affiliates of the registrant is $75 million or more.

    Instruction: The aggregate market value of the registrant's 
outstanding voting stock 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, as of a date within 60 days prior to the date of filing. See 
the definition of affiliate in Securities Act Rule 405 (Sec. 230.405 of 
this chapter).


[[Page 672]]


    (2) Primary offerings of non-convertible investment grade 
securities. Non-convertible securities to be offered for cash by or on 
behalf of a registrant, provided such securities at the time of sale are 
investment grade securities, as defined below. A non-convertible 
security is an investment grade security if, at the time of sale, at 
least one nationally recognized statistical rating organization (as that 
term is used in Rule 15c3-1(c)(2)(vi)(F) under the Securities Exchange 
Act of 1934 (Sec. 240.15c3-1(c)(2)(vi)(F) of this chapter)) has rated 
the security in one of its generic rating categories which signifies 
investment grade; typically, the four highest rating categories (within 
which there may be sub-categories or gradations indicating relative 
standing) signify investment grade.
    (3) Transactions involving secondary offerings. Outstanding 
securities to be offered for the account of any person other than the 
issuer, including securities acquired by standby underwriters in 
connection with the call or redemption by the issuer of warrants or a 
class of convertible securities, if securities of the same class are 
listed and registered on a national securities exchange or are quoted on 
the automated quotation system of a national securities association. In 
addition, Form S-3 may be used by affiliates to register securities for 
resale pursuant to the conditions specified in General Instruction C to 
Form S-8 (Sec. 239.16b of this chapter).
    (4) Rights offerings, dividend or interest reinvestment plans, and 
conversions, warrants and options. (i) Securities to be offered:
    (A) Upon the exercise of outstanding rights granted by the issuer of 
the securities to be offered, if such rights are granted on a pro rata 
basis to all existing security holders of the class of securities to 
which the rights attach;
    (B) Under a dividend or interest reinvestment plan; or
    (C) Upon the conversion of outstanding convertible securities or the 
exercise of outstanding warrants or options issued by the issuer of the 
securities to be offered, or an affiliate of that issuer.
    (ii) However, Form S-3 is available for registering these securities 
only if the issuer has sent, within the twelve calendar months 
immediately before the registration statement is filed, material 
containing the information required by Sec. 240.14a-3(b) of this chapter 
under the Exchange Act to:
    (A) All record holders of the rights;
    (B) All participants in the plans; or
    (C) All record holders of the convertible securities, warrants or 
options, respectively.
    (iii) The issuer also must have provided, within the twelve calendar 
months immediately before the Form   S-3 registration statement is 
filed, the information required by Items 401, 402 and 403 of Regulation 
S-K (Secs. 229.401 through 229.403 of this chapter) to:
    (A) Holders of rights exercisable for common stock;
    (B) Holders of securities convertible into common stock; and
    (C) Participants in plans that may invest in common stock, 
securities convertible into common stock, or warrants or options 
exercisable for common stock, respectively.
    (5) Offerings of investment grade asset-backed securities. Asset-
backed securities to be offered for cash, provided the securities are 
investment grade securities, as defined in paragraph (b)(2) of this 
section (Primary offerings of non-convertible investment grade 
securities). For purposes of this Form, the term ``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.
    (c) Majority-owned subsidiaries. If a registrant is a majority-owned 
subsidiary, security offerings may be registered on this Form if:
    (1) The registrant-subsidiary itself meets the Registrant 
Requirements and the applicable Transaction Requirement;
    (2) The parent of the registrant-subsidiary meets the Registrant 
Requirements and the conditions of Transaction Requirement in paragraph 
(b)(2) of this section (Primary offerings of

[[Page 673]]

non-convertible investment grade securities) are met; or
    (3) The parent of the registrant-subsidiary meets the Registrant 
Requirements and the applicable Transaction Requirement, and fully and 
unconditionally guarantees the payment obligations on the securities 
being registered, and the securities being registered are non-
convertible securities. Note: In such an instance, the parent-guarantor 
is the issuer of a separate security consisting of the guarantee which 
must be concurrently registered but may be registered on the same 
registration statement as are the guaranteed securities.
    (d) Rights offerings by foreign private issuers. A Foreign private 
issuer meeting eligibility requirements in paragraphs (a)(2), (a)(3) and 
(a)(4) of this section may use Form S-3 to register securities to be 
offered upon the exercise of outstanding rights granted by the issuer of 
the securities to be offered if such rights are granted pro rata to all 
existing security holders of the class of securities to which the rights 
attach. In complying with Item 11 of this Form, the registrant shall 
describe those material changes that have occurred since the end of the 
latest fiscal year for which certified financial statements were 
included in the registrant's latest filing on Form 20-F (17 CFR 
249.220f). In complying with Item 12 of this Form, the registrant shall 
incorporate by reference its latest filing on Form 20-F. The registrant 
also shall:
    (1) Furnish with the prospectus (or have furnished previously) to 
all its shareholders resident in the United States, including those 
holding under American Depository Receipts or similar arrangements, a 
copy of its latest annual report to security holders, if in the English 
language. Such annual reports or prospectus shall contain the 
registrant's undertaking to send promptly to any such United States 
holder, upon written request, a copy of the registrant's latest filing 
on Form 20-F; or
    (2) Furnish with the prospectus a copy of its latest filing on Form 
20-F.

(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. 
308(a)(2), 90 Stat. 57; secs. 3(b), 12, 13, 14, 15(d), 23(a), 48 Stat. 
882, 892, 894, 895, 901; secs. 203(a), 1, 3, 8, 49 Stat. 704, 1375, 
1377, 1379; sec. 202, 68 Stat. 686; secs. 4, 5, 6(d), 78 Stat. 569, 570-
574; secs. 1, 2, 3, 82 Stat. 454, 455; secs. 28(c), 1, 2, 3, 4, 5, 84 
Stat. 1435, 1497; sec. 105(b), 88 Stat. 1503; secs. 8, 9, 10, 89 Stat. 
117, 118, 119; sec. 308(b), 90 Stat 57; sec. 18, 89 Stat. 155; secs. 
202, 203, 204, 91 Stat. 1494, 1498-1500; sec. 20(a), 49 Stat. 833; sec. 
319, 53 Stat. 1173; sec. 38, 54 Stat. 841; 15 U.S.C. 77f, 77g, 77h, 77j, 
77s(a), 78c(b), 78l, 78m, 78n, 78o(d), 78w(a), 79t(a), 77sss(a), 80a-37)

[47 FR 11453, Mar. 16, 1982, as amended at 56 FR 30055, July 1, 1991; 57 
FR 48976, Oct. 29, 1992; 58 FR 14679, Mar. 18, 1993; 58 FR 16771, Mar. 
31, 1993; 62 FR 26388, May 14, 1997; 64 FR 11116, Mar. 8, 1999]

    Editorial Note: For Federal Register citations affecting Form S-3, 
see the List of CFR Sections Affected, which appears in the Finding Aids 
section of the printed volume and on GPO Access.



Sec. 239.14  Form N-2 for closed end management investment companies registered on Form N-8A.

    Form N-2 shall be used for registration under the Securities Act of 
1933 of securities of all closed end management investment companies 
registered under the Investment Company Act of 1940 on form N-8A 
(Sec. 274.10 of this chapter). This form is also to be used for the 
registration statement of such companies pursuant to section 8(b) of the 
Investment Company Act of 1940 (Sec. 274.11a-1 of this chapter). This 
form is not applicable for small business investment companies which 
register pursuant to Secs. 239.24 and 274.5 of this chapter.

[43 FR 39554, Sept. 5, 1978]

    Editorial Note: For Federal Register citations affecting Form N-2, 
see the List of CFR Sections Affected, which appears in the Finding Aids 
section of the printed volume and on GPO Access.

[[Page 674]]



Sec. 239.15  Form N-1 for open-end management investment companies registered on Form N-8A.

    Form N-1 shall be used for the registration under the Securities Act 
of 1933 of securities of all open-end management investment companies 
that are separate accounts of insurance companies as defined by section 
2(a)(37) of the Investment Company Act of 1940 registered under the 
Investment Company Act of 1940 on form N-8A (Sec. 274.10 of this 
chapter). This form is also to be used for the registration statement of 
such companies pursuant to section 8(b) of the Investment Company Act of 
1940 (Sec. 274.11 of this chapter). This form is not applicable for 
small business investment companies which register pursuant to 
Sec. 239.24 and Sec. 274.5 of this chapter.

(Sec. 19, Securities Act of 1933 (15 U.S.C. 77s; secs. 8 and 38, 
Investment Company Act of 1940 (15 U.S.C. 80a-8 and 80a-37)))

[49 FR 32060, Aug. 10, 1984]

    Editorial Note: For Federal Register citations affecting Form N-1, 
see the List of CFR Sections Affected, which appears in the Finding Aids 
section of the printed volume and on GPO Access.



Sec. 239.15A  Form N-1A, registration statement of open-end management investment companies.

    Form N-1A shall be used for the registration under the Securities 
Act of 1933 of securities of open-end management investment companies 
other than separate accounts of insurance companies registered under the 
Investment Company Act of 1940 (on form N-1) (Sec. 270.11 of this 
chapter). This form is also to be used for the registration statement of 
such companies pursuant to section 8(b) of the Investment Company Act of 
1940 (Sec. 270.11A of this chapter). This form is not applicable for 
small business investment companies which register pursuant to 
Secs. 239.24 and 274.5 of this chapter.

[48 FR 37940, Aug. 22, 1983]

    Editorial Note: For Federal Register citations affecting Form N-1A, 
see the List of CFR Sections Affected, which appears in the Finding Aids 
section of the printed volume and on GPO Access.



Sec. 239.16  Form S-6, for unit investment trusts registered on Form N-8B-2.

    This form may be used for registration under the Securities Act of 
1933 of securities of any unit investment trust registered under the 
Investment Company Act of 1940 on Form N-8B-2 (Sec. 274.12 of this 
chapter).

    Editorial Note: For Federal Register citations affecting Form S-6, 
see the List of CFR Sections Affected, which appears in the Finding Aids 
section of the printed volume and on GPO Access.



Sec. 239.16b  Form S-8, for registration under the Securities Act of 1933 of securities to be offered to employees pursuant to employee benefit plans.

    (a) Any registrant that, immediately prior to the time of filing a 
registration statement on this form, is subject to the requirement to 
file reports pursuant to sections 13 or 15(d) of the Securities Exchange 
Act of 1934, and has filed all reports and other materials required to 
be filed by such requirements during the preceding 12 months (or for 
such shorter period that the registrant was required to file such 
reports and materials), may use this form for registration under the 
Securities Act of 1933 (the Act) of the following securities:
    (1) Securities of the registrant to be offered to its employees or 
employees of its subsidiaries or parents under any employee benefit 
plan. The form also is available for the exercise of employee benefit 
plan options by an employee's family member (as defined in General 
Instruction A.1(a)(5) to Form S-8) who has acquired the options from the 
employee through a gift or a domestic relations order.
    (2) Interests in the above plans, if such interests constitute 
securities and are required to be registered under the Act. (See Release 
No. 33-6188 (February 1, 1980) and section 3(a)(2) of the Act.)
    (b) Electronic filings. In addition to satisfying the foregoing 
conditions, a registrant subject to the electronic filing requirements 
of Rule 101 of Regulation S-T (Sec. 232.101 of this chapter) shall have 
filed with the Commission:
    (1) All required electronic filings, including confirming electronic 
copies of

[[Page 675]]

documents submitted in paper pursuant to a temporary hardship exemption 
as provided in Rule 201 of Regulation S-T (Sec. 232.201 of this 
chapter); and
    (2) All Financial Data Schedules required to be submitted pursuant 
to Item 601(c) of Regulation S-K (Sec. 229.601(c) of this chapter) and 
Item 601(c) of Regulation S-B (Sec. 228.601(c) of this chapter).

[55 FR 23925, June 13, 1990, as amended at 58 FR 14680, Mar. 18, 1993; 
64 FR 11116, Mar. 8, 1999]

    Editorial Note: For Federal Register citations affecting Form S-8, 
see the List of CFR Sections Affected, which appears in the Finding Aids 
section of the printed volume and on GPO Access.



Sec. 239.17  [Reserved]



Sec. 239.17a  Form N-3, registration statement for separate accounts organized as management investment companies.

    Form N-3 shall be used for registration under the Securities Act of 
1933 of securities of separate accounts that offer variable annuity 
contracts and which register under the Investment Company Act of 1940 as 
management investment companies, and certain other separate accounts. 
This form is also to be used for the registration statement of such 
separate accounts pursuant to section 8(b) of the Investment Company Act 
of 1940 (Sec. 274.11b of this chapter).

[50 FR 26160, June 25, 1985]

    Editorial Note: For Federal Register citations affecting Form N-3, 
see the List of CFR Sections Affected, which appears in the Finding Aids 
section of the printed volume and on GPO Access.



Sec. 239.17b  Form N-4, registration statement for separate accounts organized as unit investment trusts.

    Form N-4 shall be used for registration under the Securities Act of 
1933 of securities of separate accounts that offer variable annuity 
contracts and which register under the Investment Company Act of 1940 as 
unit investment trusts, and certain other separate accounts. This form 
is also to be used for the registration statement of such separate 
accounts pursuant to section 8(b) of the Investment Company Act of 1940 
(Sec. 274.11c of this chapter).

[50 FR 26160, June 25, 1985]

    Editorial Note: For Federal Register citations affecting Form N-4, 
see the List of CFR Sections Affected, which appears in the Finding Aids 
section of the printed volume and on GPO Access.



Sec. 239.17c  Form N-6, registration statement for separate accounts organized as unit investment trusts that offer variable life insurance policies.

    Form N-6 shall be used for registration under the Securities Act of 
1933 of securities of separate accounts that offer variable life 
insurance policies and that register under the Investment Company Act of 
1940 as unit investment trusts. This form is also to be used for the 
registration statement of such separate accounts pursuant to section 
8(b) of the Investment Company Act of 1940 (Sec. 274.11d of this 
chapter).

[67 FR 19870, Apr. 23, 2002]



Sec. 239.18  Form S-11, for registration under the Securities Act of 1933 of securities of certain real estate companies.

    This form shall be used for registration under the Securities Act of 
1933 of (a) securities issued by real estate investment trusts, as 
defined in section 356 of the Internal Revenue Code, or (b) securities 
issued by other issuers whose business is primarily that of acquiring 
and holding for investment real estate or interests in real estate or 
interests in other issuers whose business is primarily that of acquiring 
and holding real estate or interests in real estate for investment. This 
form shall not be used, however, by any issuer which is an investment 
company registered or required to register under the Investment Company 
Act of 1940.

    Editorial Note: For Federal Register citations affecting Form S-11, 
see the List of CFR Sections Affected, which appears in the Finding Aids 
section of the printed volume and on GPO Access.

[[Page 676]]



Sec. 239.19  [Reserved]



Sec. 239.20  Form S-20, for standardized options.

    This form may be used to register standardized options under the 
Securities Act of 1933 where the issuer undertakes not to issue, clear, 
guarantee or accept an option registered on Form S-20 unless there is a 
definitive options disclosure document meeting the requirements of Rule 
9b-1 of the Securities Exchange Act of 1934.

[47 FR 41955, Sept. 23, 1982]

    Editorial Note: For Federal Register citations affecting Form S-20, 
see the List of CFR Sections Affected, which appears in the Finding Aids 
section of the printed volume and on GPO Access.



Sec. 239.23  Form N-14, for the registration of securities issued in business combination transactions by investment companies and business development 
          companies.

    This form shall be used by a registered investment company or a 
business development company as defined by section 2(a)(48) of the 
Investment Company Act of 1940 for registration under the Securities Act 
of 1933 of securities to be issued:
    (a) In a transaction of the type specified in paragraph (a) of Rule 
145 (Sec. 230.145 of this chapter);
    (b) In a merger in which the applicable state law would not require 
the solicitation of the votes or consents of all the security holders of 
the company being acquired;
    (c) In an exchange offer for securities of the issuer or another 
entity;
    (d) In a public reoffering or resale of any such securities acquired 
pursuant to this registration statement;
    (e) In more than one of the kinds of transactions listed in 
paragraphs (a) through (d) registered on one registration statement.

[50 FR 48383, Nov. 25, 1985]

    Editorial Note: For Federal Register citations affecting Form N-14, 
see the List of CFR Sections Affected, which appears in the Finding Aids 
section of the printed volume and on GPO Access.



Sec. 239.24  Form N-5, form for registration of small business investment company under the Securities Act of 1933 and the Investment Company Act of 1940.

    This form shall be used for registration under the Securities Act of 
1933 of securities issued by any small business investment company which 
is registered under the Investment Company Act of 1940, and which is 
licensed under the Small Business Investment Company Act of 1958 or 
which has received the preliminary approval of the Small Business 
Administration and has been notified by the Administration that it may 
submit a license application. This form may also be used for the 
registration statement of such company pursuant to section 8(b) of the 
Investment Company Act of 1940. The initial registration of such company 
on this form will be deemed to be filed under both the Securities Act of 
1933 and the Investment Company Act of 1940 unless it is indicated that 
the filing is made only for the purpose of one of such acts. (Same as 
Sec. 274.5 of this chapter.)

    Editorial Note: For Federal Register citations Form N-5, see the 
List of CFR Sections Affected, which appears in the Finding Aids section 
of the printed volume and on GPO Access.



Sec. 239.25  Form S-4, for the registration of securities issued in business combination transactions.

    This form may be used for registration under the Securities Act of 
1933 of securities to be issued (a) in a transaction of the type 
specified in paragraph (a) of Rule 145 (Sec. 230.145 of this chapter); 
(b) in a merger in which the applicable state law would not require the 
solicitation of the votes or consents of all of the security holders of 
the company being acquired; (c) in an exchange offer for securities of 
the issuer or another entity; (d) in a public reoffering or resale of 
any such securities acquired pursuant to this registration statement; or 
(e) in more than one of the kinds of transactions listed in paragraphs 
(a) through (d) registered on one registration statement.

[50 FR 19001, May 6, 1985]

    Editorial Note: For Federal Register citations affecting Form S-4, 
see the List of CFR Sections Affected, which appears in the

[[Page 677]]

Finding Aids section of the printed volume and on GPO Access.



Secs. 239.26-239.30  [Reserved]



Sec. 239.31  Form F-1, registration statement under the Securities Act of 1933 for securities of certain foreign private issuers.

    (a) Form F-1 shall be used for registration under the Securities Act 
of 1933 (``Securities Act'') of securities of all foreign private 
issuers, as defined in rule 405 (Sec. 230.405 of this chapter) for which 
no other form is authorized or prescribed.
    (b) If a registrant is a majority-owned subsidiary, which does not 
itself meet the conditions of these eligibility requirements, it shall 
nevertheless be deemed to have met such conditions if its parent meets 
the conditions and if the parent fully guarantees the securities being 
registered as to principal and interest.

[47 FR 54771, Dec. 6, 1982, as amended at 56 FR 30055, 30056, July 1, 
1991]

    Editorial Note: For Federal Register citations Form F-1, see the 
List of CFR Sections Affected, which appears in the Finding Aids section 
of the printed volume and on GPO Access.



Sec. 239.32  Form F-2, for registration under the Securities Act of 1933 for securities of certain foreign private issuers.

    Any foreign private issuer, as defined in Rule 405 (Sec. 230.405 of 
this chapter), which meets the following conditions may use this form 
for the registration of securities under the Securities Act of 1933 
(Securities Act) which are offered or to be offered in any transaction 
other than an exchange offer for securities of another person:
    (a) The registrant has a class of securities registered pursuant to 
section 12(b) of the Securities Exchange Act of 1934 (the ``Exchange 
Act'') or has a class of equity securities registered pursuant to 
section 12(g) of the Exchange Act or is required to file reports 
pursuant to section 15(d) of the Exchange Act and has filed annual 
reports on Form 20-F (Sec. 249.220f of this chapter), on Form 10-K and 
Form 10-KSB (Sec. 249.310 of this chapter) or, in the case of 
registrants described in General Instruction A. (2) of Form 40-F, on 
Form 40-F (Sec. 249.240f of this chapter) under the Exchange Act.
    (b)(1) The Registrant (i) has been subject to the requirements of 
section 12 or 15(d) of the Exchange Act and has filed all the 
information required to be filed pursuant to Section 13, 14 or 15(d) for 
a period of at least thirty-six calendar months immediately preceding 
the filing of the registration statement on this form; (ii) has filed in 
a timely manner all reports required to be filed during the twelve 
calendar months and any portion of a month immediately preceding the 
filing of the registration statement and, if the issuer has used (during 
the twelve calendar months and any portion of a month immediately 
preceding the filing of the registration statement) Rule 12b-25(b) 
(Sec. 240.12b-25(b) of this chapter) under the Exchange Act with respect 
to a report or portion of a report, that report or portion thereof has 
actually been filed within the time period prescribed by the Rule.
    (2) The provisions of paragraph (b)(1)(i) of this section do not 
apply to any registrant if:
    (i) The aggregate market value worldwide of the voting and non-
voting common equity of the registrant held by non-affiliates is the 
equivalent of $75 million or more, or if non-convertible securities that 
are ``investment grade securities,'' as defined in Instructions to 
paragraph (b) of this section, are being registered; and
    (ii) The registrant has filed at least one Form 20-F (Sec. 249.220f 
of this chapter), Form 40-F (Sec. 249.240f of this chapter) or Form 10-K 
(Sec. 249.310 of this chapter) that is the latest required to have been 
filed.

