[Title 17 CFR ]
[Code of Federal Regulations (annual edition) - April 1, 2024 Edition]
[From the U.S. Government Publishing Office]
[[Page i]]
Title 17
Commodity and Securities Exchanges
________________________
Part 240
Revised as of April 1, 2024
Containing a codification of documents of general
applicability and future effect
As of April 1, 2024
Published by the Office of the Federal Register
National Archives and Records Administration as a
Special Edition of the Federal Register
[[Page ii]]
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[[Page iii]]
Table of Contents
Page
Explanation................................................. v
Title 17:
Chapter II--Securities and Exchange Commission
(Continued) 3
Finding Aids:
Table of CFR Titles and Chapters........................ 845
Alphabetical List of Agencies Appearing in the CFR...... 865
Table of OMB Control Numbers............................ 875
List of CFR Sections Affected........................... 881
[[Page iv]]
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Cite this Code: CFR
To cite the regulations in
this volume use title,
part and section number.
Thus, 17 CFR 240.0-1
refers to title 17, part
240, section 0-1.
----------------------------
[[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
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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
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LEGAL STATUS
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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
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PAST PROVISIONS OF THE CODE
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``[RESERVED]'' TERMINOLOGY
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INCORPORATION BY REFERENCE
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This material, like any other properly issued regulation, has the force
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Federal Register will approve an incorporation by reference only when
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approval is based are:
(a) The incorporation will substantially reduce the volume of
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(b) The matter incorporated is in fact available to the extent
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(c) The incorporating document is drafted and submitted for
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What if the material incorporated by reference cannot be found? If
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that volume.
[[Page vii]]
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Oliver A. Potts,
Director,
Office of the Federal Register
April 1, 2024
[[Page ix]]
THIS TITLE
Title 17--Commodity and Securities Exchanges is composed of five
volumes. The first two volumes, containing parts 1-40 and 41-199,
comprise Chapter I--Commodity Futures Trading Commission. The third
volume contains Chapter II--Securities and Exchange Commission, parts
200-239. The fourth volume, comprising part 240, contains additional
regulations of the Securities and Exchange Commission. The fifth volume,
comprising part 241 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 codified under this title by the Commodity Futures Trading
Commission, the Securities and Exchange Commission, and the Department
of the Treasury as of April 1, 2024.
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 sections of volume 4,
containing part 240, and volume 5, containing part 241 to end.
For this volume, Michele Bugenhagen was Chief Editor. The Code of
Federal Regulations publication program is under the direction of John
Hyrum Martinez, assisted by Stephen J. Frattini.
[[Page 1]]
TITLE 17--COMMODITY AND SECURITIES EXCHANGES
(This book contains part 240)
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Part
chapter ii--Securities and Exchange Commission (Continued).. 240
[[Page 3]]
CHAPTER II--SECURITIES AND EXCHANGE COMMISSION (CONTINUED)
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Part Page
240 General rules and regulations, Securities
Exchange Act of 1934.................... 5
[[Page 5]]
PART 240_GENERAL RULES AND REGULATIONS, SECURITIES EXCHANGE ACT OF 1934-
-Table of Contents
Subpart A_Rules and Regulations Under the Securities Exchange Act of
1934
Rules of General Application
Sec.
240.0-1 Definitions.
240.0-2 Business hours of the Commission.
240.0-3 Filing of material with the Commission.
240.0-4 Nondisclosure of information obtained in examinations and
investigations.
240.0-5 Reference to rule by obsolete designation.
240.0-6 Disclosure detrimental to the national defense or foreign
policy.
240.0-8 Application of rules to registered broker-dealers.
240.0-9 Payment of filing fees.
240.0-10 Small entities under the Securities Exchange Act for purposes
of the Regulatory Flexibility Act.
240.0-11 Filing fees for certain acquisitions, dispositions and similar
transactions.
240.0-12 Commission procedures for filing applications for orders for
exemptive relief under Section 36 of the Exchange Act.
240.0-13 Commission procedures for filing applications to request a
substituted compliance or listed jurisdiction order under the
Exchange Act.
240.3a1-1 Exemption from the definition of ``Exchange'' under Section
3(a)(1) of the Act.
240.3a4-1 Associated persons of an issuer deemed not to be brokers.
240.3a4-2--240.3a4-6 [Reserved]
240.3a5-1 Exemption from the definition of ``dealer'' for a bank engaged
in riskless principal transactions.
240.3a5-2 Exemption from the definition of ``dealer'' for banks
effecting transactions in securities issued pursuant to
Regulation S.
240.3a5-3 Exemption from the definition of ``dealer'' for banks engaging
in securities lending transactions.
240.3a5-4 Further definition of ``as a part of a regular business'' in
connection with certain liquidity providers.
Definition of ``Equity Security'' as Used in Sections 12(g) and 16
240.3a11-1 Definition of the term ``equity security''.
Miscellaneous Exemptions
240.3a12-1 Exemption of certain mortgages and interests in mortgages.
240.3a12-2 [Reserved]
240.3a12-3 Exemption from sections 14(a), 14(b), 14(c), 14(f), and 16
for securities of certain foreign issuers.
240.3a12-4 Exemptions from sections 15(a) and 15(c)(3) for certain
mortgage securities.
240.3a12-5 Exemption of certain investment contract securities from
sections 7(c) and 11(d)(1).
240.3a12-6 Definition of ``common trust fund'' as used in section
3(a)(12) of the Act.
240.3a12-7 Exemption for certain derivative securities traded otherwise
than on a national securities exchange.
240.3a12-8 Exemption for designated foreign government securities for
purposes of futures trading.
240.3a12-9 Exemption of certain direct participation program securities
from the arranging provisions of sections 7(c) and 11(d)(1).
240.3a12-10 Exemption of certain securities issued by the Resolution
Funding Corporation.
240.3a12-11 Exemption from sections 8(a), 14(a), 14(b), and 14(c) for
debt securities listed on a national securities exchange.
240.3a12-12 Exemption from certain provisions of section 16 of the Act
for asset-backed securities.
240.3a40-1 Designation of financial responsibility rules.
240.3a43-1 Customer-related government securities activities incidental
to the futures-related business of a futures commission
merchant registered with the Commodity Futures Trading
Commission.
240.3a44-1 Proprietary government securities transactions incidental to
the futures-related business of a CFTC-regulated person.
240.3a44-2 Further definition of ``as a part of a regular business'' in
connection with certain liquidity providers.
240.3a51-1 Definition of ``penny stock''.
240.3a55-1 Method for determining market capitalization and dollar value
of average daily trading volume; application of the definition
of narrow-based security index.
240.3a55-2 Indexes underlying futures contracts trading for fewer than
30 days.
240.3a55-3 Futures contracts on security indexes trading on or subject
to the rules of a foreign board of trade.
240.3a55-4 Exclusion from definition of narrow-based security index for
indexes composed of debt securities.
Security-Based Swap Dealer and Participant Definitions
240.3a67-1 Definition of ``major security-based swap participant.''
240.3a67-2 Categories of security-based swaps.
[[Page 6]]
240.3a67-3 Definition of ``substantial position.''
240.3a67-4 Definition of ``hedging or mitigating commercial risk.''
240.3a67-5 Definition of ``substantial counterparty exposure.''
240.3a67-6 Definition of ``financial entity.''
240.3a67-7 Definition of ``highly leveraged.''
240.3a67-8 Timing requirements, reevaluation period and termination of
status.
240.3a67-9 Calculation of major participant status by certain persons.
240.3a67-10 Foreign major security-based swap participants.
Further Definition of Swap, Security-Based Swap, and Security-Based Swap
Agreement; Mixed Swaps; Security-Based Swap Agreement Recordkeeping
240.3a68-1a Meaning of ``issuers of securities in a narrow-based
security index'' as used in section 3(a)(68)(A)(ii)(III) of
the Act.
240.3a68-1b Meaning of ``narrow-based security index'' as used in
section 3(a)(68)(A)(ii)(I) of the Act.
240.3a68-2 Requests for interpretation of swaps, security-based swaps,
and mixed swaps.
240.3a68-3 Meaning of ``narrow-based security index'' as used in the
definition of ``security-based swap.''
240.3a68-4 Regulation of mixed swaps.
240.3a68-5 Regulation of certain futures contracts on foreign sovereign
debt.
240.3a69-1 Safe Harbor Definition of ``security-based swap'' and
``swap'' as used in sections 3(a)(68) and 3(a)(69) of the
Act--insurance.
240.3a69-2 Definition of ``swap'' as used in section 3(a)(69) of the
Act--additional products.
240.3a69-3 Books and records requirements for security-based swap
agreements.
240.3a71-1 Definition of ``security-based swap dealer.''
240.3a71-2 De minimis exception.
240.3a71-2A Report regarding the ``security-based swap dealer'' and
``major security-based swap participant'' definitions
(Appendix A to 17 CFR 240.3a71-2)
240.3a71-3 Cross-border security-based swap dealing activity.
240.3a71-4 Exception from aggregation for affiliated groups with
registered security-based swap dealers.
240.3a71-5 Substituted compliance for foreign security-based swap
dealers.
240.3a71-6 Substituted compliance for security-based swap dealers and
major security-based swap participants.
Definitions
240.3b-1 Definition of ``listed''.
240.3b-2 Definition of ``officer''.
240.3b-3 [Reserved]
240.3b-4 Definition of ``foreign government,'' ``foreign issuer'' and
``foreign private issuer''.
240.3b-5 Non-exempt securities issued under governmental obligations.
240.3b-6 Liability for certain statements by issuers.
240.3b-7 Definition of ``executive officer''.
240.3b-8 Definitions of ``Qualified OTC Market Maker, Qualified Third
Market Maker'' and ``Qualified Block Positioner''.
240.3b-9--240.3b-10 [Reserved]
240.3b-11 Definitions relating to limited partnership roll-up
transactions for purposes of sections 6(b)(9), 14(h) and
15A(b)(12)-(13).
240.3b-12 Definition of OTC derivatives dealer.
240.3b-13 Definition of eligible OTC derivative instrument.
240.3b-14 Definition of cash management securities activities.
240.3b-15 Definition of ancillary portfolio management securities
activities.
240.3b-16 Definitions of terms used in Section 3(a)(1) of the Act.
240.3b-17 [Reserved]
240.3b-18 Definitions of terms used in Section 3(a)(5) of the Act.
240.3b-19 Definition of ``issuer'' in section 3(a)(8) of the Act in
relation to asset-backed securities.
Clearing of Security-Based Swaps
240.3Ca-1 Stay of clearing requirement and review by the Commission.
240.3Ca-2 Submission of security-based swaps for clearing.
Registration and Exemption of Exchanges
240.6a-1 Application for registration as a national securities exchange
or exemption from registration based on limited volume.
240.6a-2 Amendments to application.
240.6a-3 Supplemental material to be filed by exchanges.
240.6a-4 Notice of registration under Section 6(g) of the Act, amendment
to such notice, and supplemental materials to be filed by
exchanges registered under Section 6(g) of the Act.
240.6h-1 Settlement and regulatory halt requirements for security
futures products.
240.6h-2 Security future based on note, bond, debenture, or evidence of
indebtedness.
240.7c2-1 [Reserved]
Hypothecation of Customers' Securities
240.8c-1 Hypothecation of customers' securities.
240.9b-1 Options disclosure document.
[[Page 7]]
Manipulative and Deceptive Devices and Contrivances
240.9j-1 Prohibition against fraud, manipulation, or deception in
connection with security-based swaps.
240.10a-1--240.10a-2 [Reserved]
240.10b-1 Prohibition of use of manipulative or deceptive devices or
contrivances with respect to certain securities exempted from
registration.
240.10b-2 [Reserved]
240.10b-3 Employment of manipulative and deceptive devices by brokers or
dealers.
240.10b-4 [Reserved]
240.10b-5 Employment of manipulative and deceptive devices.
240.10b5-1 Trading ``on the basis of'' material nonpublic information in
insider trading cases.
240.10b5-2 Duties of trust or confidence in misappropriation insider
trading cases.
240.10b-6--240.10b-8 [Reserved]
240.10b-9 Prohibited representations in connection with certain
offerings.
240.10b-10 Confirmation of transactions.
240.10b-13 [Reserved]
240.10b-16 Disclosure of credit terms in margin transactions.
240.10b-17 Untimely announcements of record dates.
240.10b-18 Purchases of certain equity securities by the issuer and
others.
240.10b-21 Deception in connection with a seller's ability or intent to
deliver securities on the date delivery is due.
240.10c-1a Securities lending transparency.
Reports Under Section 10A
240.10A-1 Notice to the Commission Pursuant to Section 10A of the Act.
240.10A-2 Auditor independence.
240.10A-3 Listing standards relating to audit committees.
Requirements Under Section 10C
240.10C-1 Listing standards relating to compensation committees.
Requirements Under Section 10D
240.10D-1 Listing standards relating to recovery of erroneously awarded
compensation.
Adoption of Floor Trading Regulation (Rule 11a-1)
240.11a-1 Regulation of floor trading.
240.11a1-1(T) Transactions yielding priority, parity, and precedence.
240.11a1-2 Transactions for certain accounts of associated persons of
members.
240.11a1-3(T) Bona fide hedge transactions in certain securities.
240.11a1-4(T) Bond transactions on national securities exchanges.
240.11a1-5 Transactions by registered competitive market makers and
registered equity market makers.
240.11a1-6 Transactions for certain accounts of OTC derivatives dealers.
240.11a2-2(T) Transactions effected by exchange members through other
members.
Adoption of Regulation on Conduct of Specialists
240.11b-1 Regulation of specialists.
Exemption of Certain Securities From Section 11(d)(1)
240.11d1-1 Exemption of certain securities from section 11(d)(1).
240.11d1-2 Exemption from section 11(d)(1) for certain investment
company securities held by broker-dealers as collateral in
margin accounts.
240.11d2-1 Exemption from Section 11(d)(2) for certain broker-dealers
effecting transactions for customers security futures products
in futures accounts.
Securities Exempted From Registration
240.12a-4 Exemption of certain warrants from section 12(a).
240.12a-5 Temporary exemption of substituted or additional securities.
240.12g-6 Exemption for securities issued pursuant to section 4(a)(6) of
the Securities Act of 1933 or Regulation Crowdfunding.
240.12a-7 Exemption of stock contained in standardized market baskets
from section 12(a) of the Act.
240.12a-8 Exemption of depositary shares.
240.12a-9 Exemption of standardized options from section 12(a) of the
Act.
240.12a-10 Exemption of security-based swaps from section 12(a) of the
Act.
240.12a-11 Exemption of security-based swaps sold in reliance on
Securities Act of 1933 Rule 240 (Sec. 230.240) from section
12(a) of the Act.
Regulation 12B: Registration and Reporting
General
240.12b-1 Scope of regulation.
240.12b-2 Definitions.
240.12b-3 Title of securities.
240.12b-4 Supplemental information.
240.12b-5 Determination of affiliates of banks.
240.12b-6 When securities are deemed to be registered.
240.12b-7 [Reserved]
Formal Requirements
240.12b-10 Requirements as to proper form.
240.12b-11 Number of copies; signatures; binding.
[[Page 8]]
240.12b-12 Requirements as to paper, printing and language.
240.12b-13 Preparation of statement or report.
240.12b-14 Riders; inserts.
240.12b-15 Amendments.
General Requirements as to Contents
240.12b-20 Additional information.
240.12b-21 Information unknown or not available.
240.12b-22 Disclaimer of control.
240.12b-23 Incorporation by reference.
240.12b-24 [Reserved]
240.12b-25 Notification of inability to timely file all or any required
portion of a Form 10-K, 20-F, 11-K, N-CEN, N-CSR, 10-Q, or 10-
D.
Exhibits
240.12b-30 Additional exhibits.
240.12b-31 Omission of substantially identical documents.
240.12b-32 [Reserved]
240.12b-33 Annual reports to other Federal agencies.
Special Provisions
240.12b-35 [Reserved]
240.12b-36 Use of financial statements filed under other acts.
240.12b-37 Satisfaction of filing requirements.
Certification by Exchanges and Effectiveness of Registration
240.12d1-1 Registration effective as to class or series.
240.12d1-2 Effectiveness of registration.
240.12d1-3 Requirements as to certification.
240.12d1-4 Date of receipt of certification by Commission.
240.12d1-5 Operation of certification on subsequent amendments.
240.12d1-6 Withdrawal of certification.
Suspension of Trading, Withdrawal, and Striking From Listing and
Registration
240.12d2-1 Suspension of trading.
240.12d2-2 Removal from listing and registration.
Unlisted Trading
240.12f-1 Applications for permission to reinstate unlisted trading
privileges.
240.12f-2 Extending unlisted trading privileges to a security that is
the subject of an initial public offering.
240.12f-3 Termination or suspension of unlisted trading privileges.
240.12f-4 Exemption of securities admitted to unlisted trading
privileges from sections 13, 14, and 16.
240.12f-5 Exchange rules for securities to which unlisted trading
privileges are extended.
240.12f-6 [Reserved]
Extensions and Temporary Exemptions; Definitions
240.12g-1 Exemption from section 12(g).
240.12g-2 Securities deemed to be registered pursuant to section
12(g)(1) upon termination of exemption pursuant to section
12(g)(2) (A) or (B).
240.12g-3 Registration of securities of successor issuers under section
12(b) or 12(g).
240.12g-4 Certifications of termination of registration under section
12(g).
240.12g-6 Exemption for securities issued pursuant to section 4(a)(6) of
the Securities Act of 1933.
240.12g3-2 Exemptions for American depositary receipts and certain
foreign securities.
240.12g5-1 Definition of securities ``held of record''.
240.12g5-2 Definition of ``total assets''.
240.12h-1 Exemptions from registration under section 12(g) of the Act.
240.12h-2 [Reserved]
240.12h-3 Suspension of duty to file reports under section 15(d).
240.12h-4 Exemption from duty to file reports under section 15(d).
240.12h-5 Exemption for subsidiary issuers of guaranteed securities and
subsidiary guarantors.
240.12h-6 Certification by a foreign private issuer regarding the
termination of registration of a class of securities under
section 12(g) or the duty to file reports under section 13(a)
or section 15(d).
240.12h-7 Exemption for issuers of securities that are subject to
insurance regulation.
Regulation 13A: Reports of Issuers of Securities Registered Pursuant to
Section 12
Annual Reports
240.13a-1 Requirements of annual reports.
240.13a-2 [Reserved]
240.13a-3 Reporting by Form 40-F registrant.
Other Reports
240.13a-10 Transition reports.
240.13a-11 Current reports on Form 8-K (Sec. 249.308 of this chapter).
240.13a-13 Quarterly reports on Form 10-Q (Sec. 249.308a of this
chapter).
240.13a-14 Certification of disclosure in annual and quarterly reports.
240.13a-15 Controls and procedures.
240.13a-16 Reports of foreign private issuers on Form 6-K (17 CFR
249.306).
240.13a-17 Reports of asset-backed issuers on Form 10-D (Sec. 249.312
of this chapter).
240.13a-18 Compliance with servicing criteria for asset-backed
securities.
240.13a-19 Reports by shell companies on Form 20-F.
[[Page 9]]
240.13a-20 Plain English presentation of specified information.
240.13a-21 Purchases of equity securities by a foreign private issuer
and affiliated purchasers.
Regulation 13b-2: Maintenance of Records and Preparation of Required
Reports
240.13b2-1 Falsification of accounting records.
240.13b2-2 Representations and conduct in connection with the
preparation of required reports and documents.
Regulation 13D-G
240.13d-1 Filing of Schedules 13D and 13G.
240.13d-2 Filing of amendments to Schedules 13D or 13G.
240.13d-3 Determination of beneficial owner.
240.13d-4 Disclaimer of beneficial ownership.
240.13d-5 Acquisition of beneficial ownership.
240.13d-6 Exemption of certain acquisitions.
240.13d-7 [Reserved]
240.13d-101 Schedule 13D--Information to be included in statements filed
pursuant to Sec. 240.13d-1(a) and amendments thereto filed
pursuant to Sec. 240.13d-2(a).
240.13d-102 Schedule 13G--Information to be included in statements filed
pursuant to Sec. 240.13d-1(b), (c), and (d) and amendments
thereto filed pursuant to Sec. 240.13d-2(b).
240.13e-1 Purchase of securities by the issuer during a third-party
tender offer.
240.13e-2 [Reserved]
240.13e-3 Going private transactions by certain issuers or their
affiliates.
240.13e-4 Tender offers by issuers.
240.13e-100 Schedule 13E-3, Transaction statement under section 13(e) of
the Securities Exchange Act of 1934 and Rule 13e-3 (Sec.
240.13e-3) thereunder.
240.13e-101 [Reserved]
240.13e-102 Schedule 13E-4F. Tender offer statement pursuant to section
13(e) (1) of the Securities Exchange Act of 1934 and Sec.
240.13e-4 thereunder.
240.13f-1 Reporting by institutional investment managers of information
with respect to accounts over which they exercise investment
discretion.
240.13f-2 Reporting by institutional investment managers regarding gross
short position and activity information.
240.13h-1 Large trader reporting.
240.13k-1 Foreign bank exemption from the insider lending prohibition
under section 13(k).
240.13n-1 Registration of security-based swap data repository.
240.13n-2 Withdrawal from registration; revocation and cancellation.
240.13n-3 Registration of successor to registered security-based swap
data repository.
240.13n-4 Duties and core principles of security-based swap data
repository.
240.13n-5 Data collection and maintenance.
240.13n-6 Automated systems.
240.13n-7 Recordkeeping of security-based swap data repository.
240.13n-8 Reports to be provided to the Commission.
240.13n-9 Privacy requirements of security-based swap data repository.
240.13n-10 Disclosure requirements of security-based swap data
repository.
240.13n-11 Chief compliance officer of security-based swap data
repository; compliance reports and financial reports.
240.13n-12 Exemption from requirements governing security-based swap
data repositories for certain non-U.S. persons.
240.13p-1 Requirement of report regarding disclosure of registrant's
supply chain information regarding conflict minerals.
240.13q-1 Disclosure of payments made by resource extraction issuers.
Regulation 14A: Solicitations of Proxies
240.14a-1 Definitions.
240.14a-2 Solicitations to which Sec. 240.14a-3 to Sec. 240.14a-15
apply.
240.14a-3 Information to be furnished to security holders.
240.14a-4 Requirements as to proxy.
240.14a-5 Presentation of information in proxy statement.
240.14a-6 Filing requirements.
240.14a-7 Obligations of registrants to provide a list of, or mail
soliciting material to, security holders.
240.14a-8 Shareholder proposals.
240.14a-9 False or misleading statements.
240.14a-10 Prohibition of certain solicitations.
240.14a-12 Solicitation before furnishing a proxy statement.
240.14a-13 Obligation of registrants in communicating with beneficial
owners.
240.14a-14 Modified or superseded documents.
240.14a-15 Differential and contingent compensation in connection with
roll-up transactions.
240.14a-16 Internet availability of proxy materials.
240.14a-17 Electronic shareholder forums.
240.14a-18 Disclosure regarding nominating shareholders and nominees
submitted for inclusion in a registrant's proxy materials
pursuant to applicable state or foreign law, or a registrant's
governing documents.
240.14a-19 Solicitation of proxies in support of director nominees other
than the registrant's nominees.
240.14a-20 Shareholder approval of executive compensation of TARP
recipients.
240.14a-21 Shareholder approval of executive compensation, frequency of
votes for approval of executive compensation and
[[Page 10]]
shareholder approval of golden parachute compensation.
240.14a-101 Schedule 14A. Information required in proxy statement.
240.14a-102 [Reserved]
240.14a-103 Notice of Exempt Solicitation. Information to be included in
statements submitted by or on behalf of a person pursuant to
Sec. 240.14a-6(g).
240.14a-104 Notice of Exempt Preliminary Roll-up Communication.
Information regarding ownership interests and any potential
conflicts of interest to be included in statements submitted
by or on behalf of a person pursuant to Sec. 240.14a-2(b)(4)
and Sec. 240.14a-6(n).
240.14Ad-1 Report of proxy voting record.
240.14b-1 Obligation of registered brokers and dealers in connection
with the prompt forwarding of certain communications to
beneficial owners.
240.14b-2 Obligation of banks, associations and other entities that
exercise fiduciary powers in connection with the prompt
forwarding of certain communications to beneficial owners.
Regulation 14C: Distribution of Information Pursuant to Section 14(c)
240.14c-1 Definitions.
240.14c-2 Distribution of information statement.
240.14c-3 Annual report to be furnished security holders.
240.14c-4 Presentation of information in information statement.
240.14c-5 Filing requirements.
240.14c-6 False or misleading statements.
240.14c-7 Providing copies of material for certain beneficial owners.
240.14c-101 Schedule 14C. Information required in information statement.
Regulation 14D
240.14d-1 Scope of and definitions applicable to Regulations 14D and
14E.
240.14d-2 Commencement of a tender offer.
240.14d-3 Filing and transmission of tender offer statement.
240.14d-4 Dissemination of tender offers to security holders.
240.14d-5 Dissemination of certain tender offers by the use of
stockholder lists and security position listings.
240.14d-6 Disclosure of tender offer information to security holders.
240.14d-7 Additional withdrawal rights.
240.14d-8 Exemption from statutory pro rata requirements.
240.14d-9 Recommendation or solicitation by the subject company and
others.
240.14d-10 Equal treatment of security holders.
240.14d-11 Subsequent offering period.
240.14d-100 Schedule TO. Tender offer statement under section 14(d)(1)
or 13(e)(1) of the Securities Exchange Act of 1934.
240.14d-101 Schedule 14D-9.
240.14d-102 Schedule 14D-1F. Tender offer statement pursuant to rule
14d-1(b) under the Securities Exchange Act of 1934.
240.14d-103 Schedule 14D-9F. Solicitation/recommendation statement
pursuant to section 14(d)(4) of the Securities Exchange Act of
1934 and rules 14d-1(b) and 14e-2(c) thereunder.
Regulation 14E
240.14e-1 Unlawful tender offer practices.
240.14e-2 Position of subject company with respect to a tender offer.
240.14e-3 Transactions in securities on the basis of material, nonpublic
information in the context of tender offers.
240.14e-4 Prohibited transactions in connection with partial tender
offers.
240.14e-5 Prohibiting purchases outside of a tender offer.
240.14e-6 Repurchase offers by certain closed-end registered investment
companies.
240.14e-7 Unlawful tender offer practices in connection with roll-ups.
240.14e-8 Prohibited conduct in connection with pre-commencement
communications.
240.14f-1 Change in majority of directors.
Regulation 14N: Filings Required by Certain Nominating Shareholders
240.14n-1 Filing of Schedule 14N.
240.14n-2 Filing of amendments to Schedule 14N.
240.14n-3 Dissemination.
240.14n-101 Schedule 14N--Information to be included in statements filed
pursuant to Sec. 240.14n-1 and amendments thereto filed
pursuant to Sec. 240.14n-2.
Exemption of Certain OTC Derivatives Dealers
240.15a-1 Securities activities of OTC derivatives dealers.
Exemption of Certain Securities From Section 15(a)
240.15a-2 Exemption of certain securities of cooperative apartment
houses from section 15(a).
240.15a-3 [Reserved]
240.15a-4 Forty-five day exemption from registration for certain members
of national securities exchanges.
240.15a-5 Exemption of certain nonbank lenders.
Registration of Brokers and Dealers
240.15a-6 Exemption of certain foreign brokers or dealers.
240.15a-7--240.15a-9 [Reserved]
[[Page 11]]
240.15a-10 Exemption of certain brokers or dealers with respect to
security futures products.
240.15a-11 [Reserved]
240.15a-12 Exemption for certain security-based swap execution
facilities from certain broker requirements.
240.15b1-1 Application for registration of brokers or dealers.
240.15b1-2 [Reserved]
240.15b1-3 Registration of successor to registered broker or dealer.
240.15b1-4 Registration of fiduciaries.
240.15b1-5 Consent to service of process to be furnished by nonresident
brokers or dealers and by nonresident general partners or
managing agents of brokers or dealers.
240.15b1-6 Notice to brokers and dealers of requirements regarding lost
securityholders and unresponsive payees.
240.15b2-2 Inspection of newly registered brokers and dealers.
240.15b3-1 Amendments to application.
240.15b5-1 Extension of registration for purposes of the Securities
Investor Protection Act of 1970 after cancellation or
revocation.
240.15b6-1 Withdrawal from registration.
240.15b7-1 Compliance with qualification requirements of self-regulatory
organizations.
240.15b7-3T Operational capability in a Year 2000 environment.
240.15b9-1 Exemption for certain exchange members.
240.15b9-2 Exemption from SRO membership for OTC derivatives dealers.
240.15b11-1 Registration by notice of security futures product broker-
dealers.
Rules Relating to Over-the-Counter Markets
240.15c1-1 Definitions.
240.15c1-2 Fraud and misrepresentation.
240.15c1-3 Misrepresentation by brokers, dealers and municipal
securities dealers as to registration.
240.15c1-4 [Reserved]
240.15c1-5 Disclosure of control.
240.15c1-6 Disclosure of interest in distribution.
240.15c1-7 Discretionary accounts.
240.15c1-8 Sales at the market.
240.15c1-9 Use of pro forma balance sheets.
240.15c2-1 Hypothecation of customers' securities.
240.15c2-3 [Reserved]
240.15c2-4 Transmission or maintenance of payments received in
connection with underwritings.
240.15c2-5 Disclosure and other requirements when extending or arranging
credit in certain transactions.
240.15c2-6 [Reserved]
240.15c2-7 Identification of quotations.
240.15c2-8 Delivery of prospectus.
240.15c2-11 Publication or submission of quotations without specified
information.
240.15c2-12 Municipal securities disclosure.
240.15c3-1 Net capital requirements for brokers or dealers.
240.15c3-1a Options (Appendix A to 17 CFR 240.15c3-1).
240.15c3-1b Adjustments to net worth and aggregate indebtedness for
certain commodities transactions (Appendix B to 17 CFR
240.15c3-1).
240.15c3-1c Consolidated computations of net capital and aggregate
indebtedness for certain subsidiaries and affiliates (Appendix
C to 17 CFR 240.15c3-1).
240.15c3-1d Satisfactory Subordination Agreements (Appendix D to 17 CFR
240.15c3-1).
240.15c3-1e Deductions for market and credit risk for certain brokers or
dealers (Appendix E to 17 CFR 240.15c3-1).
240.15c3-1f Optional market and credit risk requirements for OTC
derivatives dealers (Appendix F to 17 CFR 240.15c3-1)
240.15c3-1g Conditions for ultimate holding companies of certain brokers
or dealers (Appendix G to 17 CFR 240.15c3-1).
240.15c3-2 [Reserved]
240.15c3-3 Customer protection--reserves and custody of securities.
240.15c3-3a Exhibit A--Formula for determination of customer and PAB
account reserve requirements of brokers and dealers under
Sec. 240.15c3-3.
240.15c3-3b Exhibit B--Formula for determination of security-based swap
customer reserve requirements of brokers and dealers under
Sec. 240.15c3-3.
240.15c3-4 Internal risk management control systems for OTC derivatives
dealers.
240.15c3-5 Risk management controls for brokers or dealers with market
access.
240.15c6-1 Settlement cycle.
240.15c6-2 Same-day allocation, confirmation, and affirmation.
Regulation 15D: Reports of Registrants Under the Securities Act of 1933
Annual Reports
240.15d-1 Requirement of annual reports.
240.15d-2 Special financial report.
240.15d-3 Reports for depositary shares registered on Form F-6.
240.15d-4 Reporting by Form 40-F Registrants.
240.15d-5 Reporting by successor issuers.
240.15d-6 Suspension of duty to file reports.
Other Reports
240.15d-10 Transition reports.
240.15d-11 Current reports on Form 8-K (Sec. 249.308 of this chapter).
240.15d-13 Quarterly reports on Form 10-Q (Sec. 249.308 of this
chapter).
[[Page 12]]
240.15d-14 Certification of disclosure in annual and quarterly reports.
240.15d-15 Controls and procedures.
240.15d-16 Reports of foreign private issuers on Form 6-K [17 CFR
249.306].
240.15d-17 Reports of asset-backed issuers on Form 10-D (Sec. 249.312
of this chapter).
240.15d-18 Compliance with servicing criteria for asset-backed
securities.
240.15d-19 Reports by shell companies on Form 20-F.
240.15d-20 Plain English presentation of specified information.
Exemption of Certain Issuers From Section 15(d) of the Act
240.15d-21 Reports for employee stock purchase, savings and similar
plans.
240.15d-22 Reporting regarding asset-backed securities under section
15(d) of the Act.
240.15d-23 Reporting regarding certain securities underlying asset-
backed securities under section 15(d) of the Act.
240.15g-1 Exemptions for certain transactions.
240.15g-2 Penny stock disclosure document relating to the penny stock
market.
240.15g-3 Broker or dealer disclosure of quotations and other
information relating to the penny stock market.
240.15g-4 Disclosure of compensation to brokers or dealers.
240.15g-5 Disclosure of compensation of associated persons in connection
with penny stock transactions.
240.15g-6 Account statements for penny stock customers.
240.15g-8 Sales of escrowed securities of blank check companies.
240.15g-9 Sales practice requirements for certain low-priced securities.
240.15g-100 Schedule 15G--Information to be included in the document
distributed pursuant to 17 CFR 240.15g-2.
240.15l-1 Regulation best interest.
National and Affiliated Securities Associations
240.15Aa-1 Registration of a national or an affiliated securities
association.
240.15Aj-1 Amendments and supplements to registration statements of
securities associations.
240.15Al2-1 [Reserved]
240.15Ba1-1 Definitions.
240.15Ba1-2 Registration of municipal advisors and information regarding
certain natural persons.
240.15Ba1-3 Exemption of certain natural persons from registration under
section 15B(a)(1)(B) of the Act.
240.15Ba1-4 Withdrawal from municipal advisor registration.
240.15Ba1-5 Amendments to Form MA and Form MA-I.
240.15Ba1-6 Consent to service of process to be filed by non-resident
municipal advisors; legal opinion to be provided by non-
resident municipal advisors.
240.15Ba1-7 Registration of successor to municipal advisor.
240.15Ba1-8 Books and records to be made and maintained by municipal
advisors.
240.15Ba2-1 Application for registration of municipal securities dealers
which are banks or separately identifiable departments or
divisions of banks.
240.15Ba2-2 Application for registration of non-bank municipal
securities dealers whose business is exclusively intrastate.
240.15Ba2-4 Registration of successor to registered municipal securities
dealer.
240.15Ba2-5 Registration of fiduciaries.
240.15Ba2-6 [Reserved]
240.15Ba2-6T Temporary registration as a municipal advisor; required
amendments; and withdrawal from temporary registration.
240.15Bc3-1 Withdrawal from registration of municipal securities
dealers.
240.15Bc4-1 Persons associated with municipal advisors.
240.15Bc7-1 Availability of examination reports.
Registration of Government Securities Brokers and Government Securities
Dealers
240.15Ca1-1 Notice of government securities broker-dealer activities.
240.15Ca2-1 Application for registration as a government securities
broker or government securities dealer.
240.15Ca2-2 [Reserved]
240.15Ca2-3 Registration of successor to registered government
securities broker or government securities dealer.
240.15Ca2-4 Registration of fiduciaries.
240.15Ca2-5 Consent to service of process to be furnished by non-
resident government securities brokers or government
securities dealers and by non-resident general partners or
managing agents of government securities brokers or government
securities dealers.
240.15Cc1-1 Withdrawal from registration of government securities
brokers or government securities dealers.
Registration and Regulation of Security-based Swap Dealers and Major
Security-based Swap Participants
240.15Fb1-1 Signatures.
240.15Fb2-1 Registration of security-based swap dealers and major
security-based swap participants.
240.15Fb2-3 Amendments to Form SBSE, Form SBSE-A, and Form SBSE-BD.
240.15Fb2-4 Nonresident security-based swap dealers and major security-
based swap participants.
[[Page 13]]
240.15Fb2-5 Registration of successor to registered security-based swap
dealer or major security-based swap participant.
240.15Fb2-6 Registration of fiduciaries.
240.15Fb3-1 Duration of registration.
240.15Fb3-2 Withdrawal from registration.
240.15Fb3-3 Cancellation or revocation from registration.
240.15Fb6-1 [Reserved]
240.15Fb6-2 Associated person certification.
240.15Fh-1 Scope and reliance on representations.
240.15Fh-2 Definitions.
240.15Fh-3 Business conduct requirements.
240.15fh-4 (Rule 15fh-4) Antifraud provisions for security-based swap
dealers and major security-based swap participants; special
requirements for security-based swap dealers acting as
advisors to special entities.
240.15Fh-5 Special requirements for security-based swap dealers and
major security-based swap participants acting as
counterparties to special entities.
240.15Fh-6 Political contributions by certain security-based swap
dealers.
240.15Fi-1 Definitions.
240.15Fi-2 Acknowledgment and verification of security-based swap
transactions.
240.15Fi-3 Security-based swap portfolio reconciliation.
240.15Fi-4 Security-based swap portfolio compression.
240.15Fi-5 Security-based swap trading relationship documentation.
240.15Fk-1 Designation of chief compliance officer for security-based
swap dealers and major security-based swap participants.
240.15Ga-1 Repurchases and replacements relating to asset-backed
securities.
240.15Ga-2 Findings and conclusions of third-party due diligence
reports.
Reports of Directors, Officers, and Principal Shareholders
240.16a-1 Definition of terms.
240.16a-2 Persons and transactions subject to section 16.
240.16a-3 Reporting transactions and holdings.
240.16a-4 Derivative securities.
240.16a-5 Odd-lot dealers.
240.16a-6 Small acquisitions.
240.16a-7 Transactions effected in connection with a distribution.
240.16a-8 Trusts.
240.16a-9 Stock splits, stock dividends, and pro rata rights.
240.16a-10 Exemptions under section 16(a).
240.16a-11 Dividend or interest reinvestment plans.
240.16a-12 Domestic relations orders.
240.16a-13 Change in form of beneficial ownership.
Exemption of Certain Transactions From Section 16(b)
240.16b-1 Transactions approved by a regulatory authority.
240.16b-2 [Reserved]
240.16b-3 Transactions between an issuer and its officers or directors.
240.16b-4 [Reserved]
240.16b-5 Bona fide gifts and inheritance.
240.16b-6 Derivative securities.
240.16b-7 Mergers, reclassifications, and consolidations.
240.16b-8 Voting trusts.
Exemption of Certain Transactions From Section 16(c)
240.16c-1 Brokers.
240.16c-2 Transactions effected in connection with a distribution.
240.16c-3 Exemption of sales of securities to be acquired.
240.16c-4 Derivative securities.
Arbitrage Transactions
240.16e-1 Arbitrage transactions under section 16.
Preservation of Records and Reports of Certain Stabilizing Activities
240.17a-1 Recordkeeping rule for national securities exchanges, national
securities associations, registered clearing agencies and the
Municipal Securities Rulemaking Board.
240.17a-2 Recordkeeping requirements relating to stabilizing activities.
240.17a-3 Records to be made by certain exchange members, brokers and
dealers.
240.17a-4 Records to be preserved by certain exchange members, brokers
and dealers.
240.17a-5 Reports to be made by certain brokers and dealers.
240.17a-6 Right of national securities exchange, national securities
association, registered clearing agency or the Municipal
Securities Rulemaking Board to destroy or dispose of
documents.
240.17a-7 Records of non-resident brokers and dealers.
240.17a-8 Financial recordkeeping and reporting of currency and foreign
transactions.
240.17a-9T Records to be made and retained by certain exchange members,
brokers and dealers.
240.17a-10 Report of revenue and expenses.
240.17a-11 Notification provisions for brokers and dealers.
240.17a-12 Reports to be made by certain OTC derivatives dealers.
240.17a-13 Quarterly security counts to be made by certain exchange
members, brokers, and dealers.
240.17a-14 Form CRS, for preparation, filing and delivery of Form CRS.
240.17a-18 [Reserved]
[[Page 14]]
240.17a-19 Form X-17A-19 Report by national securities exchanges and
registered national securities associations of changes in the
membership status of any of their members.
240.17a-21 Reports of the Municipal Securities Rulemaking Board.
240.17a-22 Supplemental material of registered clearing agencies.
240.17a-25 Electronic submission of securities transaction information
by exchange members, brokers, and dealers.
240.17d-1 Examination for compliance with applicable financial
responsibility rules.
240.17d-2 Program for allocation of regulatory responsibility.
240.17f-1 Requirements for reporting and inquiry with respect to
missing, lost, counterfeit or stolen securities.
240.17f-2 Fingerprinting of securities industry personnel.
Nationally Recognized Statistical Rating Organizations
240.17g-1 Application for registration as a nationally recognized
statistical rating organization.
240.17g-2 Records to be made and retained by nationally recognized
statistical rating organizations.
240.17g-3 Annual financial and other reports to be filed or furnished by
nationally recognized statistical rating organizations.
240.17g-4 Prevention of misuse of material nonpublic information.
240.17g-5 Conflicts of interest.
240.17g-6 Prohibited acts and practices.
240.17g-7 Disclosure requirements.
240.17g-8 Policies, procedures, and internal controls.
240.17g-9 Standards of training, experience, and competence for credit
analysts.
240.17g-10 Certification of providers of third-party due diligence
services in connection with asset-backed securities.
240.17h-1T Risk assessment recordkeeping requirements for associated
persons of brokers and dealers.
240.17h-2T Risk assessment reporting requirements for brokers and
dealers.
240.17Ab2-1 Registration of clearing agencies.
240.17Ab2-2 Determinations affecting covered clearing agencies.
240.17Ac2-1 Application for registration of transfer agents.
240.17Ac2-2 Annual reporting requirement for registered transfer agents.
240.17Ac3-1 Withdrawal from registration with the Commission.
240.17Ad-1 Definitions.
240.17Ad-2 Turnaround, processing, and forwarding of items.
240.17Ad-3 Limitations on expansion.
240.17Ad-4 Applicability of Sec. Sec. 240.17Ad-2, 240.17Ad-3 and
240.17Ad-6(a) (1) through (7) and (11).
240.17Ad-5 Written inquiries and requests.
240.17Ad-6 Recordkeeping.
240.17Ad-7 Record retention.
240.17Ad-8 Securities position listings.
240.17Ad-9 Definitions.
240.17Ad-10 Prompt posting of certificate detail to master
securityholder files, maintenance of accurate securityholder
files, communications between co-transfer agents and
recordkeeping transfer agents, maintenance of current control
book, retention of certificate detail and ``buy-in'' of
physical over-issuance.
240.17Ad-11 Reports regarding aged record differences, buy-ins and
failure to post certificate detail to master securityholder
and subsidiary files.
240.17Ad-12 Safeguarding of funds and securities.
240.17Ad-13 Annual study and evaluation of internal accounting control.
240.17Ad-14 Tender agents.
240.17Ad-15 Signature guarantees.
240.17Ad-16 Notice of assumption or termination of transfer agent
services.
240.17Ad-17 Lost securityholders and unresponsive payees.
240.17Ad-18 Year 2000 Reports to be made by certain transfer agents.
240.17Ad-19 Requirements for cancellation, processing, storage,
transportation, and destruction or other disposition of
securities certificates.