Instructions to paragraph (b): 1. The aggregate market value of the 
registrant's outstanding voting stock 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 in the principal market for such stock, as of 
a date within 60 days prior to the date of filing [See the definition of 
affiliate in Securities Act Rule 405 (Sec. 230.405 of this chapter)].
    2. A non-convertible security is an investment grade security if, at 
the time of sale, at least one nationally recognized statistical rating 
organization (as that term is used in Sec. 240.15c3-1(c)(2)(vi)(F) of 
this chapter) has rated the security in one of its generic rating 
categories that signifies investment grade;

[[Page 678]]

typically, the four highest rating categories (within which there may be 
sub-categories or gradations indicating relative standing) signify 
investment grade.

    (c) Neither the registrant nor any of its consolidated or 
unconsolidated subsidiaries have, since the end of their last fiscal 
year for which certified financial statements of the registrant and its 
consolidated subsidiaries were included in a report filed pursuant to 
section 13(a) or 15(d) of the Exchange Act: (1) Failed to pay any 
dividend or sinking fund installment on preferred stock; or (2) 
defaulted (A) on any installment or installments on indebtedness for 
borrowed money, or (B) on any rental on one or more long term leases, 
which defaults in the aggregate are material to the financial position 
of the registrant and its consolidated and unconsolidated subsidiaries, 
taken as a whole.
    (d) The financial statements included in this registration statement 
comply with Item 18 of Form 20-F (Sec. 249.220f of this chapter); 
provided, however, that if the securities being registered are non-
convertible securities that are ``investment grade securities,'' as 
defined in Instructions to paragraph (b) of this section, such financial 
statements comply with either Item 17 or Item 18 of Form 20-F 
(Sec. 249.220f of this chapter).
    (e) The provisions of paragraphs (b)(1)(i) and (d) of this section 
do not apply if the Registrant has filed at least one Form 20-F, Form 
40-F or Form 10-K and Form 10-KSB that is the latest required to have 
been filed and if the only securities being registered are to be 
offered:
    (1) Upon the exercise of outstanding rights granted by the issuer of 
the securities to be offered, if such rights are granted pro rata to all 
existing securityholders of the class of securities to which the rights 
attach;
    (2) Pursuant to a dividend or interest reinvestment plan; or
    (3) Upon the conversion of outstanding convertible securities or 
upon the exercise of outstanding transferable warrants issued by the 
issuer of the securities to be offered, or by an affiliate of such 
issuer. The exemptions in this paragraph (e) are unavailable if 
securities are to be offered or sold in a standby underwriting in the 
United States or similar arrangement.
    (f) If a registrant is a successor registrant it shall be deemed to 
have met conditions, paragraphs (a), (b), (c), (d) and (e) of this 
section if: (1) Its predecessor and it, taken together, do so, provided 
that the succession was primarily for the purpose of changing the state 
or other jurisdiction of incorporation of the predecessor of forming a 
holding company and that the assets and liabilities of the successor at 
the time of succession were substantially the same as those of the 
predecessor; or (2) all predecessors met the conditions at the time of 
succession and the registrant has continued to do so since the 
succession.
    (g) If a registrant is a majority-owned subsidiary that does not 
meet the conditions of these eligibility requirements, it nevertheless 
shall be deemed to have met such conditions if its parent meets the 
conditions and if the parent fully and unconditionally guarantees the 
payment obligations on the securities being registered, and the 
securities being registered are non-convertible securities.

    Note: In such an instance the parent-guarantor is the issuer of a 
separate security consisting of the guarantee which must be concurrently 
registered but may be registered on the same registration statement as 
are the guaranteed securities. Both the parent-guarantor and the 
subsidiary shall each disclose the information required by this Form as 
if each were the only registrant except that if the subsidiary will not 
be eligible to file annual reports on Form 20-F or Form 40-F after the 
effective date of the registration statement, then it shall disclose the 
information specified in Form S-2 (Sec. 239.12 of this chapter). Rule 3-
10 of Regulation S-X (Sec. 210.3-10 of this chapter) specifies the 
financial statements required.

    (h) Electronic filings. In addition to satisfying the foregoing 
conditions, a registrant subject to the electronic filing requirements 
of Rule 101 of Regulation S-T (Sec. 232.101 of this chapter) shall have 
filed with the Commission all required electronic filings, including 
confirming electronic copies of documents submitted in paper pursuant to 
a temporary hardship exemption as provided

[[Page 679]]

in Rule 201 of Regulation S-T (Sec. 232.201 of this chapter).

[47 FR 54773, Dec. 6, 1982, as amended at 56 FR 30055, 30056, July 1, 
1991; 58 FR 14681, Mar. 18, 1993; 59 FR 21651, Apr. 26, 1994; 62 FR 
26388, May 14, 1997]

    Editorial Note: For Federal Register citations affecting Form F-2, 
see the List of CFR Sections Affected, which appears in the Finding Aids 
section of the printed volume and on GPO Access.



Sec. 239.33  Form F-3, for registration under the Securities Act of 1933 of securities of certain foreign private issuers offered pursuant to certain types of 
          transactions.

    This instruction sets forth registrant requirements and transaction 
requirements for the use of Form F-3. Any foreign private issuer, as 
defined in Rule 405 (Sec. 230.405 of this chapter), which meets the 
requirements of paragraph (a) of this section (Registrant requirements) 
may use this Form for the registration of securities under the 
Securities Act of 1933 (the Securities Act) which are offered in any 
transaction specified in paragraph (b) of this section (Transaction 
requirements), provided that the requirements applicable to the 
specified transaction are met. With respect to majority-owned 
subsidiaries, see Instruction (a)(6) below.
    (a) Registrant requirements. Except as set forth in this paragraph 
(a), all registrants must meet the following conditions in order to use 
this Form F-3 for registration under the Securities Act of securities 
offered in the transactions specified in paragraph (b) of this section:
    (1) The registrant has a class of securities registered pursuant to 
section 12(b) of the Securities Exchange Act of 1934 (``Exchange Act'') 
or has a class of equity securities registered pursuant to section 12(g) 
of the Exchange Act or is required to file reports pursuant to section 
15(d) of the Exchange Act and has filed at least one annual report on 
Form 20-F (Sec. 249.220f of this chapter), on Form 10-K (Sec. 249.310 of 
this chapter) or, in the case of registrants described in General 
Instruction A(2) of Form 40-F, on Form 40-F (Sec. 249.240f of this 
chapter) under the Exchange Act.
    (2) The registrant:
    (i) Has been subject to the requirements of section 12 or 15(d) of 
the Exchange Act and has filed all the material required to be filed 
pursuant to sections 13, 14 or 15(d) of the Exchange Act for a period of 
at least twelve calendar months immediately preceding the filing of the 
registration statement on this form; and
    (ii) Has filed in a timely manner all reports required to be filed 
during the twelve calendar months and any portion of a month immediately 
preceding the filing of the registration statement and, if the 
registrant has used (during those twelve calendar months and that 
portion of a month) Sec. 240.12b-25(b) of this chapter with respect to a 
report or a portion of a report, that report or portion thereof has 
actually been filed within the time period prescribed by Sec. 240.12b-
25(b) of this Chapter.
    (3) Neither the registrant nor any of its consolidated or 
unconsolidated subsidiaries have, since the end of their last fiscal 
year for which certified financial statements of the registrant and its 
consolidated subsidiaries were included in a report filed pursuant to 
section 13(a) or 15(d) of the Exchange Act: (i) Failed to pay any 
dividend or sinking fund installment on preferred stock; or (ii) 
defaulted (A) on any installment or installments on indebtedness for 
borrowed money, or (B) on any rental on one or more long term leases, 
which defaults in the aggregate are material to the financial position 
of the registrant and its consolidated and unconsolidated subsidiaries, 
taken as a whole.
    (4) If the registrant is a successor registrant, it shall be deemed 
to have met conditions 1, 2, 3 and 4 above if: (i) Its predecessor and 
it, taken together, do so, provided that the succession was primarily 
for the purpose of changing the state or other jurisdiction of 
incorporation of the predecessor or forming a holding company and that 
the assets and liabilities of the successor at the time of succession 
were substantially the same as those of the predecessor; or (ii) all 
predecessors met the conditions at the time of succession and the 
registrant has continued to do so since the succession.
    (5) Majority-Owned Subsidiaries. If a registrant is a majority-owned 
subsidiary, security offerings may be registered on this form if:

[[Page 680]]

    (i) The registrant-subsidiary itself meets the Registrant 
Requirements and the applicable Transaction Requirement;
    (ii) The parent of the registrant-subsidiary meets the Registrant 
Requirements and the conditions of the Transaction Requirement set forth 
in paragraph (b)(2) of this section (Offerings of Certain Debt or 
Preferred Securities) are met; or
    (iii) The parent of the registrant-subsidiary meets the Registrant 
Requirements and the applicable Transaction Requirement and fully and 
unconditionally guarantees the payment obligations on the securities 
being registered, and the securities being registered are non-
convertible securities.

    Note: In the situation described in paragraph (a)(6)(iii) of this 
section, the parent-guarantor is the issuer of a separate security 
consisting of the guarantee which must be concurrently registered but 
may be registered on the same registration statement as are the 
guaranteed securities. Both the parent-guarantor and the subsidiary 
shall each disclose the information required by this Form as if each 
were the only registrant except that if the subsidiary will not be 
eligible to file annual reports on Form 20-F or Form 40-F after the 
effective date of the registration statement, then it shall disclose the 
information specified in Form S-3 (Sec. 239.13 of this chapter). Rule 3-
10 of Regulation S-X (Sec. 210.3-10 of this chapter) specifies the 
financial statements required.

    (6) Electronic filings. In addition to satisfying the foregoing 
conditions, a registrant subject to the electronic filing requirements 
of Rule 101 of Regulation S-T (Sec. 232.101 of this chapter) shall have 
filed with the Commission all required electronic filings, including 
confirming electronic copies of documents submitted in paper pursuant to 
a temporary hardship exemption as provided in Rule 201 of Regulation S-T 
(Sec. 232.201 of this chapter).
    (b) Transaction requirements. Security offerings meeting any of the 
following conditions and made by registrants meeting the Registrant 
Requirements above may be registered on this Form:
    (1) Primary offerings by certain registrants. Securities to be 
offered for cash by or on behalf of a registrant, provided that the 
aggregate market value worldwide of the voting and non-voting common 
equity held by non-affiliates of the registrant is the equivalent of $75 
million or more. In the case of securities registered pursuant to this 
paragraph, the financial statements included in this registration 
statement must comply with Item 18 of Form 20-F (Sec. 249.220f of this 
chapter).

Instruction to Paragraph (b)(1): The aggregate market value of the 
registrant's outstanding voting stock 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, in the principal market for such stock as of 
a date within 60 days prior to the date of filing. See the definition of 
``affiliate'' in Securities Act Rule 405 (Sec. 230.405 of this chapter).

    (2) Primary offerings of non-convertible investment grade 
securities. Non-convertible securities to be offered for cash if such 
securities are investment grade securities. A non-convertible security 
is an investment grade security if, at the time of sale, at least one 
nationally recognized statistical rating organization (as that term is 
used in Sec. 240.15c3-1(c)(2)(vi)(F) of this chapter) has rated the 
security in one of its generic rating categories that signifies 
investment grade; typically, the four highest rating categories (within 
which there may be subcategories or gradations indicating relative 
standing) signify investment grade. In the case of securities registered 
pursuant to this paragraph, the financial statements included in this 
registration statement may comply with Item 17 or 18 of Form 20-F 
(Sec. 249.220f of this chapter).
    (3) Transactions involving secondary offerings. Outstanding 
securities to be offered for the account of any person other than the 
issuer, including securities acquired by standby underwriters in 
connection with the call or redemption by the issuer of warrants or a 
class of convertible securities. In the case of such securities, the 
financial statements included in this registration statement may comply 
with Item 17 or 18 of Form 20-F (Sec. 249.220f of this chapter). In 
addition, Form F-3 (Sec. 239.33) may be used by affiliates to register 
securities for resale pursuant to the conditions specified in General 
Instruction C to Form S-8 (Sec. 239.16b). In the case of such 
securities, the financial statements included in this registration

[[Page 681]]

statement must comply with Item 18 of Form 20-F (Sec. 249.220f of this 
chapter).
    (4) Rights offerings, dividend or interest reinvestment plans, and 
conversions or warrants. Securities to be offered:
    (i) Upon the exercise of outstanding rights granted by the issuer of 
the securities to be offered, if such rights are granted pro rata to all 
existing security holders of the class of securities to which the rights 
attach; or
    (ii) Pursuant to a dividend or interest reinvestment plan; or
    (iii) Upon the conversion of outstanding convertible securities or 
upon the exercise of outstanding transferable warrants issued by the 
issuer of the securities to be offered, or by an affiliate of such 
issuer. In the case of securities registered pursuant to this paragraph, 
the financial statements included in this registration statement may 
comply with Item 17 or 18 of Form 20-F (Sec. 249.220f of this chapter). 
The registration of securities to be offered or sold in a standby 
underwriting in the United States or similar arrangement is not 
permitted pursuant to this paragraph. See paragraphs (b) (1), (2) and 
(3) of this section.

[47 FR 54776, Dec. 6, 1982, as amended at 56 FR 30055, 30057, July 1, 
1991; 58 FR 14681, Mar. 18, 1993; 59 FR 21652, Apr. 26, 1994; 62 FR 
26388, May 14, 1997]

    Editorial Note: For Federal Register citations affecting Form F-3, 
see the List of CFR Sections Affected, which appears in the Finding Aids 
section of the printed volume and on GPO Access.



Sec. 239.34  Form F-4, for registration of securities of foreign private issuers issued in certain business combination transactions.

    This form may be used by any foreign private issuer, as defined in 
rule 405 (Sec. 230.405 of this chapter), for registration under the 
Securities Act of 1933 (``Securities Act'') of securities to be issued:
    (a) In a transaction of the type specified in paragraph (a) of rule 
145 (Sec. 230.145 of this chapter);
    (b) In a merger in which the applicable law would not require the 
solicitation of the votes or consents of all of the securityholders of 
the company being acquired;
    (c) In an exchange offer for securities of the issuer or another 
entity;
    (d) In a public reoffering or resale of any such securities acquired 
pursuant to this registration statement; or
    (e) In more than one of the kinds of transactions listed in 
paragraphs (a) through (d) registered on one registration statement.

[56 FR 30058, July 1, 1991]

    Editorial Note: For Federal Register citations affecting Form F-4, 
see the List of CFR Sections Affected, which appears in the Finding Aids 
section of the printed volume and on GPO Access.



Sec. 239.35  [Reserved]



Sec. 239.36  Form F-6, for registration under the Securities Act of 1933 of depositary shares evidenced by American Depositary Receipts.

    Form F-6 may be used for the registration under the Securities Act 
of 1933 (the Securities Act) of Depositary shares evidenced by American 
Depositary Receipts (ADRs) issued by a depositary against the deposit of 
the securities of a foreign issuer (regardless of the physical location 
of the certificates) if the following conditions are met:
    (a) The holder of the ADRs is entitled to withdraw the deposited 
securities at any time subject only to (1) temporary delays caused by 
closing transfer books of the depositary or the issuer of the deposited 
securities or the deposit of shares in connection with voting at a 
shareholders' meeting, or the payment of dividends, (2) the payment of 
fees, taxes, and similar charges, and (3) compliance with any laws or 
governmental regulations relating to ADRs or to the withdrawal of 
deposited securities;
    (b) The deposited securities are offered or sold in transactions 
registered under the Securities Act or in transactions that would be 
exempt therefrom if made in the United States; and
    (c) As of the filing date of this registration statement, the issuer 
of the deposited securities is reporting pursuant to the periodic 
reporting requirements of section 13(a) or 15(d) of the Securities 
Exchange Act of 1934 or the deposited securities are exempt therefrom by 
Rule 12g3-2(b) (Sec. 240.12g3-2(b) of this chapter) unless the issuer of 
the

[[Page 682]]

deposited securities concurrently files a registration statement on 
another form for the deposited securities.

[48 FR 12348, Mar. 24, 1983]

    Editorial Note: For Federal Register citations affecting the General 
Instructions to Form F-6, see the List of CFR Sections Affected, which 
appears in the Finding Aids section of the printed volume and on GPO 
Access.



Sec. 239.37  Form F-7, for registration under the Securities Act of 1933 of securities of certain Canadian issuers offered for cash upon the exercise of rights 
          granted to existing securityholders.

    (a) Form F-7 may be used for the registration under the Securities 
Act of 1933 (the ``Securities Act'') of the registrant's securities 
offered for cash upon the exercise of rights to purchase or subscribe 
for such securities that are granted to its existing securityholders in 
proportion to the number of securities held by them as of the record 
date for the rights offer.
    (b) Form F-7 is available to any registrant that:
    (1) Is incorporated or organized under the laws of Canada or any 
Canadian province or territory;
    (2) Is a foreign private issuer; and
    (3) Has had a class of its securities listed on The Montreal 
Exchange, The Toronto Stock Exchange or the Senior Board of the 
Vancouver Stock Exchange for the 12 calendar months immediately 
preceding the filing of this Form, has been subject to the continuous 
disclosure requirements of any securities commission or equivalent 
regulatory authority in Canada for a period of at least 36 calendar 
months immediately preceding the filing of this Form, and is currently 
in compliance with obligations arising from such listing and reporting.

Instruction: For purposes of this Form, ``foreign private issuer'' shall 
be construed in accordance with Rule 405 under the Securities Act.

    (c) If the registrant is a successor registrant subsisting after a 
statutory amalgamation, merger, arrangement or other reorganization 
requiring the vote of shareholders of the participating companies (a 
``business combination''), the registrant shall be deemed to meet the 
36-month reporting requirement and the 12-month listing requirement of 
paragraph (b)(3) of this section if:
    (1) The time the successor registrant has been subject to the 
continuous disclosure requirements of any securities commission or 
equivalent regulatory authority in Canada, when added separately to the 
time each predecessor had been subject to such requirements at the time 
of the business combination, in each case equals at least 36 calendar 
months, provided, however, that any predecessor need not be considered 
for purposes of the reporting history calculation if the reporting 
histories of predecessors whose assets and gross revenues, respectively, 
would contribute at least 80 percent of the total assets and gross 
revenues from continuing operations of the successor registrant, as 
measured based on pro forma combination of such participating companies' 
most recently completed fiscal years immediately prior to the business 
combination, when combined with the reporting history of the successor 
registrant in each case satisfy such 36-month reporting requirement;
    (2) The time the successor registrant has been subject to the 
listing requirements of the specified exchanges, when added separately 
to the time each predecessor had been subject to such requirements at 
the time of the business combination, in each case equals at least 12 
calendar months, provided, however, that any predecessor need not be 
considered for purposes of the listing history calculation if the 
listing histories of predecessors whose assets and gross revenues, 
respectively, would contribute at least 80 percent of the total assets 
and gross revenues from continuing operations of the successor 
registrant, as measured based on pro forma combination of such 
participating companies' most recently completed fiscal years 
immediately prior to the business combination, when combined with the 
listing history of the successor registrant in each case satisfy such 
12-month listing requirement; and
    (3) The successor registrant has been subject to such continuous 
disclosure requirements and listing requirements

[[Page 683]]

since the business combination, and is currently in compliance with its 
obligations thereunder.
    (d) The rights in connection with the transaction granted to 
securityholders that are U.S. holders shall be granted upon terms and 
conditions not less favorable than those extended to any other holder of 
the same class of securities. The securities offered or sold upon 
exercise of rights granted to U.S. holders may not be registered on this 
Form if such rights are transferable other than in accordance with 
Regulation S under the Securities Act.