240.17Ad-20 Issuer restrictions or prohibitions on ownership by
securities intermediaries.
240.17Ad-21T Operational capability in a Year 2000 environment.
240.17ad-22 Standards for clearing agencies.
240.17Ad-24 Exemption from clearing agency definition for certain
registered security-based swap dealers, registered security-
based swap execution facilities, and entities engaging in
dealing activity in security-based swaps that are eligible for
an exception under Sec. 240.3a71-2(a) (or subject to the
period set forth in Sec. 240.3a71-2(b)).
240.17ad-25 Clearing agency boards of directors and conflicts of
interest.
240.17Ad-27 Straight-through processing by clearing agencies that
provide a central matching service.
Capital, Margin and Segregation Requirements for Security-Based Swap
Dealers and Major Security-Based Swap Participants
240.18a-1 Net capital requirements for security-based swap dealers for
which there is not a prudential regulator.
240.18a-1a Options.
240.18a-1b Adjustments to net worth for certain commodities
transactions.
240.18a-1c Consolidated computations of net capital for certain
subsidiaries and affiliates of security-based swap dealers.
[[Page 15]]
240.18a-1d Satisfactory subordinated loan agreements.
240.18a-2 Capital requirements for major security-based swap
participants for which there is not a prudential regulator.
240.18a-3 Non-cleared security-based swap margin requirements for
security-based swap dealers and major security-based swap
participants for which there is not a prudential regulator.
240.18a-4 Segregation requirements for security-based swap dealers and
major security-based swap participants.
240.18a-4a Exhibit A--Formula for determination of security-based swap
customer reserve requirements under Sec. 240.18a-4.
240.18a-5 Records to be made by certain security-based swap dealers and
major security-based swap participants.
240.18a-6 Records to be preserved by certain security-based swap dealers
and major security-based swap participants.
240.18a-7 Reports to be made by certain security-based swap dealers and
major security-based swap participants.
240.18a-8 Notification provisions for security-based swap dealers and
major security-based swap participants.
240.18a-9 Quarterly security counts to be made by certain security-based
swap dealers.
240.18a-10 Alternative compliance mechanism for security-based swap
dealers that are registered as swap dealers and have limited
security-based swap activities.
Suspension and Expulsion of Exchange Members
240.19a3-1 [Reserved]
240.19b-3 [Reserved]
240.19b-4 Filings with respect to proposed rule changes by self-
regulatory organizations.
240.19b-5 Temporary exemption from the filing requirements of Section
19(b) of the Act.
240.19b-7 Filings with respect to proposed rule changes submitted
pursuant to Section 19(b)(7) of the Act.
240.19c-1 Governing certain off-board agency transactions by members of
national securities exchanges.
240.19c-3 Governing off-board trading by members of national securities
exchanges.
240.19c-4 Governing certain listing or authorization determinations by
national securities exchanges and associations.
240.19c-5 Governing the multiple listing of options on national
securities exchanges.
240.19d-1 Notices by self-regulatory organizations of final disciplinary
actions, denials, bars, or limitations respecting membership,
association, participation, or access to services, and summary
suspensions.
240.19d-2 Applications for stays of disciplinary sanctions or summary
suspensions by a self-regulatory organization.
240.19d-3 Applications for review of final disciplinary sanctions,
denials of membership, participation or association, or
prohibitions or limitations of access to services imposed by
self-regulatory organizations.
240.19d-4 Notice by the Public Company Accounting Oversight Board of
disapproval of registration or of disciplinary action.
240.19g2-1 Enforcement of compliance by national securities exchanges
and registered securities associations with the Act and rules
and regulations thereunder.
240.19h-1 Notice by a self-regulatory organization of proposed admission
to or continuance in membership or participation or
association with a member of any person subject to a statutory
disqualification, and applications to the Commission for
relief therefrom.
Securities Whistleblower Incentives and Protections
240.21F-1 General.
240.21F-2 Whistleblower status, award eligibility, confidentiality, and
retaliation protections.
240.21F-3 Payment of award.
240.21F-4 Other definitions.
240.21F-5 Amount of award.
240.21F-6 Criteria for determining amount of award.
240.21F-7 Confidentiality of submissions.
240.21F-8 Eligibility and forms.
240.21F-9 Procedures for submitting original information.
240.21F-10 Procedures for making a claim for a whistleblower award in
SEC actions that result in monetary sanctions in excess of
$1,000,000
240.21F-11 Procedures for determining awards based upon a related
action.
240.21F-12 Materials that may be used as the basis for an award
determination and that may comprise the record on appeal.
240.21F-13 Appeals.
240.21F-14 Procedures applicable to the payment of awards.
240.21F-15 No amnesty.
240.21F-16 Awards to whistleblowers who engage in culpable conduct.
240.21F-17 Staff communications with individuals reporting possible
securities law violations.
240.21F-18 Summary disposition.
Inspection and Publication of Information Filed Under the Act
240.24b-1 Documents to be kept public by exchanges.
240.24b-2 Nondisclosure of information filed with the Commission and
with any exchange.
[[Page 16]]
240.24b-3 Information filed by issuers and others under sections 12, 13,
14, and 16.
240.24c-1 Access to nonpublic information.
240.31 Section 31 transaction fees.
240.31T Temporary rule regarding fiscal year 2004.
240.36a1-1 Exemption from Section 7 for OTC derivatives dealers.
240.36a1-2 Exemption from SIPA for OTC derivatives dealers.
Subpart B--Rules and Regulations Under the Securities Investor Protection
Act of 1970 [Reserved]
Authority: 15 U.S.C. 77c, 77d, 77g, 77j, 77s, 77z-2, 77z-3, 77eee,
77ggg, 77nnn, 77sss, 77ttt, 78c, 78c-3, 78c-5, 78d, 78e, 78f, 78g, 78i,
78j, 78j-1, 78j-4, 78k, 78k-1, 78l, 78m, 78n, 78n-1, 78o, 78o-4, 78o-10,
78p, 78q, 78q-1, 78s, 78u-5, 78w, 78x, 78dd, 78ll, 78mm, 80a-20, 80a-23,
80a-29, 80a-37, 80b-3, 80b-4, 80b-11, 7201 et seq., and 8302; 7 U.S.C.
2(c)(2)(E); 12 U.S.C.5221(e)(3); 18 U.S.C. 1350; and Pub. L. 111-203,
939A, 124 Stat.1376 (2010); and Pub. L. 112-106, sec. 503 and 602, 126
Stat. 326 (2012), unless otherwise noted.
Section 240.3a4-1 also issued under secs. 3 and 15, 89 Stat. 97, as
amended, 89 Stat. 121 as amended;
Section 240.3a12-8 also issued under 15 U.S.C. 78a et seq.,
particularly secs. 3(a)(12), 15 U.S.C. 78c(a)(12), and 23(a), 15 U.S.C.
78w(a);
Section 240.3a12-10 also issued under 15 U.S.C. 78b and c;
Section 240.3a12-9 also issued under secs. 3(a)(12), 7(c), 11(d)(1),
15 U.S.C. 78c(a)(12), 78g(c), 78k(d)(1));
Sections 240.3a43-1 and 240.3a44-1 also issued under sec. 3; 15
U.S.C. 78c;
Sections 3a67-1 through 3a67-9 and 3a71-1 and 3a71-2 are also issued
under Pub. L. 111-203, Sec. Sec. 712, 761(b), 124 Stat. 1841 (2010).
Sections 240.3a67-10, 240.3a71-3, 240.3a71-4, and 240.3a71-5 are
also issued under Pub. L. 111-203, section 761(b), 124 Stat. 1754
(2010), and 15 U.S.C. 78dd(c).
Sections 240.3a71-3 and 240.3a71-5 are also issued under Pub. L.
111-203, sec. 761(b), 124 Stat. 1754 (2010), and 15 U.S.C. 78dd(c).
Section 240.3b-6 is also issued under 15 U.S.C. 77f, 77g, 77h, 77j,
77s(a).
Section 240.3b-9 also issued under secs. 2, 3 and 15, 89 Stat. 97,
as amended, 89 Stat. 121, as amended (15 U.S.C. 78b, 78c, 78o);
Section 240.9b-1 is also issued under sec. 2, 7, 10, 19(a), 48 Stat.
74, 78, 81, 85; secs. 201, 205, 209, 120, 48 Stat. 905, 906, 908; secs.
1-4, 8, 68 Stat. 683, 685; sec. 12(a), 73 Stat. 143; sec. 7(a), 74 Stat.
412; sec. 27(a), 84 Stat. 1433; sec. 308(a)(2), 90 Stat. 57; sec. 505,
94 Stat. 2292; secs. 9, 15, 23(a), 48 Stat. 889, 895, 901; sec. 230(a),
49 Stat. 704; secs. 3, 8, 49 Stat. 1377, 1379; sec. 2, 52 Stat. 1075;
secs. 6, 10, 78 Stat. 570-574, 580; sec. 11(d), 84 Stat. 121; sec. 18,
89 Stat. 155; sec. 204, 91 Stat. 1500; 15 U.S.C. 77b, 77g, 77j, 77s(a),
78i, 78o, 78w(a);
Section 240.10b-10 is also issued under secs. 2, 3, 9, 10, 11, 11A,
15, 17, 23, 48 Stat. 891, 89 Stat. 97, 121, 137, 156, (15 U.S.C. 78b,
78c, 78i, 78j, 78k, 78k-1, 78o, 78q).
Section 240.12a-7 also issued under 15 U.S.C. 78a et seq.,
particularly secs. 3(a)(12), 15 U.S.C. 78c(a)(12), 6, 15 U.S.C. 78(f),
11A, 15 U.S.C. 78k, 12, 15 U.S.C. 78(l), and 23(a)(1), 15 U.S.C.
78(w)(a)(1).
Sections 240.12b-1 to 240.12b-36 also issued under secs. 3, 12, 13,
15, 48 Stat. 892, as amended, 894, 895, as amended; 15 U.S.C. 78c, 78l,
78m, 78o;
Section 240.12b-15 is also issued under secs. 3(a) and 302, Pub. L.
No. 107-204, 116 Stat. 745.
Section 240.12b-25 is also issued under 15 U.S.C. 80a-8, 80a-24(a),
80a-29, and 80a-37.
Section 240.12g-3 is also issued under 15 U.S.C. 77f, 77g, 77h, 77j,
77s(a).
Section 240.12g3-2 is also issued under 15 U.S.C. 77f, 77g, 77h,
77j, 77s(a).
Section 240.13a-10 is also issued under secs. 3(a) and 302, Pub. L.
No. 107-204, 116 Stat. 745.
Section 240.13a-11 is also issued under secs. 3(a) and 306(a), Pub.
L. 107-204, 116 Stat. 745.
Section 240.13a-14 is also issued under secs. 3(a) and 302, Pub. L.
No. 107-204, 116 Stat. 745.
Section 240.13a-15 is also issued under secs. 3(a) and 302, Pub. L.
No. 107-204, 116 Stat. 745.
Section 240.13d-3 is also issued under Public Law 111-203 Sec. 766,
124 Stat. 1799 (2010).
Sections 240.13e-4, 240.14d-7, 240.14d-10 and 240.14e-1 also issued
under secs. 3(b), 9(a)(6), 10(b), 13(e), 14(d) and 14(e), 15 U.S.C.
78c(b), 78i(a)(6), 78j(b), 78m(e), 78n(d) and 78n(e) and sec. 23(c) of
the Investment Company Act of 1940, 15 U.S.C 80a-23(c);
Sections 240.13e-4 to 240.13e-101 also issued under secs. 3(b),
9(a)(6), 10(b), 13(e), 14(e), 15(c)(1), 48 Stat. 882, 889, 891, 894,
895, 901, sec. 8, 49 Stat. 1379, sec. 5, 78 Stat. 569, 570, secs. 2, 3,
82 Stat. 454, 455, secs. 1, 2, 3-5, 84 Stat. 1497, secs. 3, 18, 89 Stat.
97, 155; 15 U.S.C. 78c(b), 78i(a)(6), 78j(b), 78m(e), 78n(e), 78o(c);
sec. 23(c) of the Investment Company Act of 1940; 54 Stat. 825; 15
U.S.C. 80a-23(c);
Section 240.13p-1 is also issued under sec. 1502, Pub. L. 111-203,
124 Stat. 1376.
Section 240.13q-1 is also issued under sec. 1504, Pub. L. 111-203,
124 Stat. 2220.
Sections 240.14a-1, 240.14a-3, 240.14a-13, 240.14b-1, 240.14b-2,
240.14c-1, and 240.14c-7 also issued under secs. 12, 15 U.S.C. 781, and
14, Pub. L. 99-222, 99 Stat. 1737, 15 U.S.C. 78n;
Sections 240.14a-3, 240.14a-13, 240.14b-1 and 240.14c-7 also issued
under secs. 12, 14 and 17, 15 U.S.C. 781, 78n and 78g;
Sections 240.14c-1 to 240.14c-101 also issued under sec. 14, 48
Stat. 895; 15 U.S.C. 78n;
Section 240.14d-1 is also issued under 15 U.S.C. 77g, 77j, 77s(a),
77ttt(a), 80a-37.
Section 240.14e-2 is also issued under 15 U.S.C. 77g, 77h, 77s(a),
77sss, 80a-37(a).
[[Page 17]]
Section 240.14e-4 also issued under the Exchange Act, 15 U.S.C. 78a
et seq., and particularly sections 3(b), 10(a), 10(b), 14(e), 15(c), and
23(a) of the Exchange Act (15 U.S.C. 78c(b), 78j(a), 78j(b), 78n(e),
78o(c), and 78w(a)).
Section 240.15a-6, also issued under secs. 3, 10, 15, and 17, 15
U.S.C. 78c, 78j, 78o, and 78q;
Section 240.15b1-3 also issued under sec. 15, 17; 15 U.S.C. 78o 78q;
Sections 240.15b1-3 and 240.15b2-1 also issued under 15 U.S.C. 78o,
78q;
Section 240.15b2-2 also issued under secs. 3, 15; 15 U.S.C. 78c,
78o;
Sections 240.15b10-1 to 240.15b10-9 also issued under secs. 15, 17,
48 Stat. 895, 897, sec. 203, 49 Stat. 704, secs. 4, 8, 49 Stat. 1379,
sec. 5, 52 Stat. 1076, sec. 6, 78 Stat. 570; 15 U.S.C. 78o, 78q, 12
U.S.C. 241 nt.;
Section 240.15c2-6, also issued under secs. 3, 10, and 15, 15 U.S.C.
78c, 78j, and 78o.
Section 240.15c2-11 also issued under 15 U.S.C. 78j(b), 78o(c),
78q(a), and 78w(a).
Section 240.15c2-12 also issued under 15 U.S.C. 78b, 78c, 78j, 78o,
78o-4 and 78q.
Section 240.15c3-1 is also issued under 15 U.S.C. 78o(c)(3), 78o-
10(d), and 78o-10(e).
Sections 240.15c3-1a, 240.15c3-1e, 240.15c3-1f, 240.15c3-1g are also
issued under Pub. L. 111-203, secs. 939, 939A, 124. Stat. 1376 (2010)
(15 U.S.C. 78c, 15 U.S.C. 78o-7 note).
Section 240.15c3-3 is also issued under 15 U.S.C. 78c-5, 78o(c)(2),
78(c)(3), 78q(a), 78w(a); sec. 6(c), 84 Stat. 1652; 15 U.S.C. 78fff.
Section 240.15c3-3(o) is also issued under Pub. L. 106-554, 114
Stat. 2763, section 203.
Section 240.15c3-3a is also issued under Pub. L. 111-203, Sec. 939,
939A, 124. Stat. 1376 (2010) (15 U.S.C. 78c, 15 U.S.C. 78o-7 note).
Section 240.15d-5 is also issued under 15 U.S.C. 77f, 77g, 77h, 77j,
77s(a).
Section 240.15d-10 is also issued under 15 U.S.C. 80a-20(a) and 80a-
37(a), and secs. 3(a) and 302, Pub. L. No. 107-204, 116 Stat. 745.
Section 240.15d-11 is also issued under secs. 3(a) and 306(a), Pub.
L. 107-204, 116 Stat. 745.
Section 240.15d-14 is also issued under secs. 3(a) and 302, Pub. L.
No. 107-204, 116 Stat. 745.
Section 240.15d-15 is also issued under secs. 3(a) and 302, Pub. L.
No. 107-204, 116 Stat. 745.
Section 240.15l-1 is also issued under Pub. L. 111-203, sec. 913,
124 Stat. 1376, 1827 (2010).
Sections 240.15Ba1-1 through 240.15Ba1-8 are also issued under sec.
975, Public Law 111-203, 124 Stat. 1376 (2010).
Section 240.15Bc4-1 is also issued under sec. 975, Public Law 111-
203, 124 Stat. 1376 (2010).
Sections 240.15Ca1-1, 240.15Ca2-1, 240.15Ca2-2, 240.15Ca2-3,
240.15Ca2-4, 240.15Ca2-5, 240.15Cc1-1 also issued under secs. 3, 15C; 15
U.S.C. 78c, 78o-5;
Sections 240.15Fh-1 through 240.15Fh-6 and 240.15Fk-1 are also
issued under sec. 943, Pub. L. 111-203, 124 Stat. 1376.
Section 240.15Ga-1 is also issued under sec. 943, Pub. L. 111-203,
124 Stat. 1376.
Section 240.15Ga-2 is also issued under sec. 943, Pub. L. 111-203,
124 Stat. 1376. Section 240.16a-1(a) is also issued under Public Law
111-203 Sec. 766, 124 Stat. 1799 (2010).
Sections 240.15fh-1 through 240.15Fh-6 and 240.15Fk-1 are also
issued under sec. 943, Pub. L. 111-203, 124 Stat. 1376.
Section 240.17a-3 also issued under secs. 2, 17, 23a, 48 Stat. 897,
as amended; 15 U.S.C. 78d-1, 78d-2, 78q; secs. 12, 14, 17, 23(a), 48
Stat. 892, 895, 897, 901; secs. 1, 4, 8, 49 Stat. 1375, 1379; sec.
203(a), 49 Stat. 704; sec. 5, 52 Stat. 1076; sec. 202, 68 Stat. 686;
secs. 3, 5, 10, 78 Stat. 565-568, 569, 570, 580; secs. 1, 3, 82 Stat.
454, 455; secs. 28(c), 3-5, 84 Stat. 1435, 1497; sec. 105(b), 88 Stat.
1503; secs. 8, 9, 14, 18, 89 Stat. 117, 118, 137, 155; 15 U.S.C. 78l,
78n, 78q, 78w(a);
Section 240.17a-4 also issued under secs. 2, 17, 23(a), 48 Stat.
897, as amended; 15 U.S.C. 78a, 78d-1, 78d-2; sec. 14, Pub. L. 94-29, 89
Stat. 137 (15 U.S.C. 78a); sec. 18, Pub. L. 94-29, 89 Stat. 155 (15
U.S.C. 78w);
Section 240.17a-14 is also issued under Public Law 111-203, sec.
913, 124 Stat. 1376 (2010)
Section 240.17a-23 also issued under 15 U.S.C. 78b, 78c, 78o, 78q,
and 78w(a).
Section 240.17f-1 is also authorized under sections 2, 17 and 17A,
48 Stat. 891, 89 Stat. 137, 141 (15 U.S.C. 78b, 78q, 78q-1);
Section 240.17g-7 is also issued under sec. 943, Pub. L. 111-203,
124 Stat. 1376.
Section 240.17g-8 is also issued under sec. 938, Pub. L. 111-203,
124 Stat. 1376.
Section 240.17g-9 is also issued under sec. 936, Pub. L. 111-203,
124 Stat. 1376.
Section 240.17h-1T also issued under 15 U.S.C. 78q.
Sections 240.17Ac2-1(c) and 240.17Ac2-2 also issued under secs. 17,
17A and 23(a); 48 Stat. 897, as amended, 89 Stat. 137, 141 and 48 Stat.
901 (15 U.S.C. 78q, 78q-1, 78w(a));
Section 240.17Ad-1 is also issued under secs. 2, 17, 17A and 23(a);
48 Stat. 841 as amended, 48 Stat. 897, as amended, 89 Stat. 137, 141,
and 48 Stat. 901 (15 U.S.C. 78b, 78q, 78q-1, 78w);
Sections 240.17Ad-5 and 240.17Ad-10 are also issued under secs. 3
and 17A; 48 Stat. 882, as amended, and 89 Stat. (15 U.S.C. 78c and 78q-
1);
Section 240.17Ad-7 also issued under 15 U.S.C. 78b, 78q, and 78q-1.
Section 240.17Ad-17 is also issued under Pub. L. 111-203, section
929W, 124 Stat. 1869 (2010).
Section 240.17ad-22 is also issued under 12 U.S.C. 5461 et seq.
Sections 240.18a-1, 240.18a-1a, 240.18a-1b, 240.18a-1c, 240.18a-1d,
240.18a-2, 240.18a-3, and 240.18a-10 are also issued under 15 U.S.C.
78o-10(d) and 78o-10(e).
Section 240.18a-4 is also issued under 15 U.S.C. 78c-5(f).
Section 240.19b-4 is also issued under 12 U.S.C. 5465(e).
[[Page 18]]
Sections 240.19c-4 also issued under secs. 6, 11A, 14, 15A, 19 and
23 of the Securities Exchange Act of 1934 (15 U.S.C. 78o-3, and 78s);
Section 240.19c-5 also issued under Sections 6, 11A, and 19 of the
Securities Exchange Act of 1934, 48 Stat. 885, as amended, 89 Stat. 111,
as amended, and 48 Stat. 898, as amended, 15 U.S.C. 78f, 78k-1, and 78s.
Section 240.21F is also issued under Pub. L. 111-203, Sec. 922(a),
124 Stat. 1841 (2010).
Section 240.31-1 is also issued under sec. 31, 48 Stat. 904, as
amended (15 U.S.C. 78ee).
Editorial Note: Nomenclature changes to part 240 appear at 57 FR
36501, Aug. 13, 1992, and 57 FR 47409, Oct. 16, 1992.
Note: In Sec. Sec. 240.0-1 to 240.24b-3, the numbers to the right
of the decimal point correspond with the respective rule numbers of the
rules and regulations under the Securities Exchange Act of 1934.
ATTENTION ELECTRONIC FILERS
THIS REGULATION SHOULD BE READ IN CONJUNCTION WITH REGULATION S-T
(PART 232 OF THIS CHAPTER), WHICH GOVERNS THE PREPARATION AND SUBMISSION
OF DOCUMENTS IN ELECTRONIC FORMAT. MANY PROVISIONS RELATING TO THE
PREPARATION AND SUBMISSION OF DOCUMENTS IN PAPER FORMAT CONTAINED IN
THIS REGULATION ARE SUPERSEDED BY THE PROVISIONS OF REGULATION S-T FOR
DOCUMENTS REQUIRED TO BE FILED IN ELECTRONIC FORMAT.
Subpart A_Rules and Regulations Under the Securities Exchange Act of
1934
Rules of General Application
Sec. 240.0-1 Definitions.
(a) As used in the rules and regulations in this part, prescribed by
the Commission pursuant to Title I of the Securities Exchange Act of
1934 (48 Stat. 881-905; 15 U.S.C. chapter 2B), unless the context
otherwise specifically requires:
(1) The term Commission means the Securities and Exchange
Commission.
(2) The term act means Title I of the Securities Exchange Act of
1934.
(3) The term section refers to a section of the Securities Exchange
Act of 1934. \1\
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\1\ The provisions of paragraph (a)(3) of 17 CFR 240.0-1 relate to
the terminology of rules and regulations as published by the Securities
and Exchange Commission and are inapplicable to the terminology
appearing in the Code of Federal Regulations.
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(4) The term rules and regulations refers to all rules and
regulations adopted by the Commission pursuant to the act, including the
forms for registration and reports and the accompanying instructions
thereto.
(5) The term electronic filer means a person or an entity that
submits filings electronically pursuant to Rules 100 and 101 of
Regulation S-T (Sec. Sec. 232.100 and 232.101 of this chapter,
respectively).
(6) The term electronic filing means a document under the federal
securities laws that is transmitted or delivered to the Commission in
electronic format.
(b) Unless otherwise specifically stated, the terms used in this
part shall have the meaning defined in the act.
(c) A rule or regulation which defines a term without express
reference to the act or to the rules and regulations, or to a portion
thereof, defines such term for all purposes as used both in the act and
in the rules and regulations, unless the context otherwise specifically
requires.
(d) Unless otherwise specified or the context otherwise requires,
the term prospectus means a prospectus meeting the requirements of
section 10(a) of the Securities Act of 1933 as amended.
Cross References: For definition of ``listed'', see Sec. 240.3b-1;
``officer'', Sec. 240.3b-2; ``short sale'', Sec. 240.3b-3. For
additional definitions, see Sec. 240.15c1-1.
[13 FR 8178, Dec. 22, 1948, as amended at 13 FR 9321, Dec. 31, 1948; 19
FR 6730, Oct. 20, 1954; 58 FR 14682, Mar. 18, 1993; 62 FR 36459, July 8,
1997]
Sec. 240.0-2 Business hours of the Commission.
(a) The principal office of the Commission, at 100 F Street, NE,
Washington, DC 20549, is open each day, except Saturdays, Sundays, and
Federal holidays, from 9 a.m. to 5:30 p.m., Eastern Standard Time or
Eastern Daylight Saving Time, whichever currently is in effect in
Washington, DC, provided that hours for the filing of documents pursuant
to the Act or the rules and regulations thereunder are as set forth in
paragraphs (b) and (c) of this section.
[[Page 19]]
(b) Submissions made in paper. Paper documents filed with or
otherwise furnished to the Commission may be submitted to the Commission
each day, except Saturdays, Sundays and federal holidays, from 8 a.m. to
5:30 p.m., Eastern Standard Time or Eastern Daylight Saving Time,
whichever is currently in effect.
(c) Electronic filings. Filings made by direct transmission may be
submitted to the Commission each day, except Saturdays, Sundays, and
Federal holidays, from 6 a.m. to 10 p.m., Eastern Standard Time or
Eastern Daylight Saving Time, whichever is currently in effect.
Cross References: For registration and exemption of exchanges, see
Sec. Sec. 240.6a-1 to 240.6a-3. For forms for permanent registration of
securities, see Sec. 240.12b-1. For regulations relating to
registration of securities, see Sec. Sec. 240.12b-1 to 240.12b-36. For
forms for applications for registration of brokers and dealers, see
Sec. Sec. 240.15b1-1 to 240.15b9-1.
[58 FR 14682, Mar. 18, 1993, as amended at 65 FR 24801, Apr. 27, 2000;
68 FR 25799, May 13, 2003; 73 FR 973, Jan. 4, 2008; 88 FR 12209, Feb.
27, 2023]
Sec. 240.0-3 Filing of material with the Commission.
(a) All papers required to be filed with the Commission pursuant to
the Act or the rules and regulations thereunder shall be filed at the
principal office in Washington, DC. Material may be filed by delivery to
the Commission, through the mails or otherwise. The date on which papers
are actually received by the Commission shall be the date of filing
thereof if all of the requirements with respect to the filing have been
complied with, except that if the last day on which papers can be
accepted as timely filed falls on a Saturday, Sunday or holiday, such
papers may be filed on the first business day following.
(b) The manually signed original (or in the case of duplicate
originals, one duplicate original) of all registrations, applications,
statements, reports, or other documents filed under the Securities
Exchange Act of 1934, as amended, shall be numbered sequentially (in
addition to any internal numbering which otherwise may be present) by
handwritten, typed, printed, or other legible form of notation from the
facing page of the document through the last page of that document and
any exhibits or attachments thereto. Further, the total number of pages
contained in a numbered original shall be set forth on the first page of
the document.
(c) Each document filed shall contain an exhibit index, which should
immediately precede the exhibits filed with such document. The index
shall list each exhibit filed and identify by handwritten, typed,
printed, or other legible form of notation in the manually signed
original, the page number in the sequential numbering system described
in paragraph (b) of this section where such exhibit can be found or
where it is stated that the exhibit is incorporated by reference.
Further, the first page of the manually signed document shall list the
page in the filing where the exhibit index is located.
[44 FR 4666, Jan. 23, 1979, as amended at 45 FR 58828, Sept. 5, 1980]
Sec. 240.0-4 Nondisclosure of information obtained in examinations
and investigations.
Information or documents obtained by officers or employees of the
Commission in the course of any examination or investigation pursuant to
section 17(a) (48 Stat. 897, section 4, 49 Stat. 1379; 15 U.S.C. 78q(a))
or 21(a) (48 Stat. 899; 15 U.S.C. 78u(a)) shall, unless made a matter of
public record, be deemed confidential. Except as provided by 17 CFR
203.2, officers and employees are hereby prohibited from making such
confidential information or documents or any other non-public records of
the Commission available to anyone other than a member, officer or
employee of the Commission, unless the Commission or the General
Counsel, pursuant to delegated authority, authorizes the disclosure of
such information or the production of such documents as not being
contrary to the public interest. Any officer or employee who is served
with a subpoena requiring the disclosure of such information or the
production of such documents shall appear in court and, unless the
authorization described in the preceding sentence shall have been given,
shall respectfully decline to disclose
[[Page 20]]
the information or produce the documents called for, basing his or her
refusal upon this section. Any officer or employee who is served with
such a subpoena shall promptly advise the General Counsel of the service
of such subpoena, the nature of the information or documents sought, and
any circumstances which may bear upon the desirability of making
available such information or documents.
[44 FR 50836, Aug. 30, 1979, as amended at 53 FR 17459, May 17, 1988; 76
FR 71876, Nov. 21, 2011]
Sec. 240.0-5 Reference to rule by obsolete designation.
Wherever in any rule, form, or instruction book specific reference
is made to a rule by number or other designation which is now obsolete,
such reference shall be deemed to be made to the corresponding rule or
rules in the existing general rules and regulations.
[13 FR 8179, Dec. 22, 1948]
Sec. 240.0-6 Disclosure detrimental to the national defense or
foreign policy.
(a) Any requirement to the contrary notwithstanding, no registration
statement, report, proxy statement or other document filed with the
Commission or any securities exchange shall contain any document or
information which, pursuant to Executive order, has been classified by
an appropriate department or agency of the United States for protection
in the interests of national defense or foreign policy.
(b) Where a document or information is omitted pursuant to paragraph
(a) of this section, there shall be filed, in lieu of such document or
information, a statement from an appropriate department or agency of the
United States to the effect that such document or information has been
classified or that the status thereof is awaiting determination. Where a
document is omitted pursuant to paragraph (a) of this section, but
information relating to the subject matter of such document is
nevertheless included in material filed with the Commission pursuant to
a determination of an appropriate department or agency of the United
States that disclosure of such information would not be contrary to the
interests of national defense or foreign policy, a statement from such
department or agency to that effect shall be submitted for the
information of the Commission. A registrant may rely upon any such
statement in filing or omitting any document or information to which the
statement relates.
(c) The Commission may protect any information in its possession
which may require classification in the interests of national defense or
foreign policy pending determination by an appropriate department or
agency as to whether such information should be classified.
(d) It shall be the duty of the registrant to submit the documents
or information referred to in paragraph (a) of this section to the
appropriate department or agency of the United States prior to filing
them with the Commission and to obtain and submit to the Commission, at
the time of filing such documents or information, or in lieu thereof, as
the case may be, the statements from such department or agency required
by paragraph (b) of this section. All such statements shall be in
writing.
[33 FR 7682, May 24, 1968]
Sec. 240.0-8 Application of rules to registered broker-dealers.
Any provision of any rule or regulation under the Act which
prohibits any act, practice, or course of business by any person if the
mails or any means or instrumentality of interstate commerce are used in
connection therewith, shall also prohibit any such act, practice, or
course of business by any broker or dealer registered pursuant to
section 15(b) of the Act, or any person acting on behalf of such a
broker or dealer, irrespective of any use of the mails or any means or
instrumentality of interstate commerce.
[29 FR 12555, Sept. 3, 1964]
Sec. 240.0-9 Payment of filing fees.
All payment of filing fees shall be made by wire transfer, debit
card, or credit card or via the Automated Clearing House Network.
Payment of filing fees required by this section shall be
[[Page 21]]
made in accordance with the directions set forth in Sec. 202.3a of
this chapter.
[86 FR 70251, Dec. 9, 2021]
Sec. 240.0-10 Small entities under the Securities Exchange 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'' or a ``person,'' other
than an investment company, mean an ``issuer'' or ``person'' that, on
the last day of its most recent fiscal year, had total assets of $5
million or less;
(b) When used with reference to an ``issuer'' or ``person'' that is
an investment company, have the meaning ascribed to those terms by Sec.
270.0-10 of this chapter;
(c) When used with reference to a broker or dealer, mean a broker or
dealer that:
(1) Had total capital (net worth plus subordinated liabilities) of
less than $500,000 on the date in the prior fiscal year as of which its
audited financial statements were prepared pursuant to Sec. 240.17a-
5(d) or, if not required to file such statements, a broker or dealer
that had total capital (net worth plus subordinated liabilities) of less
than $500,000 on the last business day of the preceding fiscal year (or
in the time that it has been in business, if shorter); and
(2) Is not affiliated with any person (other than a natural person)
that is not a small business or small organization as defined in this
section;
(d) When used with reference to a clearing agency, mean a clearing
agency that:
(1) Compared, cleared and settled less than $500 million in
securities transactions during the preceding fiscal year (or in the time
that it has been in business, if shorter);
(2) Had less than $200 million of funds and securities in its
custody or control at all times during the preceding fiscal year (or in
the time that it has been in business, if shorter); and
(3) Is not affiliated with any person (other than a natural person)
that is not a small business or small organization as defined in this
section;
(e) When used with reference to an exchange, mean any exchange that:
(1) Has been exempted from the reporting requirements of Sec.
242.601 of this chapter; and
(2) Is not affiliated with any person (other than a natural person)
that is not a small business or small organization as defined in this
section;
(f) When used with reference to a municipal securities dealer that
is a bank (including any separately identifiable department or division
of a bank), mean any such municipal securities dealer that:
(1) Had, or is a department of a bank that had, total assets of less
than $10 million at all times during the preceding fiscal year (or in
the time that it has been in business, if shorter);
(2) Had an average monthly volume of municipal securities
transactions in the preceding fiscal year (or in the time it has been
registered, if shorter) of less than $100,000; and
(3) Is not affiliated with any person (other than a natural person)
that is not a small business or small organization as defined in this
section;
(g) When used with reference to a securities information processor,
mean a securities information processor that:
(1) Had gross revenues of less than $10 million during the preceding
fiscal year (or in the time it has been in business, if shorter);
(2) Provided service to fewer than 100 interrogation devices or
moving tickers at all times during the preceding fiscal year (or in the
time that it has been in business, if shorter); and
(3) Is not affiliated with any person (other than a natural person)
that is not a small business or small organization under this section;
and
(h) When used with reference to a transfer agent, mean a transfer
agent that:
(1) Received less than 500 items for transfer and less than 500
items for processing during the preceding six months (or in the time
that it has been in business, if shorter);
[[Page 22]]
(2) Transferred items only of issuers that would be deemed ``small
businesses'' or ``small organizations'' as defined in this section; and
(3) Maintained master shareholder files that in the aggregate
contained less than 1,000 shareholder accounts or was the named transfer
agent for less than 1,000 shareholder accounts at all times during the
preceding fiscal year (or in the time that it has been in business, if
shorter); and
(4) Is not affiliated with any person (other than a natural person)
that is not a small business or small organization under this section.
(i) For purposes of paragraph (c) of this section, a broker or
dealer is affiliated with another person if:
(1) Such broker or dealer controls, is controlled by, or is under
common control with such other person; a person shall be deemed to
control another person if that person has the right to vote 25 percent
or more of the voting securities of such other person or is entitled to
receive 25 percent or more of the net profits of such other person or is
otherwise able to direct or cause the direction of the management or
policies of such other person; or
(2) Such broker or dealer introduces transactions in securities,
other than registered investment company securities or interests or
participations in insurance company separate accounts, to such other
person, or introduces accounts of customers or other brokers or dealers,
other than accounts that hold only registered investment company
securities or interests or participations in insurance company separate
accounts, to such other person that carries such accounts on a fully
disclosed basis.
(j) For purposes of paragraphs (d) through (h) of this section, a
person is affiliated with another person if that person controls, is
controlled by, or is under common control with such other person; a
person shall be deemed to control another person if that person has the
right to vote 25 percent or more of the voting securities of such other
person or is entitled to receive 25 percent or more of the net profits
of such other person or is otherwise able to direct or cause the
direction of the management or policies of such other person.
(k) For purposes of paragraph (g) of this section, ``interrogation
device'' shall refer to any device that may be used to read or receive
securities information, including quotations, indications of interest,
last sale data and transaction reports, and shall include proprietary
terminals or personal computers that receive securities information via
computer-to-computer interfaces or gateway access.
[47 FR 5222, Feb. 4, 1982, as amended at 51 FR 25362, July 14, 1986; 63
FR 35514, June 30, 1998; 70 FR 37617, June 29, 2005]
Sec. 240.0-11 Filing fees for certain acquisitions, dispositions and
similar transactions.
(a) General. (1) At the time of filing a disclosure document
described in paragraphs (b) through (d) of this section relating to
certain acquisitions, dispositions, business combinations,
consolidations or similar transactions, the person filing the specified
document shall pay a fee payable to the Commission to be calculated as
set forth in paragraphs (b) through (d) of this section.
(2) A required fee shall be reduced in an amount equal to any fee
paid with respect to such transaction pursuant to either section 6(b) of
the Securities Act of 1933 or any applicable provision of this section;
the fee requirements under section 6(b) shall be reduced in an amount
equal to the fee paid the Commission with respect to a transaction under
this section. No part of a filing fee is refundable.
(3) If at any time after the initial payment the aggregate
consideration offered is increased, an additional filing fee based upon
such increase shall be paid with the required amended filing.
(4) When the fee is based upon the market value of securities, such
market value shall be established by either the average of the high and
low prices reported in the consolidated reporting system (for exchange
traded securities and last sale reported over-the-counter securities) or
the average of the bid and asked price (for other over-the-counter
securities) as of a specified date within 5 business days prior to the
[[Page 23]]
date of the filing. If there is no market for the securities, the value
shall be based upon the book value of the securities computed as of the
latest practicable date prior to the date of the filing, unless the
issuer of the securities is in bankruptcy or receivership or has an
accumulated capital deficit, in which case one-third of the principal
amount, par value or stated value of the securities shall be used.
(5) An exhibit to the filing shall set forth the calculation of the
fee in tabular format, as well as the amount offset by a previous filing
and the identification of such filing, if applicable.
(b) Section 13(e)(1) filings. At the time of filing such statement
as the Commission may require pursuant to section 13(e)(1) of the
Exchange Act, a fee equal to the product of the rate applicable under
section 13(e) of the Exchange Act multiplied by the value of the
securities proposed to be acquired by the acquiring person. The value of
the securities proposed to be acquired shall be determined as follows:
(1) The value of the securities to be acquired solely for cash shall
be the amount of cash to be paid for them:
(2) The value of the securities to be acquired with securities or
other non-cash consideration, whether or not in combination with a cash
payment for the same securities, shall be based upon the market value of
the securities to be received by the acquiring person as established in
accordance with paragraph (a)(4) of this section.
(c) Proxy and information statement filings. At the time of filing a
preliminary proxy statement pursuant to Rule 14a-6(a) or preliminary
information statement pursuant to Rule 14c-5(a) that concerns a merger,
consolidation, acquisition of a company, or proposed sale or other
disposition of substantially all the assets of the registrant (including
a liquidation), the following fee:
(1) For preliminary material involving a vote upon a merger,
consolidation or acquisition of a company, a fee equal to the product of
the rate applicable under section 14(g) of the Exchange Act multiplied
by the proposed cash payment or, if the consideration does not
consistent entirely of cash, the value of the securities and other
property to be transferred to security holders in the transaction. The
fee is payable whether the registrant is acquiring another company or
being acquired.
(i) The value of securities or other property to be transferred to
security holders, whether or not in combination with a cash payment for
the same securities, shall be based upon the market value of the
securities to be received by the acquiring person as established in
accordance with paragraph (a)(4) of this section.
(ii) Notwithstanding the above, where the acquisition, merger or
consolidation is for the sole purpose of changing the registrant's
domicile, no filing fee is required to be paid.
(2) For preliminary material involving a vote upon a proposed sale
or other disposition of substantially all the assets of the registrant,
a fee equal to the product of the rate applicable under section 14(g) of
the Exchange Act multiplied by the aggregate of, as applicable, the cash
and the value of the securities (other than its own) and other property
to be received by the registrant. In the case of a disposition in which
the registrant will not receive any property, such as at liquidation or
spin-off, the fee shall be equal to the product of the rate applicable
under section 14(g) of the Exchange Act multiplied by the aggregate of,
as applicable, the cash and the value of the securities and other
property to be distributed to security holders.
(i) The value of the securities to be received (or distributed in
the case of a spin-off or liquidation) shall be based upon the market
value of such securities as established in accordance with paragraph
(a)(4) of this section.
(ii) The value of other property shall be a bona fide estimate of
the fair market value of such property.
(3) Where two or more companies are involved in the transaction,
each shall pay a proportionate share of such fee, determined by the
persons involved.
(4) Notwithstanding the above, the fee required by this paragraph
(c) shall not be payable for a proxy statement filed by a company
registered under the Investment Company Act of 1940.
[[Page 24]]
(d) Section 14(d)(1) filings. At the time of filing such statement
as the Commission may require pursuant to section 14(d)(1) of the Act, a
fee equal to the product of the rate applicable under section 14(g) of
the Exchange Act multiplied by the cash or, if the consideration does
not consist entirely of cash, the value of the securities and other
property offered by the bidder. Where the bidder is offering securities
or other non-cash consideration for some or all of the securities to be
acquired, whether or not in combination with a cash payment for the same
securities, the value of the consideration to be offered for such
securities shall be based upon the market value of the securities to be
received by the bidder as established in accordance with paragraph
(a)(4) of this section.
[51 FR 2476, Jan. 17, 1986, as amended at 58 FR 14682, Mar. 18, 1993; 61
FR 49959, Sept. 24, 1996; 73 FR 17813, Apr. 1, 2008; 86 FR 70251, Dec.
9, 2021]
Sec. 240.0-12 Commission procedures for filing applications for orders
for exemptive relief under Section 36 of the Exchange Act.
(a) The application shall be in writing in the form of a letter,
must include any supporting documents necessary to make the application
complete, and otherwise must comply with Sec. 240.0-3. All applications
must be submitted to the Office of the Secretary of the Commission.
Requestors may seek confidential treatment of their applications to the
extent provided under Sec. 200.81 of this chapter. If an application is
incomplete, the Commission, through the Division handling the
application, may request that the application be withdrawn unless the
applicant can justify, based on all the facts and circumstances, why
supporting materials have not been submitted and undertakes to submit
the omitted materials promptly.
(b) An applicant may submit a request electronically. The electronic
mailbox to use for these applications is described on the Commission's
Web site at http://www.sec.gov in the ``Exchange Act Exemptive
Applications'' section. In the event the electronic mailbox is revised
in the future, applicants can find the appropriate mailbox by accessing
the ``Electronic Mailboxes at the Commission'' section.
(c) An applicant also may submit a request in paper format. Five
copies of every paper application and every amendment to such an
application must be submitted to the Office of the Secretary at 100 F
Street, NE., Washington, DC 20549-1090. Applications must be on white
paper no larger than 8\1/2\ by 11 inches in size. The left margin of
applications must be at least 1\1/2\ inches wide, and if the application
is bound, it must be bound on the left side. All typewritten or printed
material must be on one side of the paper only and must be set forth in
black ink so as to permit photocopying.
(d) Every application (electronic or paper) must contain the name,
address and telephone number of each applicant and the name, address,
and telephone number of a person to whom any questions regarding the
application should be directed. The Commission will not consider
hypothetical or anonymous requests for exemptive relief. Each applicant
shall state the basis for the relief sought, and identify the
anticipated benefits for investors and any conditions or limitations the
applicant believes would be appropriate for the protection of investors.
Applicants should also cite to and discuss applicable precedent.
(e) Amendments to the application should be prepared and submitted
as set forth in these procedures and should be marked to show what
changes have been made.
(f) After the filing is complete, the applicable Division will
review the application. Once all questions and issues have been answered
to the satisfaction of the Division, the staff will make an appropriate
recommendation to the Commission. After consideration of the
recommendation by the Commission, the Commission's Office of the
Secretary will issue an appropriate response and will notify the
applicant. If the application pertains to a section of the Exchange Act
pursuant to which the Commission has delegated its authority to the
appropriate Division, the Division Director or his or her designee will
issue an appropriate response and notify the applicant.
[[Page 25]]
(g) The Commission, in its sole discretion, may choose to publish in
the Federal Register a notice that the application has been submitted.
The notice would provide that any person may, within the period
specified therein, submit to the Commission any information that relates
to the Commission action requested in the application. The notice also
would indicate the earliest date on which the Commission would take
final action on the application, but in no event would such action be
taken earlier than 25 days following publication of the notice in the
Federal Register.
(h) The Commission may, in its sole discretion, schedule a hearing
on the matter addressed by the application.
[63 FR 8102, Feb. 18, 1998, as amended at 73 FR 973, Jan. 4, 2008; 76 FR
43891, July 22, 2011]
Sec. 240.0-13 Commission procedures for filing applications to request
a substituted compliance or listed jurisdiction order under the
Exchange Act.
(a) The application shall be in writing in the form of a letter,
must include any supporting documents necessary to make the application
complete, and otherwise must comply with Sec. 240.0-3. All applications
must be submitted to the Office of the Secretary of the Commission, by a
party that potentially would comply with requirements under the Exchange
Act pursuant to a substituted compliance or listed jurisdiction order,
or by the relevant foreign financial regulatory authority or
authorities. If an application is incomplete, the Commission may request
that the application be withdrawn unless the applicant can justify,
based on all the facts and circumstances, why supporting materials have
not been submitted and undertakes to submit the omitted materials
promptly.
(b) An applicant may submit a request electronically. The electronic
mailbox to use for these applications is described on the Commission's
website at www.sec.gov in the ``Exchange Act Substituted Compliance and
Listed Jurisdiction Applications'' section. In the event electronic
mailboxes are revised in the future, applicants can find the appropriate
mailbox by accessing the ``Electronic Mailboxes at the Commission''
section.
(c) All filings and submissions filed pursuant to this rule must be
in the English language. If a filing or submission filed pursuant to
this rule 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 entire foreign language document. A party may submit
a copy of the unabridged foreign language document when including an
English translation of a foreign language document in a filing or
submission filed pursuant to this rule. A party must provide a copy of
any foreign language document upon the request of Commission staff.
(d) An applicant also may submit a request in paper format. Five
copies of every paper application and every amendment to such an
application must be submitted to the Office of the Secretary at 100 F
Street NE., Washington, DC 20549-1090. Applications must be on white
paper no larger than 8\1/2\ by 11 inches in size. The left margin of
applications must be at least 1\1/2\ inches wide, and if the application
is bound, it must be bound on the left side. All typewritten or printed
material must be set forth in black ink so as to permit photocopying.
(e) Every application (electronic or paper) must contain the name,
address, telephone number, and email address of each applicant and the
name, address, telephone number, and email address of a person to whom
any questions regarding the application should be directed. The
Commission will not consider hypothetical or anonymous requests for a
substituted compliance or listed jurisdiction order. Each applicant
shall provide the Commission with any supporting documentation it
believes necessary for the Commission to make such determination,
including information regarding applicable requirements established by
the foreign financial regulatory authority or authorities, as well as
the methods used by the foreign financial regulatory authority or
authorities to monitor and enforce compliance with such rules.
Applicants should also cite to and discuss applicable precedent.
[[Page 26]]
(f) Amendments to the application should be prepared and submitted
as set forth in these procedures and should be marked to show what
changes have been made.
(g) After the filing is complete, the staff will review the
application. Once all questions and issues have been answered to the
satisfaction of the staff, the staff will make an appropriate
recommendation to the Commission. After consideration of the
recommendation and a vote by the Commission, the Commission's Office of
the Secretary will issue an appropriate response and will notify the
applicant.
(h) The Commission shall publish in the Federal Register a notice
that a complete application has been submitted. The notice will provide
that any person may, within the period specified therein, submit to the
Commission any information that relates to the Commission action
requested in the application. The notice also will indicate the earliest
date on which the Commission would take final action on the application,
but in no event would such action be taken earlier than 25 days
following publication of the notice in the Federal Register.
(i) The Commission may, in its sole discretion, schedule a hearing
on the matter addressed by the application.
[79 FR 47369, Aug. 12, 2014, as amended at 85 FR 6350, Feb. 4, 2020]
Sec. 240.3a1-1 Exemption from the definition of ``Exchange'' under
Section 3(a)(1) of the Act.
(a) An organization, association, or group of persons shall be
exempt from the definition of the term ``exchange'' under section
3(a)(1) of the Act, (15 U.S.C. 78c(a)(1)), if such organization,
association, or group of persons:
(1) Is operated by a national securities association;
(2) Is in compliance with Regulation ATS, 17 CFR 242.300 through
242.304;
(3) Pursuant to paragraph (a) of Sec. 242.301 of Regulation ATS, 17
CFR 242.301(a), is not required to comply with Regulation ATS, 17 CFR
242.300 through 242.304;
(4) Has registered with the Commission as a security-based swap
execution facility pursuant Sec. 242.803 of this chapter and provides a
market place or facilities for no securities other than security-based
swaps; or
(5) Has registered with the Commission as a clearing agency pursuant
to section 17A of the Act (15 U.S.C. 78q-1) and limits its exchange
functions to operation of a trading session that is designed to further
the accuracy of end-of-day valuations of security-based swaps.
(b) Notwithstanding paragraphs (a)(1) through (3) of this section,
an organization, association, or group of persons shall not be exempt
under this section from the definition of ``exchange,'' if:
(1) During three of the preceding four calendar quarters such
organization, association, or group of persons had:
(i) Fifty percent or more of the average daily dollar trading volume
in any security and five percent or more of the average daily dollar
trading volume in any class of securities; or
(ii) Forty percent or more of the average daily dollar trading
volume in any class of securities; and
(2) The Commission determines, after notice to the organization,
association, or group of persons, and an opportunity for such
organization, association, or group of persons to respond, that such an
exemption would not be necessary or appropriate in the public interest
or consistent with the protection of investors taking into account the
requirements for exchange registration under section 6 of the Act, (15
U.S.C. 78f), and the objectives of the national market system under
section 11A of the Act, (15 U.S.C 78k-1).
(3) For purposes of paragraph (b) of this section, each of the
following shall be considered a ``class of securities'':
(i) Equity securities, which shall have the same meaning as in Sec.
240.3a11-1;
(ii) Listed options, which shall mean any options traded on a
national securities exchange or automated facility of a national
securities exchange;
(iii) Unlisted options, which shall mean any options other than
those traded on a national securities exchange or automated facility of
a national securities association;
(iv) Municipal securities, which shall have the same meaning as in
section 3(a)(29) of the Act, (15 U.S.C. 78c(a)(29));
[[Page 27]]
(v) Corporate debt securities, which shall mean any securities that:
(A) Evidence a liability of the issuer of such securities;
(B) Have a fixed maturity date that is at least one year following
the date of issuance; and
(C) Are not exempted securities, as defined in section 3(a)(12) of
the Act, (15 U.S.C. 78c(a)(12));
(vi) Foreign corporate debt securities, which shall mean any
securities that:
(A) Evidence a liability of the issuer of such debt securities;
(B) Are issued by a corporation or other organization incorporated
or organized under the laws of any foreign country; and
(C) Have a fixed maturity date that is at least one year following
the date of issuance; and
(vii) Foreign sovereign debt securities, which shall mean any
securities that:
(A) Evidence a liability of the issuer of such debt securities;
(B) Are issued or guaranteed by the government of a foreign country,
any political subdivision of a foreign country or any supranational
entity; and
(C) Do not have a maturity date of a year or less following the date
of issuance.
[63 FR 70917, Dec. 22, 1998, as amended at 74 FR 52372, Oct. 9, 2009; 83
FR 38911, Aug. 7, 2018; 88 FR 87285, Dec. 15, 2023]
Sec. 240.3a4-1 Associated persons of an issuer deemed not to be brokers.
(a) An associated person of an issuer of securities shall not be
deemed to be a broker solely by reason of his participation in the sale
of the securities of such issuer if the associated person:
(1) Is not subject to a statutory disqualification, as that term is
defined in section 3(a)(39) of the Act, at the time of his
participation; and
(2) Is not compensated in connection with his participation by the
payment of commissions or other remuneration based either directly or
indirectly on transactions in securities; and
(3) Is not at the time of his participation an associated person of
a broker or dealer; and
(4) Meets the conditions of any one of paragraph (a)(4) (i), (ii),
or (iii) of this section.
(i) The associated person restricts his participation to
transactions involving offers and sales of securities:
(A) To a registered broker or dealer; a registered investment
company (or registered separate account); an insurance company; a bank;
a savings and loan association; a trust company or similar institution
supervised by a state or federal banking authority; or a trust for which
a bank, a savings and loan association, a trust company, or a registered
investment adviser either is the trustee or is authorized in writing to
make investment decisions; or
(B) That are exempted by reason of section 3(a)(7), 3(a)(9) or
3(a)(10) of the Securities Act of 1933 from the registration provisions
of that Act; or
(C) That are made pursuant to a plan or agreement submitted for the
vote or consent of the security holders who will receive securities of
the issuer in connection with a reclassification of securities of the
issuer, a merger or consolidation or a similar plan of acquisition
involving an exchange of securities, or a transfer of assets of any
other person to the issuer in exchange for securities of the issuer; or
(D) That are made pursuant to a bonus, profit-sharing, pension,
retirement, thrift, savings, incentive, stock purchase, stock ownership,
stock appreciation, stock option, dividend reinvestment or similar plan
for employees of an issuer or a subsidiary of the issuer;
(ii) The associated person meets all of the following conditions:
(A) The associated person primarily performs, or is intended
primarily to perform at the end of the offering, substantial duties for
or on behalf of the issuer otherwise than in connection with
transactions in securities; and
(B) The associated person was not a broker or dealer, or an
associated person of a broker or dealer, within the preceding 12 months;
and
(C) The associated person does not participate in selling an
offering of securities for any issuer more than once every 12 months
other than in reliance on paragraph (a)(4)(i) or (iii) of this section,
except that for securities
[[Page 28]]
issued pursuant to rule 415 under the Securities Act of 1933, the 12
months shall begin with the last sale of any security included within
one rule 415 registration.
(iii) The associated person restricts his participation to any one
or more of the following activities:
(A) Preparing any written communication or delivering such
communication through the mails or other means that does not involve
oral solicitation by the associated person of a potential purchaser;
Provided, however, that the content of such communication is approved by
a partner, officer or director of the issuer;
(B) Responding to inquiries of a potential purchaser in a
communication initiated by the potential purchaser; Provided, however,
That the content of such responses are limited to information contained
in a registration statement filed under the Securities Act of 1933 or
other offering document; or
(C) Performing ministerial and clerical work involved in effecting
any transaction.
(b) No presumption shall arise that an associated person of an
issuer has violated section 15(a) of the Act solely by reason of his
participation in the sale of securities of the issuer if he does not
meet the conditions specified in paragraph (a) of this section.
(c) Definitions. When used in this section:
(1) The term associated person of an issuer means any natural person
who is a partner, officer, director, or employee of:
(i) The issuer;
(ii) A corporate general partner of a limited partnership that is
the issuer;
(iii) A company or partnership that controls, is controlled by, or
is under common control with, the issuer; or
(iv) An investment adviser registered under the Investment Advisers
Act of 1940 to an investment company registered under the Investment
Company Act of 1940 which is the issuer.
(2) The term associated person of a broker or dealer means any
partner, officer, director, or branch manager of such broker or dealer
(or any person occupying a similar status or performing similar
functions), any person directly or indirectly controlling, controlled
by, or under common control with such broker or dealer, or any employee
of such broker or dealer, except that any person associated with a
broker or dealer whose functions are solely clerical or ministerial and
any person who is required under the laws of any State to register as a
broker or dealer in that State solely because such person is an issuer
of securities or associated person of an issuer of securities shall not
be included in the meaning of such term for purposes of this section.
[50 FR 27946, July 9, 1985]
Sec. Sec. 240.3a4-2--240.3a4-6 [Reserved]
Sec. 240.3a5-1 Exemption from the definition of ``dealer'' for a bank
engaged in riskless principal transactions.
(a) A bank is exempt from the definition of the term ``dealer'' to
the extent that it engages in or effects riskless principal transactions
if the number of such riskless principal transactions during a calendar
year combined with transactions in which the bank is acting as an agent
for a customer pursuant to section 3(a)(4)(B)(xi) of the Act (15 U.S.C.
78c(a)(4)(B)(xi)) during that same year does not exceed 500.
(b) For purposes of this section, the term riskless principal
transaction means a transaction in which, after having received an order
to buy from a customer, the bank purchased the security from another
person to offset a contemporaneous sale to such customer or, after
having received an order to sell from a customer, the bank sold the
security to another person to offset a contemporaneous purchase from
such customer.
[68 FR 8700, Feb. 24, 2003]
Sec. 240.3a5-2 Exemption from the definition of ``dealer'' for banks
effecting transactions in securities issued pursuant to Regulation S.
(a) A bank is exempt from the definition of the term ``dealer''
under section 3(a)(5) of the Act (15 U.S.C. 78c(a)(5)), to the extent
that, in a riskless principal transaction, the bank:
(1) Purchases an eligible security from an issuer or a broker-dealer
and sells that security in compliance with the requirements of 17 CFR
230.903 to a
[[Page 29]]
purchaser who is not in the United States;
(2) Purchases from a person who is not a U.S. person under 17 CFR
230.902(k) an eligible security after its initial sale with a reasonable
belief that the eligible security was initially sold outside of the
United States within the meaning of and in compliance with the
requirements of 17 CFR 230.903, and resells that security to a purchaser
who is not in the United States or to a registered broker or dealer,
provided that if the resale is made prior to the expiration of any
applicable distribution compliance period specified in 17 CFR
230.903(b)(2) or (b)(3), the resale is made in compliance with the
requirements of 17 CFR 230.904; or
(3) Purchases from a registered broker or dealer an eligible
security after its initial sale with a reasonable belief that the
eligible security was initially sold outside of the United States within
the meaning of and in compliance with the requirements of 17 CFR
230.903, and resells that security to a purchaser who is not in the
United States, provided that if the resale is made prior to the
expiration of any applicable distribution compliance period specified in
17 CFR 230.903(b)(2) or (b)(3), the resale is made in compliance with
the requirements of 17 CFR 230.904.
(b) Definitions. For purposes of this section:
(1) Distributor has the same meaning as in 17 CFR 230.902(d).
(2) Eligible security means a security that:
(i) Is not being sold from the inventory of the bank or an affiliate
of the bank; and
(ii) Is not being underwritten by the bank or an affiliate of the
bank on a firm-commitment basis, unless the bank acquired the security
from an unaffiliated distributor that did not purchase the security from
the bank or an affiliate of the bank.
(3) Purchaser means a person who purchases an eligible security and
who is not a U.S. person under 17 CFR 230.902(k).
(4) Riskless principal transaction means a transaction in which,
after having received an order to buy from a customer, the bank
purchased the security from another person to offset a contemporaneous
sale to such customer or, after having received an order to sell from a
customer, the bank sold the security to another person to offset a
contemporaneous purchase from such customer.
[72 FR 56567, Oct. 3, 2007]
Sec. 240.3a5-3 Exemption from the definition of ``dealer'' for banks
engaging in securities lending transactions.
(a) A bank is exempt from the definition of the term ``dealer''
under section 3(a)(5) of the Act (15 U.S.C. 78c(a)(5)), to the extent
that, as a conduit lender, it engages in or effects securities lending
transactions, and any securities lending services in connection with
such transactions, with or on behalf of a person the bank reasonably
believes to be:
(1) A qualified investor as defined in section 3(a)(54)(A) of the
Act (15 U.S.C. 78c(a)(54)(A)); or
(2) Any employee benefit plan that owns and invests, on a
discretionary basis, not less than $25,000,000 in investments.
(b) Securities lending transaction means a transaction in which the
owner of a security lends the security temporarily to another party
pursuant to a written securities lending agreement under which the
lender retains the economic interests of an owner of such securities,
and has the right to terminate the transaction and to recall the loaned
securities on terms agreed by the parties.
(c) Securities lending services means:
(1) Selecting and negotiating with a borrower and executing, or
directing the execution of the loan with the borrower;
(2) Receiving, delivering, or directing the receipt or delivery of
loaned securities;
(3) Receiving, delivering, or directing the receipt or delivery of
collateral;
(4) Providing mark-to-market, corporate action, recordkeeping or
other services incidental to the administration of the securities
lending transaction;
(5) Investing, or directing the investment of, cash collateral; or
[[Page 30]]
(6) Indemnifying the lender of securities with respect to various
matters.
(d) For the purposes of this section, the term conduit lender means
a bank that borrows or loans securities, as principal, for its own
account, and contemporaneously loans or borrows the same securities, as
principal, for its own account. A bank that qualifies under this
definition as a conduit lender at the commencement of a transaction will
continue to qualify, notwithstanding whether:
(1) The lending or borrowing transaction terminates and so long as
the transaction is replaced within one business day by another lending
or borrowing transaction involving the same securities; and
(2) Any substitutions of collateral occur.
[72 FR 56567, Oct. 3, 2007]
Sec. 240.3a5-4 Further definition of ``as a part of a regular
business'' in connection with certain liquidity providers.
(a) A person that is engaged in buying and selling securities for
its own account is engaged in such activity ``as a part of a regular
business'' as the phrase is used in section 3(a)(5)(B) of the Act (15
U.S.C. 78c(a)(5)(B)) if that person:
(1) Engages in a regular pattern of buying and selling securities
that has the effect of providing liquidity to other market participants
by:
(i) Regularly expressing trading interest that is at or near the
best available prices on both sides of the market for the same security
and that is communicated and represented in a way that makes it
accessible to other market participants; or
(ii) Earning revenue primarily from capturing bid-ask spreads, by
buying at the bid and selling at the offer, or from capturing any
incentives offered by trading venues to liquidity-supplying trading
interest; and
(2) Is not:
(i) A person that has or controls total assets of less than $50
million;
(ii) An investment company registered under the Investment Company
Act of 1940; or
(iii) A central bank, sovereign entity, or international financial
institution.
(b) For purposes of this section:
(1) The term person has the same meaning as prescribed in section
3(a)(9) of the Act (15 U.S.C. 78c(a)(9)).
(2) A person's own account means any account:
(i) Held in the name of that person; or
(ii) Held for the benefit of that person.
(3) The term central bank means a reserve bank or monetary authority
of a central government (including the Board of Governors of the Federal
Reserve System or any of the Federal Reserve Banks) and the Bank for
International Settlements.
(4) The term international financial institution means the African
Development Bank; African Development Fund; Asian Development Bank;
Banco Centroamericano de Integraci[oacute]n Econ[oacute]mica; Bank for
Economic Cooperation and Development in the Middle East and North
Africa; Caribbean Development Bank; Corporaci[oacute]n Andina de
Fomento; Council of Europe Development Bank; European Bank for
Reconstruction and Development; European Investment Bank; European
Investment Fund; European Stability Mechanism; Inter-American
Development Bank; Inter-American Investment Corporation; International
Bank for Reconstruction and Development; International Development
Association; International Finance Corporation; International Monetary
Fund; Islamic Development Bank; Multilateral Investment Guarantee
Agency; Nordic Investment Bank; North American Development Bank; and any
other entity that provides financing for national or regional
development in which the U.S. Government is a shareholder or
contributing member.
(5) The term sovereign entity means a central government (including
the U.S. Government), or an agency, department, or ministry of a central
government.
(c) No person shall evade the registration requirements of this
section by:
(1) Engaging in activities indirectly that would satisfy paragraph
(a) of this section; or
(2) Disaggregating accounts.
[[Page 31]]
(d) No presumption shall arise that a person is not a dealer within
the meaning of section 3(a)(5) of the Act solely because that person
does not satisfy paragraph (a) of this section.
Effective Date Note: At 89 FR 15009, Feb. 29, 2024, Sec. 240.3a5-4
was added, effective Apr. 29, 2024.
Definition of ``Equity Security'' as Used in Sections 12(g) and 16
Sec. 240.3a11-1 Definition of the term ``equity security.''
The term equity security is hereby defined to include any stock or
similar security, certificate of interest or participation in any profit
sharing agreement, preorganization certificate or subscription,
transferable share, voting trust certificate or certificate of deposit
for an equity security, limited partnership interest, interest in a
joint venture, or certificate of interest in a business trust; 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.
[67 FR 19673, Apr. 23, 2002]
Miscellaneous Exemptions
Sec. 240.3a12-1 Exemption of certain mortgages and interests in
mortgages.
Mortgages, as defined in section 302(d) of the Emergency Home
Finance Act of 1970, which are or have been sold by the Federal Home
Loan Mortgage Corporation are hereby exempted from the operation of such
provisions of the Act as by their terms do not apply to an ``exempted
security'' or to ``exempted securities''.
(Sec. 3(a)(12), 48 Stat. 882, 15 U.S.C. 78(c))
[37 FR 25167, Nov. 28, 1972]
Sec. 240.3a12-2 [Reserved]
Sec. 240.3a12-3 Exemption from sections 14(a), 14(b), 14(c), 14(f)
and 16 for securities of certain foreign issuers.
(a) Securities for which the filing of registration statements on
Form 18 [17 CFR 249.218] are authorized shall be exempt from the
operation of sections 14 and 16 of the Act.
(b) Securities registered by a foreign private issuer, as defined in
Rule 3b-4 (Sec. 240.3b-4 of this chapter), shall be exempt from
sections 14(a), 14(b), 14(c), 14(f) and 16 of the Act.
[44 FR 70137, Dec. 6, 1979, as amended at 47 FR 54780, Dec. 6, 1982; 56
FR 30067, July 1, 1991]
Sec. 240.3a12-4 Exemptions from sections 15(a) and 15(c)(3) for
certain mortgage securities.
(a) When used in this Rule the following terms shall have the
meanings indicated:
(1) The term whole loan mortgage means an evidence of indebtedness
secured by mortgage, deed of trust, or other lien upon real estate or
upon leasehold interests therein where the entire mortgage, deed or
other lien is transferred with the entire evidence of indebtedness.
(2) The term aggregated whole loan mortgage means two or more whole
loan mortgages that are grouped together and sold to one person in one
transaction.
(3) The term participation interest means an undivided interest
representing one of only two such interests in a whole loan mortgage or
in an aggregated whole loan mortgage, provided that the other interest
is retained by the originator of such participation interest.
(4) The term commitment means a contract to purchase a whole loan
mortgage, an aggregated whole loan mortgage or a participation interest
which by its terms requires that the contract be fully executed within 2
years.
(5) The term mortgage security means a whole loan mortgage, an
aggregated whole loan mortgage, a participation interest, or a
commitment.
(b) A mortgage security shall be deemed an ``exempted security'' for
purposes of subsections (a) and (c)(3) of
[[Page 32]]
section 15 of the Act provided that, in the case of and at the time of
any sale of the mortgage security by a broker or dealer, such mortgage
security is not in default and has an unpaid principal amount of at
least $50,000.
[39 FR 19945, June 5, 1974]
Sec. 240.3a12-5 Exemption of certain investment contract securities
from sections 7(c) and 11(d)(1).
(a) An investment contract security involving the direct ownership
of specified residential real property shall be exempted from the
provisions of sections 7(c) and 11(d)(1) of the Act with respect to any
transaction by a broker or dealer who, directly or indirectly, arranges
for the extension or maintenance of credit on the security to or from a
customer, if the credit:
(1) Is secured by a lien, mortgage, deed of trust, or any other
similar security interest related only to real property: Provided,
however, That this provision shall not prevent a lender from requiring
(i) a security interest in the common areas and recreational facilities
or furniture and fixtures incidental to the investment contract if the
purchase of such furniture and fixtures is required by, or subject to
the approval of, the issuer, as a condition of purchase; or (ii) an
assignment of future rentals in the event of default by the purchaser or
a co-signer or guarantor on the debt obligation other than the issuer,
its affiliates, or any broker or dealer offering such securities;
(2) Is to be repaid by periodic payments of principal and interest
pursuant to an amortization schedule established by the governing
instruments: Provided, however, That this provision shall not prevent
the extension of credit on terms which require the payment of interest
only, if extended in compliance with the other provisions of this rule;
and
(3) Is extended by a lender which is not, directly or indirectly
controlling, controlled by, or under common control with the broker or
dealer or the issuer of the securities or affiliates thereof.
(b) For purposes of this rule:
(1) Residential real property shall mean real property containing
living accommodations, whether used on a permanent or transient basis,
and may include furniture or fixtures if required as a condition of
purchase of the investment contract or if subject to the approval of the
issuer.
(2) Direct ownership shall mean ownership of a fee or leasehold
estate or a beneficial interest in a trust the purchase of which, under
applicable local law, is financed and secured by a security interest
therein similar to a mortgage or deed of trust, but it shall not include
an interest in a real estate investment trust, an interest in a general
or limited partnership, or similar indirect interest in the ownership of
real property.
(Sec. 3(a)(12), 48 Stat. 882, as amended 84 Stat. 718, 1435, 1499 (15
U.S.C. 78c(12)); sec. 7(c), 48 Stat. 886, as amended 82 Stat. 452 (15
U.S.C. 78g(c)); sec. 11(d)(1), 48 Stat. 891 as amended 68 Stat. 636 (15
U.S.C. 78k(d)(1)); sec. 15(c), 48 Stat. 895, as amended 52 Stat. 1075,
84 Stat. 1653 (15 U.S.C. 78o(c)); sec. 23(a), 48 Stat. 901, as amended
49 Stat. 704, 1379 (15 U.S.C. 78w(a)))
[40 FR 6646, Feb. 13, 1975]
Sec. 240.3a12-6 Definition of ``common trust fund'' as used in
section 3(a)(12) of the Act.
The term common trust fund as used in section 3(a)(12) of the Act
(15 U.S.C. 78c(a)(12)) shall include a common trust fund which is
maintained by a bank which is a member of an affiliated group, as
defined in section 1504(a) of the Internal Revenue Code of 1954 (26
U.S.C. 1504(a)), and which is maintained exclusively for the collective
investment and reinvestment of monies contributed thereto by one or more
bank members of such affiliated group in the capacity of trustee,
executor, administrator, or guardian; Provided, That:
(a) The common trust fund is operated in compliance with the same
state and federal regulatory requirements as would apply if the bank
maintaining such fund and any other contributing banks were the same
entity; and
(b) The rights of persons for whose benefit a contributing bank acts
as trustee, executor, administrator, or guardian would not be diminished
by
[[Page 33]]
reason of the maintenance of such common trust fund by another bank
member of the affiliated group.
(15 U.S.C. 78c(b))
[43 FR 2392, Jan. 17, 1978]
Sec. 240.3a12-7 Exemption for certain derivative securities traded
otherwise than on a national securities exchange.
Any put, call, straddle, option, or privilege traded exclusively
otherwise than on a national securities exchange and for which
quotations are not disseminated through an automated quotation system of
a registered securities association, which relates to any securities
which are direct obligations of, or obligations guaranteed as to
principal or interest by, the United States, or securities issued or
guaranteed by a corporation in which the United States has a direct or
indirect interest as shall be designated for exemption by the Secretary
of the Treasury pursuant to section 3(a)(12) of the Act, shall be exempt
from all provisions of the Act which by their terms do not apply to any
``exempted security'' or ``exempted securities,'' provided that the
securities underlying such put, call, straddle, option or privilege
represent an obligation equal to or exceeding $250,000 principal amount.
(15 U.S.C. 78a et seq., and particularly secs. 3(a)(12), 15(a)(2) and
23(a) (15 U.S.C. 78c(a)(12), 78o(a)(2) and 78w(a)))
[49 FR 5073, Feb. 10, 1984]
Sec. 240.3a12-8 Exemption for designated foreign government securities
for purposes of futures trading.
(a) When used in this Rule, the following terms shall have the
meaning indicated:
(1) The term designated foreign government security shall mean a
security not registered under the Securities Act of 1933 nor the subject
of any American depositary receipt so registered, and representing a
debt obligation of the government of
(i) The United Kingdom of Great Britain and Northern Ireland;
(ii) Canada;
(iii) Japan;
(iv) The Commonwealth of Australia;
(v) The Republic of France;
(vi) New Zealand;
(vii) The Republic of Austria;
(viii) The Kingdom of Denmark;
(ix) The Republic of Finland;
(x) The Kingdom of the Netherlands;
(xi) Switzerland;
(xii) The Federal Republic of Germany;
(xiii) The Republic of Ireland;
(xiv) The Republic of Italy;
(xv) The Kingdom of Spain;
(xvi) The United Mexican States;
(xvii) The Federative Republic of Brazil;
(xviii) The Republic of Argentina;
(xix) The Republic of Venezuela;
(xx) The Kingdom of Belgium; or
(xxi) The Kingdom of Sweden.
(2) The term qualifying foreign futures contracts shall mean any
contracts for the purchase or sale of a designated foreign government
security for future delivery, as ``future delivery'' is defined in 7
U.S.C. 2, provided such contracts require delivery outside the United
States, any of its possessions or territories, and are traded on or
through a board of trade, as defined at 7 U.S.C. 2.
(b) Any designated foreign government security shall, for purposes
only of the offer, sale or confirmation of sale of qualifying foreign
futures contracts, be exempted from all provisions of the Act which by
their terms do not apply to an ``exempted security'' or ``exempted
securities.''
(15 U.S.C. 78a et seq., and particularly secs. 3(a)(12), and 23(a) 15
U.S.C. 78c(a)(12), and 78w(a))
[49 FR 8599, Mar. 8, 1984, as amended at 51 FR 25998, July 18, 1986; 52
FR 8877, Mar. 20, 1987; 52 FR 42279, Nov. 4, 1987; 53 FR 43863, Oct. 31,
1988; 57 FR 1378, Jan. 14, 1992; 59 FR 54815, Nov. 2, 1994; 60 FR 62326,
Dec. 6, 1995; 61 FR 10274, Mar. 13, 1996; 64 FR 10567, Mar. 5, 1999; 64
FR 29553, June 2, 1999]
Sec. 240.3a12-9 Exemption of certain direct participation program
securities from the arranging provisions of sections 7(c) and 11(d)(1).
(a) Direct participation program securities sold on a basis whereby
the purchase price is paid to the issuer in one or more mandatory
deferred payments shall be deemed to be exempted securities for purposes
of the arranging provisions of sections 7(c) and 11(d)(1) of the Act,
provided that:
[[Page 34]]
(1) The securities are registered under the Securities Act of 1933
or are sold or offered exclusively on an intrastate basis in reliance
upon section 3(a)(11) of that Act;
(2) The mandatory deferred payments bear a reasonable relationship
to the capital needs and program objectives described in a business
development plan disclosed to investors in a registration statement
filed with the Commission under the Securities Act of 1933 or, where no
registration statement is required to be filed with the Commission, as
part of a statement filed with the relevant state securities
administrator;
(3) Not less than 50 percent of the purchase price of the direct
participation program security is paid by the investor at the time of
sale;
(4) The total purchase price of the direct participation program
security is due within three years in specified property programs or two
years in non-specified property programs. Such pay-in periods are to be
measured from the earlier of the completion of the offering or one year
following the effective date of the offering.
(b) For purposes of this rule:
(1) Direct participation program shall mean a program financed
through the sale of securities, other than securities that are listed on
an exchange, quoted on NASDAQ, or will otherwise be actively traded
during the pay-in period as a result of efforts by the issuer,
underwriter, or other participants in the initial distribution of such
securities, that provides for flow-through tax consequences to its
investors; Provided, however, That the term ``direct participation
program'' does not include real estate investment trusts, Subchapter S
corporate offerings, tax qualified pension and profit sharing plans
under sections 401 and 403(a) of the Internal Revenue Code (``Code''),
tax shelter annuities under section 403(b) of the Code, individual
retirement plans under section 408 of the Code, and any issuer,
including a separate account, that is registered under the Investment
Company Act of 1940.
(2) Business development plan shall mean a specific plan describing
the program's anticipated economic development and the amounts of future
capital contributions, in the form of mandatory deferred payments, to be
required at specified times or upon the occurrence of certain events.
(3) Specified property program shall mean a direct participation
program in which, at the date of effectiveness, more than 75 percent of
the net proceeds from the sale of program securities are committed to
specific purchases or expenditures. Non-specified property program shall
mean any other direct participation program.
[51 FR 8801, Mar. 14, 1986]
Sec. 240.3a12-10 Exemption of certain securities issued by the
Resolution Funding Corporation.
Securities that are issued by the Resolution Funding Corporation
pursuant to section 21B(f) of the Federal Home Loan Bank Act (12 U.S.C.
1421 et seq.) are exempt from the operation of all provisions of the Act
that by their terms do not apply to any ``exempted security'' or to
``exempted securities.''
[54 FR 37789, Sept. 13, 1989]
Sec. 240.3a12-11 Exemption from sections 8(a), 14(a), 14(b), and
14(c) for debt securities listed on a national securities exchange.
(a) Debt securities that are listed for trading on a national
securities exchange shall be exempt from the restrictions on borrowing
of section 8(a) of the Act (15 U.S.C. 78h(a)).
(b) Debt securities registered pursuant to the provisions of section
12(b) of the Act (15 U.S.C. 78l(b)) shall be exempt from sections 14(a),
14(b), and 14(c) of the Act (15 U.S.C. 78n(a), (b), and (c)), except
that Sec. Sec. 240.14a-1, 240.14a-2(a), 240.14a-9, 240.14a-13, 240.14b-
1, 240.14b-2, 240.14c-1, 240.14c-6 and 240.14c-7 shall continue to
apply.
(c) For purposes of this section, debt securities is defined to mean
any securities that are not ``equity securities'' as defined in section
3(a)(11) of the Act (15 U.S.C. 78c(a)(11)) and Sec. 240.3a11-1
thereunder.
[59 FR 55347, Nov. 7, 1994]
[[Page 35]]
Sec. 240.3a12-12 Exemption from certain provisions of section 16
of the Act for asset-backed securities.
Asset-backed securities, as defined in Sec. 229.1101 of this
chapter, are exempt from section 16 of the Act (15 U.S.C. 78p).
[70 FR 1620, Jan. 7, 2005]
Sec. 240.3a40-1 Designation of financial responsibility rules.
The term financial responsibility rules for purposes of the
Securities Investor Protection Act of 1970 shall include:
(a) Any rule adopted by the Commission pursuant to sections 8,
15(c)(3), 17(a) or 17(e)(1)(A) of the Securities Exchange Act of 1934;
(b) Any rule adopted by the Commission relating to hypothecation or
lending of customer securities;
(c) Any rule adopted by any self-regulatory organization relating to
capital, margin, recordkeeping, hypothecation or lending requirements;
and
(d) Any other rule adopted by the Commission or any self-regulatory
organization relating to the protection of funds or securities.
(Secs. 3, 15(c)(3), 17(a) and 23 (15 U.S.C. 78c, 78o, 78q(a) and 78u))
[44 FR 28318, May 15, 1979]
Sec. 240.3a43-1 Customer-related government securities activities
incidental to the futures-related business of a futures commission
merchant registered with the Commodity Futures Trading Commission.
(a) A futures commission merchant registered with the Commodity
Futures Trading Commission (``CFTC'') is not a government securities
broker or government securities dealer solely because such futures
commission merchant effects transactions in government securities that
are defined in paragraph (b) of this section as incidental to such
person's futures-related business.
(b) Provided that the futures commission merchant maintains in a
regulated account all funds and securities associated with such
government securities transactions (except funds and securities
associated with transactions under paragraph (b)(1)(i) of this section
and does not advertise that it is in the business of effecting
transactions in government securities otherwise than in connection with
futures or options on futures trading or the investment of margin or
excess funds related to such trading or the trading of any other
instrument subject to CFTC jurisdiction, the following transactions in
government securities are incidental to the futures-related business of
such a futures commission merchant:
(1) Transactions as agent for a customer--
(i) To effect delivery pursuant to a futures contract; or
(ii) For risk reduction or arbitrage of existing or
contemporaneously created postions in futures or options on futures;
(2) Transactions as agent for a customer for investment of margin
and excess funds related to futures or options on futures trading or the
trading of other instruments subject to CFTC jurisdiction, provided
further that,
(i) Such transactions involve Treasury securities with a maturity of
less than 93 days at the time of the transation.
(ii) Such transactions generate no monetary profit for the futures
commission merchant in excess of the costs of executing such
transactions, or
(iii) Such transactions are unsolicited, and commissions and other
income generated on transactions pursuant to this paragraph (b)(2)(iii)
(including transactional fees paid by the futures commission merchant
and charged to its customer) do not exceed 2% of such futures commission
merchant's total commission revenues;
(3) Exchange of futures for physicals transactions as agent for or
as principal with a customer; and
(4) Any transaction or transactions that the Commission exempts,
either unconditionally or on specified terms and conditions, as
incidental to the futures-related business of a specified futures
commission merchant, a specified category of futures commission
merchants, or futures commission merchants generally.
(c) Definitions. (1) Customer means any person for whom the futures
commission merchant effects or intends to effect transactions in
futures, options
[[Page 36]]
on futures, or any other instruments subject to CFTC jurisdiction.
(2) Regulated account means a customer segregation account subject
to the regulations of the CFTC; provided, however, that, where such
regulations do not permit to be maintained in such an account or require
to be maintained in a separate regulated account funds or securities in
proprietary accounts or funds or securities used as margin for or excess
funds related to futures contracts, options on futures or any other
instruments subject to CFTC jurisdiction that trade outside the United
States, its territories, or possessions, the term regulated account
means such separate regulated account or any other account subject to
record-keeping regulations of the CFTC.
(3) Unsolicited transaction means a transaction that is not effected
in a discretionary account or recommended to a customer by the futures
commission merchant, an associated person of a futures commission
merchant, a business affiliate that is controlled by, controlling, or
under common control with the futures commission merchant, or an
introducing broker that is guaranteed by the futures commission
merchant.
(4) Futures and futures contracts mean contracts of sale of a
commodity for future delivery traded on or subject to the rules of a
contract market designated by the CFTC or traded on or subject to the
rules of any board of trade located outside the United States, its
territories, or possessions.
(5) Options on futures means puts or calls on a futures contract
traded on or subject to the rules of a contract market designated by the
CFTC or traded or subject to the rules of any board of trade located
outside the United States, its territories, or possessions.
[52 FR 27969, July 24, 1987]
Sec. 240.3a44-1 Proprietary government securities transactions
incidental to the futures-related business of a CFTC-regulated person.
(a) A person registered with the Commodity Futures Trading
Commission (``CFTC''), a contract market designated by the CFTC, such a
contract market's affiliated clearing organization, or any floor trader
or such a contract market (hereinafter referred to collectively as a
``CFTC-regulated person'') is not a government securities dealer solely
because such person effects transactions for its own account in
government securities that are defined in paragraph (b) of this section
as incidental to such person's futures-related business.
(b) Provided that a CFTC-regulated person does not advertise or
otherwise hold itself out as a government securities dealer except as
permitted under rule 3a43-1 (Sec. 240.3a43-1) the following
transactions in government securities for its own account are incidental
to the futures-related business of such a CFTC-regulated person:
(1) Transactions to effect delivery of a government security
pursuant to a futures contract;
(2) Exchange of futures for physicals transactions with (i) a
government securities broker or government securities dealer that has
registered with the Commission or filed notice pursuant to section
15C(a) of the Act or (ii) a CFTC-regulated person;
(3) Transactions (including repurchase agreements and reverse
repurchase agreements) involving segregated customer funds and
securities or funds and securities held by a clearing organization with
(i) a government securities broker or government securities dealer that
has registered with the Commission of filed notice pursuant to section
15C(a) of the Act or (ii) a bank;
(4) Transactions for risk reduction or arbitrage of existing or
contemporaneously created positions in futures or options on futures
with (i) a government securities broker or government securities dealer
that has registered with the Commission or filed notice pursuant to
section 15C(a) of the Act or (ii) a CFTC-regulated person;
(5) Repurchase and reverse repurchase agreement transactions between
a futures commission merchant acting in a proprietary capacity and
another CFTC-regulated person acting in a proprietary capacity and
contemporaneous offsetting transactions between such a futures
commission merchant and (i) a government securities broker or government
securities dealer that has registered with the Commission or
[[Page 37]]
filed notice pursuant to section 15C(a) of the Act, (ii) a bank, or
(iii) a CFTC-regulated person acting in a proprietary capacity; and
(6) Any transaction or transactions that the Commission exempts,
either unconditionally or on specified terms and conditions, as
incidental to the futures related business of a specified CFTC-regulated
person, a specified category of CFTC-regulated persons, or CFTC-
regulated persons generally.
(c) Definitions--(1) Segregated customer funds means funds subject
to CFTC segregation requirements.
(2) Futures and futures contracts means contracts of sale of a
commodity for future delivery traded on or subject to the rules of a
contract market designated by the CFTC or traded on or subject to the
rules of any board of trade located outside the United States, its
territories, or possessions.
(3) Options on futures means puts or calls on a futures contract
traded on or subject to the rules of a contract market designated by the
CFTC or traded on or subject to the rules of any board of trade located
outside the United States, its territories, or possessions.
[52 FR 27970, July 24, 1987]
Sec. 240.3a44-2 Further definition of ``as a part of a regular business''
in connection with certain liquidity providers.
(a) A person that is engaged in buying and selling government
securities for its own account is engaged in such activity ``as a part
of a regular business'' as the phrase is used in section 3(a)(44)(A) of
the Act (15 U.S.C. 78c(a)(44)(A)) if that person:
(1) Engages in a regular pattern of buying and selling government
securities that has the effect of providing liquidity to other market
participants by:
(i) Regularly expressing trading interest that is at or near the
best available prices on both sides of the market for the same security
and that is communicated and represented in a way that makes it
accessible to other market participants; or
(ii) Earning revenue primarily from capturing bid-ask spreads, by
buying at the bid and selling at the offer, or from capturing any
incentives offered by trading venues to liquidity-supplying trading
interest; and
(2) Is not:
(i) A person that has or controls total assets of less than $50
million; or
(ii) An investment company registered under the Investment Company
Act of 1940; or
(iii) A central bank, sovereign entity, or international financial
institution.