Instruction: For purposes of this Form, the term ``U.S. holder'' shall 
mean any person whose address appears on the records of the registrant, 
any voting trustee, any depositary, any share transfer agent or any 
person acting on behalf of the registrant as being located in the United 
States.

    (e) This Form shall not be used if the registrant is an investment 
company registered or required to be registered under the Investment 
Company Act of 1940.
    (f) Any non-U.S. person acting as trustee with respect to the 
securities being registered shall file a Form F-X (Sec. 239.42 of this 
chapter) with the Commission at the time of filing this Form.

[56 FR 30060, July 1, 1991]

    Editorial Note: For Federal Register citations affecting Form F-7, 
see the List of CFR Sections Affected, which appears in the Finding Aids 
section of the printed volume and on GPO Access.



Sec. 239.38  Form F-8, for registration under the Securities Act of 1933 of securities of certain Canadian issuers to be issued in exchange offers or a business 
          combination.

    (a) Form F-8 may be used for registration under the Securities Act 
of 1933 (``Securities Act'') of securities to be issued in an exchange 
offer or in connection with a statutory amalgamation, merger, 
arrangement or other reorganization requiring the vote of shareholders 
of the participating companies (a ``business combination''). Securities 
may be registered on this Form whether they constitute the sole 
consideration for such exchange offer or business combination, or are 
offered in conjunction with cash.
    (b) This Form shall not be used for registration of securities if no 
takeover bid circular or issuer bid circular (in the case of an exchange 
offer) or information circular (in the case of a business combination) 
is prepared pursuant to the requirements of any Canadian jurisdiction 
due to the availability of an exemption from such requirements.
    (c) This Form may not be used for registration of derivative 
securities except:
    (1) Warrants, options and rights, provided that such securities and 
the underlying securities to which they relate are issued by the 
registrant, its parent or an affiliate of either; and
    (2) Convertible securities, provided that such securities are 
convertible only into securities of the registrant, its parent or an 
affiliate of either.

Instruction: For purposes of this Form, an ``affiliate'' of a person is 
anyone who beneficially owns, directly or indirectly, or exercises 
control or direction over, more than 10 percent of the outstanding 
equity shares of such person. The determination of a person's affiliates 
shall be made as of the end of such person's most recently completed 
fiscal year.

    (d) In the case of an exchange offer, Form F-8 is available to any 
registrant that:
    (1) Is incorporated or organized under the laws of Canada, or any 
Canadian province or territory;
    (2) Is a foreign private issuer;
    (3) Has had a class of its securities listed on The Montreal 
Exchange, The Toronto Stock Exchange or the Senior Board of the 
Vancouver Stock Exchange for the 12 calendar months immediately 
preceding the filing of this Form, has been subject to the continuous 
disclosure requirements of any securities commission or equivalent 
regulatory authority in Canada for a period of at least 36 calendar 
months immediately preceding the filing of this Form, and is currently 
in compliance with obligations arising from such listing and reporting; 
and
    (4) Has an aggregate market value of the public float of its 
outstanding equity shares of (CN) $75 million or more; provided, 
however, that such public float requirement need not be satisfied if the 
issuer of the securities to be exchanged is also the registrant on this 
Form.


[[Page 684]]


Instructions: 1. For purposes of this Form, ``foreign private issuer'' 
shall be construed in accordance with rule 405 under the Securities Act.
    2. For purposes of this Form, ``equity shares'' shall mean common 
shares, non-voting equity shares and subordinate or restricted voting 
equity shares, but shall not include preferred shares.
    3. For purposes of this Form, the ``public float'' of specified 
securities shall mean only such securities held by persons other than 
affiliates of the issuer.
    4. For purposes of this Form, the market value of the public float 
of outstanding equity shares shall be computed by use of the price at 
which such shares were last sold, or the average of the bid and asked 
prices of such shares, in the principal market for such shares as of a 
date within 60 days prior to the date of filing. If there is no market 
for any of such securities, the book value of such securities computed 
as of the latest practicable date prior to the filing of this Form shall 
be used for purposes of calculating the market value, 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.

    (e) In the case of an exchange offer, the securities to be 
registered on this Form shall be offered to U. S. holders upon terms and 
conditions not less favorable than those offered to any other holder of 
the same class of the securities to be exchanged (the ``subject 
securities'') for the securities of the registrant.
    (f) In the case of an exchange offer, if the registrant is a 
successor registrant subsisting after a business combination, the 
registrant shall be deemed to meet the 36-month reporting requirement 
and the 12-month listing requirement of paragraph (d)(3) of this section 
if:
    (1) The time the successor registrant has been subject to the 
continuous disclosure requirements of any securities commission or 
equivalent regulatory authority in Canada, when added separately to the 
time each predecessor had been subject to such requirements at the time 
of the business combination, in each case equals at least 36 calendar 
months, provided, however, that any predecessor need not be considered 
for purposes of the reporting history calculation if the reporting 
histories of predecessors whose assets and gross revenues, respectively, 
would contribute at least 80 percent of the total assets and gross 
revenues from continuing operations of the successor registrant, as 
measured based on pro forma combination of such participating companies' 
most recently completed fiscal years immediately prior to the business 
combination, when combined with the reporting history of the successor 
registrant in each case satisfy such 36-month reporting requirement;
    (2) The time the successor registrant has been subject to the 
listing requirements of the specified exchanges, when added separately 
to the time each predecessor had been subject to such requirements at 
the time of the business combination, in each case equals at least 12 
calendar months, provided, however, that any predecessor need not be 
considered for purposes of the listing history calculation if the 
listing histories of predecessors whose assets and gross revenues, 
respectively, would contribute at least 80 percent of the total assets 
and gross revenues from continuing operations of the successor 
registrant, as measured based on pro forma combination of such 
participating companies' most recently completed fiscal years 
immediately prior to the business combination, when combined with the 
listing history of the successor registrant in each case satisfy such 
12-month listing requirement; and
    (3) The successor registrant has been subject to such continuous 
disclosure requirements and listing requirements since the business 
combination, and is currently in compliance with its obligations 
thereunder.
    (g) In the case of an exchange offer, the issuer of the subject 
securities shall be incorporated or organized under the laws of Canada 
or any Canadian province or territory and be a foreign private issuer, 
and less than 25 percent of the class of subject securities outstanding 
shall be held by U. S. holders.

Instructions: 1. For purposes of exchange offers, the term ``U. S. 
holder'' shall mean any person whose address appears on the records of 
the issuer of the subject securities, any voting trustee, any 
depositary, any share transfer agent or any person acting in a

[[Page 685]]

similar capacity on behalf of the issuer of the subject securities as 
being located in the United States.
    2. 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 25 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 25 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 25 percent of such securities.
    3. For purposes of this Form, if this Form is filed during the 
pendency of one or more ongoing cash tender or exchange offers for 
securities of the class subject to the 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 shall 
be the same as that date used by the initial bidder or issuer.
    4. For purposes of this Form, the class of subject securities shall 
not include any securities that may be converted into or are 
exchangeable for the subject securities.
    5. For purposes of exchange offers, 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.

    (h) In the case of a business combination, Form F-8 is available if:
    (1) Each company participating in the business combination, 
including the successor registrant, is incorporated or organized under 
the laws of Canada or any Canadian province or territory and is a 
foreign private issuer;
    (2) Each company participating in the business combination other 
than the successor registrant has had a class of its securities listed 
on The Montreal Exchange, The Toronto Stock Exchange or the Senior Board 
of the Vancouver Stock Exchange for the 12 calendar months immediately 
preceding the filing of this Form, has been subject to the continuous 
disclosure requirements of any securities commission or equivalent 
regulatory authority in Canada for a period of at least 36 calendar 
months immediately preceding the filing of this Form, and is currently 
in compliance with obligations arising from such listing and reporting; 
provided, however, that any such participating company shall not be 
required to meet such 36-month reporting requirement or 12-month listing 
requirement if other participating companies whose assets and gross 
revenues, respectively, would contribute at least 80 percent of the 
total assets and gross revenues from continuing operations of the 
successor registrant, as measured based on pro forma combination of the 
participating companies' most recently completed fiscal years, each meet 
such reporting and listing requirements; and
    (3) The aggregate market value of the public float of the 
outstanding equity shares of each company participating in the business 
combination other than the successor registrant is (CN) $75 million or 
more; provided, however, that any such participating company shall not 
be required to meet such public float requirement if other participating 
companies whose assets and gross revenues, respectively, would 
contribute at least 80 percent of the total assets and gross revenues 
from continuing operations of the successor registrant, as measured 
based on pro forma combination of the participating companies' most 
recently completed fiscal years, each meet such public float 
requirement; and, provided further, that such public float requirement 
shall be deemed satisfied in the case of a participating company whose 
equity shares were the subject of an exchange offer that was registered 
or would have been eligible for registration on Form F-8, Form F-9, Form 
F-10 or Form F-

[[Page 686]]

80, or a tender offer in connection with which Schedule 13E-4F or 14D-1F 
was filed or could have been filed, that terminated within the last 
twelve months, if the participating company would have satisfied such 
public float requirement immediately prior to commencement of such 
exchange or tender offer.
    (i) In the case of a business combination, less than 25 percent of 
the class of securities to be offered by the successor registrant shall 
be held by U.S. holders as if measured immediately after completion of 
the business combination.

Instructions: 1. For purposes of business combinations, the term ``U.S. 
holder'' shall mean any person whose address appears on the records of a 
participating company, any voting trustee, any depositary, any share 
transfer agent or any person acting in a similar capacity on behalf of a 
participating company as being located in the United States.
    2. For purposes of business combinations, the calculation of U.S. 
holders shall be made by a participant as of the end of such 
participant's last quarter or, if such quarter terminated within 60 days 
of the filing date, as of the end of such participant's preceding 
quarter.

    (j) In the case of a business combination, the securities to be 
registered on this Form shall be offered to U.S. holders upon terms and 
conditions not less favorable than those offered to any other holder of 
the same class of such securities of the participating company.
    (k) This Form shall not be used if the registrant or, in the case of 
an exchange offer, the issuer of the subject securities, is an 
investment company registered or required to be registered under the 
Investment Company Act of 1940.
    (l) Registrants and any non-U.S. person acting as trustee with 
respect to the securities being registered shall each file a Form F-X 
(Sec. 239.42 of this chapter) with the Commission at the time of filing 
this Form.

[56 FR 30061, July 1, 1991]

    Editorial Note: For Federal Register citations affecting Form F-8, 
see the List of CFR Sections Affected, which appears in the Finding Aids 
section of the printed volume and on GPO Access.



Sec. 239.39  Form F-9, for registration under the Securities Act of 1933 of certain investment grade debt or investment grade preferred securities of certain 
          Canadian issuers.

    (a) Form F-9 may be used for the registration under the Securities 
Act of 1933 (the ``Securities Act'') of investment grade debt or 
investment grade preferred securities that are:
    (1) Offered for cash or in connection with an exchange offer; and
    (2) Either non-convertible or not convertible for a period of at 
least one year from the date of issuance and, except as noted in 
paragraph (e) of this section, are thereafter only convertible into a 
security of another class of the issuer.

Instruction: Securities shall be ``investment grade'' if, at the time of 
sale, at least one nationally recognized statistical rating organization 
(as that term is used in relation to Rule 15c3-1(c)(2)(vi)(F) under the 
Securities Exchange Act of 1934 (the ``Exchange Act'') (Sec. 240.15c3-
1(c)(2)(vi)(F) of this chapter)) or at least one Approved Rating 
Organization (as defined in National Policy Statement No. 45 of the 
Canadian Securities Administrators, as the same may be amended from time 
to time) has rated the security in one of its generic rating categories 
that signifies investment grade; typically the four highest rating 
categories (within which there may be subcategories or gradations 
indicating relative standing) signify investment grade.

    (b) Form F-9 is available to any registrant that:
    (1) Is incorporated or organized under the laws of Canada or any 
Canadian province or territory;
    (2) Is a foreign private issuer or a crown corporation;
    (3) Has been subject to the continuous disclosure requirements of 
any securities commission or equivalent regulatory authority in Canada 
for a period of at least 12 calendar months immediately preceding the 
filing of this Form, and is currently in compliance with such 
obligations; and
    (4) Has an aggregate market value of the public float of its 
outstanding equity shares of $75 million or more; provided, however, 
that the requirement set forth in this paragraph (b)(4) shall not apply 
if the securities being registered on this Form are not convertible into 
another security.


[[Page 687]]


Instructions: 1. For purposes of this Form, ``foreign private issuer'' 
shall be construed in accordance with rule 405 under the Securities Act.
    2. For purposes of this Form, the term ``crown corporation'' shall 
mean a corporation all of whose common shares or comparable equity is 
owned directly or indirectly by the Government of Canada or a Province 
or Territory of Canada.
    3. For purposes of this Form, the ``public float'' of specified 
securities shall mean only such securities held by persons other than 
affiliates of the issuer.
    4. For purposes of this Form, an ``affiliate'' of a person is anyone 
who beneficially owns, directly or indirectly, or exercises control or 
direction over, more than 10 percent of the outstanding equity shares of 
such person. The determination of a person's affiliates shall be made as 
of the end of such person's most recently completed fiscal year.
    5. For purposes of this Form, ``equity shares'' shall mean common 
shares, non-voting equity shares and subordinate or restricted voting 
equity shares, but shall not include preferred shares.
    6. For purposes of this Form, the market value of outstanding equity 
shares (whether or not held by affiliates) shall be computed by use of 
the price at which such shares were last sold, or the average of the bid 
and asked prices of such shares, in the principal market for such shares 
as of a date within 60 days prior to the date of filing. If there is no 
market for any of such securities, the book value of such securities 
computed as of the latest practicable date prior to the filing of this 
Form shall be used for purposes of calculating the market value, 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.

    (c) In the case of an exchange offer, the securities to be 
registered on this Form shall be offered to U.S. holders upon terms and 
conditions not less favorable than those offered to any other holder of 
the same class of the securities to be exchanged (the ``subject 
securities'') for the securities of the registrant.
    (d) In the case of an exchange offer, the issuer of the subject 
securities shall be incorporated or organized under the laws of Canada 
or any Canadian province or territory and be a foreign private issuer or 
a crown corporation.

Instructions: 1. For purposes of this Form, the term ``U.S. holder'' 
shall mean any person whose address appears on the records of the issuer 
of the subject securities, any voting trustee, any depositary, any share 
transfer agent or any person acting in a similar capacity on behalf of 
the issuer of the subject securities as being located in the United 
States.
    2. For purposes of this Form, the class of subject securities shall 
not include any securities that may be converted into or are 
exchangeable for the subject securities.

    (e) If the registrant is a majority-owned subsidiary offering debt 
securities or preferred securities, it shall be deemed to meet the 
requirements of paragraphs (b)(3) and (b)(4) of this section if the 
parent of the registrant-subsidiary meets the requirements of paragraph 
(b) of this section, as applicable, and fully and unconditionally 
guarantees the securities being registered as to principal and interest 
(if debt securities) or as to liquidation preference, redemption price 
and dividends (if preferred securities); provided, however, that the 
securities of the subsidiary are only convertible or exchangeable, if at 
all, for the securities of the parent.
    (f) If the registrant is a successor registrant subsisting after a 
statutory amalgamation, merger, arrangement or other reorganization 
requiring the vote of shareholders of the participating companies (a 
``business combination''), the registrant shall be deemed to meet the 
12-month reporting requirement of paragraph (b)(3) of this section if:
    (1) The time the successor registrant has been subject to the 
continuous disclosure requirements of any securities commission or 
equivalent regulatory authority in Canada, when added separately to the 
time each predecessor had been subject to such requirements at the time 
of the business combination, in each case equals at least 12 calendar 
months, provided, however, that any predecessor need not be considered 
for purposes of the reporting history calculation if the reporting 
histories of predecessors whose assets and gross revenues, respectively, 
would contribute at least 80 percent of the total assets and gross 
revenues from continuing operations of the successor registrant, as 
measured based on pro forma combination of such participating companies' 
most recently completed fiscal years immediately prior to the business 
combination, when

[[Page 688]]

combined with the reporting history of the successor registrant in each 
case satisfy such 12-month reporting requirement; and
    (2) The successor registrant has been subject to such continuous 
disclosure requirements since the business combination, and is currently 
in compliance with its obligations thereunder.
    (g) This Form shall not be used for registration of securities if no 
takeover bid circular or issuer bid circular (in the case of an exchange 
offer) or prospectus (in all other cases) is prepared pursuant to the 
requirements of any Canadian jurisdiction due to the availability of an 
exemption from such requirements.
    (h) This Form shall not be used if the registrant or, in the case of 
an exchange offer, the issuer of the subject securities is an investment 
company registered or required to be registered under the Investment 
Company Act of 1940.
    (i) Registrants and any non-U.S. person acting as trustee with 
respect to the securities being registered shall each file a Form F-X 
(Sec. 239.42 of this chapter) with the Commission at the time of filing 
this Form.

[56 FR 30063, July 1, 1991, as amended at 58 FR 62030, Nov. 23, 1993; 59 
FR 243, Jan. 4, 1994]

    Editorial Note: For Federal Register citations affecting Form F-9, 
see the List of CFR Sections Affected, which appears in the Finding Aids 
section of the printed volume and on GPO Access.



Sec. 239.40  Form F-10, for registration under the Securities Act of 1933 of securities of certain Canadian issuers.

    (a) Form F-10 may be used for the registration of securities under 
the Securities Act of 1933 (the ``Securities Act''), including 
securities to be issued in an exchange offer or in connection with a 
statutory amalgamation, merger, arrangement or other reorganization 
requiring the vote of shareholders of the participating companies (a 
``business combination'').
    (b) This Form may not be used for registration of derivative 
securities except:
    (1) Warrants, options and rights, provided that such securities and 
the underlying securities to which they relate are issued by the 
registrant, its parent or an affiliate of either; and
    (2) Convertible securities, provided that such securities are 
convertible only into securities of the registrant, its parent or an 
affiliate of either.

Instruction: For purposes of this Form, an ``affiliate'' of a person is 
anyone who beneficially owns, directly or indirectly, or exercises 
control or direction over, more than 10 percent of the outstanding 
equity shares of such person. The determination of a person's affiliates 
shall be made as of the end of such person's most recently completed 
fiscal year.

    (c) Form F-10 is available to any registrant that:
    (1) Is incorporated or organized under the laws of Canada or any 
Canadian province or territory;
    (2) Is a foreign private issuer;
    (3) Has been subject to the continuous disclosure requirements of 
any securities commission or equivalent regulatory authority in Canada 
for a period of at least 12 calendar months immediately preceding the 
filing of this Form, and is currently in compliance with such 
obligations, provided, however, that in the case of a business 
combination, each participating company other than the successor 
registrant must meet such 12-month reporting obligation, except that any 
such participating company shall not be required to meet such reporting 
requirement if other participating companies whose assets and gross 
revenues, respectively, would contribute at least 80 percent of the 
total assets and gross revenues from continuing operations of the 
successor registrant, as measured based on pro forma combination of the 
participating companies' most recently completed fiscal years, each meet 
such reporting requirement; and
    (4) Has an aggregate market value of the public float of its 
outstanding equity shares of $75 million or more; provided, however, 
that in the case of a business combination, the aggregate market value 
of the public float of the outstanding equity shares of each 
participating company other than the successor registrant is $75 million 
or more, except that any such participating company shall not be 
required to meet such public float requirement if other participating 
companies whose assets and gross revenues, respectively, would

[[Page 689]]

contribute at least 80 percent of the total assets and gross revenues 
from continuing operations of the successor registrant, as measured 
based on pro forma combination of the participating companies' most 
recently completed fiscal years, each meet such public float 
requirement; and provided, further, that in the case of a business 
combination, such public float requirement shall be deemed satisfied in 
the case of a participating company whose equity shares were the subject 
of an exchange offer that was registered or would have been eligible for 
registration on Form F-8, Form F-9, Form F-10 or Form F-80 
(Secs. 239.38, 239.39, 239.40 or 239.41) or a tender offer in connection 
with which Schedule 13E-4F or 14D-1F (Secs. 240.13e-102 or 240.14d-102 
of this chapter) was filed or could have been filed, that terminated 
within the last twelve months, if the participating company would have 
satisfied such public float requirement immediately prior to 
commencement of such exchange or tender offer.