(b) For purposes of this section:
(1) The term person has the same meaning as prescribed in section
3(a)(9) of the Act (15 U.S.C. 78c(a)(9)).
(2) A person's own account means any account:
(i) Held in the name of that person; or
(ii) Held for the benefit of that person.
(3) The term central bank means a reserve bank or monetary authority
of a central government (including the Board of Governors of the Federal
Reserve System or any of the Federal Reserve Banks) and the Bank for
International Settlements.
(4) The term international financial institution means the African
Development Bank; African Development Fund; Asian Development Bank;
Banco Centroamericano de Integraci[oacute]n Econ[oacute]mica; Bank for
Economic Cooperation and Development in the Middle East and North
Africa; Caribbean Development Bank; Corporaci[oacute]n Andina de
Fomento; Council of Europe Development Bank; European Bank for
Reconstruction and Development; European Investment Bank; European
Investment Fund; European Stability Mechanism; Inter-American
Development Bank; Inter-American Investment Corporation; International
Bank for Reconstruction and Development; International Development
Association; International Finance Corporation; International Monetary
Fund; Islamic Development Bank; Multilateral Investment Guarantee
Agency; Nordic Investment Bank; North American Development Bank; and any
other entity that provides financing for national or regional
development in which the U.S. Government is a shareholder or
contributing member.
(5) The term sovereign entity means a central government (including
the U.S.
[[Page 38]]
Government), or an agency, department, or ministry of a central
government.
(c) No person shall evade the registration requirements of this
section by:
(1) Engaging in activities indirectly that would satisfy paragraph
(a) of this section; or
(2) Disaggregating accounts.
(d) No presumption shall arise that a person is not a government
securities dealer within the meaning of section 3(a)(44) of the Act (15
U.S.C. 78c(a)(44)) solely because that person does not satisfy paragraph
(a) of this section.
Effective Date Note: At 88 FR 15009, Feb. 29, 2024, Sec. 240.3a44-2
was added, effective Apr. 29, 2024.
Sec. 240.3a51-1 Definition of ``penny stock''.
For purposes of section 3(a)(51) of the Act, the term ``penny
stock'' shall mean any equity security other than a security:
(a) That is an NMS stock, as defined in Sec. 242.600(b)(55) of this
chapter, provided that:
(1) The security is registered, or approved for registration upon
notice of issuance, on a national securities exchange that has been
continuously registered as a national securities exchange since April
20, 1992 (the date of the adoption of Rule 3a51-1 (Sec. 240.3a51-1) by
the Commission); and the national securities exchange has maintained
quantitative listing standards that are substantially similar to or
stricter than those listing standards that were in place on that
exchange on January 8, 2004; or
(2) The security is registered, or approved for registration upon
notice of issuance, on a national securities exchange, or is listed, or
approved for listing upon notice of issuance on, an automated quotation
system sponsored by a registered national securities association, that:
(i) Has established initial listing standards that meet or exceed
the following criteria:
(A) The issuer shall have:
(1) Stockholders' equity of $5,000,000;
(2) Market value of listed securities of $50 million for 90
consecutive days prior to applying for the listing (market value means
the closing bid price multiplied by the number of securities listed); or
(3) Net income of $750,000 (excluding non-recurring items) in the
most recently completed fiscal year or in two of the last three most
recently completed fiscal years;
(B) The issuer shall have an operating history of at least one year
or a market value of listed securities of $50 million (market value
means the closing bid price multiplied by the number of securities
listed);
(C) The issuer's stock, common or preferred, shall have a minimum
bid price of $4 per share;
(D) In the case of common stock, there shall be at least 300 round
lot holders of the security (a round lot holder means a holder of a
normal unit of trading);
(E) In the case of common stock, there shall be at least 1,000,000
publicly held shares and such shares shall have a market value of at
least $5 million (market value means the closing bid price multiplied by
number of publicly held shares, and shares held directly or indirectly
by an officer or director of the issuer and by any person who is the
beneficial owner of more than 10 percent of the total shares outstanding
are not considered to be publicly held);
(F) In the case of a convertible debt security, there shall be a
principal amount outstanding of at least $10 million;
(G) In the case of rights and warrants, there shall be at least
100,000 issued and the underlying security shall be registered on a
national securities exchange or listed on an automated quotation system
sponsored by a registered national securities association and shall
satisfy the requirements of paragraph (a) or (e) of this section;
(H) In the case of put warrants (that is, instruments that grant the
holder the right to sell to the issuing company a specified number of
shares of the company's common stock, at a specified price until a
specified period of time), there shall be at least 100,000 issued and
the underlying security shall be registered on a national securities
exchange or listed on an automated quotation system sponsored by a
[[Page 39]]
registered national securities association and shall satisfy the
requirements of paragraph (a) or (e) of this section;
(I) In the case of units (that is, two or more securities traded
together), all component parts shall be registered on a national
securities exchange or listed on an automated quotation system sponsored
by a registered national securities association and shall satisfy the
requirements of paragraph (a) or (e) of this section; and
(J) In the case of equity securities (other than common and
preferred stock, convertible debt securities, rights and warrants, put
warrants, or units), including hybrid products and derivative securities
products, the national securities exchange or registered national
securities association shall establish quantitative listing standards
that are substantially similar to those found in paragraphs (a)(2)(i)(A)
through (a)(2)(i)(I) of this section; and
(ii) Has established quantitative continued listing standards that
are reasonably related to the initial listing standards set forth in
paragraph (a)(2)(i) of this section, and that are consistent with the
maintenance of fair and orderly markets;
(b) That is issued by an investment company registered under the
Investment Company Act of 1940;
(c) That is a put or call option issued by the Options Clearing
Corporation;
(d) Except for purposes of section 7(b) of the Securities Act and
Rule 419 (17 CFR 230.419), that has a price of five dollars or more;
(1) For purposes of paragraph (d) of this section:
(i) A security has a price of five dollars or more for a particular
transaction if the security is purchased or sold in that transaction at
a price of five dollars or more, excluding any broker or dealer
commission, commission equivalent, mark-up, or mark-down; and
(ii) Other than in connection with a particular transaction, a
security has a price of five dollars or more at a given time if the
inside bid quotation is five dollars or more; provided, however, that if
there is no such inside bid quotation, a security has a price of five
dollars or more at a given time if the average of three or more
interdealer bid quotations at specified prices displayed at that time in
an interdealer quotation system, as defined in 17 CFR 240.15c2-7(c)(1),
by three or more market makers in the security, is five dollars or more.
(iii) The term ``inside bid quotation'' shall mean the highest bid
quotation for the security displayed by a market maker in the security
on an automated interdealer quotation system that has the
characteristics set forth in section 17B(b)(2) of the Act, or such other
automated interdealer quotation system designated by the Commission for
purposes of this section, at any time in which at least two market
makers are contemporaneously displaying on such system bid and offer
quotations for the security at specified prices.
(2) If a security is a unit composed of one or more securities, the
unit price divided by the number of shares of the unit that are not
warrants, options, rights, or similar securities must be five dollars or
more, as determined in accordance with paragraph (d)(1) of this section,
and any share of the unit that is a warrant, option, right, or similar
security, or a convertible security, must have an exercise price or
conversion price of five dollars or more;
(e)(1) That is registered, or approved for registration upon notice
of issuance, on a national securities exchange that makes transaction
reports available pursuant to Sec. 242.601, provided that:
(i) Price and volume information with respect to transactions in
that security is required to be reported on a current and continuing
basis and is made available to vendors of market information pursuant to
the rules of the national securities exchange;
(ii) The security is purchased or sold in a transaction that is
effected on or through the facilities of the national securities
exchange, or that is part of the distribution of the security; and
(iii) The security satisfies the requirements of paragraph (a)(1) or
(a)(2) of this section;
(2) A security that satisfies the requirements of this paragraph
(e), but does not otherwise satisfy the requirements of paragraph (a),
(b), (c), (d), (f), or (g) of this section, shall be a penny
[[Page 40]]
stock for purposes of section 15(b)(6) of the Act (15 U.S.C. 78o(b)(6));
(f) That is a security futures product listed on a national
securities exchange or an automated quotation system sponsored by a
registered national securities association; or
(g) Whose issuer has:
(1) Net tangible assets (i.e., total assets less intangible assets
and liabilities) in excess of $2,000,000, if the issuer has been in
continuous operation for at least three years, or $5,000,000, if the
issuer has been in continuous operation for less than three years; or
(2) Average revenue of at least $6,000,000 for the last three years.
(3) For purposes of paragraph (g) of this section, net tangible
assets or average revenues must be demonstrated by financial statements
dated less than fifteen months prior to the date of the transaction that
the broker or dealer has reviewed and has a reasonable basis for
believing are accurate in relation to the date of the transaction, and:
(i) If the issuer is other than a foreign private issuer, are the
most recent financial statements for the issuer that have been audited
and reported on by an independent public accountant in accordance with
the provisions of 17 CFR 210.2-02; or
(ii) If the issuer is a foreign private issuer, are the most recent
financial statements for the issuer that have been filed with the
Commission or furnished to the Commission pursuant to 17 CFR 240.12g3-
2(b); provided, however, that if financial statements for the issuer
dated less than fifteen months prior to the date of the transaction have
not been filed with or furnished to the Commission, financial statements
dated within fifteen months prior to the transaction shall be prepared
in accordance with generally accepted accounting principles in the
country of incorporation, audited in compliance with the requirements of
that jurisdiction, and reported on by an accountant duly registered and
in good standing in accordance with the regulations of that
jurisdiction.
(4) The broker or dealer shall preserve, as part of its records,
copies of the financial statements required by paragraph (g)(3) of this
section for the period specified in 17 CFR 240.17a-4(b).
[57 FR 18032, Apr. 28, 1992, as amended at 58 FR 58101, Oct. 29, 1993;
70 FR 40631, July 13, 2005; 70 FR 46090, Aug. 9, 2005; 83 FR 50221, Oct.
4, 2018; 83 FR 58427, Nov. 19, 2018; 86 FR 18809, Apr. 9, 2021]
Sec. 240.3a55-1 Method for determining market capitalization and
dollar value of average daily trading volume; application of the
definition of narrow-based security index.
(a) Market capitalization. For purposes of Section
3(a)(55)(C)(i)(III)(bb) of the Act (15 U.S.C.
78c(a)(55)(C)(i)(III)(bb)):
(1) On a particular day, a security shall be 1 of 750 securities
with the largest market capitalization as of the preceding 6 full
calendar months when it is included on a list of such securities
designated by the Commission and the CFTC as applicable for that day.
(2) In the event that the Commission and the CFTC have not
designated a list under paragraph (a)(1) of this section:
(i) The method to be used to determine market capitalization of a
security as of the preceding 6 full calendar months is to sum the values
of the market capitalization of such security for each U.S. trading day
of the preceding 6 full calendar months, and to divide this sum by the
total number of such trading days.
(ii) The 750 securities with the largest market capitalization shall
be identified from the universe of all NMS securities as defined in
Sec. 242.600 of this chapter that are common stock or depositary
shares.
(b) Dollar value of ADTV. (1) For purposes of Section 3(a)(55)(B) of
the Act (15 U.S.C. 78c(a)(55)(B)):
(i)(A) The method to be used to determine the dollar value of ADTV
of a security is to sum the dollar value of ADTV of all reported
transactions in such security in each jurisdiction as calculated
pursuant to paragraphs (b)(1)(ii) and (iii).
(B) The dollar value of ADTV of a security shall include the value
of all reported transactions for such security and for any depositary
share that represents such security.
(C) The dollar value of ADTV of a depositary share shall include the
value
[[Page 41]]
of all reported transactions for such depositary share and for the
security that is represented by such depositary share.
(ii) For trading in a security in the United States, the method to
be used to determine the dollar value of ADTV as of the preceding 6 full
calendar months is to sum the value of all reported transactions in such
security for each U.S. trading day during the preceding 6 full calendar
months, and to divide this sum by the total number of such trading days.
(iii)(A) For trading in a security in a jurisdiction other than the
United States, the method to be used to determine the dollar value of
ADTV as of the preceding 6 full calendar months is to sum the value in
U.S. dollars of all reported transactions in such security in such
jurisdiction for each trading day during the preceding 6 full calendar
months, and to divide this sum by the total number of trading days in
such jurisdiction during the preceding 6 full calendar months.
(B) If the value of reported transactions used in calculating the
ADTV of securities under paragraph (b)(1)(iii)(A) is reported in a
currency other than U.S. dollars, the total value of each day's
transactions in such currency shall be converted into U.S. dollars on
the basis of a spot rate of exchange for that day obtained from at least
one independent entity that provides or disseminates foreign exchange
quotations in the ordinary course of its business.
(iv) The dollar value of ADTV of the lowest weighted 25% of an index
is the sum of the dollar value of ADTV of each of the component
securities comprising the lowest weighted 25% of such index.
(2) For purposes of Section 3(a)(55)(C)(i)(III)(cc) of the Act (15
U.S.C. 78c(a)(55)(C)(i)(III)(cc)):
(i) On a particular day, a security shall be 1 of 675 securities
with the largest dollar value of ADTV as of the preceding 6 full
calendar months when it is included on a list of such securities
designated by the Commission and the CFTC as applicable for that day.
(ii) In the event that the Commission and the CFTC have not
designated a list under paragraph (b)(2) of this section:
(A) The method to be used to determine the dollar value of ADTV of a
security as of the preceding 6 full calendar months is to sum the value
of all reported transactions in such security in the United States for
each U.S. trading day during the preceding 6 full calendar months, and
to divide this sum by the total number of such trading days.
(B) The 675 securities with the largest dollar value of ADTV shall
be identified from the universe of all NMS securities as defined in
Sec. 242.600 of this chapter that are common stock or depositary
shares.
(c) Depositary Shares and Section 12 Registration. For purposes of
Section 3(a)(55)(C) of the Act (15 U.S.C. 78c(a)(55)(C)), the
requirement that each component security of an index be registered
pursuant to Section 12 of the Act (15 U.S.C. 78l) shall be satisfied
with respect to any security that is a depositary share if the deposited
securities underlying the depositary share are registered pursuant to
Section 12 of the Act and the depositary share is registered under the
Securities Act of 1933 (15 U.S.C. 77a et seq.) on Form F-6 (17 CFR
239.36).
(d) Definitions. For purposes of this section:
(1) CFTC means Commodity Futures Trading Commission.
(2) Closing price of a security means:
(i) If reported transactions in the security have taken place in the
United States, the price at which the last transaction in such security
took place in the regular trading session of the principal market for
the security in the United States.
(ii) If no reported transactions in a security have taken place in
the United States, the closing price of such security shall be the
closing price of any depositary share representing such security divided
by the number of shares represented by such depositary share.
(iii) If no reported transactions in a security or in a depositary
share representing such security have taken place in the United States,
the closing price of such security shall be the price at which the last
transaction in such
[[Page 42]]
security took place in the regular trading session of the principal
market for the security. If such price is reported in a currency other
than U.S. dollars, such price shall be converted into U.S. dollars on
the basis of a spot rate of exchange relevant for the time of the
transaction obtained from at least one independent entity that provides
or disseminates foreign exchange quotations in the ordinary course of
its business.
(3) Depositary share has the same meaning as in Sec. 240.12b-2.
(4) Foreign financial regulatory authority has the same meaning as
in Section 3(a)(52) of the Act (15 U.S.C. 78c(a)(52)).
(5) Lowest weighted 25% of an index. With respect to any particular
day, the lowest weighted component securities comprising, in the
aggregate, 25% of an index's weighting for purposes of Section
3(a)(55)(B)(iv) of the Act (15 U.S.C. 78c(a)(55)(B)(iv)) (``lowest
weighted 25% of an index'') means those securities:
(i) That are the lowest weighted securities when all the securities
in such index are ranked from lowest to highest based on the index's
weighting methodology; and
(ii) For which the sum of the weight of such securities is equal to,
or less than, 25% of the index's total weighting.
(6) Market capitalization of a security on a particular day:
(i) If the security is not a depositary share, is the product of:
(A) The closing price of such security on that same day; and
(B) The number of outstanding shares of such security on that same
day.
(ii) If the security is a depositary share, is the product of:
(A) The closing price of the depositary share on that same day
divided by the number of deposited securities represented by such
depositary share; and
(B) The number of outstanding shares of the security represented by
the depositary share on that same day.
(7) Outstanding shares of a security means the number of outstanding
shares of such security as reported on the most recent Form 10-K, Form
10-Q, Form 10-KSB, Form 10-QSB, or Form 20-F (17 CFR 249.310, 249.308a,
249.310b, 249.308b, or 249.220f) filed with the Commission by the issuer
of such security, including any change to such number of outstanding
shares subsequently reported by the issuer on a Form 8-K (17 CFR
249.308).
(8) Preceding 6 full calendar months means, with respect to a
particular day, the period of time beginning on the same day of the
month 6 months before and ending on the day prior to such day.
(9) Principal market for a security means the single securities
market with the largest reported trading volume for the security during
the preceding 6 full calendar months.
(10) Reported transaction means:
(i) With respect to securities transactions in the United States,
any transaction for which a transaction report is collected, processed,
and made available pursuant to an effective transaction reporting plan,
or for which a transaction report, last sale data, or quotation
information is disseminated through an automated quotation system as
described in Section 3(a)(51)(A)(ii) of the Act (15 U.S.C.
78c(a)(51)(A)(ii); and
(ii) With respect to securities transactions outside the United
States, any transaction that has been reported to a foreign financial
regulatory authority in the jurisdiction where such transaction has
taken place.
(11) U.S. trading day means any day on which a national securities
exchange is open for trading.
(12) Weighting of a component security of an index means the
percentage of such index's value represented, or accounted for, by such
component security.
[66 FR 44514, Aug. 23, 2001, as amended at 70 FR 43750, July 29, 2005]
Sec. 240.3a55-2 Indexes underlying futures contracts trading for
fewer than 30 days.
(a) An index on which a contract of sale for future delivery is
trading on a designated contract market, registered derivatives
transaction execution facility, or foreign board of trade is not a
narrow-based security index under Section 3(a)(55) of the Act (15 U.S.C.
78c(a)(55)) for the first 30 days of trading, if:
(1) Such index would not have been a narrow-based security index on
each
[[Page 43]]
trading day of the preceding 6 full calendar months with respect to a
date no earlier than 30 days prior to the commencement of trading of
such contract;
(2) On each trading day of the preceding 6 full calendar months with
respect to a date no earlier than 30 days prior to the commencement of
trading such contract:
(i) Such index had more than 9 component securities;
(ii) No component security in such index comprised more than 30
percent of the index's weighting;
(iii) The 5 highest weighted component securities in such index did
not comprise, in the aggregate, more than 60 percent of the index's
weighting; and
(iv) The dollar value of the trading volume of the lowest weighted
25% of such index was not less than $50 million (or in the case of an
index with 15 or more component securities, $30 million); or
(3) On each trading day of the preceding 6 full calendar months,
with respect to a date no earlier than 30 days prior to the commencement
of trading such contract:
(i) Such index had at least 9 component securities;
(ii) No component security in such index comprised more than 30
percent of the index's weighting; and
(iii) Each component security in such index was:
(A) Registered pursuant to Section 12 of the Act (15 U.S.C. 78) or
was a depositary share representing a security registered pursuant to
Section 12 of the Act;
(B) 1 of 750 securities with the largest market capitalization that
day; and
(C) 1 of 675 securities with the largest dollar value of trading
volume that day.
(b) An index that is not a narrow-based security index for the first
30 days of trading pursuant to paragraph (a) of this section, shall
become a narrow-based security index if such index has been a narrow-
based security index for more than 45 business days over 3 consecutive
calendar months.
(c) An index that becomes a narrow-based security index solely
because it was a narrow-based security index for more than 45 business
days over 3 consecutive calendar months pursuant to paragraph (b) of
this section shall not be a narrow-based security index for the
following 3 calendar months.
(d) Definitions. For purposes of this section:
(1) Market capitalization has the same meaning as in Sec. 240.3a55-
1(d)(6).
(2) Dollar value of trading volume of a security on a particular day
is the value in U.S. dollars of all reported transactions in such
security on that day. If the value of reported transactions used in
calculating dollar value of trading volume is reported in a currency
other than U.S. dollars, the total value of each day's transactions
shall be converted into U.S. dollars on the basis of a spot rate of
exchange for that day obtained from at least one independent entity that
provides or disseminates foreign exchange quotations in the ordinary
course of its business.
(3) Lowest weighted 25% of an index has the same meaning as in Sec.
240.3a55-1(d)(5).
(4) Preceding 6 full calendar months has the same meaning as in
Sec. 240.3a55-1(d)(8).
(5) Reported transaction has the same meaning as in Sec. 240.3a55-
1(d)(10).
[66 FR 44514, Aug. 23, 2001]
Sec. 240.3a55-3 Futures contracts on security indexes trading on or
subject to the rules of a foreign board of trade.
When a contract of sale for future delivery on a security index is
traded on or subject to the rules of a foreign board of trade, such
index shall not be a narrow-based security index if it would not be a
narrow-based security index if a futures contract on such index were
traded on a designated contract market or registered derivatives
transaction execution facility.
[66 FR 44514, Aug. 23, 2001]
Sec. 240.3a55-4 Exclusion from definition of narrow-based security
index for indexes composed of debt securities.
(a) An index is not a narrow-based security index if:
(1)(i) Each of the securities of an issuer included in the index is
a security, as defined in section 2(a)(1) of the Securities Act of
1933(15 U.S.C. 77b(a)(1)) and section 3(a)(10) of the Act
[[Page 44]]
(15 U.S.C. 78c(a)(10)) and the respective rules promulgated thereunder,
that is a note, bond, debenture, or evidence of indebtedness;
(ii) None of the securities of an issuer included in the index is an
equity security, as defined in section 3(a)(11) of the Act (15 U.S.C.
78c(a)(11)) and the rules promulgated thereunder;
(iii) The index is comprised of more than nine securities that are
issued by more than nine non-affiliated issuers;
(iv) The securities of any issuer included in the index do not
comprise more than 30 percent of the index's weighting;
(v) The securities of any five non-affiliated issuers included in
the index do not comprise more than 60 percent of the index's weighting;
(vi) Except as provided in paragraph (a)(1)(viii) of this section,
for each security of an issuer included in the index one of the
following criteria is satisfied:
(A) The issuer of the security is required to file reports pursuant
to section 13 or section 15(d) of the Act (15 U.S.C. 78m and 78o(d));
(B) The issuer of the security has a [Worldwide market value of its
outstanding common equity held by non-affiliates of $71 million or more;
(C) The issuer of the security has outstanding securities that are
notes, bonds, debentures, or evidences of indebtedness having a total
remaining principal amount of at least $1 billion;
(D) The security is an exempted security as defined in section
3(a)(12) of the Act (15 U.S.C. 78c(a)(12)) and the rules promulgated
thereunder; or
(E) The issuer of the security is a government of a foreign country
or a political subdivision of a foreign country;
(vii) Except as provided in paragraph (a)(1)(viii) of this section,
for each security of an issuer included in the index one of the
following criteria is satisfied
(A) The security has a total remaining principal amount of at least
$250,000,000; or
(B) The security is a municipal security, as defined in section
3(a)(29) of the Act (15 U.S.C. 78c(a)(29)) and the rules promulgated
thereunder that has a total remaining principal amount of at least
$200,000,000 and the issuer of such municipal security has outstanding
securities that are notes, bonds, debentures, or evidences of
indebtedness having a total remaining principal amount of at least $1
billion; and
(viii) Paragraphs (a)(1)(vi) and (a)(1)(vii) of this section will
not apply to securities of an issuer included in the index if:
(A) All securities of such issuer included in the index represent
less than 5 percent of the index's weighting; and
(B) Securities comprising at least 80 percent of the index's
weighting satisfy the provisions of paragraphs (a)(1)(vi) and
(a)(1)(vii) of this section; or
(2)(i) The index includes exempted securities, other than municipal
securities, as defined in section 3(a)(29) of the Act and the rules
promulgated thereunder, that are:
(A) Notes, bonds, debentures, or evidences of indebtedness; and
(B) Not equity securities, as defined in section 3(a)(11) of the Act
(15 U.S.C. 78c(a)(11)) and the rules promulgated thereunder; and
(ii) Without taking into account any portion of the index composed
of such exempted securities, other than municipal securities, the
remaining portion of the index would not be a narrow-based security
index: meeting all the conditions under paragraph (a)(1) of this
section.
(b) For purposes of this section:
(1) An issuer is affiliated with another issuer if it controls, is
controlled by, or is under common control with, that issuer.
(2) For purposes of this section, control means ownership of 20
percent or more of an issuer's equity, or the ability to direct the
voting of 20 percent or more of the issuer's voting equity.
(3) The term issuer includes a single issuer or group of affiliated
issuers.
[71 FR 39542, July 13, 2006]
Security-Based Swap Dealer and Participant Definitions
Source: 77 FR 30751, May 23, 2012, unless otherwise noted.
[[Page 45]]
Sec. 240.3a67-1 Definition of ``major security-based swap participant.''
(a) General. Major security-based swap participant means any person:
(1) That is not a security-based swap dealer; and
(2)(i) That maintains a substantial position in security-based swaps
for any of the major security-based swap categories, excluding both
positions held for hedging or mitigating commercial risk, and positions
maintained by any employee benefit plan (or any contract held by such a
plan) as defined in paragraphs (3) and (32) of section 3 of the Employee
Retirement Income Security Act of 1974 (29 U.S.C. 1002) for the primary
purpose of hedging or mitigating any risk directly associated with the
operation of the plan;
(ii) Whose outstanding security-based swaps create substantial
counterparty exposure that could have serious adverse effects on the
financial stability of the United States banking system or financial
markets; or
(iii) That is a financial entity that:
(A) Is highly leveraged relative to the amount of capital such
entity holds and that is not subject to capital requirements established
by an appropriate Federal banking agency (as defined in 15 U.S.C.
78c(a)(72)); and
(B) Maintains a substantial position in outstanding security-based
swaps in any major security-based swap category.
(b) Scope of designation. A person that is a major security-based
swap participant in general shall be deemed to be a major security-based
swap participant with respect to each security-based swap it enters
into, regardless of the category of the security-based swap or the
person's activities in connection with the security-based swap, unless
the Commission limits the person's designation as a major security-based
swap participant to specified categories of security-based swaps.
Sec. 240.3a67-2 Categories of security-based swaps.
For purposes of section 3(a)(67) of the Act, 15 U.S.C. 78c(a)(67),
and the rules thereunder, the terms major security-based swap category,
category of security-based swaps and any similar terms mean either of
the following categories of security-based swaps:
(a) Debt security-based swaps. Any security-based swap that is
based, in whole or in part, on one or more instruments of indebtedness
(including loans), or on a credit event relating to one or more issuers
or securities, including but not limited to any security-based swap that
is a credit default swap, total return swap on one or more debt
instruments, debt swap, debt index swap, or credit spread.
(b) Other security-based swaps. Any security-based swap not
described in paragraph (a) of this section.
Sec. 240.3a67-3 Definition of ``substantial position.''
(a) General. For purposes of section 3(a)(67) of the Act, 15 U.S.C.
78c(a)(67), and Sec. 240.3a67-1, the term substantial position means
security-based swap positions that equal or exceed either of the
following thresholds in any major category of security-based swaps:
(1) $1 billion in daily average aggregate uncollateralized outward
exposure; or
(2) $2 billion in:
(i) Daily average aggregate uncollateralized outward exposure; plus
(ii) Daily average aggregate potential outward exposure.
(b) Aggregate uncollateralized outward exposure--(1) General.
Aggregate uncollateralized outward exposure in general means the sum of
the current exposure, obtained by marking-to-market using industry
standard practices, of each of the person's security-based swap
positions with negative value in a major security-based swap category,
less the value of the collateral the person has posted in connection
with those positions.
(2) Calculation of aggregate uncollateralized outward exposure. In
calculating this amount the person shall, with respect to each of its
security-based swap counterparties in a given major security-based swap
category:
(i) Determine the dollar value of the aggregate current exposure
arising from each of its security-based swap positions with negative
value (subject to the netting provisions described
[[Page 46]]
below) in that major category by marking-to-market using industry
standard practices; and
(ii) Deduct from that dollar amount the aggregate value of the
collateral the person has posted with respect to the security-based swap
positions.
(iii) The aggregate uncollateralized outward exposure shall be the
sum of those uncollateralized amounts across all of the person's
security-based swap counterparties in the applicable major category.
(3) Relevance of netting agreements. (i) If a person has one or more
master netting agreements with a counterparty, the person may measure
the current exposure arising from its security-based swaps in any major
category on a net basis, applying the terms of those agreements.
Calculation of current exposure may take into account offsetting
positions entered into with that particular counterparty involving
security-based swaps (in any security-based swap category) as well as
swaps and securities financing transactions (consisting of securities
lending and borrowing, securities margin lending and repurchase and
reverse repurchase agreements), and other financial instruments that are
subject to netting offsets for purposes of applicable bankruptcy law, to
the extent these are consistent with the offsets permitted by the master
netting agreements.
(ii) Such adjustments may not take into account any offset
associated with positions that the person has with separate
counterparties.
(4) Allocation of uncollateralized outward exposure. If a person
calculates current exposure with a particular counterparty on a net
basis, as provided by paragraph (b)(3) of this section, the amount of
current uncollateralized exposure attributable to each ``major''
category of security-based swaps should be calculated according to the
following formula:
[GRAPHIC] [TIFF OMITTED] TR23MY12.001
Note to paragraph (b)(4). Where: ESBS(MC) equals the
amount of aggregate current exposure attributable to the entity's
security-based swap positions in the ``major'' category at issue (either
security-based credit derivatives or other security-based swaps);
Enet total equals the entity's aggregate current exposure to
the counterparty at issue, after accounting for the netting of positions
and the posting of collateral; OTMSBS(MC) equals the current
exposure associated with the entity's out-of-the-money positions in
security-based swaps in the ``major'' category at issue, subject to
those netting arrangements; and OTMSBS(O) equals the current
exposure associated with the entity's out-of-the-money positions in the
other ``major'' category of security-based swaps, subject to those
netting arrangements; and OTMnon-SBS equals the current
exposure associated with the entity's out-of-the-money positions
associated with instruments, other than security-based swaps, that are
subject to those netting arrangements.
(c) Aggregate potential outward exposure--(1) General. Aggregate
potential outward exposure means the sum of:
(i) The aggregate potential outward exposure for each of the
person's security-based swap positions in a major security-based swap
category that are neither cleared by a registered or exempt clearing
agency nor subject to daily mark-to-market margining, as calculated in
accordance with paragraph (c)(2) of this section; and
(ii) The aggregate potential outward exposure for each of the
person's security-based swap positions in a major security-based swap
category that are either cleared by a registered or exempt clearing
agency or subject to daily mark-to-market margining, as calculated in
accordance with paragraph (c)(3) of this section.
(2) Calculation of potential outward exposure for security-based
swaps that are not cleared by a registered or exempt clearing agency or
subject to daily mark-to-market margining--(i) General--(A)(1) For
positions in security-based swaps that are not cleared by a registered
or exempt clearing agency or subject to daily mark-to-market margining,
potential outward exposure equals the total notional principal amount of
[[Page 47]]
those positions, multiplied by the following factors on a position-by-
position basis reflecting the type of security-based swap. For any
security-based swap that is not of the ``debt'' type, the ``equity and
other'' conversion factors are to be used:
------------------------------------------------------------------------
Equity
Residual maturity Debt and
other
------------------------------------------------------------------------
One year or less...................................... 0.10 0.06
Over one to five years................................ 0.10 0.08
Over five years....................................... 0.10 0.10
------------------------------------------------------------------------
(2) If a security-based swap is structured such that on specified
dates any outstanding exposure is settled and the terms are reset so
that the market value of the security-based swap is zero, the remaining
maturity equals the time until the next reset date.
(B) Use of effective notional amounts. If the stated notional amount
on a position is leveraged or enhanced by the structure of the position,
the calculation in paragraph (c)(2)(i)(A) of this section shall be based
on the effective notional amount of the position rather than on the
stated notional amount.
(C) Exclusion of certain positions. The calculation in paragraph
(c)(2)(i)(A) of this section shall exclude:
(1) Positions that constitute the purchase of an option, such that
the person has no additional payment obligations under the position;
(2) Other positions for which the person has prepaid or otherwise
satisfied all of its payment obligations; and
(3) Positions for which, pursuant to regulatory requirement, the
person has assigned an amount of cash or U.S. Treasury securities that
is sufficient to pay the person's maximum possible liability under the
position, and the person may not use that cash or those Treasury
securities for other purposes.
(D) Adjustment for certain positions. Notwithstanding paragraph
(c)(2)(i)(A) of this section, the potential outward exposure associated
with a position by which a person buys credit protection using a credit
default swap, or associated with a position by which a person purchases
an option for which the person retains additional payment obligations
under the position, is capped at the net present value of the unpaid
premiums.
(ii) Adjustment for netting agreements. Notwithstanding paragraph
(c)(2)(i) of this section, for positions subject to master netting
agreements the potential outward exposure associated with the person's
security-based swaps with each counterparty equals a weighted average of
the potential outward exposure for the person's security-based swaps
with that counterparty as calculated under paragraph (c)(2)(i) of this
section, and that amount reduced by the ratio of net current exposure to
gross current exposure, consistent with the following equation as
calculated on a counterparty-by-counterparty basis:
PNet = 0.4 x PGross + 0.6 x NGR x PGross
Note to paragraph (c)(2)(ii): Where: PNet is the potential outward
exposure, adjusted for bilateral netting, of the person's security-based
swaps with a particular counterparty; PGross is the potential outward
exposure without adjustment for bilateral netting, as calculated
pursuant to paragraph (c)(2)(i) of this section; and NGR is the ratio
of:
1. The current exposure arising from its security-based swaps in the
major category as calculated on a net basis according to paragraphs
(b)(3) and (4) of this section, divided by
2. The current exposure arising from its security-based swaps in the
major category as calculated in the absence of those netting procedures.
(3) Calculation of potential outward exposure for security-based
swaps that are either cleared by a registered or exempt clearing agency
or subject to daily mark-to-market margining. For positions in security-
based swaps that are cleared by a registered or exempt clearing agency
or subject to daily mark-to-market margining:
(i) Potential outward exposure equals the potential outward exposure
that would be attributed to such positions using the procedures in
paragraph (c)(2) of this section, multiplied by:
(A) 0.1, in the case of positions cleared by a registered or exempt
clearing agency; or
(B) 0.2, in the case of positions that are subject to daily mark-to-
market margining but that are not cleared by a registered or exempt
clearing agency.
(ii) Solely for purposes of calculating potential outward exposure:
(A) A security-based swap shall be considered to be subject to daily
mark-to-market margining if, and for as long
[[Page 48]]
as, the counterparties follow the daily practice of exchanging
collateral to reflect changes in the current exposure arising from the
security-based swap (after taking into account any other financial
positions addressed by a netting agreement between the counterparties).
(B) If the person is permitted by agreement to maintain a threshold
for which it is not required to post collateral, the position still will
be considered to be subject to daily mark-to-market margining for
purposes of calculating potential outward exposure, but the total amount
of that threshold (regardless of the actual exposure at any time) less
any initial margin posted up to the amount of that threshold, shall be
added to the person's aggregate uncollateralized outward exposure for
purposes of paragraph (a)(2) of this section.
(C) If the minimum transfer amount under the agreement is in excess
of $1 million, the position still will be considered to be subject to
daily mark-to-market margining for purposes of calculating potential
outward exposure, but the entirety of the minimum transfer amount shall
be added to the person's aggregate uncollateralized outward exposure for
purposes of paragraph (a)(2) of this section.
(D) A person may, at its discretion, calculate the potential outward
exposure of positions in security-based swaps that are subject to daily
mark-to-market margining in accordance with paragraph (c)(2) of this
section in lieu of calculating the potential outward exposure of such
positions in accordance with this paragraph (c)(3).
(d) Calculation of daily average. Measures of daily average
aggregate uncollateralized outward exposure and daily average aggregate
potential outward exposure shall equal the arithmetic mean of the
applicable measure of exposure at the close of each business day,
beginning the first business day of each calendar quarter and continuing
through the last business day of that quarter.
(e) Inter-affiliate activities. In calculating its aggregate
uncollateralized outward exposure and its aggregate potential outward
exposure, a person shall not consider its security-based swap positions
with counterparties that are majority-owned affiliates. For these
purposes the parties are majority-owned affiliates if one party directly
or indirectly owns a majority interest in the other, or if a third party
directly or indirectly owns a majority interest in both counterparties
to the security-based swap, where ``majority interest'' is the right to
vote or direct the vote of a majority of a class of voting securities of
an entity, the power to sell or direct the sale of a majority of a class
of voting securities of an entity, or the right to receive upon
dissolution or the contribution of a majority of the capital of a
partnership.
Sec. 240.3a67-4 Definition of ``hedging or mitigating commercial risk.''
For purposes of section 3(a)(67) of the Act, 15 U.S.C. 78c(a)(67),
and Sec. 240.3a67-1, a security-based swap position shall be deemed to
be held for the purpose of hedging or mitigating commercial risk when:
(a)(1) Such position is economically appropriate to the reduction of
risks that are associated with the present conduct and management of a
commercial enterprise (or of a majority owned affiliate of the
enterprise), or are reasonably expected to arise in the future conduct
and management of the commercial enterprise, where such risks arise
from:
(i) The potential change in the value of assets that a person owns,
produces, manufactures, processes, or merchandises or reasonably
anticipates owning, producing, manufacturing, processing, or
merchandising in the ordinary course of business of the enterprise (or
of an affiliate under common control with the enterprise);
(ii) The potential change in the value of liabilities that a person
has incurred or reasonably anticipates incurring in the ordinary course
of business of the enterprise (or of an affiliate under common control
with the enterprise); or
(iii) The potential change in the value of services that a person
provides, purchases, or reasonably anticipates providing or purchasing
in the ordinary course of business of the enterprise (or of an affiliate
under common control with the enterprise);
[[Page 49]]
(2) Depending on the applicable facts and circumstances, the
security-based swap positions described in paragraph (a)(1) of this
section may be expected to encompass, among other positions:
(i) Positions established to manage the risk posed by a customer's,
supplier's or counterparty's potential default in connection with:
Financing provided to a customer in connection with the sale of real
property or a good, product or service; a customer's lease of real
property or a good, product or service; a customer's agreement to
purchase real property or a good, product or service in the future; or a
supplier's commitment to provide or sell a good, product or service in
the future;
(ii) Positions established to manage the default risk posed by a
financial counterparty (different from the counterparty to the hedging
position at issue) in connection with a separate transaction (including
a position involving a credit derivative, equity swap, other security-
based swap, interest rate swap, commodity swap, foreign exchange swap or
other swap, option, or future that itself is for the purpose of hedging
or mitigating commercial risk pursuant to this section or 17 CFR
1.3(kkk));
(iii) Positions established to manage equity or market risk
associated with certain employee compensation plans, including the risk
associated with market price variations in connection with stock-based
compensation plans, such as deferred compensation plans and stock
appreciation rights;
(iv) Positions established to manage equity market price risks
connected with certain business combinations, such as a corporate merger
or consolidation or similar plan or acquisition in which securities of a
person are exchanged for securities of any other person (unless the sole
purpose of the transaction is to change an issuer's domicile solely
within the United States), or a transfer of assets of a person to
another person in consideration of the issuance of securities of such
other person or any of its affiliates;
(v) Positions established by a bank to manage counterparty risks in
connection with loans the bank has made; and
(vi) Positions to close out or reduce any of the positions described
in paragraphs (a)(2)(i) through (a)(2)(v) of this section; and
(b) Such position is:
(1) Not held for a purpose that is in the nature of speculation or
trading; and
(2) Not held to hedge or mitigate the risk of another security-based
swap position or swap position, unless that other position itself is
held for the purpose of hedging or mitigating commercial risk as defined
by this section or 17 CFR 1.3(kkk).
Sec. 240.3a67-5 Definition of ``substantial counterparty exposure.''
(a) General. For purposes of section 3(a)(67) of the Act, 15 U.S.C.
78c(a)(67), and Sec. 240.3a67-1, the term substantial counterparty
exposure that could have serious adverse effects on the financial
stability of the United States banking system or financial markets means
a security-based swap position that satisfies either of the following
thresholds:
(1) $2 billion in daily average aggregate uncollateralized outward
exposure; or
(2) $4 billion in:
(i) Daily average aggregate uncollateralized outward exposure; plus
(ii) Daily average aggregate potential outward exposure.
(b) Calculation. For these purposes, daily average aggregate
uncollateralized outward exposure and daily average aggregate potential
outward exposure shall be calculated the same way as is prescribed in
Sec. 240.3a67-3, except that these amounts shall be calculated by
reference to all of the person's security-based swap positions, rather
than by reference to a specific major security-based swap category.
Sec. 240.3a67-6 Definition of ``financial entity.''
(a) General. For purposes of section 3(a)(67) of the Act, 15 U.S.C.
78c(a)(67), and Sec. 240.3a67-1, the term financial entity means:
(1) A swap dealer;
(2) A major swap participant;
(3) A commodity pool as defined in section 1a(10) of the Commodity
Exchange Act (7 U.S.C. 1a(10));
[[Page 50]]
(4) A private fund as defined in section 202(a) of the Investment
Advisers Act of 1940 (15 U.S.C. 80b-2(a));
(5) An employee benefit plan as defined in paragraphs (3) and (32)
of section 3 of the Employee Retirement Income Security Act of 1974 (29
U.S.C. 1002); and
(6) A person predominantly engaged in activities that are in the
business of banking or financial in nature, as defined in section 4(k)
of the Bank Holding Company Act of 1956 (12 U.S.C. 1843k).
(b) Exclusion for centralized hedging facilities--(1) General.
Notwithstanding paragraph (a) of this section, for purposes of this
section the term financial entity shall not encompass a person that
would be a financial entity solely as a result of the person's
activities that facilitate hedging and/or treasury functions on behalf
of one or more majority-owned affiliates that themselves do not
constitute a financial entity.
(2) Meaning of majority-owned. For these purposes the counterparties
to a security-based swap are majority-owned affiliates if one
counterparty directly or indirectly owns a majority interest in the
other, or if a third party directly or indirectly owns a majority
interest in both counterparties to the security-based swap, where
``majority interest'' includes, but is not limited to, the right to vote
or direct the vote of a majority of a class of voting securities of an
entity, the power to sell or direct the sale of a majority of a class of
voting securities of an entity, or the right to receive upon dissolution
or the contribution of a majority of the capital of a partnership.
Sec. 240.3a67-7 Definition of ``highly leveraged.''
(a) General. For purposes of section 3(a)(67) of the Act, 15 U.S.C.
78c(a)(67), and Sec. 240.3a67-1, the term highly leveraged means the
existence of a ratio of an entity's total liabilities to equity in
excess of 12 to 1 as measured at the close of business on the last
business day of the applicable fiscal quarter.
(b) Measurement of liabilities and equity. For purposes of this
section, liabilities and equity generally should each be determined in
accordance with U.S. generally accepted accounting principles; provided,
however, that a person that is an employee benefit plan, as defined in
paragraphs (3) and (32) of section 3 of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1002), may, for purposes of this
paragraph (b):
(1) Exclude obligations to pay benefits to plan participants from
the calculation of liabilities; and
(2) Substitute the total value of plan assets for equity.
Sec. 240.3a67-8 Timing requirements, reevaluation period, and
termination of status.
(a) Timing requirements. A person that is not registered as a major
security-based swap participant, but that meets the criteria in Sec.
240.3a67-1 to be a major security-based swap participant as a result of
its security-based swap activities in a fiscal quarter, will not be
deemed to be a major security-based swap participant until the earlier
of the date on which it submits a complete application for registration
pursuant to section 15F of the Act (15 U.S.C. 78o-10) or two months
after the end of that quarter.
(b) Reevaluation period. Notwithstanding paragraph (a) of this
section, if a person that is not registered as a major security-based
swap participant meets the criteria in Sec. 240.3a67-1 to be a major
security-based swap participant in a fiscal quarter, but does not exceed
any applicable threshold by more than twenty percent in that quarter:
(1) That person will not immediately be deemed a major security-
based swap participant pursuant to the timing requirements specified in
paragraph (a) of this section; but
(2) That person will be deemed a major security-based swap
participant pursuant to the timing requirements specified in paragraph
(a) of this section at the end of the next fiscal quarter if the person
exceeds any of the applicable daily average thresholds in that next
fiscal quarter.
(c) Termination of status. A person that is deemed to be a major
security-based swap participant shall continue to be deemed a major
security-based swap participant until such time that its security-based
swap activities do not exceed any of the daily average
[[Page 51]]
thresholds set forth within Sec. 240.3a67-1 for four consecutive fiscal
quarters after the date on which the person becomes registered as a
major security-based swap participant.
Sec. 240.3a67-9 Calculation of major participant status by certain
persons.
A person shall not be deemed to be a major security-based swap
participant, regardless of whether the criteria in Sec. 240.3a67-1
otherwise would cause the person to be a major security-based swap
participant, provided the person meets the conditions set forth in
paragraph (a) of this section.
(a) Conditions--(1) Caps on uncollateralized exposure and notional
positions--(i) Maximum potential uncollateralized exposure. The express
terms of the person's agreements or arrangements relating to security-
based swaps with its counterparties at no time would permit the person
to maintain a total uncollateralized exposure of more than $100 million
to all such counterparties, including any exposure that may result from
thresholds or minimum transfer amounts established by credit support
annexes or similar arrangements; and
(ii) Maximum notional amount of security-based swap positions. The
person does not maintain security-based swap positions in an effective
notional amount of more than $2 billion in any major category of
security-based swaps, or more than $4 billion in aggregate; or
(2) Caps on uncollateralized exposure plus monthly calculation--(i)
Maximum potential uncollateralized exposure. The express terms of the
person's agreements or arrangements relating to security-based swaps
with its counterparties at no time would permit the person to maintain a
total uncollateralized exposure of more than $200 million to all such
counterparties (with regard to security-based swaps and any other
instruments by which the person may have exposure to those
counterparties), including any exposure that may result from thresholds
or minimum transfer amounts established by credit support annexes or
similar arrangements; and
(ii) Calculation of positions. (A) At the end of each month, the
person performs the calculations prescribed by Sec. Sec. 240.3a67-3 and
240.3a67-5 with regard to whether the aggregate uncollateralized outward
exposure plus aggregate potential outward exposure as of that day
constitute a substantial position in a major category of security-based
swaps, or pose substantial counterparty exposure that could have serious
adverse effects on the financial stability of the United States banking
system or financial markets; these calculations shall disregard
provisions of those rules that provide for the analyses to be determined
based on a daily average over a calendar quarter; and
(B) Each such analysis produces thresholds of no more than:
(1) $1 billion in aggregate uncollateralized outward exposure plus
aggregate potential outward exposure in any major category of security-
based swaps; if the person is subject to Sec. 240.3a67-3(a)(2)(iii), by
virtue of being a highly leveraged financial entity that is not subject
to capital requirements established by an appropriate Federal banking
agency, this analysis shall account for all of the person's security-
based swap positions in that major category (without excluding hedging
positions), otherwise this analysis shall exclude the same hedging and
related positions that are excluded from consideration pursuant to Sec.
240.3a67-3(a)(2)(i); or
(2) $2 billion in aggregate uncollateralized outward exposure plus
aggregate potential outward exposure (without any positions excluded
from the analysis) with regard to all of the person's security-based
swap positions.
(3) Calculations based on certain information. (i) At the end of
each month:
(A)(1) The person's aggregate uncollateralized outward exposure with
respect to its security-based swap positions is less than $500 million
with respect to each of the major security-based swap categories; and
(2) The sum of the amount calculated under paragraph (a)(3)(i)(A)(1)
of this section with respect to each major security-based swap category
and the total notional principal amount of the person's security-based
swap positions in each such major security-based swap category, adjusted
by the multipliers set forth in Sec. 240.3a67-3(c)(2)(i)(A) on a
[[Page 52]]
position-by-position basis reflecting the type of security-based swap,
is less than $1 billion with respect to each of the major security-based
swap categories; or
(B)(1) The person's aggregate uncollateralized outward exposure with
respect to its security-based swap positions across all major security-
based swap categories is less than $500 million; and
(2) The sum of the amount calculated under paragraph (a)(3)(i)(B)(1)
of this section and the product of the total effective notional
principal amount of the person's security-based swap positions in all
major security-based swap categories multiplied by 0.10 is less than $1
billion.
(ii) For purposes of the calculations set forth in paragraph
(a)(3)(i) of this section:
(A) The person's aggregate uncollateralized outward exposure for
positions held with security-based swap dealers shall be equal to such
exposure reported on the most recent reports of such exposure received
from such security-based swap dealers; and
(B) The person's aggregate uncollateralized outward exposure for
positions that are not reflected in any report of exposure from a
security-based swap dealer (including all security-based swap positions
it holds with persons other than security-based swap dealers) shall be
calculated in accordance with Sec. 240.3a67-3(b)(2).
(b) For purposes of the calculations set forth by this section, the
person shall use the effective notional amount of a position rather than
the stated notional amount of the position if the stated notional amount
is leveraged or enhanced by the structure of the position.
(c) No presumption shall arise that a person is required to perform
the calculations needed to determine if it is a major security-based
swap participant, solely by reason that the person does not meet the
conditions specified in paragraph (a) of this section.
Sec. 240.3a67-10 Foreign major security-based swap participants.
(a) Definitions. As used in this section, the following terms shall
have the meanings indicated:
(1) Conduit affiliate has the meaning set forth in Sec. 240.3a71-
3(a)(1).
(2) Foreign branch has the meaning set forth in Sec. 240.3a71-
3(a)(2).
(3) Transaction conducted through a foreign branch has the meaning
set forth in Sec. 240.3a71-3(a)(3).
(4) U.S. person has the meaning set forth in Sec. 240.3a71-3(a)(4).
(5) U.S. major security-based swap participant means a major
security-based swap participant, as defined in section 3(a)(67) of the
Act (15 U.S.C. 78c(a)(67)), and the rules and regulations thereunder,
that is a U.S. person.
(6) Foreign major security-based swap participant means a major
security-based swap participant, as defined in section 3(a)(67) of the
Act (15 U.S.C. 78c(a)(67)), and the rules and regulations thereunder,
that is not a U.S. person.
(b) Application of major security-based swap participant tests in
the cross-border context. For purposes of calculating a person's status
as a major security-based swap participant as defined in section
3(a)(67) of the Act (15 U.S.C. 78c(a)(67)), and the rules and
regulations thereunder, a person shall include the following security-
based swap positions:
(1) If such person is a U.S. person, all security-based swap
positions that are entered into by the person, including positions
entered into through a foreign branch;
(2) If such person is a conduit affiliate, all security-based swap
positions that are entered into by the person; and
(3) If such person is a non-U.S. person other than a conduit
affiliate, all of the following types of security-based swap positions
that are entered into by the person:
(i) Security-based swap positions that are entered into with a U.S.
person; provided, however, that this paragraph (b)(3)(i) shall not apply
to:
(A) Positions with a U.S. person counterparty that arise from
transactions conducted through a foreign branch of the counterparty,
when the counterparty is a registered security-based swap dealer; and
(B) Positions with a U.S. person counterparty that arise from
transactions conducted through a foreign
[[Page 53]]
branch of the counterparty, when the transaction is entered into prior
to 60 days following the earliest date on which the registration of
security-based swap dealers is first required pursuant to the applicable
final rules and regulations; and
(ii) Security-based swap positions for which the non-U.S. person's
counterparty to the security-based swap has rights of recourse against a
U.S. person; for these purposes a counterparty has rights of recourse
against the U.S. person if the counterparty has a conditional or
unconditional legally enforceable right, in whole or in part, to receive
payments from, or otherwise collect from, the U.S. person in connection
with the security-based swap.
(c) Attributed positions--(1) In general. For purposes of
calculating a person's status as a major security-based swap participant
as defined in section 3(a)(67) of the Act (15 U.S.C. 78c(a)(67)), and
the rules and regulations thereunder, a person also shall include the
following security-based swap positions:
(i) If such person is a U.S. person, any security-based swap
position of a non-U.S. person for which the non-U.S. person's
counterparty to the security-based swap has rights of recourse against
that U.S. person.
Note to paragraph (c)(1)(i).
This paragraph describes attribution requirements for a U.S. person
solely with respect to the guarantee of the obligations of a non-U.S.
person under a security-based swap. The Commission and the Commodity
Futures Trading Commission previously provided an interpretation about
attribution to a U.S. parent, other affiliate, or guarantor to the
extent that the counterparties to those positions have recourse against
that parent, other affiliate, or guarantor in connection with the
position. See Intermediary Definitions Adopting Release, http://
www.gpo.gov/fdsys/pkg/FR-2012-08-13/pdf/2012-18003.pdf. The Commission
explained that it intended to issue separate releases addressing the
application of the major participant definition, and Title VII
generally, to non-U.S. persons. See id. at note 1041.
(ii) If such person is a non-U.S. person:
(A) Any security-based swap position of a U.S. person for which that
person's counterparty has rights of recourse against the non-U.S.
person; and
(B) Any security-based swap position of another non-U.S. person
entered into with a U.S. person counterparty who has rights of recourse
against the first non-U.S. person, provided, however, that this
paragraph (c)(1)(ii)(B) shall not apply to positions described in Sec.
240.3a67-10(b)(3)(i)(A) and (B).
(2) Exceptions. Notwithstanding paragraph (c)(1) of this section, a
person shall not include such security-based swap positions if the
person whose performance is guaranteed in connection with the security-
based swap is:
(i) Subject to capital regulation by the Commission or the Commodity
Futures Trading Commission (including, but not limited to regulation as
a swap dealer, major swap participant, security-based swap dealer, major
security-based swap participant, futures commission merchant, broker, or
dealer);
(ii) Regulated as a bank in the United States;
(iii) Subject to capital standards, adopted by the person's home
country supervisor, that are consistent in all respects with the Capital
Accord of the Basel Committee on Banking Supervision; or
(iv) Deemed not to be a major security-based swap participant
pursuant to Sec. 240.3a67-8(a).
(d) Application of customer protection requirements. (1) A
registered foreign major security-based swap participant shall not be
subject to the requirements relating to business conduct standards
described in section 15F(h) of the Act (15 U.S.C. 78o-10(h)), and the
rules and regulations thereunder, other than rules and regulations
prescribed by the Commission pursuant to section 15F(h)(1)(B) of the Act
(15 U.S.C. 78o- 10(h)(1)(B)), with respect to a security-based swap
transaction with a counterparty that is not a U.S. person or with a
counterparty that is a U.S. person in a transaction conducted through a
foreign branch of the U.S. person.
(2) A registered U.S. major security-based swap participant shall
not be subject to the requirements relating to business conduct
standards described in section 15F(h) of the Act (15 U.S.C.
[[Page 54]]
78o-10(h)), and the rules and regulations thereunder, other than rules
and regulations prescribed by the Commission pursuant to section
15F(h)(1)(B) of the Act (15 U.S.C. 78o-10(h)(1)(B)), with respect to a
security-based swap transaction that constitutes a transaction conducted
through a foreign branch of the registered U.S. major security-based
swap participant with a non-U.S. person or with a U.S.-person
counterparty that constitutes a transaction conducted through a foreign
branch of that U.S.-person counterparty.
[79 FR 47369, Aug. 12, 2014, as amended at 81 FR 30142, May 13, 2016]
Further Definition of Swap, Security-Based Swap, and Security-Based Swap
Agreement; Mixed Swaps; Security-Based Swap Agreement Recordkeeping
Sec. 240.3a68-1a Meaning of ``issuers of securities in a narrow-based
security index'' as used in section 3(a)(68)(A)(ii)(III) of the Act.
(a) Notwithstanding Sec. 240.3a68-3(a), and solely for purposes of
determining whether a credit default swap is a security-based swap under
section 3(a)(68)(A)(ii)(III) of the Act (15 U.S.C.
78c(a)(68)(A)(ii)(III)), the term issuers of securities in a narrow-
based security index as used in section 3(a)(68)(A)(ii)(III) of the Act
means issuers of securities included in an index (including an index
referencing loan borrowers or loans of such borrowers) in which:
(1)(i) There are nine or fewer non-affiliated issuers of securities
that are reference entities included in the index, provided that an
issuer of securities shall not be deemed a reference entity included in
the index for purposes of this section unless:
(A) A credit event with respect to such reference entity would
result in a payment by the credit protection seller to the credit
protection buyer under the credit default swap based on the related
notional amount allocated to such reference entity; or
(B) The fact of such credit event or the calculation in accordance
with paragraph (a)(1)(i)(A) of this section of the amount owed with
respect to such credit event is taken into account in determining
whether to make any future payments under the credit default swap with
respect to any future credit events;
(ii) The effective notional amount allocated to any reference entity
included in the index comprises more than 30 percent of the index's
weighting;
(iii) The effective notional amount allocated to any five non-
affiliated reference entities included in the index comprises more than
60 percent of the index's weighting; or
(iv) Except as provided in paragraph (b) of this section, for each
reference entity included in the index, none of the criteria in
paragraphs (a)(1)(iv)(A) through (a)(1)(iv)(H) of this section is
satisfied:
(A) The reference entity included in the index is required to file
reports pursuant to section 13 or section 15(d) of the Act (15 U.S.C.
78m or 78o(d));
(B) The reference entity included in the index is eligible to rely
on the exemption provided in Sec. 240.12g3-2(b);
(C) The reference entity included in the index has a worldwide
market value of its outstanding common equity held by non-affiliates of
$700 million or more;
(D) The reference entity included in the index (other than a
reference entity included in the index that is an issuing entity of an
asset-backed security as defined in section 3(a)(79) of the Act (15
U.S.C. 78c(a)(79))) has outstanding notes, bonds, debentures, loans, or
evidences of indebtedness (other than revolving credit facilities)
having a total remaining principal amount of at least $1 billion;
(E) The reference entity included in the index is the issuer of an
exempted security as defined in section 3(a)(12) of the Act (15 U.S.C.
78c(a)(12)) (other than any municipal security as defined in section
3(a)(29) of the Act (15 U.S.C. 78c(a)(29)));
(F) The reference entity included in the index is a government of a
foreign country or a political subdivision of a foreign country;
(G) If the reference entity included in the index is an issuing
entity of an asset-backed security as defined in section 3(a)(79) of the
Act (15 U.S.C.
[[Page 55]]
78c(a)(79)), such asset-backed security was issued in a transaction
registered under the Securities Act of 1933 (15 U.S.C. 77a et seq.) and
has publicly available distribution reports; and
(H) For a credit default swap entered into solely between eligible
contract participants as defined in section 3(a)(65) of the Act (15
U.S.C. 78c(a)(65)):
(1) The reference entity included in the index (other than a
reference entity included in the index that is an issuing entity of an
asset-backed security as defined in section 3(a)(79) of the Act (15
U.S.C. 78c(a)(79))) makes available to the public or otherwise makes
available to such eligible contract participant information about the
reference entity included in the index pursuant to Sec. 230.144A(d)(4))
of this chapter;
(2) Financial information about the reference entity included in the
index (other than a reference entity included in the index that is an
issuing entity of an asset-backed security as defined in section
3(a)(79) of the Act (15 U.S.C. 78c(a)(79))) is otherwise publicly
available; or
(3) In the case of a reference entity included in the index that is
an issuing entity of an asset-backed security as defined in section
3(a)(79) of the Act (15 U.S.C. 78c(a)(79)), information of the type and
level included in publicly available distribution reports for similar
asset-backed securities is publicly available about both the reference
entity included in the index and such asset-backed security; and
(2)(i) The index is not composed solely of reference entities that
are issuers of exempted securities as defined in section 3(a)(12) of the
Act (15 U.S.C. 78c(a)(12)), as in effect on the date of enactment of the
Futures Trading Act of 1982 (other than any municipal security as
defined in section 3(a)(29) of the Act (15 U.S.C. 78c(a)(29))), as in
effect on the date of enactment of the Futures Trading Act of 1982); and
(ii) Without taking into account any portion of the index composed
of reference entities that are issuers of exempted securities as defined
in section 3(a)(12) of the Act (15 U.S.C. 78c(a)(12)), as in effect on
the date of enactment of the Futures Trading Act of 1982 (other than any
municipal security as defined in section 3(a)(29) of the Act (15 U.S.C.
78c(a)(29))), the remaining portion of the index would be within the
term ``issuer of securities in a narrow-based security index'' under
paragraph (a)(1) of this section.
(b) Paragraph (a)(1)(iv) of this section will not apply with respect
to a reference entity included in the index if:
(1) The effective notional amounts allocated to such reference
entity comprise less than five percent of the index's weighting; and
(2) The effective notional amounts allocated to reference entities
included in the index that satisfy paragraph (a)(1)(iv) of this section
comprise at least 80 percent of the index's weighting.
(c) For purposes of this section:
(1) A reference entity included in the index is affiliated with
another reference entity included in the index (for purposes of
paragraph (c)(4) of this section) or another entity (for purposes of
paragraph (c)(5) of this section) if it controls, is controlled by, or
is under common control with, that other reference entity included in
the index or other entity, as applicable; provided that each reference
entity included in the index that is an issuing entity of an asset-
backed security as defined in section 3(a)(79) of the Act (15 U.S.C.
78c(a)(79)) will not be considered affiliated with any other reference
entity included in the index or any other entity that is an issuing
entity of an asset-backed security.
(2) Control for purposes of this section means ownership of more
than 50 percent of the equity of a reference entity included in the
index (for purposes of paragraph (c)(4) of this section) or another
entity (for purposes of paragraph (c)(5) of this section), or the
ability to direct the voting of more than 50 percent of the voting
equity of a reference entity included in the index (for purposes of
paragraph (c)(4) of this section) or another entity (for purposes of
paragraph (c)(5) of this section).
(3) In identifying a reference entity included in the index for
purposes of this section, the term reference entity includes:
(i) An issuer of securities;
[[Page 56]]
(ii) An issuer of securities that is an issuing entity of an asset-
backed security as defined in section 3(a)(79) of the Act (15 U.S.C.
78c(a)(79)); and
(iii) An issuer of securities that is a borrower with respect to any
loan identified in an index of borrowers or loans.
(4) For purposes of calculating the thresholds in paragraphs
(a)(1)(i) through (a)(1)(iii) of this section, the term reference entity
included in the index includes a single reference entity included in the
index or a group of affiliated reference entities included in the index
as determined in accordance with paragraph (c)(1) of this section (with
each reference entity included in the index that is an issuing entity of
an asset-backed security as defined in section 3(a)(79) of the Act (15
U.S.C. 78c(a)(79)) being considered a separate reference entity included
in the index).
(5) For purposes of determining whether one of the criterion in
either paragraphs (a)(1)(iv)(A) through (a)(1)(iv)(D) of this section or
paragraphs (a)(1)(iv)(H)(1) and (a)(1)(iv)(H)(2) of this section is met,
the term reference entity included in the index includes a single
reference entity included in the index or a group of affiliated entities
as determined in accordance with paragraph (c)(1) of this section (with
each issuing entity of an asset-backed security as defined in section
3(a)(79) of the Act (15 U.S.C. 78c(a)(79)) being considered a separate
entity).
[77 FR 48356, Aug. 13, 2012, as amended at 79 FR 57344, Sept. 24, 2014]
Sec. 240.3a68-1b Meaning of ``narrow-based security index'' as used
in section 3(a)(68)(A)(ii)(I) of the Act.
(a) Notwithstanding Sec. 240.3a68-3(a), and solely for purposes of
determining whether a credit default swap is a security-based swap under
section 3(a)(68)(A)(ii)(I) of the Act (15 U.S.C. 78c(a)(68)(A)(ii)(I)),
the term narrow-based security index as used in section
3(a)(68)(A)(ii)(I) of the Act means an index in which:
(1)(i) The index is composed of nine or fewer securities or
securities that are issued by nine or fewer non-affiliated issuers,
provided that a security shall not be deemed a component of the index
for purposes of this section unless:
(A) A credit event with respect to the issuer of such security or a
credit event with respect to such security would result in a payment by
the credit protection seller to the credit protection buyer under the
credit default swap based on the related notional amount allocated to
such security; or
(B) The fact of such credit event or the calculation in accordance
with paragraph (a)(1)(i)(A) of this section of the amount owed with
respect to such credit event is taken into account in determining
whether to make any future payments under the credit default swap with
respect to any future credit events;
(ii) The effective notional amount allocated to the securities of
any issuer included in the index comprises more than 30 percent of the
index's weighting;
(iii) The effective notional amount allocated to the securities of
any five non-affiliated issuers included in the index comprises more
than 60 percent of the index's weighting; or
(iv) Except as provided in paragraph (b) of this section, for each
security included in the index none of the criteria in paragraphs
(a)(1)(iv)(A) through (a)(1)(iv)(H) of this section is satisfied:
(A) The issuer of the security included in the index is required to
file reports pursuant to section 13 or section 15(d) of the Act (15
U.S.C. 78m or 78o(d));
(B) The issuer of the security included in the index is eligible to
rely on the exemption provided in Sec. 240.12g3-2(b);
(C) The issuer of the security included in the index has a worldwide
market value of its outstanding common equity held by non-affiliates of
$700 million or more;
(D) The issuer of the security included in the index (other than an
issuer of the security that is an issuing entity of an asset-backed
security as defined in section 3(a)(79) of the Act (15 U.S.C.
78c(a)(79))) has outstanding notes, bonds, debentures, loans, or
evidences of indebtedness (other than revolving credit facilities)
having a total remaining principal amount of at least $1 billion;
[[Page 57]]
(E) The security included in the index is an exempted security as
defined in section 3(a)(12) of the Act (15 U.S.C. 78c(a)(12)) (other
than any municipal security as defined in section 3(a)(29) of the Act
(15 U.S.C. 78c(a)(29)));
(F) The issuer of the security included in the index is a government
of a foreign country or a political subdivision of a foreign country;
(G) If the security included in the index is an asset-backed
security as defined in section 3(a)(79) of the Act (15 U.S.C.
78c(a)(79)), the security was issued in a transaction registered under
the Securities Act of 1933 (15 U.S.C. 77a et seq.) and has publicly
available distribution reports; and
(H) For a credit default swap entered into solely between eligible
contract participants as defined in section 3(a)(65) of the Act (15
U.S.C. 78c(a)(65)):
(1) The issuer of the security included in the index (other than an
issuer of the security that is an issuing entity of an asset-backed
security as defined in section 3(a)(79) of the Act (15 U.S.C.
78c(a)(79))) makes available to the public or otherwise makes available
to such eligible contract participant information about such issuer
pursuant to Sec. 230.144A(d)(4)) of this chapter;
(2) Financial information about the issuer of the security included
in the index (other than an issuer of the security that is an issuing
entity of an asset-backed security as defined in section 3(a)(79) of the
Act (15 U.S.C. 78c(a)(79))) is otherwise publicly available; or
(3) In the case of an asset-backed security as defined in section
3(a)(79) of the Act (15 U.S.C. 78c(a)(79)), information of the type and
level included in public distribution reports for similar asset-backed
securities is publicly available about both the issuing entity and such
asset-backed security; and
(2)(i) The index is not composed solely of exempted securities as
defined in section 3(a)(12) of the Act (15 U.S.C. 78c(a)(12)), as in
effect on the date of enactment of the Futures Trading Act of 1982
(other than any municipal security as defined in section 3(a)(29) of the
Act (15 U.S.C. 78c(a)(29))), as in effect on the date of enactment of
the Futures Trading Act of 1982); and
(ii) Without taking into account any portion of the index composed
of exempted securities as defined in section 3(a)(12) of the Act (15
U.S.C. 78c(a)(12)), as in effect on the date of enactment of the Futures
Trading Act of 1982 (other than any municipal security as defined in
section 3(a)(29) of the Act (15 U.S.C. 78c(a)(29))), the remaining
portion of the index would be within the term ``narrow-based security
index'' under paragraph (a)(1) of this section.
(b) Paragraph (a)(1)(iv) of this section will not apply with respect
to securities of an issuer included in the index if:
(1) The effective notional amounts allocated to all securities of
such issuer included in the index comprise less than five percent of the
index's weighting; and
(2) The securities that satisfy paragraph (a)(1)(iv) of this section
comprise at least 80 percent of the index's weighting.
(c) For purposes of this section:
(1) An issuer of securities included in the index is affiliated with
another issuer of securities included in the index (for purposes of
paragraph (c)(4) of this section) or another entity (for purposes of
paragraph (c)(5) of this section) if it controls, is controlled by, or
is under common control with, that other issuer or other entity, as
applicable; provided that each issuer of securities included in the
index that is an issuing entity of an asset-backed security as defined
in section 3(a)(79) of the Act (15 U.S.C. 78c(a)(79)) will not be
considered affiliated with any other issuer of securities included in
the index or any other entity that is an issuing entity of an asset-
backed security.
(2) Control for purposes of this section means ownership of more
than 50 percent of the equity of an issuer of securities included in the
index (for purposes of paragraph (c)(4) of this section) or another
entity (for purposes of paragraph (c)(5) of this section), or the
ability to direct the voting of more than 50 percent of the voting
equity an issuer of securities included in the index (for purposes of
paragraph (c)(4) of this section) or another entity (for purposes of
paragraph (c)(5) of this section).
[[Page 58]]
(3) In identifying an issuer of securities included in the index for
purposes of this section, the term issuer includes:
(i) An issuer of securities; and
(ii) An issuer of securities that is an issuing entity of an asset-
backed security as defined in section 3(a)(79) of the Act (15 U.S.C.
78c(a)(79)).
(4) For purposes of calculating the thresholds in paragraphs
(a)(1)(i) through (a)(1)(iii) of this section, the term issuer of the
security included in the index includes a single issuer of securities
included in the index or a group of affiliated issuers of securities
included in the index as determined in accordance with paragraph (c)(1)
of this section (with each issuer of securities included in the index
that is an issuing entity of an asset-backed security as defined in
section 3(a)(79) of the Act (15 U.S.C. 78c(a)(79)) being considered a
separate issuer of securities included in the index).
(5) For purposes of determining whether one of the criterion in
either paragraphs (a)(1)(iv)(A) through (a)(1))(iv)(D) of this section
or paragraphs (a)(1)(iv)(H)(1) and (a)(1)(iv)(H)(2) of this section is
met, the term issuer of the security included in the index includes a
single issuer of securities included in the index or a group affiliated
entities as determined in accordance with paragraph (c)(1) of this
section (with each issuing entity of an asset-backed security as defined
in section 3(a)(79) of the Act (15 U.S.C. 78c(a)(79)) being considered a
separate entity).
[77 FR 48356, Aug. 13, 2012, as amended at 79 FR 57344, Sept. 24, 2014]
Sec. 240.3a68-2 Requests for interpretation of swaps, security-based
swaps, and mixed swaps.
(a) In general. Any person may submit a request to the Commission
and the Commodity Futures Trading Commission to provide a joint
interpretation of whether a particular agreement, contract, or
transaction (or class thereof) is:
(1) A swap, as that term is defined in section 3(a)(69) of the Act
(15 U.S.C. 78c(a)(69)) and the rules and regulations promulgated
thereunder;
(2) A security-based swap, as that term is defined in section
3(a)(68) of the Act (15 U.S.C. 78c(a)(68)) and the rules and regulations
promulgated thereunder; or
(3) A mixed swap, as that term is defined in section 3(a)(68)(D) of
the Act and the rules and regulations promulgated thereunder.
(b) Request process. In making a request pursuant to paragraph (a)
of this section, the requesting person must provide the Commission and
the Commodity Futures Trading Commission with the following:
(1) All material information regarding the terms of the agreement,
contract, or transaction (or class thereof);
(2) A statement of the economic characteristics and purpose of the
agreement, contract, or transaction (or class thereof);
(3) The requesting person's determination as to whether the
agreement, contract, or transaction (or class thereof) should be
characterized as a swap, a security-based swap, or both (i.e., a mixed
swap), including the basis for such determination; and
(4) Such other information as may be requested by the Commission or
the Commodity Futures Trading Commission.
(c) Request withdrawal. A person may withdraw a request made
pursuant to paragraph (a) of this section at any time prior to the
issuance of a joint interpretation or joint proposed rule by the
Commission and the Commodity Futures Trading Commission in response to
the request; provided, however, that notwithstanding such withdrawal,
the Commission and the Commodity Futures Trading Commission may provide
a joint interpretation of whether the agreement, contract, or
transaction (or class thereof) is a swap, a security-based swap, or both
(i.e., a mixed swap).
(d) Request by the Commission or the Commodity Futures Trading
Commission. In the absence of a request for a joint interpretation under
paragraph (a) of this section:
(1) If the Commission or the Commodity Futures Trading Commission
receives a proposal to list, trade, or clear an agreement, contract, or
transaction (or class thereof) that raises
[[Page 59]]
questions as to the appropriate characterization of such agreement,
contract, or transaction (or class thereof) as a swap, a security-based
swap, or both (i.e., a mixed swap), the Commission or the Commodity
Futures Trading Commission, as applicable, promptly shall notify the
other of the agreement, contract, or transaction (or class thereof); and
(2) The Commission or the Commodity Futures Trading Commission, or
their Chairmen jointly, may submit a request for a joint interpretation
as described in paragraph (a) of this section; such submission shall be
made pursuant to paragraph (b) of this section, and may be withdrawn
pursuant to paragraph (c) of this section.
(e) Timeframe for joint interpretation. (1) If the Commission and
the Commodity Futures Trading Commission determine to issue a joint
interpretation as described in paragraph (a) of this section, such joint
interpretation shall be issued within 120 days after receipt of a
complete submission requesting a joint interpretation under paragraph
(a) or (d) of this section.
(2) The Commission and the Commodity Futures Trading Commission
shall consult with the Board of Governors of the Federal Reserve System
prior to issuing any joint interpretation as described in paragraph (a)
of this section.
(3) If the Commission and the Commodity Futures Trading Commission
seek public comment with respect to a joint interpretation regarding an
agreement, contract, or transaction (or class thereof), the 120-day
period described in paragraph (e)(1) of this section shall be stayed
during the pendency of the comment period, but shall recommence with the
business day after the public comment period ends.
(4) Nothing in this section shall require the Commission and the
Commodity Futures Trading Commission to issue any joint interpretation.
(5) If the Commission and the Commodity Futures Trading Commission
do not issue a joint interpretation within the time period described in
paragraph (e)(1) or (e)(3) of this section, each of the Commission and
the Commodity Futures Trading Commission shall publicly provide the
reasons for not issuing such a joint interpretation within the
applicable timeframes.
(f) Joint proposed rule. (1) Rather than issue a joint
interpretation pursuant to paragraph (a) of this section, the Commission
and the Commodity Futures Trading Commission may issue a joint proposed
rule, in consultation with the Board of Governors of the Federal Reserve
System, to further define one or more of the terms swap, security-based
swap, or mixed swap.
(2) A joint proposed rule described in paragraph (f)(1) of this
section shall be issued within the timeframe for issuing a joint
interpretation set forth in paragraph (e) of this section.
[77 FR 48356, Aug. 13, 2012]
Sec. 240.3a68-3 Meaning of ``narrow-based security index'' as used
in the definition of ``security-based swap.''
(a) In general. Except as otherwise provided in Sec. 240.3a68-1a
and Sec. 240.3a68-1b, for purposes of section 3(a)(68) of the Act (15
U.S.C. 78c(a)(68)), the term narrow-based security index has the meaning
set forth in section 3(a)(55) of the Act (15 U.S.C. 78c(a)(55)), and the
rules, regulations, and orders of the Commission thereunder.
(b) Tolerance period for swaps traded on designated contract
markets, swap execution facilities and foreign boards of trade.
Notwithstanding paragraph (a) of this section, solely for purposes of
swaps traded on or subject to the rules of a designated contract market,
swap execution facility, or foreign board of trade pursuant to the
Commodity Exchange Act (7 U.S.C. 1 et seq.), a security index underlying
such swaps shall not be considered a narrow-based security index if:
(1)(i) A swap on the index is traded on or subject to the rules of a
designated contract market, swap execution facility, or foreign board of
trade pursuant to the Commodity Exchange Act (7 U.S.C. 1 et seq.) for at
least 30 days as a swap on an index that was not a narrow-based security
index; or
(ii) Such index was not a narrow-based security index during every
trading day of the six full calendar months preceding a date no earlier
than 30 days prior to the commencement of trading of a swap on such
index on a market
[[Page 60]]
described in paragraph (b)(1)(i) of this section; and
(2) The index has been a narrow-based security index for no more
than 45 business days over three consecutive calendar months.
(c) Tolerance period for security-based swaps traded on national
securities exchanges or security-based swap execution facilities.
Notwithstanding paragraph (a) of this section, solely for purposes of
security-based swaps traded on a national securities exchange or
security-based swap execution facility, a security index underlying such
security-based swaps shall be considered a narrow-based security index
if:
(1)(i) A security-based swap on the index is traded on a national
securities exchange or security-based swap execution facility for at
least 30 days as a security-based swap on a narrow-based security index;
or
(ii) Such index was a narrow-based security index during every
trading day of the six full calendar months preceding a date no earlier
than 30 days prior to the commencement of trading of a security-based
swap on such index on a market described in paragraph (c)(1)(i) of this
section; and
(2) The index has been a security index that is not a narrow-based
security index for no more than 45 business days over three consecutive
calendar months.
(d) Grace period. (1) Solely with respect to a swap that is traded
on or subject to the rules of a designated contract market, swap
execution facility or foreign board of trade pursuant to the Commodity
Exchange Act (7 U.S.C. 1 et seq.), an index that becomes a narrow-based
security index under paragraph (b) of this section solely because it was
a narrow-based security index for more than 45 business days over three
consecutive calendar months shall not be a narrow-based security index
for the following three calendar months.
(2) Solely with respect to a security-based swap that is traded on a
national securities exchange or security-based swap execution facility,
an index that becomes a security index that is not a narrow-based
security index under paragraph (c) of this section solely because it was
not a narrow-based security index for more than 45 business days over
three consecutive calendar months shall be a narrow-based security index
for the following three calendar months.
[77 FR 48356, Aug. 13, 2012]
Sec. 240.3a68-4 Regulation of mixed swaps.
(a) In general. The term mixed swap has the meaning set forth in
section 3(a)(68)(D) of the Act (15 U.S.C. 78c(a)(68)(D)).
(b) Regulation of bilateral uncleared mixed swaps entered into by
dually-registered dealers or major participants. A mixed swap:
(1) That is neither executed on nor subject to the rules of a
designated contract market, national securities exchange, swap execution
facility, security-based swap execution facility, or foreign board of
trade;
(2) That will not be submitted to a derivatives clearing
organization or registered or exempt clearing agency to be cleared; and
(3) Where at least one party is registered with the Commission as a
security-based swap dealer or major security-based swap participant and
also with the Commodity Futures Trading Commission as a swap dealer or
major swap participant, shall be subject to:
(i) The following provisions of the Commodity Exchange Act (7 U.S.C.
1 et seq.), and the rules and regulations promulgated thereunder, set
forth in the rules and regulations of the Commodity Futures Trading
Commission:
(A) Examinations and information sharing: 7 U.S.C. 6s(f) and 12;
(B) Enforcement: 7 U.S.C. 2(a)(1)(B), 6(b), 6b, 6c, 6s(h)(1)(A),
6s(h)(4)(A), 9, 13b, 13a-1, 13a-2, 13, 13c(a), 13c(b), 15 and 26;
(C) Reporting to a swap data repository: 7 U.S.C. 6r;
(D) Real-time reporting: 7 U.S.C. 2(a)(13);
(E) Capital: 7 U.S.C. 6s(e); and
(F) Position Limits: 7 U.S.C. 6a; and
(ii) The provisions of the Federal securities laws, as defined in
section 3(a)(47) of the Act (15 U.S.C. 78c(a)(47)), and the rules and
regulations promulgated thereunder.
(c) Process for determining regulatory treatment for other mixed
swaps--(1) In
[[Page 61]]
general. Any person who desires or intends to list, trade, or clear a
mixed swap (or class thereof) that is not subject to paragraph (b) of
this section may request the Commission and the Commodity Futures
Trading Commission to issue a joint order permitting the requesting
person (and any other person or persons that subsequently lists, trades,
or clears that mixed swap) to comply, as to parallel provisions only,
with specified parallel provisions of either the Act (15 U.S.C. 78a et
seq.) or the Commodity Exchange Act (7 U.S.C. 1 et seq.), and the rules
and regulations thereunder (collectively, specified parallel
provisions), instead of being required to comply with parallel
provisions of both the Act and the Commodity Exchange Act. For purposes
of this paragraph (c), parallel provisions means comparable provisions
of the Act and the Commodity Exchange Act that were added or amended by
the Wall Street Transparency and Accountability Act of 2010 with respect
to security-based swaps and swaps, and the rules and regulations
thereunder.
(2) Request process. A person submitting a request pursuant to
paragraph (c)(1) of this section must provide the Commission and the
Commodity Futures Trading Commission with the following:
(i) All material information regarding the terms of the specified,
or specified class of, mixed swap;
(ii) The economic characteristics and purpose of the specified, or
specified class of, mixed swap;
(iii) The specified parallel provisions, and the reasons the person
believes such specified parallel provisions would be appropriate for the
mixed swap (or class thereof); and
(iv) An analysis of:
(A) The nature and purposes of the parallel provisions that are the
subject of the request;
(B) The comparability of such parallel provisions;
(C) The extent of any conflicts or differences between such parallel
provisions; and
(D) Such other information as may be requested by the Commission or
the Commodity Futures Trading Commission.
(3) Request withdrawal. A person may withdraw a request made
pursuant to paragraph (c)(1) of this section at any time prior to the
issuance of a joint order under paragraph (c)(4) of this section by the
Commission and the Commodity Futures Trading Commission in response to
the request.
(4) Issuance of orders. In response to a request under paragraph
(c)(1) of this section, the Commission and the Commodity Futures Trading
Commission, as necessary to carry out the purposes of the Wall Street
Transparency and Accountability Act of 2010, may issue a joint order,
after notice and opportunity for comment, permitting the requesting
person (and any other person or persons that subsequently lists, trades,
or clears that mixed swap) to comply, as to parallel provisions only,
with the specified parallel provisions (or another subset of the
parallel provisions that are the subject of the request, as the
Commissions determine is appropriate), instead of being required to
comply with parallel provisions of both the Act (15 U.S.C. 78a et seq.)
and the Commodity Exchange Act (7 U.S.C. 1 et seq.). In determining the
contents of such joint order, the Commission and the Commodity Futures
Trading Commission may consider, among other things:
(i) The nature and purposes of the parallel provisions that are the
subject of the request;
(ii) The comparability of such parallel provisions; and
(iii) The extent of any conflicts or differences between such
parallel provisions.
(5) Timeframe. (i) If the Commission and the Commodity Futures
Trading Commission determine to issue a joint order as described in
paragraph (c)(4) of this section, such joint order shall be issued
within 120 days after receipt of a complete request for a joint order
under paragraph (c)(1) of this section, which time period shall be
stayed during the pendency of the public comment period provided for in
paragraph (c)(4) of this section and shall recommence with the business
day after the public comment period ends.
[[Page 62]]
(ii) Nothing in this section shall require the Commission and the
Commodity Futures Trading Commission to issue any joint order.
(iii) If the Commission and the Commodity Futures Trading Commission
do not issue a joint order within the time period described in paragraph
(c)(5)(i) of this section, each of the Commission and the Commodity
Futures Trading Commission shall publicly provide the reasons for not
issuing such a joint order within that timeframe.
[77 FR 48356, Aug. 13, 2012]
Sec. 240.3a68-5 Regulation of certain futures contracts on foreign
sovereign debt.
The term security-based swap as used in section 3(a)(68) of the Act
(15 U.S.C. 78c(a)(68)) does not include an agreement, contract, or
transaction that is based on or references a qualifying foreign futures
contract (as defined in Sec. 240.3a12-8 on the debt securities of any
one or more of the foreign governments enumerated in Sec. 240.3a12-8,
provided that such agreement, contract, or transaction satisfies the
following conditions:
(a) The futures contract that the agreement, contract, or
transaction references or upon which the agreement, contract, or
transaction is based is a qualifying foreign futures contract that
satisfies the conditions of Sec. 240.3a12-8 applicable to qualifying
foreign futures contracts;
(b) The agreement, contract, or transaction is traded on or through
a board of trade (as defined in 7 U.S.C. 2);
(c) The debt securities upon which the qualifying foreign futures
contract is based or referenced and any security used to determine the
cash settlement amount pursuant to paragraph (d) of this section were
not registered under the Securities Act of 1933 (15 U.S.C. 77 et seq.)
or the subject of any American depositary receipt registered under the
Securities Act of 1933;
(d) The agreement, contract, or transaction may only be cash
settled; and
(e) The agreement, contract or transaction is not entered into by
the issuer of the debt securities upon which the qualifying foreign
futures contract is based or referenced (including any security used to
determine the cash payment due on settlement of such agreement, contract
or transaction), an affiliate (as defined in the Securities Act of 1933
(15 U.S.C. 77 et seq.) and the rules and regulations thereunder) of the
issuer, or an underwriter of such issuer's debt securities.
[77 FR 48356, Aug. 13, 2012]
Sec. 240.3a69-1 Safe Harbor Definition of ``security-based swap''
and ``swap'' as used in sections 3(a)(68) and 3(a)(69) of the Act-
-insurance.
(a) This paragraph is a non-exclusive safe harbor. The terms
security-based swap as used in section 3(a)(68) of the Act (15 U.S.C.
78c(a)(68)) and swap as used in section 3(a)(69) of the Act (15 U.S.C.