Instructions: 1. For purposes of this Form, ``foreign private issuer'' 
shall be construed in accordance with rule 405 under the Securities Act.
    2. For purposes of this Form, the ``public float'' of specified 
securities shall mean only such securities held by persons other than 
affiliates of the issuer.
    3. For purposes of this Form, ``equity shares'' shall mean common 
shares, non-voting equity shares and subordinate or restricted voting 
equity shares, but shall not include preferred shares.
    4. For purposes of this Form, the market value of outstanding equity 
shares (whether or not held by affiliates) shall be computed by use of 
the price at which such shares were last sold, or the average of the bid 
and asked prices of such shares, in the principal market for such shares 
as of a date within 60 days prior to the date of filing. If there is no 
market for any of such securities, the book value of such securities 
computed as of the latest practicable date prior to the filing of this 
Form shall be used for purposes of calculating the market value, 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.

    (d) In the case of an exchange offer, the issuer of the securities 
to be exchanged (the ``subject securities'') for securities of the 
registrant shall be incorporated or organized under the laws of Canada 
or any Canadian province or territory and be a foreign private issuer.
    (e) In the case of a business combination, each participating 
company shall be incorporated or organized under the laws of Canada or 
any Canadian province or territory and be a foreign private issuer.
    (f) In the case of an exchange offer, the securities to be 
registered on this Form shall be offered to U.S. holders upon terms and 
conditions not less favorable than those offered to any other holder of 
the same class of the subject securities.
    (g) In the case of a business combination, the securities to be 
registered on this Form shall be offered to U.S. holders upon terms and 
conditions not less favorable than those offered to any other holder of 
the same class of such securities of the participating company.

Instructions: 1. For purposes of exchange offers, the term ``U.S. 
holder'' shall mean any person whose address appears on the records of 
the issuer of the subject securities, any voting trustee, any 
depositary, any share transfer agent or any person acting in a similar 
capacity on behalf of the issuer of the subject securities as being 
located in the United States.
    2. For purposes of business combinations, the term ``U.S. holder'' 
shall mean any person whose address appears on the records of a 
participating company, any voting trustee, any depositary, any share 
transfer agent or any person acting in a similar capacity on behalf of a 
participating company as being located in the United States.
    3. For purposes of this Form, the class of subject securities shall 
not include any securities that may be converted into or are 
exchangeable for the subject securities.

    (h) With respect to registration of debt securities or preferred 
securities on this Form, if the registrant is a majority-owned 
subsidiary, it shall be deemed to meet the requirements of paragraphs 
(c)(3) and (c)(4) of this section if the parent of the registrant-
subsidiary meets the requirements of paragraph (c) of this section and 
fully and unconditionally guarantees the securities being registered as 
to principal and interest (if debt securities) or as to liquidation 
preference, redemption price and dividends (if preferred shares); 
provided, however, that the securities of the subsidiary are only 
convertible or

[[Page 690]]

exchangeable, if at all, for the securities of the parent.
    (i) If the registrant is a successor registrant subsisting after a 
business combination, it shall be deemed to meet the 12-month reporting 
requirement of paragraph (c)(3) of this section if:
    (1) The time the successor registrant has been subject to the 
continuous disclosure requirements of any securities commission or 
equivalent regulatory authority in Canada, when added separately to the 
time each predecessor had been subject to such requirements at the time 
of the business combination, in each case equals at least 12 calendar 
months, provided, however, that any predecessor need not be considered 
for purposes of the reporting history calculation if the reporting 
histories of predecessors whose assets and gross revenues, respectively, 
would contribute at least 80 percent of the total assets and gross 
revenues from continuing operations of the successor registrant, as 
measured based on pro forma combination of such participating companies' 
most recently completed fiscal years immediately prior to the business 
combination, when combined with the reporting history of the successor 
registrant in each case satisfy such 12-month reporting requirement; and
    (2) The successor registrant has been subject to such continuous 
disclosure requirements since the business combination, and is currently 
in compliance with its obligations thereunder.
    (j) This Form shall not be used for registration of securities if no 
takeover bid circular or issuer bid circular (in the case of an exchange 
offer) or information circular (in the case of a business combination) 
or prospectus (in all other cases) is prepared pursuant to the 
requirements of any Canadian jurisdiction due to the availability of an 
exemption from such requirements.
    (k) This Form shall not be used if the registrant or, in the case of 
an exchange offer, the issuer of the subject securities is an investment 
company registered or required to be registered under the Investment 
Company Act of 1940.
    (l) Registrants and any non-U.S. person acting as trustee with 
respect to the securities being registered shall each file a Form F-X 
(Sec. 239.42 of this chapter) with the Commission at the time of filing 
this Form.

[56 FR 30064, July 1, 1991, as amended at 58 FR 62030, Nov. 23, 1993]

    Editorial Note: For Federal Register citations affecting Form F-10, 
see the List of CFR Sections Affected, which appears in the Finding Aids 
section of the printed volume and on GPO Access.



Sec. 239.41  Form F-80, for registration under the Securities Act of 1933 of securities of certain Canadian issuers to be issued in exchange offers or a 
          business combination.

    (a) Form F-80 may be used for registration under the Securities Act 
of 1933 (``Securities Act'') of securities to be issued in an exchange 
offer or in connection with a statutory amalgamation, merger, 
arrangement or other reorganization requiring the vote of shareholders 
of the participating companies (a ``business combination''). Securities 
may be registered on this Form whether they constitute the sole 
consideration for such exchange offer or business combination, or are 
offered in conjunction with cash.
    (b) This Form shall not be used for registration of securities if no 
takeover bid circular or issuer bid circular (in the case of an exchange 
offer) or information circular (in the case of a business combination) 
is prepared pursuant to the requirements of any Canadian jurisdiction 
due to the availability of an exemption from such requirements.
    (c) This Form may not be used for registration of derivative 
securities except:
    (1) Warrants, options and rights, provided that such securities and 
the underlying securities to which they relate are issued by the 
registrant, its parent or an affiliate of either; and
    (2) Convertible securities, provided that such securities are 
convertible only into securities of the registrant, its parent or an 
affiliate of either.

Instruction: For purposes of this Form, an ``affiliate'' of a person is 
anyone who beneficially owns, directly or indirectly, or exercises 
control or direction over, more than 10 percent of the outstanding 
equity shares of such person. The determination of a person's affiliates 
shall be made as of the end of such person's most recently completed 
fiscal year.


[[Page 691]]


    (d) In the case of an exchange offer, Form F-80 is available to any 
registrant that:
    (1) Is incorporated or organized under the laws of Canada or any 
Canadian province or territory;
    (2) Is a foreign private issuer;
    (3) Has had a class of its securities listed on The Montreal 
Exchange, The Toronto Stock Exchange or the Senior Board of the 
Vancouver Stock Exchange for the 12 calendar months immediately 
preceding the filing of this Form, has been subject to the continuous 
disclosure requirements of any securities commission or equivalent 
regulatory authority in Canada for a period of at least 36 calendar 
months immediately preceding the filing of this Form, and is currently 
in compliance with obligations arising from such listing and reporting; 
and
    (4) Has an aggregate market value of the public float of its 
outstanding equity shares of (CN) $75 million or more; provided, 
however, that such public float requirement need not be satisfied if the 
issuer of the securities to be exchanged is also the registrant on this 
Form.

Instructions: 1. For purposes of this Form, ``foreign private issuer'' 
shall be construed in accordance with Rule 405 under the Securities Act.
    2. For purposes of this Form, ``equity shares'' shall mean common 
shares, non-voting equity shares and subordinate or restricted voting 
equity shares, but shall not include preferred shares.
    3. For purposes of this Form, the ``public float'' of specified 
securities shall mean only such securities held by persons other than 
affiliates of the issuer.
    4. For purposes of this Form, the market value of the public float 
of outstanding equity shares shall be computed by use of the price at 
which such shares were last sold, or the average of the bid and asked 
prices of such shares, in the principal market for such shares as of a 
date within 60 days prior to the date of filing. If there is no market 
for any of such securities, the book value of such securities computed 
as of the latest practicable date prior to the filing of this Form shall 
be used for purposes of calculating the market value, 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.

    (e) In the case of an exchange offer, the securities to be 
registered on this Form shall be offered to U. S. holders upon terms and 
conditions not less favorable than those offered to any other holder of 
the same class of the securities to be exchanged (the ``subject 
securities'') for the securities of the registrant.
    (f) In the case of an exchange offer, if the registrant is a 
successor registrant subsisting after a business combination, the 
registrant shall be deemed to meet the 36-month reporting requirement 
and the 12-month listing requirement of paragraph (d) (3) of this 
section if:
    (1) The time the successor registrant has been subject to the 
continuous disclosure requirements of any securities commission or 
equivalent regulatory authority in Canada, when added separately to the 
time each predecessor had been subject to such requirements at the time 
of the business combination, in each case equals at least 36 calendar 
months, provided, however, that any predecessor need not be considered 
for purposes of the reporting history calculation if the reporting 
histories of predecessors whose assets and gross revenues, respectively, 
would contribute at least 80 percent of the total assets and gross 
revenues from continuing operations of the successor registrant, as 
measured based on pro forma combination of such participating companies' 
most recently completed fiscal years immediately prior to the business 
combination, when combined with the reporting history of the successor 
registrant in each case satisfy such 36-month reporting requirement;
    (2) The time the successor registrant has been subject to the 
listing requirements of the specified exchanges, when added separately 
to the time each predecessor had been subject to such requirements at 
the time of the business combination, in each case equals at least 12 
calendar months, provided, however, that any predecessor need not be 
considered for purposes of the listing history calculation if the 
listing histories of predecessors whose assets and gross revenues, 
respectively, would contribute at least 80 percent of the total assets 
and gross revenues from

[[Page 692]]

continuing operations of the successor registrant, as measured based on 
pro forma combination of such participating companies' most recently 
completed fiscal years immediately prior to the business combination, 
when combined with the listing history of the successor registrant in 
each case satisfy such 12-month listing requirement; and
    (3) The successor registrant has been subject to such continuous 
disclosure requirements and listing requirements since the business 
combination, and is currently in compliance with its obligations 
thereunder.
    (g) In the case of an exchange offer, the issuer of the subject 
securities shall be incorporated or organized under the laws of Canada 
or any Canadian province or territory and be a foreign private issuer, 
and less than 40 percent of the class of subject securities outstanding 
shall be held by U.S. holders.

Instructions: 1. For purposes of exchange offers, the term ``U.S. 
holder'' shall mean any person whose address appears on the records of 
the issuer of the subject securities, any voting trustee, any 
depositary, any share transfer agent or any person acting in a similar 
capacity on behalf of the issuer of the subject securities as being 
located in the United States.
    2. 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 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.
    3. For purposes of this Form, if this Form is filed during the 
pendency of one or more ongoing cash tender or exchange offers for 
securities of the class subject to the 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 shall 
be the same as that date used by the initial bidder or issuer.
    4. For purposes of this Form, the class of subject securities shall 
not include any securities that may be converted into or are 
exchangeable for the subject securities.
    5. For purposes of exchange offers, 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.

    (h) In the case of a business combination, Form F-80 is available 
if:
    (1) Each company participating in the business combination, 
including the successor registrant, is incorporated or organized under 
the laws of Canada or any Canadian province or territory and is a 
foreign private issuer;
    (2) Each company participating in the business combination other 
than the successor registrant has had a class of its securities listed 
on The Montreal Exchange, The Toronto Stock Exchange or the Senior Board 
of the Vancouver Stock Exchange for the 12 calendar months immediately 
preceding the filing of this Form, has been subject to the continuous 
disclosure requirements of any securities commission or equivalent 
regulatory authority in Canada for a period of at least 36 calendar 
months immediately preceding the filing of this Form, and is currently 
in compliance with obligations arising from such listing and reporting; 
provided, however, that any such participating company shall not be 
required to meet such 36-month reporting requirement or 12-month listing 
requirement if other participating companies whose assets and gross 
revenues, respectively, would contribute at least 80 percent of the 
total assets and gross revenues from continuing operations of the 
successor registrant, as measured based on pro forma combination of the

[[Page 693]]

participating companies' most recently completed fiscal years, each meet 
such reporting and listing requirements; and
    (3) The aggregate market value of the public float of the 
outstanding equity shares of each company participating in the business 
combination other than the successor registrant is (CN) $75 million or 
more; provided, however, that any such participating company shall not 
be required to meet such public float requirement if other participating 
companies whose assets and gross revenues, respectively, would 
contribute at least 80 percent of the total assets and gross revenues 
from continuing operations of the successor registrant, as measured 
based on pro forma combination of the participating companies' most 
recently completed fiscal years, each meet such public float 
requirement; and, provided further, that such public float requirement 
shall be deemed satisfied in the case of a participating company whose 
equity shares were the subject of an exchange offer that was registered 
or would have been eligible for registration on Form F-8, Form F-9, Form 
F-10 or Form F-80, or a tender offer in connection with which Schedule 
13E-4F or 14D-1F was filed or could have been filed, that terminated 
within the last twelve months, if the participating company would have 
satisfied such public float requirement immediately prior to 
commencement of such exchange or tender offer.
    (i) In the case of a business combination, less than 40 percent of 
the class of securities to be offered by the successor registrant shall 
be held by U.S. holders, as if measured immediately after completion of 
the business combination.

Instructions: 1. For purposes of business combinations, the term ``U.S. 
holder'' shall mean any person whose address appears on the records of a 
participating company, any voting trustee, any depositary, any share 
transfer agent or any person acting in a similar capacity on behalf of a 
participating company as being located in the United States.
    2. For purposes of business combinations, the calculation of U.S. 
holders shall be made by a participant as of the end of such 
participant's last quarter or, if such quarter terminated within 60 days 
of the filing date, as of the end of such participant's preceding 
quarter.

    (j) In the case of a business combination, the securities to be 
registered on this Form shall be offered to U.S. holders upon terms and 
conditions not less favorable than those offered to any other holder of 
the same class of such securities of the participating company.
    (k) This Form shall not be used if the registrant or, in the case of 
an exchange offer, the issuer of the subject securities is an investment 
company registered or required to be registered under the Investment 
Company Act of 1940.
    (l) Registrants and any non-U.S. person acting as trustee with 
respect to the securities being registered shall each file a Form F-X 
(Sec. 239.42 of this chapter) with the Commission at the time of filing 
this Form.

[56 FR 30065, July 1, 1991]

    Editorial Note: For Federal Register citations affecting Form F-80, 
see the List of CFR Sections Affected, which appears in the Finding Aids 
section of the printed volume and on GPO Access.




Sec. 239.42  Form F-X, for appointment of agent for service of process and 
undertaking for issuers registering securities on Form F-8, F-9, F-10, or F-80 
          (Secs. 239.38, 239.39, 239.40, or 239.41 of this chapter) or 
          registering securities or filing periodic reports on Form 40-F 
          (Sec. 249.240f of this chapter), or by any issuer or other 
          non-U.S. person filing tender offer documents on Schedule 13E-
          4F, 14D-1F or 14D-9F (Secs. 240.13e-102, 240.14d-102 or 
          240.14d-103 of this chapter), by any non-U.S. person acting as 
          trustee with respect to securities registered on Form F-7 
          (Sec. 239.37 of this chapter), F-8, F-9, F-10, F-80 or SB-2 
          (Sec. 239.10 of this chapter), or by a Canadian issuer 
          qualifying an offering statement pursuant to Regulation A 
          (Sec. 230.251 et seq.) on Form 1-A (Sec. 239.90 of this 
          chapter), or registering securities on Form SB-2, or by any 
          non-U.S. issuer providing Form CB to the Commission in 
          connection with a tender offer, rights offering or business 
          combination.

    Form F-X shall be filed with the Commission:
    (a) By any issuer registering securities on Form F-8, F-9, F-10, F-
80 or SB-2 under the Securities Act of 1933;

[[Page 694]]

    (b) By any issuer registering securities on Form 40-F under the 
Securities Exchange Act of 1934;
    (c) By any issuer filing a periodic report on Form 40-F, if it has 
not previously filed a Form F-X in connection with the class of 
securities in relation to which the obligation to file a report on Form 
40-F arises;
    (d) By any issuer or other non-U.S. person filing tender offer 
documents on Schedule 13E-4F, 14D-1F or 14D-9F;
    (e) By any non-U.S. person acting as trustee with respect to 
securities registered on Form F-7, F-8, F-9, F-10 or F-80;
    (f) By a Canadian issuer qualifying an offering statement pursuant 
to the provisions of Regulation A, or registering securities on Form SB-
2; and
    (g) By any non-U.S. issuer providing Form CB to the Commission in 
connection with a tender offer, rights offering or business combination.

[56 FR 30067, July 1, 1991, as amended at 57 FR 36475, Aug. 13, 1992; 64 
FR 61402, Nov. 10, 1999]

    Editorial Note: For Federal Register citations affecting Form F-X, 
see the List of CFR Sections Affected, which appears in the Finding Aids 
section of the printed volume and on GPO Access.




Sec. 239.43  Form F-N, appointment of agent for service of process by foreign 
banks and foreign insurance companies and certain of their holding companies 
and 
          finance subsidiaries making public offerings of securities in 
          the United States.

    Form F-N shall be filed with the Commission in connection with the 
filing of a registration statement under the Act by those entities 
specified in rule 489 (17 CFR 230.489).

[56 FR 56299, Nov. 4, 1991]



Secs. 239.44-239.61  [Reserved]



Sec. 239.62  Form ET, transmittal form for electronic format documents on magnetic tape or diskette to be filed on the EDGAR system.

    This form shall accompany electronic filings submitted on magnetic 
tape or diskette under the EDGAR system.

[57 FR 18218, Apr. 29, 1992]

    Editorial Note: For Federal Register Citations affecting Form ET, 
see the List of CFR Sections Affected, which appears in the Finding Aids 
section of the printed volume and on GPO Access.



Sec. 239.63  Form ID, uniform application for access codes to file on EDGAR.

    (a) Form ID is to be used by registrants, third party filers, or 
their agents for the purpose of requesting assignment of access codes to 
permit filing on EDGAR, as follows:
    (1) Central Index Key (CIK)--uniquely identifies each filer, filing 
agent, and training agent.
    (2) CIK Confirmation Code (CCC)--used in the header of a filing in 
conjunction with the CIK of the filer to ensure that the filing has been 
authorized by the filer.
    (3) Password (PW)--allows a filer, filing agent or training agent to 
log on to the EDGAR system, submit filings, and change its CCC.
    (4) Password Modification Authorization Code (PMAC)--allows a filer, 
filing agent or training agent to change its Password.
    (b) Form ID also may be used or the purpose of requesting a 
reassignment of their CCC, PW and PMAC.

[57 FR 18218, Apr. 29, 1992]

    Editorial Note: For Federal Register citations affecting Form ID, 
see the List of CFR Sections Affected, which appears in the Finding Aids 
section of the printed volume and on GPO Access.



Sec. 239.64  Form SE, form for submission of paper format exhibits by electronic filers.

    This form shall be used by an electronic filer for the submission of 
any paper format document relating to an otherwise electronic filing, as 
provided in Rule 311 of Regulation S-T (Sec. 232.311 of this chapter).

[58 FR 14682, Mar. 18, 1993]

    Editorial Note: For Federal Register citations affecting Form SE, 
see the List of CFR Sections Affected, which appears in the Finding Aids 
section of the printed volume and on GPO Access.

[[Page 695]]



Sec. 239.65  Form TH--Notification of reliance on temporary hardship exemption.

    Form TH shall be filed by any electronic filer who submits to the 
Commission, pursuant to a temporary hardship exemption, a document in 
paper format that otherwise would be required to be submitted 
electronically, as prescribed by Rule 201(a) of Regulation S-T 
(Sec. 232.201(a) of this chapter).

[58 FR 14682, Mar. 18, 1993]

    Editorial Note: For Federal Register citations affecting Form TH, 
see the List of CFR Sections Affected, which appears in the Finding Aids 
section of the printed volume and on GPO Access.



                Subpart B--Forms Pertaining to Exemptions



Sec. 239.90  Form 1-A, offering statement under Regulation A.

    This form shall be used for filing under Regulation A 
(Secs. 230.251-230.263 of this chapter).

[57 FR 36476, Aug. 13, 1992]

    Editorial Note: For Federal Register citations affecting Form 1-A, 
see the List of CFR Sections Affected, which appears in the Finding Aids 
section of the printed volume and on GPO Access.