78c(a)(69)) do not include an agreement, contract, or transaction that:
(1) By its terms or by law, as a condition of performance on the
agreement, contract, or transaction:
(i) Requires the beneficiary of the agreement, contract, or
transaction to have an insurable interest that is the subject of the
agreement, contract, or transaction and thereby carry the risk of loss
with respect to that interest continuously throughout the duration of
the agreement, contract, or transaction;
(ii) Requires that loss to occur and to be proved, and that any
payment or indemnification therefor be limited to the value of the
insurable interest;
(iii) Is not traded, separately from the insured interest, on an
organized market or over the counter; and
(iv) With respect to financial guaranty insurance only, in the event
of payment default or insolvency of the obligor, any acceleration of
payments under the policy is at the sole discretion of the insurer; and
(2) Is provided:
(i)(A) By a person that is subject to supervision by the insurance
commissioner (or similar official or agency) of any State, as defined in
section 3(a)(16) of the Act (15 U.S.C. 78c(a)(16)), or by the United
States or an agency or instrumentality thereof; and
(B) Such agreement, contract, or transaction is regulated as
insurance
[[Page 63]]
under applicable State law or the laws of the United States;
(ii)(A) Directly or indirectly by the United States, any State or
any of their respective agencies or instrumentalities; or
(B) Pursuant to a statutorily authorized program thereof; or
(iii) In the case of reinsurance only by a person to another person
that satisfies the conditions set forth in paragraph (a)(2) of this
section, provided that:
(A) Such person is not prohibited by applicable State law or the
laws of the United States from offering such agreement, contract, or
transaction to such person that satisfies the conditions set forth in
paragraph (a)(2) of this section;
(B) The agreement, contract, or transaction to be reinsured
satisfies the conditions set forth in paragraph (a)(1) or (3) of this
section; and
(C) Except as otherwise permitted under applicable State law, the
total amount reimbursable by all reinsurers for such agreement,
contract, or transaction may not exceed the claims or losses paid by the
person writing the risk being ceded or transferred by such person; or
(iv) In the case of non-admitted insurance by a person who:
(A) Is located outside of the United States and listed on the
Quarterly Listing of Alien Insurers as maintained by the International
Insurers Department of the National Association of Insurance
Commissioners; or
(B) Meets the eligibility criteria for non-admitted insurers under
applicable State law; or
(3) Is provided in accordance with the conditions set forth in
paragraph (a)(2) of this section and is one of the following types of
products:
(i) Surety bond;
(ii) Fidelity bond;
(iii) Life insurance;
(iv) Health insurance;
(v) Long term care insurance;
(vi) Title insurance;
(vii) Property and casualty insurance;
(viii) Annuity;
(ix) Disability insurance;
(x) Insurance against default on individual residential mortgages;
and
(xi) Reinsurance of any of the foregoing products identified in
paragraphs (i) through (x) of this section.
(b) The terms security-based swap as used in section 3(a)(68) of the
Act (15 U.S.C. 78c(a)(68)) and swap as used in section 3(a)(69) of the
Act (15 U.S.C. 78c(a)(69)) do not include an agreement, contract, or
transaction that was entered into on or before the effective date of
this section and that, at such time that it was entered into, was
provided in accordance with the conditions set forth in paragraph (a)(2)
of this section.
[77 FR 48356, Aug. 13, 2012]
Sec. 240.3a69-2 Definition of ``swap'' as used in section 3(a)(69)
of the Act--additional products.
(a) In general. The term swap has the meaning set forth in section
3(a)(69) of the Act (15 U.S.C. 78c(a)(69)).
(b) Inclusion of particular products. (1) The term swap includes,
without limiting the meaning set forth in section 3(a)(69) of the Act
(15 U.S.C. 78c(a)(69)), the following agreements, contracts, and
transactions:
(i) A cross-currency swap;
(ii) A currency option, foreign currency option, foreign exchange
option and foreign exchange rate option;
(iii) A foreign exchange forward;
(iv) A foreign exchange swap;
(v) A forward rate agreement; and
(vi) A non-deliverable forward involving foreign exchange.
(2) The term swap does not include an agreement, contract, or
transaction described in paragraph (b)(1) of this section that is
otherwise excluded by section 1a(47)(B) of the Commodity Exchange Act (7
U.S.C. 1a(47)(B)).
(c) Foreign exchange forwards and foreign exchange swaps.
Notwithstanding paragraph (b)(2) of this section:
(1) A foreign exchange forward or a foreign exchange swap shall not
be considered a swap if the Secretary of the Treasury makes a
determination described in section 1a(47)(E)(i) of the Commodity
Exchange Act (7 U.S.C. 1a(47)(E)(i)).
(2) Notwithstanding paragraph (c)(1) of this section:
(i) The reporting requirements set forth in section 4r of the
Commodity
[[Page 64]]
Exchange Act (7 U.S.C. 6r) and regulations promulgated thereunder shall
apply to a foreign exchange forward or foreign exchange swap; and
(ii) The business conduct standards set forth in section 4s(h) of
the Commodity Exchange Act (7 U.S.C. 6s) and regulations promulgated
thereunder shall apply to a swap dealer or major swap participant that
is a party to a foreign exchange forward or foreign exchange swap.
(3) For purposes of section 1a(47)(E) of the Commodity Exchange Act
(7 U.S.C. 1a(47)(E)) and this section, the term foreign exchange forward
has the meaning set forth in section 1a(24) of the Commodity Exchange
Act (7 U.S.C. 1a(24)).
(4) For purposes of section 1a(47)(E) of the Commodity Exchange Act
(7 U.S.C. 1a(47)(E)) and this section, the term foreign exchange swap
has the meaning set forth in section 1a(25) of the Commodity Exchange
Act (7 U.S.C. 1a(25)).
(5) For purposes of sections 1a(24) and 1a(25) of the Commodity
Exchange Act (7 U.S.C. 1a(24) and (25)) and this section, the following
transactions are not foreign exchange forwards or foreign exchange
swaps:
(i) A currency swap or a cross-currency swap;
(ii) A currency option, foreign currency option, foreign exchange
option, or foreign exchange rate option; and
(iii) A non-deliverable forward involving foreign exchange.
[77 FR 48356, Aug. 13, 2012]
Sec. 240.3a69-3 Books and records requirements for security-based
swap agreements.
(a) A person registered as a swap data repository under section 21
of the Commodity Exchange Act (7 U.S.C. 24a) and the rules and
regulations thereunder:
(1) Shall not be required to keep and maintain additional books and
records regarding security-based swap agreements other than the books
and records regarding swaps required to be kept and maintained pursuant
to section 21 of the Commodity Exchange Act (7 U.S.C. 24a) and the rules
and regulations thereunder; and
(2) Shall not be required to collect and maintain additional data
regarding security-based swap agreements other than the data regarding
swaps required to be collected and maintained by such persons pursuant
to section 21 of the Commodity Exchange Act (7 U.S.C. 24a) and the rules
and regulations thereunder.
(b) A person shall not be required to keep and maintain additional
books and records, including daily trading records, regarding security-
based swap agreements other than the books and records regarding swaps
required to be kept and maintained by such persons pursuant to section
4s of the Commodity Exchange Act (7 U.S.C. 6s) and the rules and
regulations thereunder if such person is registered as:
(1) A swap dealer under section 4s(a)(1) of the Commodity Exchange
Act (7 U.S.C. 6s(a)(1)) and the rules and regulations thereunder;
(2) A major swap participant under section 4s(a)(2) of the Commodity
Exchange Act (7 U.S.C. 6s(a)(2)) and the rules and regulations
thereunder;
(3) A security-based swap dealer under section 15F(a)(1) of the Act
(15 U.S.C. 78o-10(a)(1)) and the rules and regulations thereunder; or
(4) A major security-based swap participant under section 15F(a)(2)
of the Act (15 U.S.C. 78o-10(a)(2)) and the rules and regulations
thereunder.
(c) The term security-based swap agreement has the meaning set forth
in section 3(a)(78) of the Act (15 U.S.C. 78c(a)(78)).
[77 FR 48356, Aug. 13, 2012]
Sec. 240.3a71-1 Definition of ``security-based swap dealer.''
(a) General. The term security-based swap dealer in general means
any person who:
(1) Holds itself out as a dealer in security-based swaps;
(2) Makes a market in security-based swaps;
(3) Regularly enters into security-based swaps with counterparties
as an ordinary course of business for its own account; or
(4) Engages in any activity causing it to be commonly known in the
trade as a dealer or market maker in security-based swaps.
(b) Exception. The term security-based swap dealer does not include
a person
[[Page 65]]
that enters into security-based swaps for such person's own account,
either individually or in a fiduciary capacity, but not as a part of
regular business.
(c) Scope of designation. A person that is a security-based swap
dealer in general shall be deemed to be a security-based swap dealer
with respect to each security-based swap it enters into, regardless of
the type, class, or category of the security-based swap or the person's
activities in connection with the security-based swap, unless the
Commission limits the person's designation as a security-based swap
dealer to specified types, classes, or categories of security-based
swaps or specified activities of the person in connection with security-
based swaps.
(d) Inter-affiliate activities--(1) General. In determining whether
a person is a security-based swap dealer, that person's security-based
swaps with majority-owned affiliates shall not be considered.
(2) Meaning of majority-owned. For these purposes the counterparties
to a security-based swap are majority-owned affiliates if one
counterparty directly or indirectly owns a majority interest in the
other, or if a third party directly or indirectly owns a majority
interest in both counterparties to the security-based swap, where
``majority interest'' is the right to vote or direct the vote of a
majority of a class of voting securities of an entity, the power to sell
or direct the sale of a majority of a class of voting securities of an
entity, or the right to receive upon dissolution or the contribution of
a majority of the capital of a partnership.
[78 FR 30751, May 23, 2013]
Sec. 240.3a71-2 De minimis exception.
(a) Requirements. For purposes of section 3(a)(71) of the Act (15
U.S.C. 78c(a)(71)) and Sec. 240.3a71-1, a person that is not currently
registered as a security-based swap dealer shall be deemed not to be a
security-based swap dealer, and, therefore, shall not be subject to
section 15F of the Act (15 U.S.C. 78o-10) and the rules, regulations and
interpretations issued thereunder, as a result of security-based swap
dealing activity that meets the following conditions:
(1) Notional thresholds. The security-based swap positions connected
with the dealing activity in which the person--or any other entity
controlling, controlled by or under common control with the person--
engages over the course of the immediately preceding 12 months (or
following the effective date of final rules implementing section
3(a)(68) of the Act (15 U.S.C. 78c(a)(68)) if that period is less than
12 months) have:
(i) An aggregate gross notional amount of no more than $3 billion,
subject to a phase-in level of an aggregate gross notional amount of no
more than $8 billion applied in accordance with paragraph (a)(2)(i) of
this section, with regard to credit default swaps that constitute
security-based swaps;
(ii) An aggregate gross notional amount of no more than $150
million, subject to a phase-in level of an aggregate gross notional
amount of no more than $400 million applied in accordance with paragraph
(a)(2)(i) of this section, with regard to security-based swaps not
described in paragraph (a)(1)(i) of this section; and
(iii) An aggregate gross notional amount of no more than $25 million
with regard to all security-based swaps in which the counterparty is a
special entity (as that term is defined in section 15F(h)(2)(C) of the
Act (15 U.S.C. 78o-10(h)(2)(C)).
(2) Phase-in procedure--(i) Phase-in period. For purposes of
paragraphs (a)(1)(i) and (ii) of this section, a person that engages in
security-based swap dealing activity that does not exceed either of the
phase-in levels set forth in paragraphs (a)(1)(i) and (ii) of this
section, as applicable, shall be deemed not to be a security-based swap
dealer, and, therefore, shall not be subject to Section 15F of the Act
(15 U.S.C. 78o-10) and the rules, regulations and interpretations issued
thereunder, as a result of its security-based swap dealing activity,
until the ``phase-in termination date'' established as provided in
paragraph (a)(2)(ii) of this section; provided, however, that this
phase-in period shall not be available to the extent that a person
engages in security-based swap dealing activity with counterparties that
are natural persons, other than natural persons who qualify as eligible
contract participants by virtue of section
[[Page 66]]
1a(18)(A)(xi)(II) of the Commodity Exchange Act, (7 U.S.C.
1a(18)(A)(xi)(II)). The Commission shall announce the phase-in
termination date on the Commission Web site and publish such date in the
Federal Register.
(ii) Establishment of phase-in termination date. (A) Nine months
after the publication of the staff report described in Appendix A of
this section, and after giving due consideration to that report and any
associated public comment, the Commission may either:
(1) Terminate the phase-in period set forth in paragraph (a)(2)(i)
of this section, in which case the phase-in termination date shall be
established by the Commission by order published in the Federal
Register; or
(2) Determine that it is necessary or appropriate in the public
interest to propose through rulemaking an alternative to the $3 billion
and $150 million amounts set forth in paragraphs (a)(1)(i) and (ii) of
this section, as applicable, that would constitute a de minimis quantity
of security-based swap dealing in connection with transactions with or
on behalf of customers within the meaning of section 3(a)(71)(D) of the
Act, (15 U.S.C. 78c(a)(71)(D)), in which case the Commission shall by
order published in the Federal Register provide notice of such
determination to propose through rulemaking an alternative, which order
shall also establish the phase-in termination date.
(B) If the phase-in termination date has not been previously
established pursuant to paragraph (a)(2)(ii)(A) of this section, then in
any event the phase-in termination date shall occur five years after the
data collection initiation date defined in paragraph (a)(2)(iii) of this
section.
(iii) Data collection initiation date. The term ``data collection
initiation date'' shall mean the date that is the later of: the last
compliance date for the registration and regulatory requirements for
security-based swap dealers and major security-based swap participants
under Section 15F of the Act (15 U.S.C. 78o-10); or the first date on
which compliance with the trade-by-trade reporting rules for credit-
related and equity-related security-based swaps to a registered
security-based swap data repository is required. The Commission shall
announce the data collection initiation date on the Commission Web site
and publish such date in the Federal Register.
(3) Use of effective notional amounts. For purposes of paragraph
(a)(1) of this section, if the stated notional amount of a security-
based swap is leveraged or enhanced by the structure of the security-
based swap, the calculation shall be based on the effective notional
amount of the security-based swap rather than on the stated notional
amount.
(b) Registration period for persons that no longer can take
advantage of the exception. A person that has not registered as a
security-based swap dealer by virtue of satisfying the requirements of
paragraph (a) of this section, but that no longer can take advantage of
the de minimis exception provided for in paragraph (a) of this section,
will be deemed not to be a security-based swap dealer under section
3(a)(71) of the Act (15 U.S.C. 78c(a)(71)) and subject to the
requirements of section 15F of the Act (15 U.S.C. 78o-10) and the rules,
regulations and interpretations issued thereunder until the earlier of
the date on which it submits a complete application for registration
pursuant to section 15F(b) (15 U.S.C. 78o-10(b)) or two months after the
end of the month in which that person becomes no longer able to take
advantage of the exception.
(c) Applicability to registered security-based swap dealers. A
person who currently is registered as a security-based swap dealer may
apply to withdraw that registration, while continuing to engage in
security-based swap dealing activity in reliance on this section, so
long as that person has been registered as a security-based swap dealer
for at least 12 months and satisfies the conditions of paragraph (a) of
this section.
(d) Future adjustments to scope of the de minimis exception. The
Commission may by rule or regulation change the requirements of the de
minimis exception described in paragraphs (a) through (c) of this
section.
(e) Voluntary registration. Notwithstanding paragraph (a) of this
section, a person that chooses to register with the Commission as a
security-based
[[Page 67]]
swap dealer shall be deemed to be a security-based swap dealer, and,
therefore, shall be subject to Section 15F of the Act (15 U.S.C 78o-10)
and the rules, regulations and interpretations issued thereunder.
[78 FR 30751, May 23, 2013]
Sec. 240.3a71-2A Report regarding the ``security-based swap dealer''
and ``major security-based swap participant'' definitions
(Appendix A to 17 CFR 240.3a71-2).
Appendix A to Sec. 240.3a71-2 sets forth guidelines applicable to a
report that the Commission has directed its staff to make in connection
with the rules and interpretations further defining the Act's
definitions of the terms ``security-based swap dealer'' (including the
de minimis exception to that definition) and ``major security-based swap
participant.'' The Commission intends to consider this report in
reviewing the effect and application of these rules based on the
evolution of the security-based swap market following the implementation
of the registration and regulatory requirements of Section 15F of the
Act (15 U.S.C. 78o-10). The report may also be informative as to
potential changes to the rules further defining those terms. In
producing this report, the staff shall consider security-based swap data
collected by the Commission pursuant to other Title VII rules, as well
as any other applicable information as the staff may determine to be
appropriate for its analysis.
(a) Report topics. As appropriate, based on the availability of data
and information, the report should address the following topics:
(1) De minimis exception. In connection with the de minimis
exception to the definition of ``security-based swap dealer,'' the
report generally should assess whether any of the de minimis thresholds
set forth in paragraph (a)(1) of Sec. 240.3a71-2 should be increased or
decreased;
(2) General security-based swap dealer analysis. In connection with
the definition of ``security-based swap dealer,'' the report generally
should consider the factors that are useful for identifying security-
based swap dealing activity, including the application of the dealer-
trader distinction for that purpose, and the potential use of more
objective tests or safe harbors as part of the analysis;
(3) General major security-based swap participant analysis. In
connection with the definition of ``major security-based swap
participant,'' the report generally should consider the tests used to
identify the presence of a ``substantial position'' in a major category
of security-based swaps, and the tests used to identify persons whose
security-based swap positions create ``substantial counterparty
exposure,'' including the potential use of alternative tests or
thresholds;
(4) Commercial risk hedging exclusion. In connection with the
definition of ``major security-based swap participant,'' the report
generally should consider the definition of ``hedging or mitigating
commercial risk,'' including whether that latter definition
inappropriately permits certain positions to be excluded from the
``substantial position'' analysis, and whether the continued
availability of the exclusion for such hedging positions should be
conditioned on a person assessing and documenting the hedging
effectiveness of those positions;
(5) Highly leveraged financial entities. In connection with the
definition of ``major security-based swap participant,'' the report
generally should consider the definition of ``highly leveraged,''
including whether alternative approaches should be used to identify
highly leveraged financial entities;
(6) Inter-affiliate exclusions. In connection with the definitions
of ``security-based swap dealer'' and ``major security-based swap
participant,'' the report generally should consider the impact of rule
provisions excluding inter-affiliate transactions from the relevant
analyses, and should assess potential alternative approaches for such
exclusions; and
(7) Other topics. Any other analysis of security-based swap data and
information the Commission or the staff deem relevant to this rule.
(b) Timing of report. The report shall be completed no later than
three years following the data collection initiation date, established
pursuant to Sec. 240.3a71-2(a)(2)(iii).
[[Page 68]]
(c) Public comment on the report. Following completion of the
report, the report shall be published in the Federal Register for public
comment.
Sec. 240.3a71-3 Cross-border security-based swap dealing activity.
(a) Definitions. As used in this section, the following terms shall
have the meanings indicated:
(1) Conduit affiliate--(i) Definition. Conduit affiliate means a
person, other than a U.S. person, that:
(A) Is directly or indirectly majority-owned by one or more U.S.
persons; and
(B) In the regular course of business enters into security-based
swaps with one or more other non-U.S. persons, or with foreign branches
of U.S. banks that are registered as security-based swap dealers, for
the purpose of hedging or mitigating risks faced by, or otherwise taking
positions on behalf of, one or more U.S. persons (other than U.S.
persons that are registered as security-based swap dealers or major
security-based swap participants) who are controlling, controlled by, or
under common control with the person, and enters into offsetting
security-based swaps or other arrangements with such U.S. persons to
transfer risks and benefits of those security-based swaps.
(ii) Majority-ownership standard. The majority-ownership standard in
paragraph (a)(1)(i)(A) of this section is satisfied if one or more
persons described in Sec. 240.3a71-3(a)(4)(i)(B) directly or indirectly
own a majority interest in the non-U.S. person, where ``majority
interest'' is the right to vote or direct the vote of a majority of a
class of voting securities of an entity, the power to sell or direct the
sale of a majority of a class of voting securities of an entity, or the
right to receive upon dissolution, or the contribution of, a majority of
the capital of a partnership.
(2) Foreign branch means any branch of a U.S. bank if:
(i) The branch is located outside the United States;
(ii) The branch operates for valid business reasons; and
(iii) The branch is engaged in the business of banking and is
subject to substantive banking regulation in the jurisdiction where
located.
(3) Transaction conducted through a foreign branch--(i) Definition.
Transaction conducted through a foreign branch means a security-based
swap transaction that is arranged, negotiated, and executed by a U.S.
person through a foreign branch of such U.S. person if:
(A) The foreign branch is the counterparty to such security-based
swap transaction; and
(B) The security-based swap transaction is arranged, negotiated, and
executed on behalf of the foreign branch solely by persons located
outside the United States.
(ii) Representations. A person shall not be required to consider its
counterparty's activity in connection with paragraph (a)(3)(i)(B) of
this section in determining whether a security-based swap transaction is
a transaction conducted through a foreign branch if such person receives
a representation from its counterparty that the security-based swap
transaction is arranged, negotiated, and executed on behalf of the
foreign branch solely by persons located outside the United States,
unless such person knows or has reason to know that the representation
is not accurate; for the purposes of this final rule a person would have
reason to know the representation is not accurate if a reasonable person
should know, under all of the facts of which the person is aware, that
it is not accurate.
(4) U.S. person. (i) Except as provided in paragraph (a)(4)(iii) of
this section, U.S. person means any person that is:
(A) A natural person resident in the United States;
(B) A partnership, corporation, trust, investment vehicle, or other
legal person organized, incorporated, or established under the laws of
the United States or having its principal place of business in the
United States;
(C) An account (whether discretionary or non-discretionary) of a
U.S. person; or
(D) An estate of a decedent who was a resident of the United States
at the time of death.
(ii) For purposes of this section, principal place of business means
the location from which the officers, partners,
[[Page 69]]
or managers of the legal person primarily direct, control, and
coordinate the activities of the legal person. With respect to an
externally managed investment vehicle, this location is the office from
which the manager of the vehicle primarily directs, controls, and
coordinates the investment activities of the vehicle.
(iii) The term U.S. person does not include 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 and pension plans, and any other similar international
organizations, their agencies and pension plans.
(iv) A person shall not be required to consider its counterparty to
a security-based swap to be a U.S. person if such person receives a
representation from the counterparty that the counterparty does not
satisfy the criteria set forth in paragraph (a)(4)(i) of this section,
unless such person knows or has reason to know that the representation
is not accurate; for the purposes of this final rule a person would have
reason to know the representation is not accurate if a reasonable person
should know, under all of the facts of which the person is aware, that
it is not accurate.
(5) United States means the United States of America, its
territories and possessions, any State of the United States, and the
District of Columbia.
(6) U.S. security-based swap dealer means a security-based swap
dealer, as defined in section 3(a)(71) of the Act (15 U.S.C.
78c(a)(71)), and the rules and regulations thereunder, that is a U.S.
person.
(7) Foreign security-based swap dealer means a security-based swap
dealer, as defined in section 3(a)(71) of the Act (15 U.S.C.
78c(a)(71)), and the rules and regulations thereunder, that is not a
U.S. person.
(8) U.S. business means:
(i) With respect to a foreign security-based swap dealer:
(A) Any security-based swap transaction entered into, or offered to
be entered into, by or on behalf of such foreign security-based swap
dealer, with a U.S. person (other than a transaction conducted through a
foreign branch of that person); or
(B) Any security-based swap transaction arranged, negotiated, or
executed by personnel of the foreign security-based swap dealer located
in a U.S. branch or office, or by personnel of an agent of the foreign
security-based swap dealer located in a U.S. branch or office; and
(ii) With respect to a U.S. security-based swap dealer, any
transaction entered into or offered to be entered into by or on behalf
of such U.S. security-based swap dealer, other than a transaction
conducted through a foreign branch with a non-U.S. person or with a
U.S.-person counterparty that constitutes a transaction conducted
through a foreign branch of the counterparty.
(9) Foreign business means security-based swap transactions entered
into, or offered to be entered into, by or on behalf of a security-based
swap dealer, other than the U.S. business of such person.
(10) An entity is a majority-owned affiliate of another entity if
the entity directly or indirectly owns a majority interest in the other,
or if a third party directly or indirectly owns a majority interest in
both entities, where ``majority interest'' is the right to vote or
direct the vote of a majority of a class of voting securities of an
entity, the power to sell or direct the sale of a majority of a class of
voting securities of an entity, or the right to receive upon
dissolution, or the contribution of, a majority of the capital of a
partnership.
(11) Foreign associated person means a natural person domiciled
outside the United States who--with respect to a non-U.S. person relying
on the exception set forth in paragraph (d) of this section--is a
partner, officer, director, or branch manager of such non-U.S. person
(or any person occupying a similar status or performing similar
functions), any person directly or indirectly controlling, controlled
by, or under common control with such non-U.S. person, or any employee
of such non-U.S. person.
(12) Listed jurisdiction means any jurisdiction that the Commission
by
[[Page 70]]
order has designated as a listed jurisdiction for purposes of the
exception specified in paragraph (d) of this section.
(13) Covered inter-dealer security-based swap means any security-
based swap between:
(i) A non-U.S. person relying on the exception in paragraph (d) of
this section; and
(ii) A non-U.S. person that is, or is an affiliate of, a registered
security-based swap dealer or registered broker that has filed with the
Commission a notice pursuant to paragraph (d)(1)(vi) of this section;
provided, however, that a covered inter-dealer security-based swap does
not include a security-based swap with a non-U.S. person that the non-
U.S. person relying on the exception in paragraph (d) of this section
reasonably determines at the time of execution of the security-based
swap is neither a registered security-based swap dealer or registered
broker that has filed with the Commission a notice pursuant to paragraph
(d)(1)(vi) of this section nor an affiliate of such a registered
security-based swap dealer or registered broker.
(b) Application of de minimis exception to cross-border dealing
activity. For purposes of calculating the amount of security-based swap
positions connected with dealing activity under Sec. 240.3a71-2(a)(1),
except as provided in Sec. 240.3a71-5, a person shall include the
following security-based swap transactions:
(1)(i) If such person is a U.S. person, all security-based swap
transactions connected with the dealing activity in which such person
engages, including transactions conducted through a foreign branch;
(ii) If such person is a conduit affiliate, all security-based swap
transactions connected with the dealing activity in which such person
engages; and
(iii) If such person is a non-U.S. person other than a conduit
affiliate, all of the following types of transactions:
(A) Security-based swap transactions connected with the dealing
activity in which such person engages that are entered into with a U.S.
person; provided, however, that this paragraph (b)(1)(iii)(A) shall not
apply to:
(1) Transactions with a U.S. person counterparty that constitute
transactions conducted through a foreign branch of the counterparty,
when the counterparty is a registered security-based swap dealer; and
(2) Transactions with a U.S. person counterparty that constitute
transactions conducted through a foreign branch of the counterparty,
when the transaction is entered into prior to 60 days following the
earliest date on which the registration of security-based swap dealers
is first required pursuant to the applicable final rules and
regulations; and
(B) Security-based swap transactions connected with the dealing
activity in which such person engages for which the counterparty to the
security-based swap has rights of recourse against a U.S. person that is
controlling, controlled by, or under common control with the non-U.S.
person; for these purposes a counterparty has rights of recourse against
the U.S. person if the counterparty has a conditional or unconditional
legally enforceable right, in whole or in part, to receive payments
from, or otherwise collect from, the U.S. person in connection with the
security-based swap; and
(C) Except as provided in paragraph (d) of this section, or unless
such person is a person described in paragraph (a)(4)(iii) of this
section, security-based swap transactions connected with such person's
security-based swap dealing activity that are arranged, negotiated, or
executed by personnel of such non-U.S. person located in a U.S. branch
or office, or by personnel of an agent of such non-U.S. person located
in a U.S. branch or office; and
(2) If such person engages in transactions described in paragraph
(b)(1) of this section, except as provided in Sec. 240.3a71-4, all of
the following types of security-based swap transactions:
(i) Security-based swap transactions connected with the dealing
activity in which any U.S. person controlling, controlled by, or under
common control with such person engages, including transactions
conducted through a foreign branch;
(ii) Security-based swap transactions connected with the dealing
activity in which any conduit affiliate controlling,
[[Page 71]]
controlled by, or under common control with such person engages; and
(iii) Security-based swap transactions connected with the dealing
activity of any non-U.S. person, other than a conduit affiliate, that is
controlling, controlled by, or under common control with such person,
that are described in paragraph (b)(1)(iii) of this section.
(c) Application of customer protection requirements. A registered
security-based swap dealer, with respect to its foreign business, shall
not be subject to the requirements relating to business conduct
standards described in section 15F(h) of the Act (15 U.S.C. 78o-10(h)),
and the rules and regulations thereunder, other than the rules and
regulations prescribed by the Commission pursuant to section
15F(h)(1)(B) of the Act (15 U.S.C. 78o-10(h)(1)(B)).
(d) Exception from counting certain transactions. The counting
requirement described by paragraph (b)(1)(iii)(C) of this section will
not apply to the security-based swap dealing transactions of a non-U.S.
person if the conditions of paragraph (d)(1) of this section have been
satisfied.
(1) Conditions--(i) Entity conducting U.S. activity. All activity
that otherwise would cause a security-based swap transaction to be
described by paragraph (b)(1)(iii)(C) of this section--namely, all
arranging, negotiating or executing activity that is conducted by
personnel of the entity (or its agent) located in a branch or office in
the United States--is conducted by such U.S. personnel in their capacity
as persons associated with an entity that:
(A) Is registered with the Commission as:
(1) A broker registered under section 15 of the Act (15 U.S.C. 78o)
that is subject to and complies with Sec. 240.15c3-1(a)(7);
(2) A broker registered under section 15 of the Act (15 U.S.C. 78o),
other than a broker that is subject to Sec. 240.15c3-1(a)(7), that
complies with Sec. 240.15c3-1(a)(10), as if that entity were registered
with the Commission as a security-based swap dealer, if it is not so
registered; or
(3) A security-based swap dealer; and
(B) Is a majority-owned affiliate of the non-U.S. person relying on
this exception.
(ii) Compliance with specified security-based swap dealer
requirements--(A) Compliance required. In connection with such
transactions, the registered entity described in paragraph (d)(1)(i) of
this section complies with the requirements described in paragraph
(d)(1)(ii)(B) of this section
(1) As if the counterparties to the non-U.S. person relying on this
exception also were counterparties to that entity; and
(2) As if that entity were registered with the Commission as a
security-based swap dealer, if it is not so registered.
(B) Applicable requirements. The compliance obligation described in
paragraph (d)(1)(ii)(A) of this section applies to the following
provisions of the Act and the rules and regulations thereunder:
(1) Section 15F(h)(3)(B)(i), (ii) and Sec. 240.15Fh-3(b), including
in connection with material incentives and conflicts of interest
associated with the non-U.S. person relying on the exception;
(2) Section 240.15Fh-3(f)(1); provided, however, that if the
registered entity described in paragraph (d)(1)(i) of this section
reasonably determines that the counterparty to whom it recommends a
security-based swap or trading strategy involving a security-based swap
is an ``institutional counterparty'' as defined in Sec. 240.15Fh-
3(f)(4), the registered entity instead may fulfill its obligations under
Sec. 240.15Fh-3(f)(1)(ii) if it discloses to the counterparty that it
is not undertaking to assess the suitability of the security-based swap
or trading strategy involving a security-based swap for the
counterparty;
(3) Section 15F(h)(3)(C) of the Act and Sec. 240.15Fh-3(g); and
(4) Sections 240.15Fi-1 and 240.15Fi-2.
(iii) Commission access to books, records and testimony. (A) The
non-U.S. person relying on this exception promptly provides
representatives of the Commission (upon request of the Commission or its
representatives or pursuant to a supervisory or enforcement memorandum
of understanding or other arrangement or agreement reached between any
foreign securities authority,
[[Page 72]]
including any foreign government, as specified in section 3(a)(50) of
the Act, and the Commission or the U.S. Government) with any information
or documents within the non-U.S. person's possession, custody, or
control, promptly makes its foreign associated persons available for
testimony, and provides any assistance in taking the evidence of other
persons, wherever located, that the Commission or its representatives
requests and that relates to transactions subject to this exception;
provided, however, that if, after exercising its best efforts, the non-
U.S. person is prohibited by applicable foreign law or regulations from
providing such information, documents, testimony, or assistance, the
non-U.S. person may continue to rely on this exception until the
Commission issues an order modifying or withdrawing an associated
``listed jurisdiction'' determination pursuant to paragraph (d)(2)(iii)
of this section.
(B) The registered entity described in paragraph (d)(1)(i) of this
section:
(1) Creates and maintains books and records relating to the
transactions subject to this exception that are required, as applicable,
by Sec. Sec. 240.17a-3 and 240.17a-4, or by Sec. Sec. 240.18a-5 and
240.18a-6, including any books and records requirements relating to the
provisions specified in paragraph (d)(1)(ii)(B) of this section;
(2) Obtains from the non-U.S. person relying on the exception, and
maintains for not less than three years following the activity described
in paragraph (d)(1)(i) of this section, the first two years in an easily
accessible place, documentation regarding such non-U.S. person's
compliance with the condition in paragraph (d)(1)(vii) of this section;
(3) Obtains from the non-U.S. person relying on the exception, and
maintains for not less than three years following the activity described
in paragraph (d)(1)(i) of this section, the first two years in an easily
accessible place, documentation encompassing all terms governing the
trading relationship between the non-U.S. person and its counterparty
relating to the transactions subject to this exception, including,
without limitation, terms addressing payment obligations, netting of
payments, events of default or other termination events, calculation and
netting of obligations upon termination, transfer of rights and
obligations, allocation of any applicable regulatory reporting
obligations, governing law, valuation, and dispute resolution; and
(4) Obtains from the non-U.S. person relying on this exception, and
maintains for not less than three years following the activity described
in paragraph (d)(1)(i) of this section, the first two years in an easily
accessible place, written consent to service of process for any civil
action brought by or proceeding before the Commission, providing that
process may be served on the non-U.S. person by service on the
registered entity in the manner set forth in the registered entity's
current Form BD, SBSE, SBSE-A or SBSE-BD, as applicable.
(iv) Counterparty notification In connection with the transaction,
the registered entity described in paragraph (d)(1)(i) of this section
notifies the counterparties of the non-U.S. person relying on this
exception that the non-U.S. person is not registered with the Commission
as a security-based swap dealer, and that certain Exchange Act
provisions or rules addressing the regulation of security-based swaps
would not be applicable in connection with the transaction, including
provisions affording clearing rights to counterparties. Such notice
shall be provided contemporaneously with, and in the same manner as, the
arranging, negotiating, or executing activity at issue; provided,
however, that during a period in which a counterparty is neither a
customer (as such term is defined in Sec. 240.15c3-3) of the registered
entity described in paragraph (d)(1)(i) of this section (if such
registered entity is a registered broker or dealer) nor a counterparty
to a security-based swap with the registered entity described in
paragraph (d)(1)(i) of this section, such notice need only be provided
contemporaneously with, and in the same manner as, the first such
arranging, negotiating, or executing activity during such period. This
disclosure will not be required if the identity of that
[[Page 73]]
counterparty is not known to that registered entity at a reasonably
sufficient time prior to the execution of the transaction to permit such
disclosure.
(v) Subject to regulation of a listed jurisdiction. The non-U.S.
person relying on this exception is subject to the margin and capital
requirements of a listed jurisdiction when engaging in the transactions
subject to this exception.
(vi) Notice by registered entity. Before an associated person of the
registered entity described in paragraph (d)(1)(i) of this section
commences the activity described in paragraph (d)(1)(i) of this section,
such registered entity shall file with the Commission a notice that its
associated persons may conduct such activity. Such registered entity
shall file this notice by submitting it to the electronic mailbox
described on the Commission's website at www.sec.gov at the ``ANE
Exception Notices'' section. The Commission shall publicly post such
notice on the same section of its website.
(vii) Limitation for covered inter-dealer security-based swaps. The
aggregate gross notional amount of covered inter-dealer security-based
swap positions connected with dealing activity subject to the exception
in this paragraph (d) engaged in by persons described in paragraph
(d)(6)(i) of this section over the course of the immediately preceding
12 months does not exceed $50 billion.
(2) Order for listed jurisdiction designation. The Commission by
order, may conditionally or unconditionally determine that a foreign
jurisdiction is a listed jurisdiction for purposes of this section. The
Commission may make listed jurisdiction determinations in response to
applications, or upon the Commission's own initiative.
(i) Applications. Applications for an order requesting listed
jurisdiction status may be made by a party or group of parties that
potentially would seek to rely on the exception provided by paragraph
(d) of this section, or by any foreign financial regulatory authority or
authorities supervising such a party or its security-based swap
activities. Applications must be filed pursuant to the procedures set
forth in Sec. 240.0-13.
(ii) Criteria considered. In considering a foreign jurisdiction's
potential status as a listed jurisdiction, the Commission may consider
factors relevant for purposes of assessing whether such an order would
be in the public interest, including:
(A) Applicable margin and capital requirements of the foreign
financial regulatory system; and
(B) The effectiveness of the supervisory compliance program
administered by, and the enforcement authority exercised by, the foreign
financial regulatory authority in connection with such requirements,
including the application of those requirements in connection with an
entity's cross-border business.
(iii) Withdrawal or modification of listed jurisdiction status. The
Commission may, on its own initiative, by order after notice and
opportunity for comment, modify or withdraw a jurisdiction's status as a
listed jurisdiction, if the Commission determines that continued listed
jurisdiction status no longer would be in the public interest, based on:
(A) The criteria set forth in paragraph (d)(2)(ii) of this section;
(B) Any laws or regulations that have had the effect of preventing
the Commission or its representatives, on request, to promptly access
information or documents regarding the activities of persons relying on
the exception provided by this paragraph (d), to obtain the testimony of
their foreign associated persons, and to obtain the assistance of
persons relying on this exception in taking the evidence of other
persons, wherever located, as described in paragraph (d)(1)(iii)(A) of
this section; and
(C) Any other factor the Commission determines to be relevant to
whether continued status as a listed jurisdiction would be in the public
interest.
(3) Exception for person that engages in arranging, negotiating, or
executing activity as agent. The registered entity described in
paragraph (d)(1)(i) of this section need not count, against the de
minimis thresholds described in Sec. 240.3a71-2(a)(1), the transactions
described by paragraph (d) of this section.
(4) Limited exemption from registration as a broker. A registered
security-based swap dealer and its associated persons who conduct the
activities described in
[[Page 74]]
paragraph (d)(1)(i) of this section shall not be subject to registration
as a broker pursuant to section 15(a)(1) of the Act solely because the
registered entity or the associated person conducts any activity
described in paragraph (d)(1)(i) of this section with or for a person
that is an eligible contract participant, provided that:
(i) The conditions of paragraph (d)(1) of this section are satisfied
in connection with such activities; and
(ii) If Sec. 240.10b-10 would apply to an activity subject to the
exception in paragraph (d)(1)(i), such registered security-based swap
dealer provides to the customer the disclosures required by Sec.
240.10b-10(a)(2) (excluding Sec. 240.10b-10(a)(2)(i) and (ii)) and
Sec. 240.10b-10(a)(8) in accordance with the time and form requirements
set forth in Sec. 240.15Fi-2(b) and (c) or, alternatively, promptly
after discovery of any defect in the registered security-based swap
dealer's good faith effort to comply with such requirements.
(5) Exemption from Sec. 240.10b-10. A broker or dealer that is also
a registered security-based swap dealer or registered broker described
in paragraph (d)(1)(i) of this section shall be exempt from the
requirements of Sec. 240.10b-10 with respect to activity described in
paragraph (d)(1)(i) of this section, provided that such broker or
dealer:
(i) Complies with paragraph (d)(1)(ii)(B)(4) of this section in
connection with such activity; and
(ii) Provides to the customer the disclosures required by Sec.
240.10b-10(a)(2) (excluding Sec. 240.10b-10(a)(2)(i) and (ii)) and
Sec. 240.10b-10(a)(8) in accordance with the time and form requirements
set forth in Sec. 240.15Fi-2(b) and (c) or, alternatively, promptly
after discovery of any defect in the broker or dealer's good faith
effort to comply with such requirements.
(6) Limitation for covered inter-dealer security-based swaps--(i)
Scope of limitation for covered inter-dealer security-based swaps. The
threshold described in paragraph (d)(1)(vii) of this section applies to
covered inter-dealer security-based swap positions connected with
dealing activity subject to the exception in this paragraph (d) engaged
in by any of the following persons:
(A) The non-U.S. person relying on the exception in this paragraph
(d); and
(B) Any affiliate of such person, except for an affiliate that is
deemed not to be a security-based swap dealer pursuant to Rule 3a71-
2(b).
(ii) Impact of exceeding exception threshold. If the threshold
described in paragraph (d)(1)(vii) of this section is exceeded, then
(A) As of the date the condition in paragraph (d)(1)(vii) of this
section is no longer satisfied, the non-U.S. person that is no longer
able to satisfy that condition may not rely on the exception in this
paragraph (d) for future security-based swap transactions.
(B) For purposes of calculating the amount of security-based swap
positions connected with dealing activity under Sec. 240.3a71-2(a)(1),
the non-U.S. person that is no longer able to satisfy the condition in
paragraph (d)(1)(vii) of this section shall include all covered inter-
dealer security-based swap positions connected with dealing activity
subject to the exception in this paragraph (d) engaged in by persons
described in paragraph (d)(6)(i) of this section over the course of the
immediately preceding 12 months, such positions to be included in such
calculation as of the date that the condition in paragraph (d)(1)(vii)
of this section is no longer satisfied.
[79 FR 47370, Aug. 12, 2014, as amended at 81 FR 8637, Feb. 19, 2016, 81
FR 30142, May 13, 2016; 85 FR 6350, Feb. 4, 2020]
Sec. 240.3a71-4 Exception from aggregation for affiliated groups with
registered security-based swap dealers.
Notwithstanding Sec. Sec. 240.3a71-2(a)(1) and 240.3a71-3(b)(2), a
person shall not include the security-based swap transactions of another
person (an ``affiliate'') controlling, controlled by, or under common
control with such person where such affiliate either is:
(a) Registered with the Commission as a security-based swap dealer;
or
(b) Deemed not to be a security-based swap dealer pursuant to Sec.
240.3a71-2(b).
[79 FR 47370, Aug. 12, 2014]
[[Page 75]]
Sec. 240.3a71-5 Exception for cleared transactions executed on a swap
execution facility.
(a) For purposes of Sec. 240.3a71-3(b)(1), a non-U.S. person, other
than a conduit affiliate, shall not include its security-based swap
transactions that are entered into anonymously on an execution facility
or national securities exchange and are cleared through a clearing
agency; and
(b) For purposes of Sec. 240.3a71-3(b)(2), a person shall not
include security-based swap transactions of an affiliated non-U.S.
person, other than a conduit affiliate, when such transactions are
entered into anonymously on an execution facility or national securities
exchange and are cleared through a clearing agency.
(c) The exceptions in paragraphs (a) and (b) of this section shall
not apply to any security-based swap transactions of a non-U.S. person
or of an affiliated non-U.S. person connected with the person's
security-based swap dealing activity that are arranged, negotiated, or
executed by personnel of such non-U.S. person located in a U.S. branch
or office, or by personnel of an agent of such non-U.S. person located
in a U.S. branch or office.
[79 FR 47370, Aug. 12, 2014, as amended at 81 FR 8637, Feb. 19, 2016]
Sec. 240.3a71-6 Substituted compliance for security-based swap dealers
and major security-based swap participants.
(a) Determinations--(1) In general. Subject to paragraph (a)(2) of
this section, the Commission may, conditionally or unconditionally, by
order, make a determination with respect to a foreign financial
regulatory system that compliance with specified requirements under such
foreign financial regulatory system by a registered security-based swap
dealer and/or by a registered major security-based swap participant
(each a ``security-based swap entity''), or class thereof, may satisfy
the corresponding requirements identified in paragraph (d) of this
section that would otherwise apply to such security-based swap entity
(or class thereof).
(2) Standard. The Commission shall not make a substituted compliance
determination under paragraph (a)(1) of this section unless the
Commission:
(i) Determines that the requirements of such foreign financial
regulatory system applicable to such security-based swap entity (or
class thereof) or to the activities of such security-based swap entity
(or class thereof) are comparable to otherwise applicable requirements,
after taking into account such factors as the Commission determines are
appropriate, such as the scope and objectives of the relevant foreign
regulatory requirements (taking into account the applicable criteria set
forth in paragraph (d) of this section), as well as the effectiveness of
the supervisory compliance program administered, and the enforcement
authority exercised, by a foreign financial regulatory authority or
authorities in such system to support its oversight of such security-
based swap entity (or class thereof) or of the activities of such
security-based swap entity (or class thereof); and
(ii) Has entered into a supervisory and enforcement memorandum of
understanding and/or other arrangement with the relevant foreign
financial regulatory authority or authorities under such foreign
financial regulatory system addressing supervisory and enforcement
cooperation and other matters arising under the substituted compliance
determination.
(3) Withdrawal or modification. The Commission may, on its own
initiative, by order, modify or withdraw a substituted compliance
determination under paragraph (a)(1) of this section, after appropriate
notice and opportunity for comment.
(b) Reliance by security-based swap entities. A registered security-
based swap entity may satisfy the requirements described in paragraph
(d) of this section by complying with corresponding law, rules and
regulations under a foreign financial regulatory system, provided:
(1) The Commission has made a substituted compliance determination
pursuant to paragraph (a)(1) of this section regarding such foreign
financial regulatory system providing that compliance with specified
requirements under such foreign financial regulatory system by such
registered security-
[[Page 76]]
based swap entity (or class thereof) may satisfy the corresponding
requirements described in paragraph (d) of this section; and
(2) Such registered security-based swap entity satisfies any
conditions set forth in a substituted compliance determination made by
the Commission pursuant to paragraph (a)(1) of this section.
(c) Requests for determinations. (1) A party or group of parties
that potentially would comply with specified requirements pursuant to
paragraph (a)(1), or any foreign financial regulatory authority or
authorities supervising such a party or its security-based swap
activities, may file an application, pursuant to the procedures set
forth in Sec. 240.0-13, requesting that the Commission make a
substituted compliance determination pursuant to paragraph (a)(1) of
this section, with respect to one or more requirements described in
paragraph (d) of this section.
(2) Such a party or group of parties may make a request under
paragraph (c)(1) of this section only if:
(i) Each such party, or the party's activities, is directly
supervised by the foreign financial regulatory authority or authorities
with respect to the foreign regulatory requirements relating to the
applicable requirements described in paragraph (d) of this section; and
(ii) Each such party provides the certification and opinion of
counsel as described in Sec. 240.15Fb2-4(c), as if the party were
subject to that requirement at the time of the request.
(3) Such foreign financial authority or authorities may make a
request under paragraph (c)(1) of this section only if each such
authority provides adequate assurances that no law or policy of any
relevant foreign jurisdiction would impede the ability of any entity
that is directly supervised by the foreign financial regulatory
authority and that may register with the Commission as a security-based
swap dealer or major security-based swap participant to provide prompt
access to the Commission to such entity's books and records or to submit
to onsite inspection or examination by the Commission.
(d) Eligible requirements. The Commission may make a substituted
compliance determination under paragraph (a)(1) of this section to
permit security-based swap entities that are not U.S. persons (as
defined in Sec. 240.3a71-3(a)(4)), but not security-based swap entities
that are U.S. persons, to satisfy the following requirements by
complying with comparable foreign requirements:
(1) Business conduct and supervision. The business conduct and
supervision requirements of sections 15F(h) and (j) of the Act (15
U.S.C. 78o-10(h) and (j)) and Sec. Sec. 240.15Fh-3 through 15Fh-6,
other than the antifraud provisions of section 15F(h)(4)(A) of the Act
and Sec. 240.15Fh-4(a), and other than the provisions of sections
15F(j)(3) and 15F(j)(4)(B) of the Act; provided, however, that prior to
making such a substituted compliance determination the Commission
intends to consider whether the information that is required to be
provided to counterparties pursuant to the requirements of the foreign
financial regulatory system, the counterparty protections under the
requirements of the foreign financial regulatory system, the mandates
for supervisory systems under the requirements of the foreign financial
regulatory system, and the duties imposed by the foreign financial
regulatory system, are comparable to those associated with the
applicable provisions arising under the Act and its rules and
regulations.
(2) Chief compliance officer. The chief compliance officer
requirements of section 15F(k) of the Act (15 U.S.C. 78o-10(k)) and
Sec. 240.15Fk-1; provided, however, that prior to making such a
substituted compliance determination the Commission intends to consider
whether the requirements of the foreign financial regulatory system
regarding chief compliance officer obligations are comparable to those
required pursuant to the applicable provisions arising under the Act and
its rules and regulations.
(3) Trade acknowledgment and verification. The trade acknowledgment
and verification requirements of section 15F(i) of the Act (15 U.S.C.
78o-10(i)) and Sec. 240.15Fi-2; provided, however, that prior to making
such a substituted compliance determination the
[[Page 77]]
Commission intends to consider whether the information that is required
to be provided pursuant to the requirements of the foreign financial
regulatory system, and the manner and timeframe by which that
information must be provided, are comparable to those required pursuant
to the applicable provisions arising under the Act and its rules and
regulations.
(4) Capital--(i) Security-based swap dealers. The capital
requirements of section 15F(e) of the Act (15 U.S.C. 78o-10(e)) and
Sec. 240.18a-1; provided, however, that prior to making such
substituted compliance determination, the Commission intends to consider
(in addition to any conditions imposed) whether the capital requirements
of the foreign financial regulatory system are designed to help ensure
the safety and soundness of registrants in a manner that is comparable
to the applicable provisions arising under the Act and its rules and
regulations.
(ii) Major security-based swap participants. The capital
requirements of section 15F(e) of the Act (15 U.S.C. 78o-10(e)) and
Sec. 240.18a-2; provided, however, that prior to making such
substituted compliance determination, the Commission intends to consider
(in addition to any conditions imposed) whether the capital requirements
of the foreign financial regulatory system are comparable to the
applicable provisions arising under the Act and its rules and
regulations.
(5) Margin--(i) Security-based swap dealers. The margin requirements
of section 15F(e) of the Act (15 U.S.C. 78o-10(e)) and Sec. 240.18a-3;
provided, however, that prior to making such substituted compliance
determination, the Commission intends to consider (in addition to any
conditions imposed) whether the foreign financial regulatory system
requires registrants to adequately cover their current and potential
future exposure to over-the-counter derivatives counterparties, and
ensures registrants' safety and soundness, in a manner comparable to the
applicable provisions arising under the Act and its rules and
regulations.
(ii) Major security-based swap participants. The margin requirements
of section 15F(e) of the Act (15 U.S.C. 78o-10(e)) and Sec. 240.18a-3;
provided, however, that prior to making such substituted compliance
determination, the Commission intends to consider (in addition to any
conditions imposed) whether the foreign financial regulatory system
requires registrants to adequately cover their current exposure to over-
the-counter derivatives counterparties, and ensures registrants' safety
and soundness, in a manner comparable to the applicable provisions
arising under the Act and its rules and regulations.
(6) Recordkeeping and reporting. The recordkeeping and reporting
requirements of Section 15F of the Act (15 U.S.C. 78o-10) and Sec. Sec.
240.18a-5 through 240.18a-9; provided, however, that prior to making
such a substituted compliance determination the Commission intends to
consider (in addition to any conditions imposed), whether the foreign
financial regulatory system's required records and reports, the
timeframes for recording or reporting information, the accounting
standards governing the records and reports, and the required format of
the records and reports are comparable to applicable provisions arising
under the Act and its rules and regulations and would permit the
Commission to examine and inspect regulated firms' compliance with the
applicable securities laws.
(7) Portfolio reconciliation, portfolio compression, and trading
relationship documentation requirements. The portfolio reconciliation,
portfolio compression, and trading relationship documentation
requirements of section 15F(i) of the Act (15 U.S.C. 78o-10(i)) and
Sec. Sec. 240.15Fi-3 through 240.15Fi-5; provided, however, that prior
to making such a substituted compliance determination the Commission
intends to consider whether the requirements of the foreign financial
regulatory system for engaging in portfolio reconciliation and portfolio
compression and for executing trading relationship documentation with
counterparties, the duties imposed by the foreign financial regulatory
system, and the information that is required to be provided to
counterparties pursuant to the requirements of the foreign financial
regulatory system, are comparable to those required pursuant to the
applicable
[[Page 78]]
provisions arising under the Act and its rules and regulations.
[81 FR 30143, May 13, 2016, as amended at 81 FR 39844, June 17, 2016; 84
FR 44041, Aug. 22, 2019; 84 FR 68646, Dec. 16, 2019; 85 FR 6412, Feb. 4,
2020]
Definitions
Sec. 240.3b-1 Definition of ``listed''.
The term listed means admitted to full trading privileges upon
application by the issuer or its fiscal agent or, in the case of the
securities of a foreign corporation, upon application by a banker
engaged in distributing them; and includes securities for which
authority to add to the list on official notice of issuance has been
granted.
(Sec. 3, 48 Stat. 884; 15 U.S.C. 78c)
[13 FR 8179, Dec. 22, 1948]
Sec. 240.3b-2 Definition of ``officer''.
The term officer means a president, vice president, secretary,
treasury or principal financial officer, comptroller or principal
accounting officer, and any person routinely performing corresponding
functions with respect to any organization whether incorporated or
unincorporated.
[47 FR 11464, Mar. 16, 1982; 47 FR 11819, Mar. 19, 1982]
Sec. 240.3b-3 [Reserved]
Sec. 240.3b-4 Definition of ``foreign government,'' ``foreign issuer''
and ``foreign private issuer''.
(a) The term foreign government means the government of any foreign
country or of any political subdivision of a foreign country.
(b) The term foreign issuer means any issuer which is a foreign
government, a national of any foreign country or a corporation or other
organization incorporated or organized under the laws of any foreign
country.
(c) The term foreign private issuer means any foreign issuer other
than a foreign government except for an issuer meeting the following
conditions as of the last business day of its most recently completed
second fiscal quarter:
(1) More than 50 percent of the issuer's outstanding voting
securities are directly or indirectly held 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.
Note to paragraph (c)(1): To determine the percentage of outstanding
voting securities held by U.S. residents:
A. Use the method of calculating record ownership in Sec. 240.12g3-
2(a), except that:
(1) 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:
(i) The United States,
(ii) Your jurisdiction of incorporation, and
(iii) The jurisdiction that is the primary trading market for your
voting securities, if different than your jurisdiction of incorporation;
and
(2) Notwithstanding Sec. 240.12g5-1(a)(8) of this chapter, you
shall not exclude securities held by persons who received the securities
pursuant to an employee compensation plan.
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
provided to you or filed publicly and based on information otherwise
provided to you.
(d) Notwithstanding paragraph (c) of this section, in the case of a
new registrant with the Commission, the determination of whether an
issuer is a foreign private issuer will be made as of a date within 30
days prior to the issuer's filing of an initial registration statement
under either the Act or the Securities Act of 1933.
(e) Once an issuer qualifies as a foreign private issuer, it will
immediately be able to use the forms and rules designated for foreign
private issuers until it fails to qualify for this status at the
[[Page 79]]
end of its most recently completed second fiscal quarter. An issuer's
determination that it fails to qualify as a foreign private issuer
governs its eligibility to use the forms and rules designated for
foreign private issuers beginning on the first day of the fiscal year
following the determination date. Once an issuer fails to qualify for
foreign private issuer status, it will remain unqualified unless it
meets the requirements for foreign private issuer status as of the last
business day of its second fiscal quarter.
[32 FR 7848, May 30, 1967, as amended at 48 FR 46739, Oct. 14, 1983; 64
FR 53912, Oct. 5, 1999; 73 FR 58323, Oct. 6, 2008; 81 FR 28705, May 10,
2016]
Sec. 240.3b-5 Non-exempt securities issued under governmental
obligations.
(a) Any part of an obligation evidenced by any bond, note,
debenture, or other evidence of indebtedness issued by any governmental
unit specified in section 3(a)(12) of the Act which is payable from
payments to be made in respect of property or money which is or will be
used, under a lease, sale, or loan arrangement, by or for industrial or
commercial enterprise, shall be deemed to be a separate ``security''
within the meaning of section 3(a)(10) of the Act, issued by the lessee
or obligor under the lease, sale or loan arrangement.
(b) An obligation shall not be deemed a separate ``security'' as
defined in paragraph (a) of this section if, (1) the obligation is
payable from the general revenues of a governmental unit, specified in
section 3(a)(12) of the Act, having other resources which may be used
for the payment of the obligation, or (2) the obligation relates to a
public project or facility owned and operated by or on behalf of and
under the control of a governmental unit specified in such section, or
(3) the obligation relates to a facility which is leased to and under
the control of an industrial or commercial enterprise but is a part of a
public project which, as a whole, is owned by and under the general
control of a governmental unit specified in such section, or an
instrumentality thereof.
(c) This rule shall apply to transactions of the character described
in paragraph (a) of this section only with respect to bonds, notes,
debentures or other evidences of indebtedness sold after December 31,
1968.
(Sec. 3, 48 Stat. 882; 15 U.S.C. 78c, 77s)
[33 FR 12648, Sept. 6, 1968, as amended at 35 FR 6000, Apr. 11, 1970]
Sec. 240.3b-6 Liability for certain statements by issuers.
(a) A statement within the coverage of paragraph (b) of this section
which is made by or on behalf of an issuer or by an outside reviewer
retained by the issuer shall be deemed not to be a fraudulent statement
(as defined in paragraph (d) of this section), unless it is shown that
such statement was made or reaffirmed without a reasonable basis or was
disclosed other than in good faith.
(b) This rule applies to the following statements:
(1) A forward-looking statement (as defined in paragraph (c) of this
section) made in a document filed with the Commission, in Part I of a
quarterly report on Form 10-Q, Sec. 249.308a of this chapter, or in an
annual report to security holders meeting the requirements of Rules 14a-
3(b) and (c) or 14c-3(a) and (b) (Sec. 240.14a-3(b) and (c) or Sec.
240.14c-3(a) and (b)), a statement reaffirming such forward-looking
statement after the date the document was filed or the annual report was
made publicly available, or a forward-looking statement made before the
date the document was filed or the date the annual report was made
publicly available if such statement is reaffirmed in a filed document,
in Part I of a quarterly report on Form 10-Q, 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 Act 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, 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 Act, the
statements
[[Page 80]]
are made in a registration statement filed under the Securities Act of
1933 offering statement or solicitation of interest, written document or
broadcast script under Regulation A or pursuant to Section 12(b) or (g)
of the Securities Exchange Act of 1934; and
(ii) The statements are not made by or on behalf of an issuer that
is an investment company registered under the Investment Company Act of
1940; and
(2) Information that is disclosed in a document filed with the
Commission in Part I of a quarterly report on Form 10-Q (Sec. 249.308a
of this chapter) or in an annual report to security holders meeting the
requirements of Rules 14a-3(b) and (c) or 14c-3(a) and (b) under the Act
(Sec. 240.14a-3(b) and (c) or Sec. 240.14c-3(a) and (b) of this
chapter) and that 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), ``Management's Discussion and Analysis of
Financial Condition and Results of Operations,'' Item 5 of Form 20-F
(Sec. 240.220(f) of this chapter), ``Operating and Financial Review and
Prospects,'' 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 FASB ASC paragraphs 932-235-
50-29 through 932-235-50-36 (Extractive Activities--Oil and Gas Topic)),
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 5 of Form 20-F or
(4) Disclosed statements of the assumptions underlying or relating
to any of the statements described in paragraphs (c) (1), (2), or (3) of
this section.
(d) For the purpose of this rule the term fraudulent statement shall
mean a statement which is an untrue statement of a material fact, a
statement false or misleading with respect to any material fact, an
omission to state a material fact necessary to make a statement not
misleading, or which constitutes the employment of a manipulative,
deceptive, or fraudulent device, contrivance, scheme, transaction, act,
practice, course of business, or an artifice to defraud, as those terms
are used in the Securities Exchange Act of 1934 or the rules or
regulations promulgated thereunder.
[46 FR 13990, Feb. 25, 1981, as amended at 46 FR 19457, Mar. 31, 1981;
47 FR 11464, Mar. 16, 1982; 47 FR 54780, Dec. 6, 1982; 47 FR 57915, Dec.
29, 1982; 48 FR 19876, May 3, 1983; 56 FR 30067, July 1, 1991; 57 FR
36494, Aug. 13, 1992; 64 FR 53912, Oct. 5, 1999; 73 FR 973, Jan. 4,
2008; 76 FR 50122, Aug. 12, 2011]
Sec. 240.3b-7 Definition of ``executive officer''.
The term executive officer, when used with reference to a
registrant, means its president, any vice president of the registrant in
charge of a principal business unit, division or function (such as
sales, administration or finance), any other officer who performs a
policy making function or any other person who performs similar policy
making functions for the registrant. Executive officers of subsidiaries
may be deemed executive officers of the registrant if they perform such
policy making functions for the registrant.
[47 FR 11464, Mar. 16, 1982, as amended at 56 FR 7265, Feb. 21, 1991]
Sec. 240.3b-8 Definitions of ``Qualified OTC Market Maker, Qualified
Third Market Maker'' and ``Qualified Block Positioner''.
For the purposes of Regulation U under the Act (12 CFR part 221):
[[Page 81]]
(a) The term Qualified OTC Market Maker in an over-the-counter
(``OTC'') margin security means a dealer in any ``OTC Margin Security''
(as that term is defined in section 2(j) of Regulation U (12 CFR
221.2(j)) who (1) is a broker or dealer registered pursuant to section
15 of the Act, (2) is subject to and is in compliance with Rule 15c3-1
(17 CFR 240.15c3-1), (3) has and maintains minimum net capital, as
defined in Rule 15c3-1, of the lesser of (i) $250,000 or (ii) $25,000
plus $5,000 for each security in excess of five with regard to which the
broker or dealer is, or is seeking to become a Qualified OTC Market
Maker, and (4) except when such activity is unlawful, meets all of the
following conditions with respect to such security: (i) He regularly
publishes bona fide, competitive bid and offer quotations in a
recognized inter-dealer quotation system, (ii) he furnishes bona fide,
competitive bid and offer quotations to other brokers and dealers on
request, (iii) he is ready, willing and able to effect transactions in
reasonable amounts, and at his quoted prices, with other brokers and
dealers, and (iv) he has a reasonable average rate of inventory turnover
in such security.
(b) The term Qualified Third Market Maker means a dealer in any
stock registered on a national securities exchange (``exchange'') who
(1) is a broker or dealer registered pursuant to section 15 of the Act,
(2) is subject to and is in compliance with Rule 15c3-1 (17 CFR
240.15c3-1), (3) has and maintains minimum net capital, as defined in
Rule 15c3-1, of the lesser of (i) $500,000 or (ii) $100,000 plus $20,000
for each security in excess of five with regard to which the broker or
dealer is, or is seeking to become, a Qualified Third Market Maker, and
(4) except when such activity is unlawful, meets all of the following
conditions with respect to such security: (i) He furnishes bona fide,
competitive bid and offer quotations at all times to other brokers and
dealers on request, (ii) he is ready, willing and able to effect
transactions for his own account in reasonable amounts, and at his
quoted prices with other brokers and dealers, and (iii) he has a
reasonable average rate of inventory turnover in such security.
(c) The term Qualified Block Positioner means a dealer who (1) is a
broker or dealer registered pursuant to section 15 of the Act, (2) is
subject to and in compliance with Rule 15c3-1 (17 CFR 240.15c3-1), (3)
has and maintains minimum net capital, as defined in Rule 15c3-1 of
$1,000,000 and (4) except when such activity is unlawful, meets all of
the following conditions: (i) He engages in the activity of purchasing
long or selling short, from time to time, from or to a customer (other
than a partner or a joint venture or other entity in which a partner,
the dealer, or a person associated with such dealer, as defined in
section 3(a) (18) of the Act, participates) a block of stock with a
current market value of $200,000 or more in a single transaction, or in
several transactions at approximately the same time, from a single
source to facilitate a sale or purchase by such customer, (ii) he has
determined in the exercise of reasonable diligence that the block could
not be sold to or purchased from others on equivalent or better terms,
and (iii) he sells the shares comprising the block as rapidly as
possible commensurate with the circumstances.
(15 U.S.C. 78a et seq., as amended by Pub. L. 94-29 (June 4, 1975),
particularly secs. 2, 3, 11, 15, 17 and 23 thereof (15 U.S.C. 78b, 78c,
78k, 78o, 78q and 78w))
[48 FR 39606, Sept. 1, 1983]
Sec. Sec. 240.3b-9--240.3b-10 [Reserved]
Sec. 240.3b-11 Definitions relating to limited partnership roll-up
transactions for purposes of sections 6(b)(9), 14(h) and 15A(b)(12)-(13).
For purposes of sections 6(b)(9), 14(h) and 15A(b)(12)-(13) of the
Act (15 U.S.C. 78f(b)(9), 78n(h) and 78o-3(b)(12)-(13)):
(a) The term limited partnership roll-up transaction does not
include a transaction involving only entities that are not ``finite-
life'' as defined in Item 901(b)(2) of Regulation S-K (Sec.
229.901(b)(2) of this chapter).
(b) The term limited partnership roll-up transaction does not
include a transaction involving only entities registered under the
Investment Company Act of 1940 (15 U.S.C. 80a-1 et seq.) or any Business
Development Company as defined in section 2(a)(48) of that Act (15
U.S.C. 80a-2(a)(48)).
[[Page 82]]
(c) The term regularly traded shall be defined as in Item
901(c)(2)(v)(C) of Regulation S-K (Sec. 229.901(c)(2)(v)(C) of this
chapter).
[59 FR 63684, Dec. 8, 1994]
Sec. 240.3b-12 Definition of OTC derivatives dealer.
The term OTC derivatives dealer means any dealer that is affiliated
with a registered broker or dealer (other than an OTC derivatives
dealer), and whose securities activities:
(a) Are limited to:
(1) Engaging in dealer activities in eligible OTC derivative
instruments that are securities;
(2) Issuing and reacquiring securities that are issued by the
dealer, including warrants on securities, hybrid securities, and
structured notes;
(3) Engaging in cash management securities activities;
(4) Engaging in ancillary portfolio management securities
activities; and
(5) Engaging in such other securities activities that the Commission
designates by order pursuant to Sec. 240.15a-1(b)(1); and
(b) Consist primarily of the activities described in paragraphs
(a)(1), (a)(2), and (a)(3) of this section; and
(c) Do not consist of any other securities activities, including
engaging in any transaction in any security that is not an eligible OTC
derivative instrument, except as permitted under paragraphs (a)(3),
(a)(4), and (a)(5) of this section.
(d) For purposes of this section, the term hybrid security means a
security that incorporates payment features economically similar to
options, forwards, futures, swap agreements, or collars involving
currencies, interest or other rates, commodities, securities, indices,
quantitative measures, or other financial or economic interests or
property of any kind, or any payment or delivery that is dependent on
the occurrence or nonoccurrence of any event associated with a potential
financial, economic, or commercial consequence (or any combination,
permutation, or derivative of such contract or underlying interest).
[63 FR 59394, Nov. 3, 1998]
Sec. 240.3b-13 Definition of eligible OTC derivative instrument.
(a) Except as otherwise provided in paragraph (b) of this section,
the term eligible OTC derivative instrument means any contract,
agreement, or transaction that:
(1) Provides, in whole or in part, on a firm or contingent basis,
for the purchase or sale of, or is based on the value of, or any
interest in, one or more commodities, securities, currencies, interest
or other rates, indices, quantitative measures, or other financial or
economic interests or property of any kind; or
(2) Involves any payment or delivery that is dependent on the
occurrence or nonoccurrence of any event associated with a potential
financial, economic, or commercial consequence; or
(3) Involves any combination or permutation of any contract,
agreement, or transaction or underlying interest, property, or event
described in paragraphs (a)(1) or (a)(2) of this section.
(b) The term eligible OTC derivative instrument does not include any
contract, agreement, or transaction that:
(1) Provides for the purchase or sale of a security, on a firm
basis, unless:
(i) The settlement date for such purchase or sale occurs at least
one year following the trade date or, in the case of an eligible forward
contract, at least four months following the trade date; or
(ii) The material economic features of the contract, agreement, or
transaction consist primarily of features of a type described in
paragraph (a) of this section other than the provision for the purchase
or sale of a security on a firm basis; or
(2) Provides, in whole or in part, on a firm or contingent basis,
for the purchase or sale of, or is based on the value of, or any
interest in, any security (or group or index of securities), and is:
(i) Listed on, or traded on or through, a national securities
exchange or registered national securities association, or facility or
market thereof; or
(ii) Except as otherwise determined by the Commission by order
pursuant
[[Page 83]]
to Sec. 240.15a-1(b)(2), one of a class of fungible instruments that
are standardized as to their material economic terms.
(c) The Commission may issue an order pursuant to Sec. 240.15a-
1(b)(3) clarifying whether certain contracts, agreements, or
transactions are within the scope of eligible OTC derivative instrument.
(d) For purposes of this section, the term eligible forward contract
means a forward contract that provides for the purchase or sale of a
security other than a government security, provided that, if such
contract provides for the purchase or sale of margin stock (as defined
in Regulation U of the Regulations of the Board of Governors of the
Federal Reserve System, 12 CFR Part 221), such contract either:
(1) Provides for the purchase or sale of such stock by the issuer
thereof (or an affiliate that is not a bank or a broker or dealer); or
(2) Provides for the transfer of transaction collateral in an amount
that would satisfy the requirements, if any, that would be applicable
assuming the OTC derivatives dealer party to such transaction were not
eligible for the exemption from Regulation T of the Regulations of the
Board of Governors of the Federal Reserve System, 12 CFR part 220, set
forth in Sec. 240.36a1-1.
[63 FR 59395, Nov. 3, 1998]
Sec. 240.3b-14 Definition of cash management securities activities.
The term cash management securities activities means securities
activities that are limited to transactions involving:
(a) Any taking possession of, and any subsequent sale or disposition
of, collateral provided by a counterparty, or any acquisition of, and
any subsequent sale or disposition of, collateral to be provided to a
counterparty, in connection with any securities activities of the dealer
permitted under Sec. 240.15a-1 or any non-securities activities of the
dealer that involve eligible OTC derivative instruments or other
financial instruments;
(b) Cash management, in connection with any securities activities of
the dealer permitted under Sec. 240.15a-1 or any non-securities
activities of the dealer that involve eligible OTC derivative
instruments or other financial instruments; or
(c) Financing of positions of the dealer acquired in connection with
any securities activities of the dealer permitted under Sec. 240.15a-1
or any non-securities activities that involve eligible OTC derivative
instruments or other financial instruments.
[63 FR 59395, Nov. 3, 1998]
Sec. 240.3b-15 Definition of ancillary portfolio management securities
activities.
(a) The term ancillary portfolio management securities activities
means securities activities that:
(1) Are limited to transactions in connection with:
(i) Dealer activities in eligible OTC derivative instruments;
(ii) The issuance of securities by the dealer; or
(iii) Such other securities activities that the Commission
designates by order pursuant to Sec. 240.15a-1(b)(1); and
(2) Are conducted for the purpose of reducing the market or credit
risk of the dealer or consist of incidental trading activities for
portfolio management purposes; and
(3) Are limited to risk exposures within the market, credit,
leverage, and liquidity risk parameters set forth in:
(i) The trading authorizations granted to the associated person (or
to the supervisor of such associated person) who executes a particular
transaction for, or on behalf of, the dealer; and
(ii) The written guidelines approved by the governing body of the
dealer and included in the internal risk management control system for
the dealer pursuant to Sec. 240.15c3-4; and
(4) Are conducted solely by one or more associated persons of the
dealer who perform substantial duties for, or on behalf of, the dealer
in connection with its dealer activities in eligible OTC derivative
instruments.
(b) The Commission may issue an order pursuant to Sec. 240.15a-
1(b)(4) clarifying whether certain securities activities are within the
scope of ancillary portfolio management securities activities.
[63 FR 59395, Nov. 3, 1998]
[[Page 84]]
Sec. 240.3b-16 Definitions of terms used in Section 3(a)(1) of the Act.
(a) An organization, association, or group of persons shall be
considered to constitute, maintain, or provide ``a market place or
facilities for bringing together purchasers and sellers of securities or
for otherwise performing with respect to securities the functions
commonly performed by a stock exchange,'' as those terms are used in
section 3(a)(1) of the Act, (15 U.S.C. 78c(a)(1)), if such organization,
association, or group of persons:
(1) Brings together the orders for securities of multiple buyers and
sellers; and
(2) Uses established, non-discretionary methods (whether by
providing a trading facility or by setting rules) under which such
orders interact with each other, and the buyers and sellers entering
such orders agree to the terms of a trade.
(b) An organization, association, or group of persons shall not be
considered to constitute, maintain, or provide ``a market place or
facilities for bringing together purchasers and sellers of securities or
for otherwise performing with respect to securities the functions
commonly performed by a stock exchange,'' solely because such
organization, association, or group of persons engages in one or more of
the following activities:
(1) Routes orders to a national securities exchange, a market
operated by a national securities association, or a broker-dealer for
execution; or
(2) Allows persons to enter orders for execution against the bids
and offers of a single dealer; and
(i) As an incidental part of these activities, matches orders that
are not displayed to any person other than the dealer and its employees;
or
(ii) In the course of acting as a market maker registered with a
self-regulatory organization, displays the limit orders of such market
maker's, or other broker-dealer's, customers; and
(A) Matches customer orders with such displayed limit orders; and
(B) As an incidental part of its market making activities, crosses
or matches orders that are not displayed to any person other than the
market maker and its employees.
(c) For purposes of this section the term order means any firm
indication of a willingness to buy or sell a security, as either
principal or agent, including any bid or offer quotation, market order,
limit order, or other priced order.
(d) For the purposes of this section, the terms bid and offer shall
have the same meaning as under Sec. 242.600 of this chapter.
(e) The Commission may conditionally or unconditionally exempt any
organization, association, or group of persons from the definition in
paragraph (a) of this section.
[63 FR 70918, Dec. 22, 1998, as amended at 70 FR 37617, June 29, 2005]
Sec. 240.3b-17 [Reserved]
Sec. 240.3b-18 Definitions of terms used in Section 3(a)(5) of the Act.
For the purposes of section 3(a)(5)(C) of the Act (15 U.S.C.
78c(a)(5)(C):
(a) The term affiliate means any company that controls, is
controlled by, or is under common control with another company.
(b) The term consumer-related receivable means any obligation
incurred by any natural person to pay money arising out of a transaction
in which the money, property, insurance, or services (being purchased)
are primarily for personal, family, or household purposes.
(c) The term member as it relates to the term ``syndicate of banks''
means a bank that is a participant in a syndicate of banks and together
with its affiliates, other than its broker or dealer affiliates,
originates no less than 10% of the value of the obligations in a pool of
obligations used to back the securities issued through a grantor trust
or other separate entity.
(d) The term obligation means any note, draft, acceptance, loan,
lease, receivable, or other evidence of indebtedness that is not a
security issued by a person other than the bank.
(e) The term originated means:
(1) Funding an obligation at the time that the obligation is
created; or
(2) Initially approving and underwriting the obligation, or
initially agreeing to purchase the obligation, provided that:
[[Page 85]]
(i) The obligation conforms to the underwriting standards or is
evidenced by the loan documents of the bank or its affiliates, other
than its broker or dealer affiliates; and
(ii) The bank or its affiliates, other than its broker or dealer
affiliates, fund the obligation in a timely manner, not to exceed six
months after the obligation is created.
(f) The term pool means more than one obligation or type of
obligation grouped together to provide collateral for a securities
offering.
(g) The term predominantly originated means that no less than 85% of
the value of the obligations in any pool were originated by:
(1) The bank or its affiliates, other than its broker or dealer
affiliates; or
(2) Banks that are members of a syndicate of banks and affiliates of
such banks, other than their broker or dealer affiliates, if the
obligations or pool of obligations consist of mortgage obligations or
consumer-related receivables.
(3) For this purpose, the bank and its affiliates include any
financial institution with which the bank or its affiliates have merged
but does not include the purchase of a pool of obligations or the
purchase of a line of business.
(h) The term syndicate of banks means a group of banks that acts
jointly, on a temporary basis, to issue through a grantor trust or other
separate entity, securities backed by obligations originated by each of
the individual banks or their affiliates, other than their broker or
dealer affiliates.
[68 FR 8700, Feb. 24, 2003]
Sec. 240.3b-19 Definition of ``issuer'' in section 3(a)(8) of the
Act in relation to asset-backed securities.
The following applies with respect to asset-backed securities under
the Act. Terms used in this section have the same meaning as in Item
1101 of Regulation AB (Sec. 229.1101 of this chapter).
(a) The depositor for the asset-backed securities acting solely in
its capacity as depositor to the issuing entity is the ``issuer'' for
purposes of the asset-backed securities of that issuing entity.
(b) The person acting in the capacity as the depositor specified in
paragraph (a) of this section is a different ``issuer'' from that same
person acting as a depositor for another issuing entity or for purposes
of that person's own securities.
[70 FR 1620, Jan. 7, 2005]
Clearing of Security-Based Swaps
Sec. 240.3Ca-1 Stay of clearing requirement and review by the Commission.
(a) After making a determination pursuant to a clearing agency's
security-based swap submission that a security-based swap, or any group,
category, type or class of security-based swaps, is required to be
cleared, the Commission, on application of a counterparty to a security-
based swap or on the Commission's own initiative, may stay the clearing
requirement until the Commission completes a review of the terms of the
security-based swap (or group, category, type, or class of security-
based swaps) and the clearing of the security-based swap (or group,
category, type, or class of security-based swaps) by the clearing agency
that has accepted it for clearing.
(b) A counterparty to a security-based swap applying for a stay of
the clearing requirement for a security-based swap (or group, category,
type, or class of security-based swaps) shall submit a written statement
to the Commission that includes:
(1) A request for a stay of the clearing requirement;
(2) The identity of the counterparties to the security-based swap
and a contact at the counterparty requesting the stay;
(3) The identity of the clearing agency clearing the security-based
swap;
(4) The terms of the security-based swap subject to the clearing
requirement and a description of the clearing arrangement; and
(5) Reasons why such stay should be granted and why the security-
based swap should not be subject to a clearing requirement, specifically
addressing the same factors a clearing agency must address in its
security-based-swap submission pursuant to Sec. 240.19b-4(o)(3).
(c) A stay of the clearing requirement may be granted with respect
to a
[[Page 86]]
security-based swap, or the group, category, type, or class of security-
based swaps, as determined by the Commission.
(d) The Commission's review shall include a quantitative and
qualitative assessment of the factors specified in Sec. 240.19b-
4(o)(3). Any clearing agency that has accepted for clearing a security-
based swap, or any group, category, type or class of security-based
swaps, that is subject to the stay of the clearing requirement shall
provide information requested by the Commission as necessary to assess
any of the factors it determines to be appropriate in the course of its
review.
(e) Upon completion of its review, the Commission may:
(1) Determine, subject to any terms and conditions that the
Commission determines to be appropriate in the public interest, that the
security-based swap, or group, category, type, or class of security-
based swaps must be cleared; or
(2) Determine that the clearing requirement will not apply to the
security-based swap, or group, category, type, or class of security-
based swaps, but clearing may continue on a non-mandatory basis.
[77 FR 41647, July 13, 2012]
Sec. 240.3Ca-2 Submission of security-based swaps for clearing.
Pursuant to section 3C(a)(1) of the Act (15 U.S.C. 78c-3(a)(1)), it
shall be unlawful for any person to engage in a security-based swap
unless that person submits such security-based swap for clearing to a
clearing agency that is registered under this Act or a clearing agency
that is exempt from registration under the Act if the security-based
swap is required to be cleared. The phrase submits such security-based
swap for clearing to a clearing agency in the clearing requirement of
Section 3C(a)(1) of the Act shall mean that the security-based swap will
be submitted for central clearing to a clearing agency that functions as
a central counterparty.
[77 FR 41647, July 13, 2012]
Registration and Exemption of Exchanges
Sec. 240.6a-1 Application for registration as a national securities
exchange or exemption from registration based on limited volume.
(a) An application for registration as a national securities
exchange, or for exemption from such registration based on limited
volume, shall be filed on Form 1 (Sec. 249.1 of this chapter), in
accordance with the instructions contained therein.
(b) Promptly after the discovery that any information filed on Form
1 was inaccurate when filed, the exchange shall file with the Commission
an amendment correcting such inaccuracy.
(c) Promptly after the discovery that any information in the
statement, any exhibit, or any amendment was inaccurate when filed, the
exchange shall file with the Commission an amendment correcting such
inaccuracy.
(d) Whenever the number of changes to be reported in an amendment,
or the number of amendments filed, are so great that the purpose of
clarity will be promoted by the filing of a new complete statement and
exhibits, an exchange may, at its election, or shall, upon request of
the Commission, file as an amendment a complete new statement together
with all exhibits which are prescribed to be filed in connection with
Form 1.
(Secs. 5, 6, 17, 48 Stat. 885, 897, as amended; 15 U.S.C. 78e, 78f, 78q)
[14 FR 7759, Dec. 29, 1949, as amended at 63 FR 70918, Dec. 22, 1998]
Sec. 240.6a-2 Amendments to application.
(a) A national securities exchange, or an exchange exempted from
such registration based on limited volume, shall file an amendment to
Form 1, (Sec. 249.1 of this chapter), which shall set forth the nature
and effective date of the action taken and shall provide any new
information and correct any information rendered inaccurate, on Form 1,
(Sec. 249.1 of this chapter), within 10 days after any action is taken
that renders inaccurate, or that causes to be incomplete, any of the
following:
[[Page 87]]
(1) Information filed on the Execution Page of Form 1, or amendment
thereto; or
(2) Information filed as part of Exhibits C, F, G, H, J, K or M, or
any amendments thereto.
(b) On or before June 30 of each year, a national securities
exchange, or an exchange exempted from such registration based on
limited volume, shall file, as an amendment to Form 1, the following:
(1) Exhibits D and I as of the end of the latest fiscal year of the
exchange; and
(2) Exhibits K, M, and N, which shall be up to date as of the latest
date practicable within 3 months of the date the amendment is filed.
(c) On or before June 30, 2001 and every 3 years thereafter, a
national securities exchange, or an exchange exempted from such
registration based on limited volume, shall file, as an amendment to
Form 1, complete Exhibits A, B, C and J. The information filed under
this paragraph (c) shall be current as of the latest practicable date,
but shall, at a minimum, be up to date within 3 months as of the date
the amendment is filed.
(d)(1) If an exchange, on an annual or more frequent basis,
publishes, or cooperates in the publication of, any of the information
required to be filed by paragraphs (b)(2) and (c) of this section, in
lieu of filing such information, an exchange may:
(i) Identify the publication in which such information is available,
the name, address, and telephone number of the person from whom such
publication may be obtained, and the price of such publication; and
(ii) Certify to the accuracy of such information as of its
publication date.
(2) If an exchange keeps the information required under paragraphs
(b)(2) and (c) of this section up to date and makes it available to the
Commission and the public upon request, in lieu of filing such
information, an exchange may certify that the information is kept up to
date and is available to the Commission and the public upon request.
(3) If the information required to be filed under paragraphs (b)(2)
and (c) of this section is available continuously on an Internet web
site controlled by an exchange, in lieu of filing such information with
the Commission, such exchange may:
(i) Indicate the location of the Internet web site where such
information may be found; and
(ii) Certify that the information available at such location is
accurate as of its date.
(e) The Commission may exempt a national securities exchange, or an
exchange exempted from such registration based on limited volume, from
filing the amendment required by this section for any affiliate or
subsidiary listed in Exhibit C of the exchange's application for
registration, as amended, that either:
(1) Is listed in Exhibit C of the application for registration or
notice of registration, as amended, of one or more other national
securities exchanges; or
(2) Was an inactive subsidiary throughout the subsidiary's latest
fiscal year. Any such exemption may be granted upon terms and conditions
the Commission deems necessary or appropriate in the public interest or
for the protection of investors, provided however, that at least one
national securities exchange shall be required to file the amendments
required by this section for an affiliate or subsidiary described in
paragraph (e)(1) of this section.
(f) A national securities exchange registered pursuant to Section
6(g)(1) of the Act (15 U.S.C. 78f(g)(1)) shall be exempt from the
requirements of this section.
[63 FR 70918, Dec. 22, 1998, as amended at 66 FR 43741, Aug. 20, 2001]
Sec. 240.6a-3 Supplemental material to be filed by exchanges.
(a)(1) A national securities exchange, or an exchange exempted from
such registration based on limited volume, shall file with the
Commission any material (including notices, circulars, bulletins, lists,
and periodicals) issued or made generally available to members of, or
participants or subscribers to, the exchange. Such material shall be
filed with the Commission within 10 days after issuing or making such
material available to members, participants or subscribers.
[[Page 88]]
(2) If the information required to be filed under paragraph (a)(1)
of this section is available continuously on an Internet web site
controlled by an exchange, in lieu of filing such information with the
Commission, such exchange may:
(i) Indicate the location of the Internet web site where such
information may be found; and
(ii) Certify that the information available at such location is
accurate as of its date.
(b) Within 15 days after the end of each calendar month, a national
securities exchange or an exchange exempted from such registration based
on limited volume, shall file a report concerning the securities sold on
such exchange during the calendar month. Such report shall set forth:
(1) The number of shares of stock sold and the aggregate dollar
amount of such stock sold;
(2) The principal amount of bonds sold and the aggregate dollar
amount of such bonds sold; and
(3) The number of rights and warrants sold and the aggregate dollar
amount of such rights and warrants sold.
(c) A national securities exchange registered pursuant to Section
6(g)(1) of the Act (15 U.S.C. 78f(g)(1)) shall be exempt from the
requirements of this section.
[63 FR 70919, Dec. 22, 1998, as amended at 66 FR 43741, Aug. 20, 2001]
Sec. 240.6a-4 Notice of registration under Section 6(g) of the Act,
amendment to such notice, and supplemental materials to be filed by
exchanges registered under Section 6(g) of the Act.