Sec. 239.91  Form 2-A, report pursuant to Rule 257 of Regulation A.

    This form shall be used for reports of sales and use of proceeds 
pursuant to Rule 257 of Regulation A (Sec. 230.257 of this chapter).

[57 FR 36476, Aug. 13, 1992]

    Editorial Note: For Federal Register citations affecting Form 2-A, 
see the List of CFR Sections Affected, which appears in the Finding Aids 
section of the printed volume and on GPO Access.



Secs. 239.92-239.143  [Reserved]



Sec. 239.144  Form 144, for notice of proposed sale of securities pursuant to Sec. 230.144 of this chapter.

    (a) Except as indicated in paragraph (b) of this section, this form 
shall be filed in triplicate with the Commission at its principal office 
in Washington, DC, by each person who intends to sell securities in 
reliance upon Sec. 230.144 of this chapter and shall be transmitted for 
filing concurrently with either the placing with a broker of an order to 
execute a sale of securities or the execution directly with a market 
maker of a sale of securities.
    (b) This form need not be filed if the amount of securities to be 
sold during any period of 3 months does not exceed 500 shares or other 
units and the aggregate sale price thereof does not exceed $10,000.
    (c) Under sections 2(11), 4(1), 4(2), 4(4) and 19(a) of the 
Securities Act of 1933 (17 CFR 230) and Rule 144 thereunder, the 
Commission is authorized to solicit the information required to be 
supplied by this form by persons desiring to sell unregistered 
securities. Disclosure of the information specified in this form is 
mandatory before processing notices of proposed sale of securities under 
Sec. 230.144 of this chapter. The information will be used for the 
primary purpose of disclosing the proposed sale of unregistered 
securities by persons deemed not to be engaged in the distribution of 
securities. This notice 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 account 
numbers, if furnished, will assist the Commission in identifying persons 
desiring to sell unregistered securities and, therefore, in promptly 
processing notices of proposed sale of securities. Failure to disclose 
the information requested by Form 144 would make an exception under 
Sec. 230.144 of this chapter unavailable and may result in civil or 
criminal action for violations of the Federal securities laws.

[37 FR 4329, Mar. 2, 1972, as amended at 40 FR 55319, Nov. 28, 1975; 43 
FR 5423, Nov. 21, 1978; 62 FR 35340, July 1, 1997]

    Editorial Note: For Federal Register citations affecting Form 144, 
see the List of CFR Sections Affected, which appears in the

[[Page 696]]

Finding Aids section of the printed volume and on GPO Access.



Secs. 239.145-239.199  [Reserved]



Sec. 239.200  Form 1-E, notification under Regulation E.

    This form shall be used for notification pursuant to Rule 604 
(Sec. 230.604 of this chapter) of Regulation E (Secs. 230.601-230.610a 
of this chapter) by a small business investment company or business 
development company described in Rule 602 (Sec. 230.602 of this 
chapter).

(Secs 3(b) and 3(c), Securities Act of 1933 (15 U.S.C. 77c (b) and (c); 
sec. 38, Investment Company Act of 1940 (15 U.S.C. 80a-37))

[49 FR 35347, Sept. 7, 1984]

    Editorial Note: For Federal Register citations Form 1-E, see the 
List of CFR Sections Affected, which appears in the Finding Aids section 
of the printed volume and on GPO Access.



Sec. 239.201  Form 2-E, report of sales pursuant to Rule 609 of Regulation E.

    This form shall be used for report of sales of securities under 
Regulation E (Secs. 230.601--230.610a of this chapter) by a small 
business investment company described in Rule 602 (Sec. 230.602 of this 
chapter) as required by Rule 609 of Regulation E (Sec. 230.609 of this 
chapter).



Secs. 239.202-239.300  [Reserved]



Sec. 239.500  Form D, notice of sales of securities under Regulation D and section 4(6) of the Securities Act of 1933.

    (a) Five copies of a notice on this form shall be filed with the 
Commission no later than 15 days after the first sale of securities in 
an offering under Regulation D (Sec. 230.501--Sec. 230.508 of this 
chapter) or under section 4(6) of the Securities Act of 1933.
    (b) One copy of every notice on Form D shall be manually signed by a 
person duly authorized by the issuer.
    (c) When sales are made under Sec. 230.505, the notice shall contain 
an undertaking by the issuer to furnish to the Commission, upon the 
written request of its staff, the information furnished to non-
accredited investors.
    (d) Amendments to notices filed under paragraph (a) need only report 
the issuer's name and the information required by Part C and any 
material change in the facts from those set forth in Parts A and B.
    (e) A notice on Form D shall be considered filed with the Commission 
under paragraph (a) of this section:
    (1) As of the date on which it is received at the Commission's 
principal office in Washington DC; or
    (2) As of the date on which the notice is mailed by means of United 
States registered or certified mail to the Commission's principal office 
in Washington, DC, if the notice is delivered to such office after the 
date on which it is required to be filed.

[54 FR 11374, Mar. 20, 1989]

    Editorial Note: For Federal Register citations affecting Form D, see 
the List of CFR Sections Affected, which appears in the Finding Aids 
section of the printed volume and on GPO Access.



Sec. 239.701  [Reserved]



Sec. 239.800  Form CB, report of sales of securities in connection with an exchange offer or a rights offering.

    This Form is used to report sales of securities in connection with a 
rights offering in reliance upon Sec. 230.801 of this chapter and to 
report sales of securities in connection with an exchange offer or 
business combination in reliance upon Sec. 230.802 of this chapter.

[64 FR 61403, Nov. 10, 1999]

    Editorial Note: For Federal Register citations affecting Form CB, 
see the List of CFR Sections Affected, which appears in the Finding Aids 
section of the printed volume and on GPO Access.

[[Page 697]]



                              FINDING AIDS




  --------------------------------------------------------------------

  A list of CFR titles, subtitles, chapters, subchapters and parts and 
an alphabetical list of agencies publishing in the CFR are included in 
the CFR Index and Finding Aids volume to the Code of Federal Regulations 
which is published separately and revised annually.

  Material Approved for Incorporation by Reference
  Table of CFR Titles and Chapters
  Alphabetical List of Agencies Appearing in the CFR
  List of CFR Sections Affected

[[Page 699]]

            Material Approved for Incorporation by Reference

                      (Revised as of April 1, 2003)

  The Director of the Federal Register has approved under 5 U.S.C. 
552(a) and 1 CFR Part 51 the incorporation by reference of the following 
publications. This list contains only those incorporations by reference 
effective as of the revision date of this volume. Incorporations by 
reference found within a regulation are effective upon the effective 
date of that regulation. For more information on incorporation by 
reference, see the preliminary pages of this volume.


17 CFR (PARTS 200 TO 239)

SECURITIES AND EXCHANGE COMMISSION
                                                                  17 CFR


Securities and Exchange Commission

  Public Reference Room, Mail Stop 1-2, 450 5th 
  Street, NW., Washington, DC 20549
  Note: The following is also available in paper 
  format by calling Disclosure, Inc. at (800) 638-
  8241; or in electronic format by calling 
  CompuServe, Inc. at (800) 638-8241.
EDGAR Filer Manual: Guide for Electronic Filing                  232.301
  with the U.S. Securities and Exchange 
  Commission, Volume I--Modernized EDGARLink 
  (Release 8.0), September 2001.
EDGAR Filer Manual: Guide for Electronic Filing                  232.301
  with the U.S. Securities and Exchange 
  Commission, Volume II--N-SAR Supplement (Release 
  7.0), July 2001.



[[Page 701]]



                    Table of CFR Titles and Chapters




                      (Revised as of April 1, 2003)

                      Title 1--General Provisions

         I  Administrative Committee of the Federal Register 
                (Parts 1--49)
        II  Office of the Federal Register (Parts 50--299)
        IV  Miscellaneous Agencies (Parts 400--500)

                          Title 2 [Reserved]

                        Title 3--The President

         I  Executive Office of the President (Parts 100--199)

                           Title 4--Accounts

         I  General Accounting Office (Parts 1--99)

                   Title 5--Administrative Personnel

         I  Office of Personnel Management (Parts 1--1199)
        II  Merit Systems Protection Board (Parts 1200--1299)
       III  Office of Management and Budget (Parts 1300--1399)
         V  The International Organizations Employees Loyalty 
                Board (Parts 1500--1599)
        VI  Federal Retirement Thrift Investment Board (Parts 
                1600--1699)
      VIII  Office of Special Counsel (Parts 1800--1899)
        IX  Appalachian Regional Commission (Parts 1900--1999)
        XI  Armed Forces Retirement Home (Part 2100)
       XIV  Federal Labor Relations Authority, General Counsel of 
                the Federal Labor Relations Authority and Federal 
                Service Impasses Panel (Parts 2400--2499)
        XV  Office of Administration, Executive Office of the 
                President (Parts 2500--2599)
       XVI  Office of Government Ethics (Parts 2600--2699)
       XXI  Department of the Treasury (Parts 3100--3199)
      XXII  Federal Deposit Insurance Corporation (Part 3201)
     XXIII  Department of Energy (Part 3301)
      XXIV  Federal Energy Regulatory Commission (Part 3401)
       XXV  Department of the Interior (Part 3501)
      XXVI  Department of Defense (Part 3601)

[[Page 702]]

    XXVIII  Department of Justice (Part 3801)
      XXIX  Federal Communications Commission (Parts 3900--3999)
       XXX  Farm Credit System Insurance Corporation (Parts 4000--
                4099)
      XXXI  Farm Credit Administration (Parts 4100--4199)
    XXXIII  Overseas Private Investment Corporation (Part 4301)
      XXXV  Office of Personnel Management (Part 4501)
        XL  Interstate Commerce Commission (Part 5001)
       XLI  Commodity Futures Trading Commission (Part 5101)
      XLII  Department of Labor (Part 5201)
     XLIII  National Science Foundation (Part 5301)
       XLV  Department of Health and Human Services (Part 5501)
      XLVI  Postal Rate Commission (Part 5601)
     XLVII  Federal Trade Commission (Part 5701)
    XLVIII  Nuclear Regulatory Commission (Part 5801)
         L  Department of Transportation (Part 6001)
       LII  Export-Import Bank of the United States (Part 6201)
      LIII  Department of Education (Parts 6300--6399)
       LIV  Environmental Protection Agency (Part 6401)
      LVII  General Services Administration (Part 6701)
     LVIII  Board of Governors of the Federal Reserve System (Part 
                6801)
       LIX  National Aeronautics and Space Administration (Part 
                6901)
        LX  United States Postal Service (Part 7001)
       LXI  National Labor Relations Board (Part 7101)
      LXII  Equal Employment Opportunity Commission (Part 7201)
     LXIII  Inter-American Foundation (Part 7301)
       LXV  Department of Housing and Urban Development (Part 
                7501)
      LXVI  National Archives and Records Administration (Part 
                7601)
      LXIX  Tennessee Valley Authority (Part 7901)
      LXXI  Consumer Product Safety Commission (Part 8101)
    LXXIII  Department of Agriculture (Part 8301)
     LXXIV  Federal Mine Safety and Health Review Commission (Part 
                8401)
     LXXVI  Federal Retirement Thrift Investment Board (Part 8601)
    LXXVII  Office of Management and Budget (Part 8701)

                      Title 6--Homeland Security

         I  Department of Homeland Security, Office of the 
                Secretary (Parts 0--100)

                         Title 7--Agriculture

            Subtitle A--Office of the Secretary of Agriculture 
                (Parts 0--26)
            Subtitle B--Regulations of the Department of 
                Agriculture
         I  Agricultural Marketing Service (Standards, 
                Inspections, Marketing Practices), Department of 
                Agriculture (Parts 27--209)

[[Page 703]]

        II  Food and Nutrition Service, Department of Agriculture 
                (Parts 210--299)
       III  Animal and Plant Health Inspection Service, Department 
                of Agriculture (Parts 300--399)
        IV  Federal Crop Insurance Corporation, Department of 
                Agriculture (Parts 400--499)
         V  Agricultural Research Service, Department of 
                Agriculture (Parts 500--599)
        VI  Natural Resources Conservation Service, Department of 
                Agriculture (Parts 600--699)
       VII  Farm Service Agency, Department of Agriculture (Parts 
                700--799)
      VIII  Grain Inspection, Packers and Stockyards 
                Administration (Federal Grain Inspection Service), 
                Department of Agriculture (Parts 800--899)
        IX  Agricultural Marketing Service (Marketing Agreements 
                and Orders; Fruits, Vegetables, Nuts), Department 
                of Agriculture (Parts 900--999)
         X  Agricultural Marketing Service (Marketing Agreements 
                and Orders; Milk), Department of Agriculture 
                (Parts 1000--1199)
        XI  Agricultural Marketing Service (Marketing Agreements 
                and Orders; Miscellaneous Commodities), Department 
                of Agriculture (Parts 1200--1299)
       XIV  Commodity Credit Corporation, Department of 
                Agriculture (Parts 1400--1499)
        XV  Foreign Agricultural Service, Department of 
                Agriculture (Parts 1500--1599)
       XVI  Rural Telephone Bank, Department of Agriculture (Parts 
                1600--1699)
      XVII  Rural Utilities Service, Department of Agriculture 
                (Parts 1700--1799)
     XVIII  Rural Housing Service, Rural Business-Cooperative 
                Service, Rural Utilities Service, and Farm Service 
                Agency, Department of Agriculture (Parts 1800--
                2099)
        XX  Local Television Loan Guarantee Board (Parts 2200--
                2299)
      XXVI  Office of Inspector General, Department of Agriculture 
                (Parts 2600--2699)
     XXVII  Office of Information Resources Management, Department 
                of Agriculture (Parts 2700--2799)
    XXVIII  Office of Operations, Department of Agriculture (Parts 
                2800--2899)
      XXIX  Office of Energy, Department of Agriculture (Parts 
                2900--2999)
       XXX  Office of the Chief Financial Officer, Department of 
                Agriculture (Parts 3000--3099)
      XXXI  Office of Environmental Quality, Department of 
                Agriculture (Parts 3100--3199)
     XXXII  Office of Procurement and Property Management, 
                Department of Agriculture (Parts 3200--3299)
    XXXIII  Office of Transportation, Department of Agriculture 
                (Parts 3300--3399)

[[Page 704]]

     XXXIV  Cooperative State Research, Education, and Extension 
                Service, Department of Agriculture (Parts 3400--
                3499)
      XXXV  Rural Housing Service, Department of Agriculture 
                (Parts 3500--3599)
     XXXVI  National Agricultural Statistics Service, Department 
                of Agriculture (Parts 3600--3699)
    XXXVII  Economic Research Service, Department of Agriculture 
                (Parts 3700--3799)
   XXXVIII  World Agricultural Outlook Board, Department of 
                Agriculture (Parts 3800--3899)
       XLI  [Reserved]
      XLII  Rural Business-Cooperative Service and Rural Utilities 
                Service, Department of Agriculture (Parts 4200--
                4299)

                    Title 8--Aliens and Nationality

         I  Immigration and Naturalization Service, Department of 
                Homeland Security (Parts 1--599)
         V  Executive Office for Immigration Review, Department of 
                Justice (Parts 1000--1400)

                 Title 9--Animals and Animal Products

         I  Animal and Plant Health Inspection Service, Department 
                of Agriculture (Parts 1--199)
        II  Grain Inspection, Packers and Stockyards 
                Administration (Packers and Stockyards Programs), 
                Department of Agriculture (Parts 200--299)
       III  Food Safety and Inspection Service, Department of 
                Agriculture (Parts 300--599)

                           Title 10--Energy

         I  Nuclear Regulatory Commission (Parts 0--199)
        II  Department of Energy (Parts 200--699)
       III  Department of Energy (Parts 700--999)
         X  Department of Energy (General Provisions) (Parts 1000-
                -1099)
      XVII  Defense Nuclear Facilities Safety Board (Parts 1700--
                1799)
     XVIII  Northeast Interstate Low-Level Radioactive Waste 
                Commission (Part 1800)

                      Title 11--Federal Elections

         I  Federal Election Commission (Parts 1--9099)

                      Title 12--Banks and Banking

         I  Comptroller of the Currency, Department of the 
                Treasury (Parts 1--199)

[[Page 705]]

        II  Federal Reserve System (Parts 200--299)
       III  Federal Deposit Insurance Corporation (Parts 300--399)
        IV  Export-Import Bank of the United States (Parts 400--
                499)
         V  Office of Thrift Supervision, Department of the 
                Treasury (Parts 500--599)
        VI  Farm Credit Administration (Parts 600--699)
       VII  National Credit Union Administration (Parts 700--799)
      VIII  Federal Financing Bank (Parts 800--899)
        IX  Federal Housing Finance Board (Parts 900--999)
        XI  Federal Financial Institutions Examination Council 
                (Parts 1100--1199)
       XIV  Farm Credit System Insurance Corporation (Parts 1400--
                1499)
        XV  Department of the Treasury (Parts 1500--1599)
      XVII  Office of Federal Housing Enterprise Oversight, 
                Department of Housing and Urban Development (Parts 
                1700--1799)
     XVIII  Community Development Financial Institutions Fund, 
                Department of the Treasury (Parts 1800--1899)

               Title 13--Business Credit and Assistance

         I  Small Business Administration (Parts 1--199)
       III  Economic Development Administration, Department of 
                Commerce (Parts 300--399)
        IV  Emergency Steel Guarantee Loan Board (Parts 400--499)
         V  Emergency Oil and Gas Guaranteed Loan Board (Parts 
                500--599)

                    Title 14--Aeronautics and Space

         I  Federal Aviation Administration, Department of 
                Transportation (Parts 1--199)
        II  Office of the Secretary, Department of Transportation 
                (Aviation Proceedings) (Parts 200--399)
       III  Commercial Space Transportation, Federal Aviation 
                Administration, Department of Transportation 
                (Parts 400--499)
         V  National Aeronautics and Space Administration (Parts 
                1200--1299)
        VI  Air Transportation System Stabilization (Parts 1300--
                1399)

                 Title 15--Commerce and Foreign Trade

            Subtitle A--Office of the Secretary of Commerce (Parts 
                0--29)
            Subtitle B--Regulations Relating to Commerce and 
                Foreign Trade
         I  Bureau of the Census, Department of Commerce (Parts 
                30--199)
        II  National Institute of Standards and Technology, 
                Department of Commerce (Parts 200--299)

[[Page 706]]

       III  International Trade Administration, Department of 
                Commerce (Parts 300--399)
        IV  Foreign-Trade Zones Board, Department of Commerce 
                (Parts 400--499)
       VII  Bureau of Industry and Security, Department of 
                Commerce (Parts 700--799)
      VIII  Bureau of Economic Analysis, Department of Commerce 
                (Parts 800--899)
        IX  National Oceanic and Atmospheric Administration, 
                Department of Commerce (Parts 900--999)
        XI  Technology Administration, Department of Commerce 
                (Parts 1100--1199)
      XIII  East-West Foreign Trade Board (Parts 1300--1399)
       XIV  Minority Business Development Agency (Parts 1400--
                1499)
            Subtitle C--Regulations Relating to Foreign Trade 
                Agreements
        XX  Office of the United States Trade Representative 
                (Parts 2000--2099)
            Subtitle D--Regulations Relating to Telecommunications 
                and Information
     XXIII  National Telecommunications and Information 
                Administration, Department of Commerce (Parts 
                2300--2399)

                    Title 16--Commercial Practices

         I  Federal Trade Commission (Parts 0--999)
        II  Consumer Product Safety Commission (Parts 1000--1799)

             Title 17--Commodity and Securities Exchanges

         I  Commodity Futures Trading Commission (Parts 1--199)
        II  Securities and Exchange Commission (Parts 200--399)
        IV  Department of the Treasury (Parts 400--499)

          Title 18--Conservation of Power and Water Resources

         I  Federal Energy Regulatory Commission, Department of 
                Energy (Parts 1--399)
       III  Delaware River Basin Commission (Parts 400--499)
        VI  Water Resources Council (Parts 700--799)
      VIII  Susquehanna River Basin Commission (Parts 800--899)
      XIII  Tennessee Valley Authority (Parts 1300--1399)

                       Title 19--Customs Duties

         I  United States Customs Service, Department of the 
                Treasury (Parts 1--199)
        II  United States International Trade Commission (Parts 
                200--299)

[[Page 707]]

       III  International Trade Administration, Department of 
                Commerce (Parts 300--399)

                     Title 20--Employees' Benefits

         I  Office of Workers' Compensation Programs, Department 
                of Labor (Parts 1--199)
        II  Railroad Retirement Board (Parts 200--399)
       III  Social Security Administration (Parts 400--499)
        IV  Employees' Compensation Appeals Board, Department of 
                Labor (Parts 500--599)
         V  Employment and Training Administration, Department of 
                Labor (Parts 600--699)
        VI  Employment Standards Administration, Department of 
                Labor (Parts 700--799)
       VII  Benefits Review Board, Department of Labor (Parts 800-
                -899)
      VIII  Joint Board for the Enrollment of Actuaries (Parts 
                900--999)
        IX  Office of the Assistant Secretary for Veterans' 
                Employment and Training, Department of Labor 
                (Parts 1000--1099)

                       Title 21--Food and Drugs

         I  Food and Drug Administration, Department of Health and 
                Human Services (Parts 1--1299)
        II  Drug Enforcement Administration, Department of Justice 
                (Parts 1300--1399)
       III  Office of National Drug Control Policy (Parts 1400--
                1499)

                      Title 22--Foreign Relations

         I  Department of State (Parts 1--199)
        II  Agency for International Development (Parts 200--299)
       III  Peace Corps (Parts 300--399)
        IV  International Joint Commission, United States and 
                Canada (Parts 400--499)
         V  Broadcasting Board of Governors (Parts 500--599)
       VII  Overseas Private Investment Corporation (Parts 700--
                799)
        IX  Foreign Service Grievance Board (Parts 900--999)
         X  Inter-American Foundation (Parts 1000--1099)
        XI  International Boundary and Water Commission, United 
                States and Mexico, United States Section (Parts 
                1100--1199)
       XII  United States International Development Cooperation 
                Agency (Parts 1200--1299)
       XIV  Foreign Service Labor Relations Board; Federal Labor 
                Relations Authority; General Counsel of the 
                Federal Labor Relations Authority; and the Foreign 
                Service Impasse Disputes Panel (Parts 1400--1499)
        XV  African Development Foundation (Parts 1500--1599)

[[Page 708]]

       XVI  Japan-United States Friendship Commission (Parts 1600-
                -1699)
      XVII  United States Institute of Peace (Parts 1700--1799)

                          Title 23--Highways

         I  Federal Highway Administration, Department of 
                Transportation (Parts 1--999)
        II  National Highway Traffic Safety Administration and 
                Federal Highway Administration, Department of 
                Transportation (Parts 1200--1299)
       III  National Highway Traffic Safety Administration, 
                Department of Transportation (Parts 1300--1399)

                Title 24--Housing and Urban Development

            Subtitle A--Office of the Secretary, Department of 
                Housing and Urban Development (Parts 0--99)
            Subtitle B--Regulations Relating to Housing and Urban 
                Development
         I  Office of Assistant Secretary for Equal Opportunity, 
                Department of Housing and Urban Development (Parts 
                100--199)
        II  Office of Assistant Secretary for Housing-Federal 
                Housing Commissioner, Department of Housing and 
                Urban Development (Parts 200--299)
       III  Government National Mortgage Association, Department 
                of Housing and Urban Development (Parts 300--399)
        IV  Office of Housing and Office of Multifamily Housing 
                Assistance Restructuring, Department of Housing 
                and Urban Development (Parts 400--499)
         V  Office of Assistant Secretary for Community Planning 
                and Development, Department of Housing and Urban 
                Development (Parts 500--599)
        VI  Office of Assistant Secretary for Community Planning 
                and Development, Department of Housing and Urban 
                Development (Parts 600--699) [Reserved]
       VII  Office of the Secretary, Department of Housing and 
                Urban Development (Housing Assistance Programs and 
                Public and Indian Housing Programs) (Parts 700--
                799)
      VIII  Office of the Assistant Secretary for Housing--Federal 
                Housing Commissioner, Department of Housing and 
                Urban Development (Section 8 Housing Assistance 
                Programs, Section 202 Direct Loan Program, Section 
                202 Supportive Housing for the Elderly Program and 
                Section 811 Supportive Housing for Persons With 
                Disabilities Program) (Parts 800--899)
        IX  Office of Assistant Secretary for Public and Indian 
                Housing, Department of Housing and Urban 
                Development (Parts 900--1699)
         X  Office of Assistant Secretary for Housing--Federal 
                Housing Commissioner, Department of Housing and 
                Urban Development (Interstate Land Sales 
                Registration Program) (Parts 1700--1799)

[[Page 709]]

       XII  Office of Inspector General, Department of Housing and 
                Urban Development (Parts 2000--2099)
        XX  Office of Assistant Secretary for Housing--Federal 
                Housing Commissioner, Department of Housing and 
                Urban Development (Parts 3200--3899)
       XXV  Neighborhood Reinvestment Corporation (Parts 4100--
                4199)

                           Title 25--Indians

         I  Bureau of Indian Affairs, Department of the Interior 
                (Parts 1--299)
        II  Indian Arts and Crafts Board, Department of the 
                Interior (Parts 300--399)
       III  National Indian Gaming Commission, Department of the 
                Interior (Parts 500--599)
        IV  Office of Navajo and Hopi Indian Relocation (Parts 
                700--799)
         V  Bureau of Indian Affairs, Department of the Interior, 
                and Indian Health Service, Department of Health 
                and Human Services (Part 900)
        VI  Office of the Assistant Secretary-Indian Affairs, 
                Department of the Interior (Parts 1000--1199)
       VII  Office of the Special Trustee for American Indians, 
                Department of the Interior (Part 1200)

                      Title 26--Internal Revenue

         I  Internal Revenue Service, Department of the Treasury 
                (Parts 1--899)

           Title 27--Alcohol, Tobacco Products and Firearms

         I  Alcohol and Tobacco Tax and Trade Bureau, Department 
                of the Treasury (Parts 1--299)
        II  Bureau of Alcohol, Tobacco, Firearms, and Explosives, 
                Department of Justice (Parts 400--699)

                   Title 28--Judicial Administration

         I  Department of Justice (Parts 0--199)
       III  Federal Prison Industries, Inc., Department of Justice 
                (Parts 300--399)
         V  Bureau of Prisons, Department of Justice (Parts 500--
                599)
        VI  Offices of Independent Counsel, Department of Justice 
                (Parts 600--699)
       VII  Office of Independent Counsel (Parts 700--799)
      VIII  Court Services and Offender Supervision Agency for the 
                District of Columbia (Parts 800--899)
        IX  National Crime Prevention and Privacy Compact Council 
                (Parts 900--999)

[[Page 710]]

        XI  Department of Justice and Department of State (Parts 
                1100--1199)

                            Title 29--Labor

            Subtitle A--Office of the Secretary of Labor (Parts 0-
                -99)
            Subtitle B--Regulations Relating to Labor
         I  National Labor Relations Board (Parts 100--199)
        II  Office of Labor-Management Standards, Department of 
                Labor (Parts 200--299)
       III  National Railroad Adjustment Board (Parts 300--399)
        IV  Office of Labor-Management Standards, Department of 
                Labor (Parts 400--499)
         V  Wage and Hour Division, Department of Labor (Parts 
                500--899)
        IX  Construction Industry Collective Bargaining Commission 
                (Parts 900--999)
         X  National Mediation Board (Parts 1200--1299)
       XII  Federal Mediation and Conciliation Service (Parts 
                1400--1499)
       XIV  Equal Employment Opportunity Commission (Parts 1600--
                1699)
      XVII  Occupational Safety and Health Administration, 
                Department of Labor (Parts 1900--1999)
        XX  Occupational Safety and Health Review Commission 
                (Parts 2200--2499)
       XXV  Pension and Welfare Benefits Administration, 
                Department of Labor (Parts 2500--2599)
     XXVII  Federal Mine Safety and Health Review Commission 
                (Parts 2700--2799)
        XL  Pension Benefit Guaranty Corporation (Parts 4000--
                4999)

                      Title 30--Mineral Resources

         I  Mine Safety and Health Administration, Department of 
                Labor (Parts 1--199)
        II  Minerals Management Service, Department of the 
                Interior (Parts 200--299)
       III  Board of Surface Mining and Reclamation Appeals, 
                Department of the Interior (Parts 300--399)
        IV  Geological Survey, Department of the Interior (Parts 
                400--499)
       VII  Office of Surface Mining Reclamation and Enforcement, 
                Department of the Interior (Parts 700--999)

                 Title 31--Money and Finance: Treasury

            Subtitle A--Office of the Secretary of the Treasury 
                (Parts 0--50)
            Subtitle B--Regulations Relating to Money and Finance
         I  Monetary Offices, Department of the Treasury (Parts 
                51--199)
        II  Fiscal Service, Department of the Treasury (Parts 200-
                -399)

[[Page 711]]

        IV  Secret Service, Department of the Treasury (Parts 400-
                -499)
         V  Office of Foreign Assets Control, Department of the 
                Treasury (Parts 500--599)
        VI  Bureau of Engraving and Printing, Department of the 
                Treasury (Parts 600--699)
       VII  Federal Law Enforcement Training Center, Department of 
                the Treasury (Parts 700--799)
      VIII  Office of International Investment, Department of the 
                Treasury (Parts 800--899)
        IX  Federal Claims Collection Standards (Department of the 
                Treasury--Department of Justice) (Parts 900--999)

                      Title 32--National Defense

            Subtitle A--Department of Defense
         I  Office of the Secretary of Defense (Parts 1--399)
         V  Department of the Army (Parts 400--699)
        VI  Department of the Navy (Parts 700--799)
       VII  Department of the Air Force (Parts 800--1099)
            Subtitle B--Other Regulations Relating to National 
                Defense
       XII  Defense Logistics Agency (Parts 1200--1299)
       XVI  Selective Service System (Parts 1600--1699)
     XVIII  National Counterintelligence Center (Parts 1800--1899)
       XIX  Central Intelligence Agency (Parts 1900--1999)
        XX  Information Security Oversight Office, National 
                Archives and Records Administration (Parts 2000--
                2099)
       XXI  National Security Council (Parts 2100--2199)
      XXIV  Office of Science and Technology Policy (Parts 2400--
                2499)
     XXVII  Office for Micronesian Status Negotiations (Parts 
                2700--2799)
    XXVIII  Office of the Vice President of the United States 
                (Parts 2800--2899)

               Title 33--Navigation and Navigable Waters

         I  Coast Guard, Department of Transportation (Parts 1--
                199)
        II  Corps of Engineers, Department of the Army (Parts 200-
                -399)
        IV  Saint Lawrence Seaway Development Corporation, 
                Department of Transportation (Parts 400--499)

                          Title 34--Education

            Subtitle A--Office of the Secretary, Department of 
                Education (Parts 1--99)
            Subtitle B--Regulations of the Offices of the 
                Department of Education
         I  Office for Civil Rights, Department of Education 
                (Parts 100--199)

[[Page 712]]

        II  Office of Elementary and Secondary Education, 
                Department of Education (Parts 200--299)
       III  Office of Special Education and Rehabilitative 
                Services, Department of Education (Parts 300--399)
        IV  Office of Vocational and Adult Education, Department 
                of Education (Parts 400--499)
         V  Office of Bilingual Education and Minority Languages 
                Affairs, Department of Education (Parts 500--599)
        VI  Office of Postsecondary Education, Department of 
                Education (Parts 600--699)
        XI  National Institute for Literacy (Parts 1100--1199)
            Subtitle C--Regulations Relating to Education
       XII  National Council on Disability (Parts 1200--1299)

                        Title 35--Panama Canal

         I  Panama Canal Regulations (Parts 1--299)

             Title 36--Parks, Forests, and Public Property

         I  National Park Service, Department of the Interior 
                (Parts 1--199)
        II  Forest Service, Department of Agriculture (Parts 200--
                299)
       III  Corps of Engineers, Department of the Army (Parts 300-
                -399)
        IV  American Battle Monuments Commission (Parts 400--499)
         V  Smithsonian Institution (Parts 500--599)
       VII  Library of Congress (Parts 700--799)
      VIII  Advisory Council on Historic Preservation (Parts 800--
                899)
        IX  Pennsylvania Avenue Development Corporation (Parts 
                900--999)
         X  Presidio Trust (Parts 1000--1099)
        XI  Architectural and Transportation Barriers Compliance 
                Board (Parts 1100--1199)
       XII  National Archives and Records Administration (Parts 
                1200--1299)
        XV  Oklahoma City National Memorial Trust (Part 1501)
       XVI  Morris K. Udall Scholarship and Excellence in National 
                Environmental Policy Foundation (Parts 1600--1699)

             Title 37--Patents, Trademarks, and Copyrights

         I  United States Patent and Trademark Office, Department 
                of Commerce (Parts 1--199)
        II  Copyright Office, Library of Congress (Parts 200--299)
        IV  Assistant Secretary for Technology Policy, Department 
                of Commerce (Parts 400--499)
         V  Under Secretary for Technology, Department of Commerce 
                (Parts 500--599)

[[Page 713]]

           Title 38--Pensions, Bonuses, and Veterans' Relief

         I  Department of Veterans Affairs (Parts 0--99)

                       Title 39--Postal Service

         I  United States Postal Service (Parts 1--999)
       III  Postal Rate Commission (Parts 3000--3099)

                  Title 40--Protection of Environment

         I  Environmental Protection Agency (Parts 1--799)
        IV  Environmental Protection Agency and Department of 
                Justice (Parts 1400--1499)
         V  Council on Environmental Quality (Parts 1500--1599)
        VI  Chemical Safety and Hazard Investigation Board (Parts 
                1600--1699)
       VII  Environmental Protection Agency and Department of 
                Defense; Uniform National Discharge Standards for 
                Vessels of the Armed Forces (Parts 1700--1799)

          Title 41--Public Contracts and Property Management

            Subtitle B--Other Provisions Relating to Public 
                Contracts
        50  Public Contracts, Department of Labor (Parts 50-1--50-
                999)
        51  Committee for Purchase From People Who Are Blind or 
                Severely Disabled (Parts 51-1--51-99)
        60  Office of Federal Contract Compliance Programs, Equal 
                Employment Opportunity, Department of Labor (Parts 
                60-1--60-999)
        61  Office of the Assistant Secretary for Veterans' 
                Employment and Training Service, Department of 
                Labor (Parts 61-1--61-999)
            Subtitle C--Federal Property Management Regulations 
                System
       101  Federal Property Management Regulations (Parts 101-1--
                101-99)
       102  Federal Management Regulation (Parts 102-1--102-299)
       105  General Services Administration (Parts 105-1--105-999)
       109  Department of Energy Property Management Regulations 
                (Parts 109-1--109-99)
       114  Department of the Interior (Parts 114-1--114-99)
       115  Environmental Protection Agency (Parts 115-1--115-99)
       128  Department of Justice (Parts 128-1--128-99)
            Subtitle D--Other Provisions Relating to Property 
                Management [Reserved]
            Subtitle E--Federal Information Resources Management 
                Regulations System
       201  Federal Information Resources Management Regulation 
                (Parts 201-1--201-99) [Reserved]
            Subtitle F--Federal Travel Regulation System
       300  General (Parts 300-1--300-99)
       301  Temporary Duty (TDY) Travel Allowances (Parts 301-1--
                301-99)

[[Page 714]]

       302  Relocation Allowances (Parts 302-1--302-99)
       303  Payment of Expenses Connected with the Death of 
                Certain Employees (Part 303-70)
       304  Payment of Travel Expenses from a Non-Federal Source 
                (Parts 304-1--304-99)

                        Title 42--Public Health

         I  Public Health Service, Department of Health and Human 
                Services (Parts 1--199)
        IV  Centers for Medicare & Medicaid Services, Department 
                of Health and Human Services (Parts 400--499)
         V  Office of Inspector General-Health Care, Department of 
                Health and Human Services (Parts 1000--1999)

                   Title 43--Public Lands: Interior

            Subtitle A--Office of the Secretary of the Interior 
                (Parts 1--199)
            Subtitle B--Regulations Relating to Public Lands
         I  Bureau of Reclamation, Department of the Interior 
                (Parts 200--499)
        II  Bureau of Land Management, Department of the Interior 
                (Parts 1000--9999)
       III  Utah Reclamation Mitigation and Conservation 
                Commission (Parts 10000--10005)

             Title 44--Emergency Management and Assistance

         I  Federal Emergency Management Agency (Parts 0--399)
        IV  Department of Commerce and Department of 
                Transportation (Parts 400--499)

                       Title 45--Public Welfare

            Subtitle A--Department of Health and Human Services 
                (Parts 1--199)
            Subtitle B--Regulations Relating to Public Welfare
        II  Office of Family Assistance (Assistance Programs), 
                Administration for Children and Families, 
                Department of Health and Human Services (Parts 
                200--299)
       III  Office of Child Support Enforcement (Child Support 
                Enforcement Program), Administration for Children 
                and Families, Department of Health and Human 
                Services (Parts 300--399)
        IV  Office of Refugee Resettlement, Administration for 
                Children and Families Department of Health and 
                Human Services (Parts 400--499)
         V  Foreign Claims Settlement Commission of the United 
                States, Department of Justice (Parts 500--599)
        VI  National Science Foundation (Parts 600--699)

[[Page 715]]

       VII  Commission on Civil Rights (Parts 700--799)
      VIII  Office of Personnel Management (Parts 800--899)
         X  Office of Community Services, Administration for 
                Children and Families, Department of Health and 
                Human Services (Parts 1000--1099)
        XI  National Foundation on the Arts and the Humanities 
                (Parts 1100--1199)
       XII  Corporation for National and Community Service (Parts 
                1200--1299)
      XIII  Office of Human Development Services, Department of 
                Health and Human Services (Parts 1300--1399)
       XVI  Legal Services Corporation (Parts 1600--1699)
      XVII  National Commission on Libraries and Information 
                Science (Parts 1700--1799)
     XVIII  Harry S. Truman Scholarship Foundation (Parts 1800--
                1899)
       XXI  Commission on Fine Arts (Parts 2100--2199)
     XXIII  Arctic Research Commission (Part 2301)
      XXIV  James Madison Memorial Fellowship Foundation (Parts 
                2400--2499)
       XXV  Corporation for National and Community Service (Parts 
                2500--2599)

                          Title 46--Shipping

         I  Coast Guard, Department of Transportation (Parts 1--
                199)
        II  Maritime Administration, Department of Transportation 
                (Parts 200--399)
       III  Coast Guard (Great Lakes Pilotage), Department of 
                Transportation (Parts 400--499)
        IV  Federal Maritime Commission (Parts 500--599)

                      Title 47--Telecommunication

         I  Federal Communications Commission (Parts 0--199)
        II  Office of Science and Technology Policy and National 
                Security Council (Parts 200--299)
       III  National Telecommunications and Information 
                Administration, Department of Commerce (Parts 300-
                -399)

           Title 48--Federal Acquisition Regulations System

         1  Federal Acquisition Regulation (Parts 1--99)
         2  Department of Defense (Parts 200--299)
         3  Department of Health and Human Services (Parts 300--
                399)
         4  Department of Agriculture (Parts 400--499)
         5  General Services Administration (Parts 500--599)
         6  Department of State (Parts 600--699)

[[Page 716]]

         7  United States Agency for International Development 
                (Parts 700--799)
         8  Department of Veterans Affairs (Parts 800--899)
         9  Department of Energy (Parts 900--999)
        10  Department of the Treasury (Parts 1000--1099)
        12  Department of Transportation (Parts 1200--1299)
        13  Department of Commerce (Parts 1300--1399)
        14  Department of the Interior (Parts 1400--1499)
        15  Environmental Protection Agency (Parts 1500--1599)
        16  Office of Personnel Management Federal Employees 
                Health Benefits Acquisition Regulation (Parts 
                1600--1699)
        17  Office of Personnel Management (Parts 1700--1799)
        18  National Aeronautics and Space Administration (Parts 
                1800--1899)
        19  Broadcasting Board of Governors (Parts 1900--1999)
        20  Nuclear Regulatory Commission (Parts 2000--2099)
        21  Office of Personnel Management, Federal Employees 
                Group Life Insurance Federal Acquisition 
                Regulation (Parts 2100--2199)
        23  Social Security Administration (Parts 2300--2399)
        24  Department of Housing and Urban Development (Parts 
                2400--2499)
        25  National Science Foundation (Parts 2500--2599)
        28  Department of Justice (Parts 2800--2899)
        29  Department of Labor (Parts 2900--2999)
        34  Department of Education Acquisition Regulation (Parts 
                3400--3499)
        35  Panama Canal Commission (Parts 3500--3599)
        44  Federal Emergency Management Agency (Parts 4400--4499)
        51  Department of the Army Acquisition Regulations (Parts 
                5100--5199)
        52  Department of the Navy Acquisition Regulations (Parts 
                5200--5299)
        53  Department of the Air Force Federal Acquisition 
                Regulation Supplement (Parts 5300--5399)
        54  Defense Logistics Agency, Department of Defense (Parts 
                5400--5499)
        57  African Development Foundation (Parts 5700--5799)
        61  General Services Administration Board of Contract 
                Appeals (Parts 6100--6199)
        63  Department of Transportation Board of Contract Appeals 
                (Parts 6300--6399)
        99  Cost Accounting Standards Board, Office of Federal 
                Procurement Policy, Office of Management and 
                Budget (Parts 9900--9999)

[[Page 717]]

                       Title 49--Transportation

            Subtitle A--Office of the Secretary of Transportation 
                (Parts 1--99)
            Subtitle B--Other Regulations Relating to 
                Transportation
         I  Research and Special Programs Administration, 
                Department of Transportation (Parts 100--199)
        II  Federal Railroad Administration, Department of 
                Transportation (Parts 200--299)
       III  Federal Motor Carrier Safety Administration, 
                Department of Transportation (Parts 300--399)
        IV  Coast Guard, Department of Transportation (Parts 400--
                499)
         V  National Highway Traffic Safety Administration, 
                Department of Transportation (Parts 500--599)
        VI  Federal Transit Administration, Department of 
                Transportation (Parts 600--699)
       VII  National Railroad Passenger Corporation (AMTRAK) 
                (Parts 700--799)
      VIII  National Transportation Safety Board (Parts 800--999)
         X  Surface Transportation Board, Department of 
                Transportation (Parts 1000--1399)
        XI  Bureau of Transportation Statistics, Department of 
                Transportation (Parts 1400--1499)
       XII  Transportation Security Administration, Department of 
                Transportation (Parts 1500--1599)

                   Title 50--Wildlife and Fisheries

         I  United States Fish and Wildlife Service, Department of 
                the Interior (Parts 1--199)
        II  National Marine Fisheries Service, National Oceanic 
                and Atmospheric Administration, Department of 
                Commerce (Parts 200--299)
       III  International Fishing and Related Activities (Parts 
                300--399)
        IV  Joint Regulations (United States Fish and Wildlife 
                Service, Department of the Interior and National 
                Marine Fisheries Service, National Oceanic and 
                Atmospheric Administration, Department of 
                Commerce); Endangered Species Committee 
                Regulations (Parts 400--499)
         V  Marine Mammal Commission (Parts 500--599)
        VI  Fishery Conservation and Management, National Oceanic 
                and Atmospheric Administration, Department of 
                Commerce (Parts 600--699)

                      CFR Index and Finding Aids

            Subject/Agency Index
            List of Agency Prepared Indexes
            Parallel Tables of Statutory Authorities and Rules
            List of CFR Titles, Chapters, Subchapters, and Parts
            Alphabetical List of Agencies Appearing in the CFR



[[Page 719]]





           Alphabetical List of Agencies Appearing in the CFR




                      (Revised as of April 1, 2003)

                                                  CFR Title, Subtitle or 
                     Agency                               Chapter

Administrative Committee of the Federal Register  1, I
Advanced Research Projects Agency                 32, I
Advisory Council on Historic Preservation         36, VIII
African Development Foundation                    22, XV
  Federal Acquisition Regulation                  48, 57
Agency for International Development, United      22, II
     States
  Federal Acquisition Regulation                  48, 7
Agricultural Marketing Service                    7, I, IX, X, XI
Agricultural Research Service                     7, V
Agriculture Department                            5, LXXIII
  Agricultural Marketing Service                  7, I, IX, X, XI
  Agricultural Research Service                   7, V
  Animal and Plant Health Inspection Service      7, III; 9, I
  Chief Financial Officer, Office of              7, XXX
  Commodity Credit Corporation                    7, XIV
  Cooperative State Research, Education, and      7, XXXIV
       Extension Service
  Economic Research Service                       7, XXXVII
  Energy, Office of                               7, XXIX
  Environmental Quality, Office of                7, XXXI
  Farm Service Agency                             7, VII, XVIII
  Federal Acquisition Regulation                  48, 4
  Federal Crop Insurance Corporation              7, IV
  Food and Nutrition Service                      7, II
  Food Safety and Inspection Service              9, III
  Foreign Agricultural Service                    7, XV
  Forest Service                                  36, II
  Grain Inspection, Packers and Stockyards        7, VIII; 9, II
       Administration
  Information Resources Management, Office of     7, XXVII
  Inspector General, Office of                    7, XXVI
  National Agricultural Library                   7, XLI
  National Agricultural Statistics Service        7, XXXVI
  Natural Resources Conservation Service          7, VI
  Operations, Office of                           7, XXVIII
  Procurement and Property Management, Office of  7, XXXII
  Rural Business-Cooperative Service              7, XVIII, XLII
  Rural Development Administration                7, XLII
  Rural Housing Service                           7, XVIII, XXXV
  Rural Telephone Bank                            7, XVI
  Rural Utilities Service                         7, XVII, XVIII, XLII
  Secretary of Agriculture, Office of             7, Subtitle A
  Transportation, Office of                       7, XXXIII
  World Agricultural Outlook Board                7, XXXVIII
Air Force Department                              32, VII
  Federal Acquisition Regulation Supplement       48, 53
Air Transportation Stabilization Board            14, VI
Alcohol and Tobacco Tax and Trade Bureau          27, I
Alcohol, Tobacco, Firearms, and Explosives,       27, II
     Bureau of
AMTRAK                                            49, VII
American Battle Monuments Commission              36, IV
American Indians, Office of the Special Trustee   25, VII
Animal and Plant Health Inspection Service        7, III; 9, I
Appalachian Regional Commission                   5, IX

[[Page 720]]

Architectural and Transportation Barriers         36, XI
     Compliance Board
Arctic Research Commission                        45, XXIII
Armed Forces Retirement Home                      5, XI
Army Department                                   32, V
  Engineers, Corps of                             33, II; 36, III
  Federal Acquisition Regulation                  48, 51
Benefits Review Board                             20, VII
Bilingual Education and Minority Languages        34, V
     Affairs, Office of
Blind or Severely Disabled, Committee for         41, 51
     Purchase From People Who Are
Broadcasting Board of Governors                   22, V
  Federal Acquisition Regulation                  48, 19
Census Bureau                                     15, I
Centers for Medicare & Medicaid Services          42, IV
Central Intelligence Agency                       32, XIX
Chief Financial Officer, Office of                7, XXX
Child Support Enforcement, Office of              45, III
Children and Families, Administration for         45, II, III, IV, X
Civil Rights, Commission on                       45, VII
Civil Rights, Office for                          34, I
Coast Guard                                       33, I; 46, I; 49, IV
Coast Guard (Great Lakes Pilotage)                46, III
Commerce Department                               44, IV
  Census Bureau                                   15, I
  Economic Affairs, Under Secretary               37, V
  Economic Analysis, Bureau of                    15, VIII
  Economic Development Administration             13, III
  Emergency Management and Assistance             44, IV
  Federal Acquisition Regulation                  48, 13
  Fishery Conservation and Management             50, VI
  Foreign-Trade Zones Board                       15, IV
  Industry and Security, Bureau of                15, VII
  International Trade Administration              15, III; 19, III
  National Institute of Standards and Technology  15, II
  National Marine Fisheries Service               50, II, IV, VI
  National Oceanic and Atmospheric                15, IX; 50, II, III, IV, 
       Administration                             VI
  National Telecommunications and Information     15, XXIII; 47, III
       Administration
  National Weather Service                        15, IX
  Patent and Trademark Office, United States      37, I
  Productivity, Technology and Innovation,        37, IV
       Assistant Secretary for
  Secretary of Commerce, Office of                15, Subtitle A
  Technology, Under Secretary for                 37, V
  Technology Administration                       15, XI
  Technology Policy, Assistant Secretary for      37, IV
Commercial Space Transportation                   14, III
Commodity Credit Corporation                      7, XIV
Commodity Futures Trading Commission              5, XLI; 17, I
Community Planning and Development, Office of     24, V, VI
     Assistant Secretary for
Community Services, Office of                     45, X
Comptroller of the Currency                       12, I
Construction Industry Collective Bargaining       29, IX
     Commission
Consumer Product Safety Commission                5, LXXI; 16, II
Cooperative State Research, Education, and        7, XXXIV
     Extension Service
Copyright Office                                  37, II
Corporation for National and Community Service    45, XII, XXV
Cost Accounting Standards Board                   48, 99
Council on Environmental Quality                  40, V
Court Services and Offender Supervision Agency    28, VIII
     for the District of Columbia
Customs Service, United States                    19, I
Defense Contract Audit Agency                     32, I
Defense Department                                5, XXVI; 32, Subtitle A; 
                                                  40, VII

[[Page 721]]

  Advanced Research Projects Agency               32, I
  Air Force Department                            32, VII
  Army Department                                 32, V; 33, II; 36, III, 
                                                  48, 51
  Defense Intelligence Agency                     32, I
  Defense Logistics Agency                        32, I, XII; 48, 54
  Engineers, Corps of                             33, II; 36, III
  Federal Acquisition Regulation                  48, 2
  National Imagery and Mapping Agency             32, I
  Navy Department                                 32, VI; 48, 52
  Secretary of Defense, Office of                 32, I
Defense Contract Audit Agency                     32, I
Defense Intelligence Agency                       32, I
Defense Logistics Agency                          32, XII; 48, 54
Defense Nuclear Facilities Safety Board           10, XVII
Delaware River Basin Commission                   18, III
District of Columbia, Court Services and          28, VIII
     Offender Supervision Agency for the
Drug Enforcement Administration                   21, II
East-West Foreign Trade Board                     15, XIII
Economic Affairs, Under Secretary                 37, V
Economic Analysis, Bureau of                      15, VIII
Economic Development Administration               13, III
Economic Research Service                         7, XXXVII
Education, Department of                          5, LIII
  Bilingual Education and Minority Languages      34, V
       Affairs, Office of
  Civil Rights, Office for                        34, I
  Educational Research and Improvement, Office    34, VII
       of
  Elementary and Secondary Education, Office of   34, II
  Federal Acquisition Regulation                  48, 34
  Postsecondary Education, Office of              34, VI
  Secretary of Education, Office of               34, Subtitle A
  Special Education and Rehabilitative Services,  34, III
       Office of
  Vocational and Adult Education, Office of       34, IV
Educational Research and Improvement, Office of   34, VII
Elementary and Secondary Education, Office of     34, II
Emergency Oil and Gas Guaranteed Loan Board       13, V
Emergency Steel Guarantee Loan Board              13, IV
Employees' Compensation Appeals Board             20, IV
Employees Loyalty Board                           5, V
Employment and Training Administration            20, V
Employment Standards Administration               20, VI
Endangered Species Committee                      50, IV
Energy, Department of                             5, XXIII; 10, II, III, X
  Federal Acquisition Regulation                  48, 9
  Federal Energy Regulatory Commission            5, XXIV; 18, I
  Property Management Regulations                 41, 109
Energy, Office of                                 7, XXIX
Engineers, Corps of                               33, II; 36, III
Engraving and Printing, Bureau of                 31, VI
Environmental Protection Agency                   5, LIV; 40, I, IV, VII
  Federal Acquisition Regulation                  48, 15
  Property Management Regulations                 41, 115
Environmental Quality, Office of                  7, XXXI
Equal Employment Opportunity Commission           5, LXII; 29, XIV
Equal Opportunity, Office of Assistant Secretary  24, I
     for
Executive Office of the President                 3, I
  Administration, Office of                       5, XV
  Environmental Quality, Council on               40, V
  Management and Budget, Office of                5, III, LXXVII; 14, VI; 
                                                  48, 99
  National Drug Control Policy, Office of         21, III
  National Security Council                       32, XXI; 47, 2
  Presidential Documents                          3
  Science and Technology Policy, Office of        32, XXIV; 47, II
  Trade Representative, Office of the United      15, XX
     States
[[Page 722]]

Export-Import Bank of the United States           5, LII; 12, IV
Family Assistance, Office of                      45, II
Farm Credit Administration                        5, XXXI; 12, VI
Farm Credit System Insurance Corporation          5, XXX; 12, XIV
Farm Service Agency                               7, VII, XVIII
Federal Acquisition Regulation                    48, 1
Federal Aviation Administration                   14, I
  Commercial Space Transportation                 14, III
Federal Claims Collection Standards               31, IX
Federal Communications Commission                 5, XXIX; 47, I
Federal Contract Compliance Programs, Office of   41, 60
Federal Crop Insurance Corporation                7, IV
Federal Deposit Insurance Corporation             5, XXII; 12, III
Federal Election Commission                       11, I
Federal Emergency Management Agency               44, I
  Federal Acquisition Regulation                  48, 44
Federal Employees Group Life Insurance Federal    48, 21
     Acquisition Regulation
Federal Employees Health Benefits Acquisition     48, 16
     Regulation
Federal Energy Regulatory Commission              5, XXIV; 18, I
Federal Financial Institutions Examination        12, XI
     Council
Federal Financing Bank                            12, VIII
Federal Highway Administration                    23, I, II
Federal Home Loan Mortgage Corporation            1, IV
Federal Housing Enterprise Oversight Office       12, XVII
Federal Housing Finance Board                     12, IX
Federal Labor Relations Authority, and General    5, XIV; 22, XIV
     Counsel of the Federal Labor Relations 
     Authority
Federal Law Enforcement Training Center           31, VII
Federal Management Regulation                     41, 102
Federal Maritime Commission                       46, IV
Federal Mediation and Conciliation Service        29, XII
Federal Mine Safety and Health Review Commission  5, LXXIV; 29, XXVII
Federal Motor Carrier Safety Administration       49, III
Federal Prison Industries, Inc.                   28, III
Federal Procurement Policy Office                 48, 99
Federal Property Management Regulations           41, 101
Federal Railroad Administration                   49, II
Federal Register, Administrative Committee of     1, I
Federal Register, Office of                       1, II
Federal Reserve System                            12, II
  Board of Governors                              5, LVIII
Federal Retirement Thrift Investment Board        5, VI, LXXVI
Federal Service Impasses Panel                    5, XIV
Federal Trade Commission                          5, XLVII; 16, I
Federal Transit Administration                    49, VI
Federal Travel Regulation System                  41, Subtitle F
Fine Arts, Commission on                          45, XXI
Fiscal Service                                    31, II
Fish and Wildlife Service, United States          50, I, IV
Fishery Conservation and Management               50, VI
Food and Drug Administration                      21, I
Food and Nutrition Service                        7, II
Food Safety and Inspection Service                9, III
Foreign Agricultural Service                      7, XV
Foreign Assets Control, Office of                 31, V
Foreign Claims Settlement Commission of the       45, V
     United States
Foreign Service Grievance Board                   22, IX
Foreign Service Impasse Disputes Panel            22, XIV
Foreign Service Labor Relations Board             22, XIV
Foreign-Trade Zones Board                         15, IV
Forest Service                                    36, II
General Accounting Office                         4, I
General Services Administration                   5, LVII; 41, 105
  Contract Appeals, Board of                      48, 61
  Federal Acquisition Regulation                  48, 5
  Federal Management Regulation                   41, 102

[[Page 723]]

  Federal Property Management Regulations         41, 101
  Federal Travel Regulation System                41, Subtitle F
  General                                         41, 300
  Payment From a Non-Federal Source for Travel    41, 304
       Expenses
  Payment of Expenses Connected With the Death    41, 303
       of Certain Employees
  Relocation Allowances                           41, 302
  Temporary Duty (TDY) Travel Allowances          41, 301
Geological Survey                                 30, IV
Government Ethics, Office of                      5, XVI
Government National Mortgage Association          24, III
Grain Inspection, Packers and Stockyards          7, VIII; 9, II
     Administration
Harry S. Truman Scholarship Foundation            45, XVIII
Health and Human Services, Department of          5, XLV; 45, Subtitle A
  Centers for Medicare & Medicaid Services        42, IV
  Child Support Enforcement, Office of            45, III
  Children and Families, Administration for       45, II, III, IV, X
  Community Services, Office of                   45, X
  Family Assistance, Office of                    45, II
  Federal Acquisition Regulation                  48, 3
  Food and Drug Administration                    21, I
  Human Development Services, Office of           45, XIII
  Indian Health Service                           25, V; 42, I
  Inspector General (Health Care), Office of      42, V
  Public Health Service                           42, I
  Refugee Resettlement, Office of                 45, IV
Homeland Security, Department of                  6, I
  Immigration and Naturalization Service          8, I
Housing and Urban Development, Department of      5, LXV; 24, Subtitle B
  Community Planning and Development, Office of   24, V, VI
       Assistant Secretary for
  Equal Opportunity, Office of Assistant          24, I
       Secretary for
  Federal Acquisition Regulation                  48, 24
  Federal Housing Enterprise Oversight, Office    12, XVII
       of
  Government National Mortgage Association        24, III
  Housing--Federal Housing Commissioner, Office   24, II, VIII, X, XX
       of Assistant Secretary for
  Housing, Office of, and Multifamily Housing     24, IV
       Assistance Restructuring, Office of
  Inspector General, Office of                    24, XII
  Public and Indian Housing, Office of Assistant  24, IX
       Secretary for
  Secretary, Office of                            24, Subtitle A, VII
Housing--Federal Housing Commissioner, Office of  24, II, VIII, X, XX
     Assistant Secretary for
Housing, Office of, and Multifamily Housing       24, IV
     Assistance Restructuring, Office of
Human Development Services, Office of             45, XIII
Immigration and Naturalization Service            8, I
Immigration Review, Executive Office for          8, V
Independent Counsel, Office of                    28, VII
Indian Affairs, Bureau of                         25, I, V
Indian Affairs, Office of the Assistant           25, VI
     Secretary
Indian Arts and Crafts Board                      25, II
Indian Health Service                             25, V; 42, I
Industry and Security, Bureau of                  15, VII
Information Resources Management, Office of       7, XXVII
Information Security Oversight Office, National   32, XX
     Archives and Records Administration
Inspector General
  Agriculture Department                          7, XXVI
  Health and Human Services Department            42, V
  Housing and Urban Development Department        24, XII
Institute of Peace, United States                 22, XVII
Inter-American Foundation                         5, LXIII; 22, X
Interior Department
  American Indians, Office of the Special         25, VII
       Trustee
  Endangered Species Committee                    50, IV

[[Page 724]]

  Federal Acquisition Regulation                  48, 14
  Federal Property Management Regulations System  41, 114
  Fish and Wildlife Service, United States        50, I, IV
  Geological Survey                               30, IV
  Indian Affairs, Bureau of                       25, I, V
  Indian Affairs, Office of the Assistant         25, VI
       Secretary
  Indian Arts and Crafts Board                    25, II
  Land Management, Bureau of                      43, II
  Minerals Management Service                     30, II
  National Indian Gaming Commission               25, III
  National Park Service                           36, I
  Reclamation, Bureau of                          43, I
  Secretary of the Interior, Office of            43, Subtitle A
  Surface Mining and Reclamation Appeals, Board   30, III
       of
  Surface Mining Reclamation and Enforcement,     30, VII
       Office of
Internal Revenue Service                          26, I
International Boundary and Water Commission,      22, XI
     United States and Mexico, United States 
     Section
International Development, United States Agency   22, II
     for
  Federal Acquisition Regulation                  48, 7
International Development Cooperation Agency,     22, XII
     United States
International Fishing and Related Activities      50, III
International Investment, Office of               31, VIII
International Joint Commission, United States     22, IV
     and Canada
International Organizations Employees Loyalty     5, V
     Board
International Trade Administration                15, III; 19, III
International Trade Commission, United States     19, II
Interstate Commerce Commission                    5, XL
James Madison Memorial Fellowship Foundation      45, XXIV
Japan-United States Friendship Commission         22, XVI
Joint Board for the Enrollment of Actuaries       20, VIII
Justice Department                                5, XXVIII; 28, I, XI; 40, 
                                                  IV
  Alcohol, Tobacco, Firearms, and Explosives,     27, II
       Bureau of
  Drug Enforcement Administration                 21, II
  Federal Acquisition Regulation                  48, 28
  Federal Claims Collection Standards             31, IX
  Federal Prison Industries, Inc.                 28, III
  Foreign Claims Settlement Commission of the     45, V
       United States
  Immigration Review, Executive Office for        8, V
  Offices of Independent Counsel                  28, VI
  Prisons, Bureau of                              28, V
  Property Management Regulations                 41, 128
Labor Department                                  5, XLII
  Benefits Review Board                           20, VII
  Employees' Compensation Appeals Board           20, IV
  Employment and Training Administration          20, V
  Employment Standards Administration             20, VI
  Federal Acquisition Regulation                  48, 29
  Federal Contract Compliance Programs, Office    41, 60
       of
  Federal Procurement Regulations System          41, 50
  Labor-Management Standards, Office of           29, II, IV
  Mine Safety and Health Administration           30, I
  Occupational Safety and Health Administration   29, XVII
  Pension and Welfare Benefits Administration     29, XXV
  Public Contracts                                41, 50
  Secretary of Labor, Office of                   29, Subtitle A
  Veterans' Employment and Training Service,      41, 61; 20, IX
       Office of the Assistant Secretary for
  Wage and Hour Division                          29, V
  Workers' Compensation Programs, Office of       20, I
Labor-Management Standards, Office of             29, II, IV
Land Management, Bureau of                        43, II
Legal Services Corporation                        45, XVI
Library of Congress                               36, VII

[[Page 725]]

  Copyright Office                                37, II
Local Television Loan Guarantee Board             7, XX
Management and Budget, Office of                  5, III, LXXVII; 14, VI; 
                                                  48, 99
Marine Mammal Commission                          50, V
Maritime Administration                           46, II
Merit Systems Protection Board                    5, II
Micronesian Status Negotiations, Office for       32, XXVII
Mine Safety and Health Administration             30, I
Minerals Management Service                       30, II
Minority Business Development Agency              15, XIV
Miscellaneous Agencies                            1, IV
Monetary Offices                                  31, I
Morris K. Udall Scholarship and Excellence in     36, XVI
     National Environmental Policy Foundation
National Aeronautics and Space Administration     5, LIX; 14, V
  Federal Acquisition Regulation                  48, 18
National Agricultural Library                     7, XLI
National Agricultural Statistics Service          7, XXXVI
National and Community Service, Corporation for   45, XII, XXV
National Archives and Records Administration      5, LXVI; 36, XII
  Information Security Oversight Office           32, XX
National Bureau of Standards                      15, II
National Capital Planning Commission              1, IV
National Commission for Employment Policy         1, IV
National Commission on Libraries and Information  45, XVII
     Science
National Council on Disability                    34, XII
National Counterintelligence Center               32, XVIII
National Credit Union Administration              12, VII
National Crime Prevention and Privacy Compact     28, IX
     Council
National Drug Control Policy, Office of           21, III
National Foundation on the Arts and the           45, XI
     Humanities
National Highway Traffic Safety Administration    23, II, III; 49, V
National Imagery and Mapping Agency               32, I
National Indian Gaming Commission                 25, III
National Institute for Literacy                   34, XI
National Institute of Standards and Technology    15, II
National Labor Relations Board                    5, LXI; 29, I
National Marine Fisheries Service                 50, II, IV, VI
National Mediation Board                          29, X
National Oceanic and Atmospheric Administration   15, IX; 50, II, III, IV, 
                                                  VI
National Park Service                             36, I
National Railroad Adjustment Board                29, III
National Railroad Passenger Corporation (AMTRAK)  49, VII
National Science Foundation                       5, XLIII; 45, VI
  Federal Acquisition Regulation                  48, 25
National Security Council                         32, XXI
National Security Council and Office of Science   47, II
     and Technology Policy
National Telecommunications and Information       15, XXIII; 47, III
     Administration
National Transportation Safety Board              49, VIII
National Weather Service                          15, IX
Natural Resources Conservation Service            7, VI
Navajo and Hopi Indian Relocation, Office of      25, IV
Navy Department                                   32, VI
  Federal Acquisition Regulation                  48, 52
Neighborhood Reinvestment Corporation             24, XXV
Northeast Interstate Low-Level Radioactive Waste  10, XVIII
     Commission
Nuclear Regulatory Commission                     5, XLVIII; 10, I
  Federal Acquisition Regulation                  48, 20
Occupational Safety and Health Administration     29, XVII
Occupational Safety and Health Review Commission  29, XX
Offices of Independent Counsel                    28, VI
Oklahoma City National Memorial Trust             36, XV
Operations Office                                 7, XXVIII

[[Page 726]]

Overseas Private Investment Corporation           5, XXXIII; 22, VII
Panama Canal Commission                           48, 35
Panama Canal Regulations                          35, I
Patent and Trademark Office, United States        37, I
Payment From a Non-Federal Source for Travel      41, 304
     Expenses
Payment of Expenses Connected With the Death of   41, 303
     Certain Employees
Peace Corps                                       22, III
Pennsylvania Avenue Development Corporation       36, IX
Pension and Welfare Benefits Administration       29, XXV
Pension Benefit Guaranty Corporation              29, XL
Personnel Management, Office of                   5, I, XXXV; 45, VIII
  Federal Acquisition Regulation                  48, 17
  Federal Employees Group Life Insurance Federal  48, 21
       Acquisition Regulation
  Federal Employees Health Benefits Acquisition   48, 16
       Regulation
Postal Rate Commission                            5, XLVI; 39, III
Postal Service, United States                     5, LX; 39, I
Postsecondary Education, Office of                34, VI
President's Commission on White House             1, IV
     Fellowships
Presidential Documents                            3
Presidio Trust                                    36, X
Prisons, Bureau of                                28, V
Procurement and Property Management, Office of    7, XXXII
Productivity, Technology and Innovation,          37, IV
     Assistant Secretary
Public Contracts, Department of Labor             41, 50
Public and Indian Housing, Office of Assistant    24, IX
     Secretary for
Public Health Service                             42, I
Railroad Retirement Board                         20, II
Reclamation, Bureau of                            43, I
Refugee Resettlement, Office of                   45, IV
Regional Action Planning Commissions              13, V
Relocation Allowances                             41, 302
Research and Special Programs Administration      49, I
Rural Business-Cooperative Service                7, XVIII, XLII
Rural Development Administration                  7, XLII
Rural Housing Service                             7, XVIII, XXXV
Rural Telephone Bank                              7, XVI
Rural Utilities Service                           7, XVII, XVIII, XLII
Saint Lawrence Seaway Development Corporation     33, IV
Science and Technology Policy, Office of          32, XXIV
Science and Technology Policy, Office of, and     47, II
     National Security Council
Secret Service                                    31, IV
Securities and Exchange Commission                17, II
Selective Service System                          32, XVI
Small Business Administration                     13, I
Smithsonian Institution                           36, V
Social Security Administration                    20, III; 48, 23
Soldiers' and Airmen's Home, United States        5, XI
Special Counsel, Office of                        5, VIII
Special Education and Rehabilitative Services,    34, III
     Office of
State Department                                  22, I; 28, XI
  Federal Acquisition Regulation                  48, 6
Surface Mining and Reclamation Appeals, Board of  30, III
Surface Mining Reclamation and Enforcement,       30, VII
     Office of
Surface Transportation Board                      49, X
Susquehanna River Basin Commission                18, VIII
Technology Administration                         15, XI
Technology Policy, Assistant Secretary for        37, IV
Technology, Under Secretary for                   37, V
Tennessee Valley Authority                        5, LXIX; 18, XIII
Thrift Supervision Office, Department of the      12, V
     Treasury
Trade Representative, United States, Office of    15, XX
Transportation, Department of                     5, L
  Coast Guard                                     33, I; 46, I; 49, IV

[[Page 727]]

  Coast Guard (Great Lakes Pilotage)              46, III
  Commercial Space Transportation                 14, III
  Contract Appeals, Board of                      48, 63
  Emergency Management and Assistance             44, IV
  Federal Acquisition Regulation                  48, 12
  Federal Aviation Administration                 14, I
  Federal Highway Administration                  23, I, II
  Federal Motor Carrier Safety Administration     49, III
  Federal Railroad Administration                 49, II
  Federal Transit Administration                  49, VI
  Maritime Administration                         46, II
  National Highway Traffic Safety Administration  23, II, III; 49, V
  Research and Special Programs Administration    49, I
  Saint Lawrence Seaway Development Corporation   33, IV
  Secretary of Transportation, Office of          14, II; 49, Subtitle A
  Surface Transportation Board                    49, X
  Transportation Security Administration          49, XII
  Transportation Statistics Bureau                49, XI
Transportation, Office of                         7, XXXIII
Transportation Security Administration            49, XII
Transportation Statistics Bureau                  49, XI
Travel Allowances, Temporary Duty (TDY)           41, 301
Treasury Department                               5, XXI; 12, XV; 17, IV; 
                                                  31, IX
  Alcohol and Tobacco Tax and Trade Bureau        27, I
  Community Development Financial Institutions    12, XVIII
       Fund
  Comptroller of the Currency                     12, I
  Customs Service, United States                  19, I
  Engraving and Printing, Bureau of               31, VI
  Federal Acquisition Regulation                  48, 10
  Federal Law Enforcement Training Center         31, VII
  Fiscal Service                                  31, II
  Foreign Assets Control, Office of               31, V
  Internal Revenue Service                        26, I
  International Investment, Office of             31, VIII
  Monetary Offices                                31, I
  Secret Service                                  31, IV
  Secretary of the Treasury, Office of            31, Subtitle A
  Thrift Supervision, Office of                   12, V
Truman, Harry S. Scholarship Foundation           45, XVIII
United States and Canada, International Joint     22, IV
     Commission
United States and Mexico, International Boundary  22, XI
     and Water Commission, United States Section
Utah Reclamation Mitigation and Conservation      43, III
     Commission
Veterans Affairs Department                       38, I
  Federal Acquisition Regulation                  48, 8
Veterans' Employment and Training Service,        41, 61; 20, IX
     Office of the Assistant Secretary for
Vice President of the United States, Office of    32, XXVIII
Vocational and Adult Education, Office of         34, IV
Wage and Hour Division                            29, V
Water Resources Council                           18, VI
Workers' Compensation Programs, Office of         20, I
World Agricultural Outlook Board                  7, XXXVIII

[[Page 729]]



List of CFR Sections Affected



All changes in this volume of the Code of Federal Regulations which were 
made by documents published in the Federal Register since January 1, 
2001, are enumerated in the following list. Entries indicate the nature 
of the changes effected. Page numbers refer to Federal Register pages. 
The user should consult the entries for chapters and parts as well as 
sections for revisions.
For the period before January 1, 2001, see the ``List of CFR Sections 
Affected, 1949-1963, 1964-1972, 1973-1985, and 1986-2000,'' which is 
published in 11 separate volumes.

                                  2001

17 CFR
                                                                   66 FR
                                                                    Page
Chapter II
200  Comment period extended.......................................38370
200.30-3  (a)(69) and (70) added...................................11536
    (a)(28) amended; (a)(71) added.................................15792
    (a)(72) added; interim.........................................27796
    (a)(73) added..................................................31840
    (a)(74) added..................................................35842
    (a)(73)(i) and (ii) amended; (iii) added.......................40886
    (a)(75) and (76) added.........................................43721
200.30-4  (a)(12) added............................................35842
200.30-18  (h) and (i) redesignated as (i) and (j); new (h) added 
                                                                   35842
201.1001  Revised...................................................8762
201.1002  Added.....................................................8762
201.1001--201.1002 (Subpart E)  Table I amended; Table II added.....8762
202.3  (b)(3)  added; authority citation removed...................43741
204.1--204.29  Authority citation revised..........................54130
204.1  (b) revised.................................................54130
204.2  (a) revised.................................................54130
204.3  (a) removed; (b) through (f) redesignated as (a) through 
        (e); new (b), (c) and (e) revised..........................54130
204.4  (a) and (b) removed; (c) and (d) redesignated as new (a) 
        and (b); new (a) revised...................................54130
204.5  Introductory text revised...................................54130
204.6  (a) and (d) revised.........................................54131
204.7  (a)(1)(ii) amended..........................................54131
204.8  Amended.....................................................54131
204.9  (c) and (d) revised.........................................54131
204.10  Removed....................................................54131
204.11  Amended....................................................54131
204.30--204.44 (Subpart B)  Authority citation revised.............54131
204.31  (a) amended................................................54131
204.32  Amended....................................................54131
204.33  Introductory text and (c) revised; (f) amended.............54131
204.35  (a) amended................................................54131
204.36  (b) amended................................................54131
204.38  (a) amended................................................54132
204.40  (b) introductory text, (2) and (e) amended.................54132
204.43  (a) introductory text revised; (a)(6) amended..............54132
204.44  Amended....................................................54132
204.50--204.56 (Subpart C)  Authority citation revised.............54132
204.50  Revised....................................................54132
204.51  Removed....................................................54132
204.52  (a) revised; (b) introductory text and (2) amended; (c) 
        added......................................................54132
    (c) corrected..................................................56383
204.53  Removed....................................................54132
    Corrected......................................................56383
204.54  (a) introductory text amended; (b) removed; (c) 
        redesignated as new (b); new (b) revised...................54132
204.55  Revised....................................................54132
204.56  Revised....................................................54132
204.60--204.65 (Subpart D)  Added..................................54132
204.75--204.77 (Subpart D)  Redesignated as Subpart E..............54132
204.76  (a) amended................................................54135

[[Page 730]]

204.77  (c) removed; (a) and (b)(5) revised........................54135
210  Policy statement..............................................38149
211  Staff accounting bulletin.....................................36457
    Policy statement...............................................38149
    Interpretive releases...................................48336, 49274
230  Authority citation revised...............................8896, 9017
230.155  Added......................................................8896
230.429  Revised....................................................8896
230.457  (f)(5), (p) and (q) added; (o) amended.....................8896
230.477  (b) amended; (c) revised; (d) added........................8897
230.482  (e)(3)(iv) amended; (e)(4) and (f) redesignated as (e)(5) 
        and (g); new (e)(4) and (f) added; new (e)(5) revised; 
        eff. 4-16-01................................................9017
231  Interpretive releases..................................33176, 49274
232.301  Revised....................................................8765
    Revised.................................................42942, 49830
239.14  Form N-2 corrected.........................................13234
239.15A  Form N-1A amended..........................................3760
    Form N-1A amended; eff. 4-16-01...........................9018, 9019
    Form N-1A corrected............................................13234
239.17a  Form N-3 corrected........................................13234
239.32  Form F-2 amended...........................................32539
239.33  Form F-3 amended...........................................32539

                                  2002

17 CFR
                                                                   67 FR
                                                                    Page
Chapter II
200.20b  (a) revised...............................................43535
200.30-3  (a)(77) added............................................65037
200.30-7  (a)(12) added; authority citation removed................30326
200.30-14  (g)(1)(xv) added........................................56220
200.800 (Subpart N)  Revised.......................................14634
210.2-02  (e) added................................................13533
210.3-01  Preceding Notes 1T, 2T and 3T added; eff. 3-18-02 
        through 12-31-02...........................................13533
    (c) introductory text and (d) amended; (e) revised; (i) added 
                                                                   58503
210.3-09  Authority citation removed; (a) and (b) amended; (b)(1) 
        through (4) added..........................................58504
210.3-12  (a) and (b) amended; (g) added...........................58504
228  Authority citation revised.............................13535, 57287
228.201  (d) added...................................................245
228.304T  Added; eff. 3-18-02 through 12-31-02.....................13535
228.307  Added.....................................................57287
228.310  Notes 1T and 2T added; eff. 3-18-02 through 12-31-02......13535
228.601  (b)(10)(ii)(B) redesignated as (b)(10)(ii)(C); new 
        (b)(10)(ii)(B) added.........................................246
228.601T  Added; eff. 3-18-02 through 12-31-02.....................13536
229  Authority citation amended......................................246
    Authority citation revised..............................13536, 57287
229.101  (e) revised...............................................58504
229.201  (d) added; authority citation removed.......................246
229.304T  Added; eff. 3-18-02 through 12-31-02.....................13536
229.307  Added.....................................................57287
229.601  (b)(10)(iii)(B) redesignated as (b)(10)(iii)(C); new 
        (b)(10)(iii)(B) added........................................247
229.601T  Added; eff. 3-18-02 through 12-31-02.....................13536
230  Authority citation amended...............................230, 13536
    Authority citation revised.....................................19673
230.134b  Revised..................................................19868
230.135b  Revised....................................................230
230.401a  Added....................................................13536
230.403  (c) revised; authority citation removed...................36698
230.405  Amended...................................................19673
230.427T  Added; eff. 3-18-02 through 12-31-02.....................13536
230.428  (b)(2)(iv) instruction 2T added; eff. 3-18-02 through 12-
        31-02......................................................13537
230.430  (b) introductory text revised.............................19868
230.430A  (e) revised..............................................19869
230.437a  Added....................................................13537
230.493  Revised...................................................36699
230.495  (a), (c) and (d) revised..................................19869
230.496  Revised...................................................19869
230.497  (c) and (e) revised.......................................19869
231  Interpretive releases.........................................43246
232  Authority citation revised....................................57287
232.100  (a) and (c) revised.......................................36699

[[Page 731]]

232.101  (a)(1)(iii) note, (c)(16) and (17) redesignated as 
        (a)(1)(iii) Note 1, (c)(15) and (16); (a)(1)(iii) Note 2, 
        (a)(1)(vi), (vii), (viii) and (b)(7) through (10) added; 
        (a)(1)(iv), (v), (c)(5), (6), (14), new (c)(15) and (16) 
        amended; (b)(1), (6) and (c)(9) revised; (c)(15) and (d) 
        removed....................................................36699
232.302  (a) and (b) revised.......................................57287
232.303  (b) revised...............................................36700
232.306  (a) revised; (b) redesignated as (e); new (b), (c) and 
        (d) added..................................................36700
232.311  (f), (g) and (h) redesignated as (h), (i) and (j); new 
        (f) and (g) added..........................................36700
232.601  Removed...................................................36700
239  Authority citation revised....................................19869
239.17b  Form N-4 amended..........................................69979
239.17c  Added.....................................................19870
    Form N-6 amended...............................................69981
239.31  Form F-1 amended...........................................36700
239.32  Form F-2 amended...........................................36701
239.33  Form F-3 amended...........................................36701
239.34  Form F-4 amended...........................................36701
239.36  Form F-6 amended...........................................36702
239.37  Form F-7 amended...........................................36702
239.38  Form F-8 amended...........................................36702
239.39  Form F-9 amended...........................................36703
239.40  Form F-10 amended..........................................36703
239.41  Form F-80 amended..........................................36704
239.42  Form F-X amended...........................................36709
239.800  Form CB amended...........................................36707

                                  2003

   (Regulations published from January 1, 2003 through April 1, 2003)

17 CFR
                                                                   68 FR
                                                                    Page
Chapter II
200.30-3  (a)(10) revised; eff. 4-16-03............................12783
205  Added; eff. 8-5-03.............................................6320
210  Authority citation revised.....................................4871
210.2-01  (c)(2)(iii), (4), (e)(1), (f)(1), (3) and (7) revised; 
        (c)(6), (7), (8) and (f)(17) added; (e) heading and (e)(2) 
        removed; (e)(3) redesignated as (e)(2); eff. 5-6-03.........6044
210.2-06  Added.....................................................4872
210.2-07  Added; eff. 5-6-03........................................6048
228  Authority citation revised.....................................4830
Authority citation amended..........................................5125
    Authority citation amended; eff. 4-7-03.........................5998
228.10  (h) added...................................................4830
228.303  (c) and (d) added; introductory text and new (c) amended; 
        eff. 4-7-03.................................................5998
228.401  (e) added..................................................5126
    (e) corrected..................................................15353
228.406  Added......................................................5126
228.601  Table amended; (b)(14) added...............................5126
  Authority citation revised........................................4831
229  Authority citation amended.....................................5127
    Authority citation amended; eff. 4-7-03.........................5999
229.10  Heading revised; (e) added..................................4831
229.303  Authority citation removed; (a)(4), (5) and (c) added; 
        (a) introductory text, (3)(iv), Instructions and (b) 
        Instructions amended; eff. 4-7-03...........................5999
229.401  (h) added..................................................5127
    (h) corrected..................................................15354
229.406  Added......................................................5127
229.601  Table amended; (b)(14) added...............................5128
230.238  Added.......................................................192
239.14  Form N-2 amended............................................6582
239.15A  Form N-1A amended..........................................6581
239.17a  Form N-3 amended...........................................6583


                      []