(a) Notice of registration. (1) An exchange may register as a
national securities exchange solely for the purposes of trading security
futures products by filing Form 1-N (Sec. 249.10 of this chapter)
(``notice of registration''), in accordance with the instructions
contained therein, if:
(i) The exchange is a board of trade, as that term in defined in the
Commodity Exchange Act (7 U.S.C. 1a(2)), that:
(A) Has been designated a contract market by the Commodity Futures
Trading Commission and such designation is not suspended by order of the
Commodity Futures Trading Commission; or
(B) Is registered as a derivative transaction execution facility
under Section 5a of the Commodity Exchange Act (7 U.S.C. 7a) and such
registration is not suspended by the Commodity Futures Trading
Commission; and
(ii) Such exchange does not serve as a market place for transactions
in securities other than:
(A) Security futures products; or
(B) Futures on exempted securities or on groups or indexes of
securities or options thereon that have been authorized under Section
2(a)(1)(C) of the Commodity Exchange Act (7 U.S.C. 2a).
(2) Promptly after the discovery that any information filed on Form
1-N (Sec. 249.10 of this chapter) was inaccurate when filed, the
exchange shall file with the Commission an amendment correcting such
inaccuracy.
(b) Amendment to notice of registration. (1) A national securities
exchange registered pursuant to Section 6(g)(1) of the Act (15 U.S.C.
78f(g)(1)) (``Security Futures Product Exchange'') shall file an
amendment to Form 1-N (Sec. 249.10 of this chapter), which shall set
forth the nature and effective date of the action taken and shall
provide any new information and correct any information rendered
inaccurate, on Form 1-N (Sec. 249.10 of this chapter), within:
(i) Ten days after any action is taken that renders inaccurate, or
that causes to be incomplete, any information filed on the Execution
Page of Form 1-N (Sec. 249.10 of this chapter), or amendment thereto;
or
(ii) 30 days after any action is taken that renders inaccurate, or
that causes to be incomplete, any information filed as part of Exhibit F
to Form 1-N (Sec. 249.10 of this chapter), or any amendments thereto.
(2) A Security Futures Product Exchange shall maintain records
relating to changes in information required in Exhibits C and E to Form
1-N (Sec. 249.10 of this chapter) which shall be current of as of the
latest practicable date, but shall, at a minimum, be up-to-date within
30 days. A Security Futures Product Exchange shall make such
[[Page 89]]
records available to the Commission and the public upon request.
(3) On or before June 30, 2002, and by June 30 every year
thereafter, a Security Futures Product Exchange shall file, as an
amendment to Form 1-N (Sec. 249.10 of this chapter), Exhibits F, H, and
I, which shall be current of as of the latest practicable date, but
shall, at a minimum, be up-to-date within three months as of the date
the amendment is filed.
(4) On or before June 30, 2004, and by June 30 every three years
thereafter, a Security Futures Product Exchange shall file, as an
amendment to Form 1-N (Sec. 249.10 of this chapter), complete Exhibits
A, B, C, and E, which shall be current of as of the latest practicable
date, but shall, at a minimum, be up-to-date within three months as of
the date the amendment is filed.
(5)(i) If a Security Futures Product Exchange, on an annual or more
frequent basis, publishes, or cooperates in the publication of, any of
the information required to be filed by paragraphs (b)(3) and (b)(4) of
this section, in lieu of filing such information, a Security Futures
Product Exchange may satisfy this filing requirement by:
(A) Identifying the publication in which such information is
available, the name, address, and telephone number of the person from
whom such publication may be obtained, and the price of such
publication; and
(B) Certifying to the accuracy of such information as of its
publication date.
(ii) If a Security Futures Product Exchange keeps the information
required under paragraphs (b)(3) and (b)(4) of this section up-to-date
and makes it available to the Commission and the public upon request, in
lieu of filing such information, a Security Futures Product Exchange may
satisfy this filing requirement by certifying that the information is
kept up-to-date and is available to the Commission and the public upon
request.
(iii) If the information required to be filed under paragraphs
(b)(3) and (b)(4) of this section is available continuously on an
Internet web site controlled by a Security Futures Product Exchange, in
lieu of filing such information with the Commission, such Security
Futures Product Exchange may satisfy this filing requirement by:
(A) Indicating the location of the Internet web site where such
information may be found; and
(B) Certifying that the information available at such location is
accurate as of its date.
(6)(i) The Commission may exempt a Security Futures Product Exchange
from filing the amendment required by this section for any affiliate or
subsidiary listed in Exhibit C to Form 1-N (Sec. 249.10 of this
chapter), as amended, that either:
(A) Is listed in Exhibit C to Form 1 (Sec. 249.1 of this chapter)
or to Form 1-N (Sec. 249.10 of this chapter), as amended, of one or
more other national securities exchanges; or
(B) Was an inactive affiliate or subsidiary throughout the
affiliate's or subsidiary's latest fiscal year.
(ii) Any such exemption may be granted upon terms and conditions the
Commission deems necessary or appropriate in the public interest or for
the protection of investors, provided however, that at least one
national securities exchange shall be required to file the amendments
required by this section for an affiliate or subsidiary described in
paragraph (b)(6)(i) of this section.
(7) If a Security Futures Product Exchange has filed documents with
the Commodity Futures Trading Commission, to the extent that such
documents contain information satisfying the Commission's informational
requirements, copies of such documents may be filed with the Commission
in lieu of the required written notice.
(c) Supplemental material to be filed by Security Futures Product
Exchanges. (1)(i) A Security Futures Product Exchange shall file with
the Commission any material related to the trading of security futures
products (including notices, circulars, bulletins, lists, and
periodicals) issued or made generally available to members of,
participants in, or subscribers to, the exchange. Such material shall be
filed with the Commission within ten days after issuing or making such
material available to members, participants, or subscribers.
[[Page 90]]
(ii) If the information required to be filed under paragraph
(c)(1)(i) of this section is available continuously on an Internet web
site controlled by an exchange, in lieu of filing such information with
the Commission, such exchange may:
(A) Indicate the location of the Internet web site where such
information may be found; and
(B) Certify that the information available at such location is
accurate as of its date.
(2) Within 15 days after the end of each calendar month, a Security
Futures Product Exchange shall file a report concerning the security
futures products traded on such exchange during the previous calendar
month. Such a report shall:
(i) For each contract of sale for future delivery of a single
security, the number of contracts traded on such exchange during the
relevant calendar month and the total number of shares underlying such
contracts traded; and
(ii)For each contract of sale for future delivery of a narrow-based
security index, the number of contracts traded on such exchange during
the relevant calendar month and the total number of shares represented
by the index underlying such contracts traded.
[66 FR 43741, Aug. 20, 2001]
Sec. 240.6h-1 Settlement and regulatory halt requirements for security
futures products.
(a) For the purposes of this section:
(1) Opening price means the price at which a security opened for
trading, or a price that fairly reflects the price at which a security
opened for trading, during the regular trading session of the national
securities exchange or national securities association that lists the
security. If the security is not listed on a national securities
exchange or a national securities association, then opening price shall
mean the price at which a security opened for trading, or a price that
fairly reflects the price at which a security opened for trading, on the
primary market for the security.
(2) Regular trading session of a security means the normal hours for
business of a national securities exchange or national securities
association that lists the security.
(3) Regulatory halt means a delay, halt, or suspension in the
trading of a security, that is instituted by the national securities
exchange or national securities association that lists the security, as
a result of:
(i) A determination that there are matters relating to the security
or issuer that have not been adequately disclosed to the public, or that
there are regulatory problems relating to the security which should be
clarified before trading is permitted to continue; or
(ii) The operation of circuit breaker procedures to halt or suspend
trading in all equity securities trading on that national securities
exchange or national securities association.
(b) Final settlement prices for security futures products. (1) The
final settlement price of a cash-settled security futures product must
fairly reflect the opening price of the underlying security or
securities.
(2) Notwithstanding paragraph (b)(1) of this section, if an opening
price for one or more securities underlying a security futures product
is not readily available, the final settlement price of the security
futures product shall fairly reflect:
(i) The price of the underlying security or securities during the
most recent regular trading session for such security or securities; or
(ii) The next available opening price of the underlying security or
securities.
(3) Notwithstanding paragraph (b)(1) or (b)(2) of this section, if a
clearing agency registered under Section 17A of the Act (15 U.S.C. 78q-
1), or exempt from registration pursuant to Section 17A(b)(7) of the Act
(15 U.S.C. 78q-1(b)(7)), to which the final settlement price of a
security futures product is or would be reported determines, pursuant to
its rules, that such final settlement price is not consistent with the
protection of investors and the public interest, taking into account
such factors as fairness to buyers and sellers of the affected security
futures product, the maintenance of a fair and orderly market in such
security futures product, and consistency of interpretation
[[Page 91]]
and practice, the clearing agency shall have the authority to determine,
under its rules, a final settlement price for such security futures
product.
(c) Regulatory trading halts. The rules of a national securities
exchange or national securities association registered pursuant to
Section 15A(a) of the Act (15 U.S.C. 78o-3(a)) that lists or trades one
or more security futures products must include the following provisions:
(1) Trading of a security futures product based on a single security
shall be halted at all times that a regulatory halt has been instituted
for the underlying security; and
(2) Trading of a security futures product based on a narrow-based
security index shall be halted at all times that a regulatory halt has
been instituted for one or more underlying securities that constitute 50
percent or more of the market capitalization of the narrow-based
security index.
(d) The Commission may exempt from the requirements of this section,
either unconditionally or on specified terms and conditions, any
national securities exchange or national securities association, if the
Commission determines that such exemption is necessary or appropriate in
the public interest and consistent with the protection of investors. An
exemption granted pursuant to this paragraph shall not operate as an
exemption from any Commodity Futures Trading Commission rules. Any
exemption that may be required from such rules must be obtained
separately from the Commodity Futures Trading Commission.
[67 FR 36762, May 24, 2002]
Sec. 240.6h-2 Security future based on note, bond, debenture, or
evidence of indebtedness.
A security future may be based upon a security that is a note, bond,
debenture, or evidence of indebtedness or a narrow-based security index
composed of such securities.
[71 FR 39543, July 13, 2006]
Sec. 240.7c2-1 [Reserved]
Hypothecation of Customers' Securities
Sec. 240.8c-1 Hypothecation of customers' securities.
(a) General provisions. No member of a national securities exchange,
and no broker or dealer who transacts a business in securities through
the medium of any such member shall, directly or indirectly, hypothecate
or arrange for or permit the continued hypothecation of any securities
carried for the account of any customer under circumstances:
(1) That will permit the commingling of securities carried for the
account of any such customer with securities carried for the account of
any other customer, without first obtaining the written consent of each
such customer to such hypothecation;
(2) That will permit such securities to be commingled with
securities carried for the account of any person other than a bona fide
customer of such member, broker or dealer under a lien for a loan made
to such member, broker or dealer; or
(3) That will permit securities carried for the account of customers
to be hypothecated or subjected to any lien or liens or claim or claims
of the pledges or pledgees, for a sum which exceeds the aggregate
indebtedness of all customers in respect of securities carried for their
accounts; except that this clause shall not be deemed to be violated by
reason of an excess arising on any day through the reduction of the
aggregate indebtedness of customers on such day, provided that funds or
securities in an amount sufficient to eliminate such excess are paid or
placed in transfer to pledgees for the purpose of reducing the sum of
the liens or claims to which securities carried for the account of
customers are subjected as promptly as practicable after such reduction
occurs, but before the lapse of one-half hour after the commencement of
banking hours on the next banking day at the place where the largest
principal amount of loans of such member, broker or dealer are payable
and, in any event, before such member, broker or dealer on such
[[Page 92]]
day has obtained or increased any bank loan collateralized by securities
carried for the account of customers.
(b) Definitions. For the purposes of this section:
(1) The term customer shall not include any general or special
partner or any director or officer of such member, broker or dealer, or
any participant, as such, in any joint, group or syndicate account with
such member, broker or dealer or with any partner, officer or director
thereof. The term also shall not include any counterparty who has
delivered collateral to an OTC derivatives dealer pursuant to a
transaction in an eligible OTC derivative instrument, or pursuant to the
OTC derivatives dealer's cash management securities activities or
ancillary portfolio management securities activities, and who has
received a prominent written notice from the OTC derivatives dealer
that:
(i) Except as otherwise agreed in writing by the OTC derivatives
dealer and the counterparty, the dealer may repledge or otherwise use
the collateral in its business;
(ii) In the event of the OTC derivatives dealer's failure, the
counterparty will likely be considered an unsecured creditor of the
dealer as to that collateral;
(iii) The Securities Investor Protection Act of 1970 (15 U.S.C.
78aaa through 78lll) does not protect the counterparty; and
(iv) The collateral will not be subject to the requirements of Sec.
240.8c-1, Sec. 240.15c2-1, Sec. 240.15c3-2, or Sec. 240.15c3-3;
(2) The term securities carried for the account of any customer
shall be deemed to mean:
(i) Securities received by or on behalf of such member, broker or
dealer for the account of any customer;
(ii) Securities sold and appropriated by such member, broker or
dealer to a customer, except that if such securities were subject to a
lien when appropriated to a customer they shall not be deemed to be
``securities carried for the account of any customer'' pending their
release from such lien as promptly as practicable:
(iii) Securities sold, but not appropriated, by such member, broker
or dealer to a customer who has made any payment therefor, to the extent
that such member, broker or dealer owns and has received delivery of
securities of like kind, except that if such securities were subject to
a lien when such payment was made they shall not be deemed to be
``securities carried for the account of any customer'' pending their
release from such lien as promptly as practicable:
(3) ``Aggregate indebtedness'' shall not be deemed to be reduced by
reason of uncollected items. In computing aggregate indebtedness,
related guaranteed and guarantor accounts shall be treated as a single
account and considered on a consolidated basis, and balances in accounts
carrying both long and short positions shall be adjusted by treating the
market value of the securities required to cover such short positions as
though such market value were a debit; and
(4) In computing the sum of the liens or claims to which securities
carried for the account of customers of a member, broker or dealer are
subject, any rehypothecation of such securities by another member,
broker or dealer who is subject to this section or to Sec. 240.15c2-1
shall be disregarded.
(c) Exemption for cash accounts. The provisions of paragraph (a)(1)
of this section shall not apply to any hypothecation of securities
carried for the account of a customer in a special cash account within
the meaning of 12 CFR 220.4(c): Provided, That at or before the
completion of the transaction of purchase of such securities for, or of
sale of such securities to, such customer, written notice is given or
sent to such customer disclosing that such securities are or may be
hypothecated under circumstances which will permit the commingling
thereof with securities carried for the account of other customers. The
term the completion of the transaction shall have the meaning given to
such term by Sec. 240.15c1-1(b).
(d) Exemption for clearinghouse liens. The provisions of paragraphs
(a)(2), (a)(3), and (f) of this section shall not apply to any lien or
claim of the clearing corporation, or similar department or association,
of a national securities exchange or a registered national securities
association for a loan made and to be repaid on the same calendar day,
[[Page 93]]
which is incidental to the clearing of transactions in securities or
loans through such corporation, department, or association: Provided,
however, That for the purpose of paragraph (a)(3) of this section,
``aggregate indebtedness of all customers in respect of securities
carried for their accounts'' shall not include indebtedness in respect
of any securities subject to any lien or claim exempted by this
paragraph.
(e) Exemption for certain liens on securities of noncustomers. The
provisions of paragraph (a)(2) of this section shall not be deemed to
prevent such member, broker or dealer from permitting securities not
carried for the account of a customer to be subjected (1) to a lien for
a loan made against securities carried for the account of customers, or
(2) to a lien for a loan made and to be repaid on the same calendar day.
For the purpose of this exemption, a loan shall be deemed to be ``made
against securities carried for the account of customers'' if only
securities carried for the account of customers are used to obtain or to
increase such loan or as substitutes for other securities carried for
the account of customers.
(f) Notice and certification requirements. No person subject to this
section shall hypothecate any security carried for the account of a
customer unless at or prior to the time of each such hypothecation, he
gives written notice to the pledgee that the security pledged is carried
for the account of a customer and that such hypothecation does not
contravene any provision of this section, except that in the case of an
omnibus account the members, broker or dealer for whom such account is
carried may furnish a signed statement to the person carrying such
account that all securities carried therein by such member, broker or
dealer will be securities carried for the account of his customers and
that the hypothecation thereof by such member, broker or dealer will not
contravene any provision of this section. The provisions of this
paragraph shall not apply to any hypothecation of securities under any
lien or claim of a pledgee securing a loan made and to be repaid on the
same calendar day.
(g) The fact that securities carried for the accounts of customers
and securities carried for the accounts of others are represented by one
or more certificates in the custody of a clearing corporation or other
subsidiary organization of either a national securities exchange or of a
registered national securities association, or of a custodian bank, in
accordance with a system for the central handling of securities
established by a national securities exchange or a registered national
securities association, pursuant to which system the hypothecation of
such securities is effected by bookkeeping entries without physical
delivery of such securities, shall not, in and of itself, result in a
commingling of securities prohibited by paragraph (a)(1) or (a)(2) of
this section, whenever a participating member, broker or dealer
hypothecates securities in accordance with such system: Provided,
however, That (1) any such custodian of any securities held by or for
such system shall agree that it will not for any reason, including the
assertion of any claim, right or lien of any kind, refuse to refrain
from promptly delivering any such securities (other than securities then
hypothecated in accordance with such system) to such clearing
corporation or other subsidiary organization or as directed by it,
except that nothing in such agreement shall be deemed to require the
custodian to deliver any securities in contravention of any notice of
levy, seizure or similar notice, or order or judgment, issued or
directed by a governmental agency or court, or officer thereof, having
jurisdiction over such custodian, which on its face affects such
securities; (2) such systems shall have safeguards in the handling,
transfer and delivery of securities and provisions for fidelity bond
coverage of the employees and agents of the clearing corporation or
other subsidiary organization and for periodic examinations by
independent public accountants; and (3) the provisions of this paragraph
shall not be effective with respect to any particular system unless the
agreement required by paragraph (g)(1) of this section and the
safeguards and provisions required by paragraph (g)(2) of this section
shall have been deemed adequate by the Commission for the protection of
investors, and unless any
[[Page 94]]
subsequent amendments to such agreement, safeguards or provisions shall
have been deemed adequate by the Commission for the protection of
investors.
(Secs. 3, 8, 15, 48 Stat. 882, 888, 895; 15 U.S.C. 78c, 78h, 78o)
Cross Reference: For interpretative releases applicable to Sec.
240.8c-1, see Nos. 2690 and 2822 in tabulation, part 241 of this
chapter.
[13 FR 8180, Dec. 22, 1948, as amended at 31 FR 7740, June 1, 1966; 37
FR 73, Jan. 5, 1973; 63 FR 59395, Nov. 3, 1998]
Sec. 240.9b-1 Options disclosure document.
(a) Definitions. The following definitions shall apply for the
purpose of this rule.
(1) Options market means a national securities exchange, an
automated quotation system of a registered securities association or a
foreign securities exchange on which standardized options are traded.
(2) Options class means all options contracts covering the same
underlying instrument.
(3) Options disclosure document means a document, including all
amendments and supplements thereto, prepared by one or more options
markets which has been filed with the Commission or distributed in
accordance with paragraph (b) of this section. Definitive options
disclosure document or document means an options disclosure document
furnished to customers in accordance with paragraph (b) of this section.
(4) Standardized options are options contracts trading on a national
securities exchange, an automated quotation system of a registered
securities association, or a foreign securities exchange which relate to
options classes the terms of which are limited to specific expiration
dates and exercise prices, or such other securities as the Commission
may, by order, designate.
(b)(1) Five preliminary copies of an options disclosure document
containing the information specified in paragraph (c) of this section
shall be filed with the Commission by an options market at least 60 days
prior to the date definitive copies are furnished to customers, unless
the commission determines otherwise having due regard to the adequacy of
the information disclosed and the public interest and protection of
investors. Five copies of the definitive options disclosure document
shall be filed with the Commission not later than the date the options
disclosure document is furnished to customers. Notwithstanding the
above, the use of an options disclosure document shall not be permitted
unless the options class to which such document relates is the subject
of an effective registration statement on Form S-20 under the Securities
Act of 1933, or is exempt from registration under the Securities Act of
1933 (15 U.S.C. 77a et seq.).
(2)(i) If the information contained in the options disclosure
document becomes or will become materially inaccurate or incomplete or
there is or will be an omission of material information necessary to
make the options disclosure document not misleading, the options market
shall amend or supplement its options disclosure document by filing five
copies of an amendment or supplement to such options disclosure document
with the Commission at least 30 days prior to the date definitive copies
are furnished to customers, unless the Commission determines otherwise
having due regard to the adequacy of the information disclosed and the
public interest and protection of investors. Five copies of the
definitive options disclosure document, as amended or supplemented,
shall be filed with the Commission not later than the date the amendment
or supplement, or the amended options disclosure document, is furnished
to customers.
(ii) Notwithstanding paragraph (b)(2)(i) of this section, an options
market may distribute an amendment or supplement to an options
disclosure document prior to such 30 day period if it determines, in
good faith, that such delivery is necessary to ensure timely and
accurate disclosure with respect to one or more of the options classes
covered by the document. Five copies of any amendment or supplement
distributed pursuant to this paragraph shall be filed with the
Commission at the time of distribution. In that instance, if the
Commission determines, having given due regard to the adequacy of the
[[Page 95]]
information disclosed and the public interest and the protection of
investors, it may require refiling of the amendment pursuant to
paragraph (b)(2)(i) of this section.
(c) Information required in an options disclosure document. An
options disclosure document shall contain the following information,
unless otherwise provided by the Commission, with respect to the options
classes covered by the document:
(1) A glossary of terms;
(2) A discussion of the mechanics of exercising the options;
(3) A discussion of the risks of being a holder or writer of the
options;
(4) The identification of the market or markets in which the options
are traded;
(5) A brief reference to the transaction costs, margin requirements
and tax consequences of options trading;
(6) The identification of the issuer of the options;
(7) A general identification of the type of instrument or
instruments underlying the options class or classes covered by the
document;
(8) If the options are not exempt from registration under the
Securities Act of 1933 (15 U.S.C. 77a et seq.), the registration of the
options on form S-20 (17 CFR 239.20) and the availability of the
prospectus and the information in part II of the registration statement;
and
(9) Such other information as the Commission may specify.
(d) Broker-dealer obligations. (1) No broker or dealer shall accept
an order from a customer to purchase or sell an option contract relating
to an options class that is the subject of a definitive options
disclosure document, or approve the customer's account for the trading
of such option, unless the broker or dealer furnishes or has furnished
to the customer a copy of the definitive options disclosure document.
(2) If a definitive options disclosure document relating to an
options class is amended or supplemented, each broker and dealer shall
promptly send a copy of the definitive amendment or supplement or a copy
of the definitive options disclosure document as amended to each
customer whose account is approved for trading the options class or
classes to which the amendment or supplement relates.
[47 FR 41956, Sept. 23, 1982, as amended at 51 FR 14982, Apr. 22, 1986;
65 FR 64139, Oct. 26, 2000; 68 FR 192, Jan. 2, 2003]
Manipulative and Deceptive Devices and Contrivances
Sec. 240.9j-1 Prohibition against fraud, manipulation, or deception
in connection with security-based swaps.
(a) It shall be unlawful for any person, directly or indirectly, to
effect any transaction in, or attempt to effect any transaction in, any
security-based swap, or to purchase or sell, or induce or attempt to
induce the purchase or sale of, any security-based swap (including but
not limited to, in whole or in part, the execution, termination (prior
to its scheduled maturity date), assignment, exchange, or similar
transfer or conveyance of, or extinguishing of any rights or obligations
under, a security based-swap, as the context may require), in connection
with which such person:
(1) Employs or attempts to employ any device, scheme, or artifice to
defraud or manipulate;
(2) Makes or attempts to make 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 were
made, not misleading;
(3) Obtains money or property by means of any untrue statement of a
material fact or any omission to state a material fact necessary in
order to make the statements made, in light of the circumstances under
which they were made, not misleading;
(4) Engages in any act, practice, or course of business which
operates or would operate as a fraud or deceit upon any person;
(5) Attempts to obtain money or property by means of any untrue
statement of a material fact or any omission to state a material fact
necessary in order to make the statements made, in light of the
circumstances under which they were made, not misleading,
[[Page 96]]
or attempts to engage in any act, practice, or course of business which
operates or would operate as a fraud or deceit upon any person; or
(6) Manipulates or attempts to manipulate the price or valuation of
any security-based swap, or any payment or delivery related thereto.
(b) Wherever communicating, or purchasing or selling a security
(other than a security-based swap) while in possession of material
nonpublic information would violate, or result in liability to any
purchaser or seller of the security under, either the Act or the
Securities Act of 1933, or any rule or regulation thereunder, such
conduct in connection with a purchase or sale of a security-based swap
with respect to such security or with respect to a group or index of
securities including such security shall also violate, and result in
comparable liability to any purchaser or seller of that security under,
such provision, rule, or regulation.
(c) Wherever taking any of the actions set forth in paragraph (a) of
this section involving a security-based swap would violate, or result in
liability under, Section 9(j) of the Act or this section, such conduct,
when taken by a counterparty to such security-based swap (or any
affiliate of, or a person acting in concert with, such security-based
swap counterparty in furtherance of such prohibited activity), in
connection with a purchase or sale of a security, loan, or group or
index of securities on which such security-based swap is based, shall
also violate, and shall be deemed a violation of, section 9(j) of the
Act or paragraph (a) of this section.
(d) For purposes of this section, the terms ``purchase'' and
``sale'' shall have the same meanings as set forth in Sections 3(a)(13)
(15 U.S.C. 78c(a)(13)) and 3(a)(14) (15 U.S.C. 78c(a)(14)) of the Act.
(e) A person shall not be liable under paragraphs (a)(1) through
(a)(5) of this section solely for being aware of material nonpublic
information while taking the following actions:
(1) Actions taken by a person in accordance with binding contractual
rights and obligations under a security-based swap (as reflected in the
written documentation governing such security-based swap or any
amendment thereto) so long as the person demonstrates that:
(i) The security-based swap was entered into, or the amendment was
made, before the person became aware of such material nonpublic
information, and
(ii) The security-based swap was entered into in good faith and not
as part of a plan or scheme to evade the prohibitions of this section.
(2) Actions taken by a person other than a natural person if the
person demonstrates that:
(i) The individual making the investment decision on behalf of the
person taking the action was not aware of the material nonpublic
information, and
(ii) The person had implemented reasonable policies and procedures,
taking into consideration the nature of the person's business, to ensure
that individuals making investment decisions would not be in violation
of paragraphs (a)(1) through (a)(5) of this section. These policies and
procedures may include those that restrict effecting a transaction in,
or purchasing or selling, any security, including any security-based
swap, as to which the person has material nonpublic information, or
those that prevent such individuals from becoming aware of such
information.
[88 FR 42584, June 30, 2023]
Sec. Sec. 240.10a-1--240.10a-2 [Reserved]
Sec. 240.10b-1 Prohibition of use of manipulative or deceptive devices
or contrivances with respect to certain securities exempted from
registration.
The term manipulative or deceptive device or contrivance, as used in
section 10(b) (48 Stat. 891; 15 U.S.C. 78j(b)), is hereby defined to
include any act or omission to act with respect to any security exempted
from the operation of section 12(a) (48 Stat. 892; 15 U.S.C. 78l(a))
pursuant to any section in this part which specifically provides that
this section shall be applicable to such security if such act or
omission to act would have been unlawful under section 9(a) (48 Stat.
889; 15 U.S.C. 78i(a)), or any rule or regulation heretofore or
hereafter prescribed thereunder, if
[[Page 97]]
done or omitted to be done with respect to a security registered on a
national securities exchange, and the use of any means or
instrumentality of interstate commerce or of the mails or of any
facility of any national securities exchange to use or employ any such
device or contrivance in connection with the purchase or sale of any
such security is hereby prohibited.
(Secs. 10, 12, 48 Stat. 891, 892; 15 U.S.C. 78j, 78l)
Cross References: For applicability of this section, see Sec. Sec.
240.12a-4 and 240.12a-5. For regulations relating to employment of
manipulative and deceptive devices, see Sec. Sec. 240.10b-3 and
240.10b-5.
[13 FR 8183, Dec. 22, 1948]
Sec. 240.10b-2 [Reserved]
Sec. 240.10b-3 Employment of manipulative and deceptive devices by
brokers or dealers.
(a) It shall be unlawful for any broker or dealer, directly or
indirectly, by the use of any means or instrumentality of interstate
commerce, or of the mails, or of any facility of any national securities
exchange, to use or employ, in connection with the purchase or sale of
any security otherwise than on a national securities exchange, any act,
practice, or course of business defined by the Commission to be included
within the term ``manipulative, deceptive, or other fraudulent device or
contrivance'', as such term is used in section 15(c)(1) of the act.
(b) It shall be unlawful for any municipal securities dealer
directly or indirectly, by the use of any means or instrumentality of
interstate commerce, or of the mails, or of any facility of any national
securities exchange, to use or employ, in connection with the purchase
or sale of any municipal security, any act, practice, or course of
business defined by the Commission to be included within the term
``manipulative, deceptive, or other fraudulent device or contrivance,''
as such term is used in section 15(c)(1) of the act.
(Secs. 10, 12, 48 Stat. 891, 892, as amended; 15 U.S.C. 78j, 78l)
Cross References: See also Sec. 240.10b-5. For regulation relating
to prohibition of manipulative or deceptive devices, see Sec. 240.10b-
1. For the term ``manipulative, deceptive, or other fraudulent device or
contrivance'', as used in section 15(c)(1) of the act, see Sec. Sec.
240.15c1-2 to 240.15c1-9.
[13 FR 8183, Dec. 22, 1948, as amended at 19 FR 8017, Dec. 4, 1954; 41
FR 22824, June 7, 1976]
Sec. 240.10b-4 [Reserved]
Sec. 240.10b-5 Employment of manipulative and deceptive devices.
It shall be unlawful for any person, directly or indirectly, by the
use of any means or instrumentality of interstate commerce, or of the
mails or of any facility of any national securities exchange,
(a) To employ any device, scheme, or artifice to defraud,
(b) To make any untrue statement of a material fact or to omit to
state a material fact necessary in order to make the statements made, in
the light of the circumstances under which they were made, not
misleading, or
(c) To engage in any act, practice, or course of business which
operates or would operate as a fraud or deceit upon any person,
in connection with the purchase or sale of any security.
(Sec. 10; 48 Stat. 891; 15 U.S.C. 78j)
[13 FR 8183, Dec. 22, 1948, as amended at 16 FR 7928, Aug. 11, 1951]
Sec. 240.10b5-1 Trading ``on the basis of'' material nonpublic
information in insider trading cases.
(a) Manipulative or deceptive devices. The ``manipulative or
deceptive device[s] or contrivance[s]'' prohibited by Section 10(b) of
the Act (15 U.S.C. 78j) and Sec. 240.10b-5 (Rule 10b-5) thereunder
include, among other things, the purchase or sale of a security of any
issuer, on the basis of material nonpublic information about that
security or issuer, in breach of a duty of trust or confidence that is
owed directly, indirectly, or derivatively, to the issuer of that
security or the shareholders of that issuer, or to any other person who
is the source of the material nonpublic information.
(b) Awareness of material nonpublic information. Subject to the
affirmative defenses in paragraph (c) of this section, a purchase or
sale of a security of an issuer is on the basis of material
[[Page 98]]
nonpublic information for purposes of Section 10(b) and Rule 10b-5 if
the person making the purchase or sale was aware of the material
nonpublic information when the person made the purchase or sale. The law
of insider trading is otherwise defined by judicial opinions construing
Rule 10b-5, and Rule 10b5-1 does not modify the scope of insider trading
law in any other respect.
(c) Affirmative defenses. (1)(i) Subject to paragraph (1)(ii) of
this section, a person's purchase or sale is not on the basis of
material nonpublic information if the person making the purchase or sale
demonstrates that:
(A) Before becoming aware of the information, the person had:
(1) Entered into a binding contract to purchase or sell the
security,
(2) Instructed another person to purchase or sell the security for
the instructing person's account, or
(3) Adopted a written plan for trading securities;
(B) The contract, instruction, or plan described in paragraph
(c)(1)(i)(A) of this section:
(1) Specified the amount of securities to be purchased or sold and
the price at which and the date on which the securities were to be
purchased or sold;
(2) Included a written formula or algorithm, or computer program,
for determining the amount of securities to be purchased or sold and the
price at which and the date on which the securities were to be purchased
or sold; or
(3) Did not permit the person to exercise any subsequent influence
over how, when, or whether to effect purchases or sales; provided, in
addition, that any other person who, pursuant to the contract,
instruction, or plan, did exercise such influence must not have been
aware of the material nonpublic information when doing so; and
(C) The purchase or sale that occurred was pursuant to the contract,
instruction, or plan. A purchase or sale is not ``pursuant to a
contract, instruction, or plan'' if, among other things, the person who
entered into the contract, instruction, or plan altered or deviated from
the contract, instruction, or plan to purchase or sell securities
(whether by changing the amount, price, or timing of the purchase or
sale), or entered into or altered a corresponding or hedging transaction
or position with respect to those securities.
(ii) Paragraph (c)(1)(i) of this section is applicable only when:
(A) The contract, instruction, or plan to purchase or sell
securities was given or entered into in good faith and not as part of a
plan or scheme to evade the prohibitions of this section, and the person
who entered into the contract, instruction, or plan has acted in good
faith with respect to the contract, instruction or plan;
(B) If the person who entered into the contract, instruction, or
plan is:
(1) A director or officer (as defined in Sec. 240.16a-1(f) (Rule
16a-1(f)) of the issuer, no purchases or sales occur until expiration of
a cooling-off period consisting of the later of:
(i) Ninety days after the adoption of the contract, instruction, or
plan or
(ii) Two business days following the disclosure of the issuer's
financial results in a Form 10-Q (Sec. 249.308a of this chapter) or
Form 10-K (Sec. 249.310 of this chapter) for the completed fiscal
quarter in which the plan was adopted or, for foreign private issuers,
in a Form 20-F (Sec. 249.220f of this chapter) or Form 6-K (Sec.
249.306 of this chapter) that discloses the issuer's financial results
(but, in any event, this required cooling-off period is subject to a
maximum of 120 days after adoption of the contract, instruction, or
plan); or
(2) Not the issuer and not a director or officer (as defined in
Sec. 240.16a-1(f) (Rule 16a-1(f)) of the issuer, no purchases or sales
occur until the expiration of a cooling-off period that is 30 days after
the adoption of the contract, instruction or plan;
(C) If the person who entered into a plan as described in paragraph
(c)(1)(i)(A)(3) of this section is a director or officer (as defined in
Rule 16a-1(f) (Sec. 240.16a-1(f)) of the issuer of the securities, such
director or officer included a representation in the plan certifying
that, on the date of adoption of the plan:
(1) The individual director or officer is not aware of any material
nonpublic information about the security or issuer; and
[[Page 99]]
(2) The individual director or officer is adopting the plan in good
faith and not as part of a plan or scheme to evade the prohibitions of
this section;
(D) The person (other than the issuer) who entered into the
contract, instruction, or plan has no outstanding (and does not
subsequently enter into any additional) contract, instruction, or plan
that would qualify for the affirmative defense under paragraph (c)(1) of
this section for purchases or sales of the issuer's securities on the
open market; except that:
(1) For purposes of this paragraph (c)(1)(ii)(D), a series of
separate contracts with different broker-dealers or other agents acting
on behalf of the person (other than the issuer) to execute trades
thereunder may be treated as a single ``plan,'' provided that the
individual constituent contracts with each broker-dealer or other agent,
when taken together as a whole, meet all of the applicable conditions of
and remain collectively subject to the provisions of this rule,
including that a modification of any individual contract acts as
modification of the whole contract, instruction of plan, as defined in
paragraph (c)(1)(iv) of this section. The substitution of a broker-
dealer or other agent acting on behalf of the person (other than the
issuer) for another broker-dealer that is executing trades pursuant to a
contract, instruction or plan shall not be a modification of the
contract, instruction, or plan (as defined in paragraph (c)(1)(iv) of
this section) as long as the purchase or sales instructions applicable
to the substitute and substituted broker are identical with respect to
the prices of securities to be purchased or sold, dates of the purchases
or sales to be executed, and amount of securities to be purchased or
sold; and
(2) The person (other than the issuer) may have one later-commencing
contract, instruction, or plan for purchases or sales of any securities
of the issuer on the open market under which trading is not authorized
to begin until after all trades under the earlier-commencing contract,
instruction, or plan are completed or expired without execution;
provided, however, that if the first trade under the later-commencing
contract, instruction, or plan is scheduled during the Effective
Cooling-Off Period, the later-commencing contract, instruction, or plan
may not rely on this paragraph (c)(1)(ii)(D)(2). For purposes of this
paragraph (c)(1)(ii)(D)(2), ``Effective Cooling-Off Period'' means the
cooling-off period that would be applicable under paragraph
(c)(1)(ii)(B) of this section with respect to the later-commencing
contract, instruction, or plan if the date of adoption of the later-
commencing contract, instruction, or plan were deemed to be the date of
termination of the earlier-commencing contract, instruction, or plan;
and
(3) A contract, instruction, or plan providing for an eligible sell-
to-cover transaction shall not be considered an outstanding or
additional contract, instruction, or plan under paragraph (c)(1)(ii)(D)
of this section, and such eligible sell-to-cover transaction shall not
be subject to the limitation under paragraph (c)(1)(ii)(D) of this
section. A contract, instruction, or plan provides for an eligible sell-
to-cover transaction where the contract, instruction, or plan authorizes
an agent to sell only such securities as are necessary to satisfy tax
withholding obligations arising exclusively from the vesting of a
compensatory award, such as restricted stock or stock appreciation
rights, and the insider does not otherwise exercise control over the
timing of such sales; and
(E) With respect to persons (other than the issuer), if the
contract, instruction, or plan does not provide for an eligible sell-to-
cover transaction as described in paragraph (c)(1)(ii)(D)(3) of this
section and is designed to effect the open-market purchase or sale of
the total amount of securities as a single transaction, the person who
entered into the contract, instruction, or plan has not during the prior
12-month period adopted a contract, instruction, or plan that:
(1) was designed to effect the open-market purchase or sale of all
of the securities covered by such prior contract, instruction or plan,
in a single transaction; and
(2) Would otherwise qualify for the affirmative defense under
paragraph (c)(1) of this section.
[[Page 100]]
(iii) This paragraph (c)(1)(iii) defines certain terms as used in
paragraph (c) of this Section.
(A) Amount. ``Amount'' means either a specified number of shares or
other securities or a specified dollar value of securities.
(B) Price. ``Price'' means the market price on a particular date or
a limit price, or a particular dollar price.
(C) Date. ``Date'' means, in the case of a market order, the
specific day of the year on which the order is to be executed (or as
soon thereafter as is practicable under ordinary principles of best
execution). ``Date'' means, in the case of a limit order, a day of the
year on which the limit order is in force.
(iv) Any modification or change to the amount, price, or timing of
the purchase or sale of the securities underlying a contract,
instruction, or written plan as described in paragraph (c)(1)(i)(A) of
this section is a termination of such contract, instruction, or written
plan, and the adoption of a new contract, instruction, or written plan.
A plan modification, such as the substitution or removal of a broker
that is executing trades pursuant to a Rule 10b5-1 arrangement on behalf
of the person, that changes the price or date on which purchases or
sales are to be executed, is a termination of such plan and the adoption
of a new plan.
(2) A person other than a natural person also may demonstrate that a
purchase or sale of securities is not ``on the basis of'' material
nonpublic information if the person demonstrates that:
(i) The individual making the investment decision on behalf of the
person to purchase or sell the securities was not aware of the
information; and
(ii) The person had implemented reasonable policies and procedures,
taking into consideration the nature of the person's business, to ensure
that individuals making investment decisions would not violate the laws
prohibiting trading on the basis of material nonpublic information.
These policies and procedures may include those that restrict any
purchase, sale, and causing any purchase or sale of any security as to
which the person has material nonpublic information, or those that
prevent such individuals from becoming aware of such information.
[65 FR 51737, Aug. 24, 2000, as amended at 87 FR 80429, Dec. 29, 2022]
Sec. 240.10b5-2 Duties of trust or confidence in misappropriation
insider trading cases.
Preliminary Note to Sec. 240.10b5-2: This section provides a non-
exclusive definition of circumstances in which a person has a duty of
trust or confidence for purposes of the ``misappropriation'' theory of
insider trading under Section 10(b) of the Act and Rule 10b-5. The law
of insider trading is otherwise defined by judicial opinions construing
Rule 10b-5, and Rule 10b5-2 does not modify the scope of insider trading
law in any other respect.
(a) Scope of Rule. This section shall apply to any violation of
Section 10(b) of the Act (15 U.S.C. 78j(b)) and Sec. 240.10b-5
thereunder that is based on the purchase or sale of securities on the
basis of, or the communication of, material nonpublic information
misappropriated in breach of a duty of trust or confidence.
(b) Enumerated ``duties of trust or confidence.'' For purposes of
this section, a ``duty of trust or confidence'' exists in the following
circumstances, among others:
(1) Whenever a person agrees to maintain information in confidence;
(2) Whenever the person communicating the material nonpublic
information and the person to whom it is communicated have a history,
pattern, or practice of sharing confidences, such that the recipient of
the information knows or reasonably should know that the person
communicating the material nonpublic information expects that the
recipient will maintain its confidentiality; or
(3) Whenever a person receives or obtains material nonpublic
information from his or her spouse, parent, child, or sibling; provided,
however, that the person receiving or obtaining the information may
demonstrate that no duty of trust or confidence existed with respect to
the information, by establishing that he or she neither knew nor
reasonably should have known that the person who was the source of the
information expected that the person would keep the information
confidential, because of the parties' history, pattern,
[[Page 101]]
or practice of sharing and maintaining confidences, and because there
was no agreement or understanding to maintain the confidentiality of the
information.
[65 FR 51738, Aug. 24, 2000]
Sec. Sec. 240.10b-6--240.10b-8 [Reserved]
Sec. 240.10b-9 Prohibited representations in connection with certain
offerings.
(a) It shall constitute a manipulative or deception device or
contrivance, as used in section 10(b) of the Act, for any person,
directly or indirectly, in connection with the offer or sale of any
security, to make any representation:
(1) To the effect that the security is being offered or sold on an
``all-or-none'' basis, unless the security is part of an offering or
distribution being made on the condition that all or a specified amount
of the consideration paid for such security will be promptly refunded to
the purchaser unless (i) all of the securities being offered are sold at
a specified price within a specified time, and (ii) the total amount due
to the seller is received by him by a specified date; or
(2) To the effect that the security is being offered or sold on any
other basis whereby all or part of the consideration paid for any such
security will be refunded to the purchaser if all or some of the
securities are not sold, unless the security is part of an offering or
distribution being made on the condition that all or a specified part of
the consideration paid for such security will be promptly refunded to
the purchaser unless (i) a specified number of units of the security are
sold at a specified price within a specified time, and (ii) the total
amount due to the seller is received by him by a specified date.
(b) This rule shall not apply to any offer or sale of securities as
to which the seller has a firm commitment from underwriters or others
(subject only to customary conditions precedent, including ``market
outs'') for the purchase of all the securities being offered.
(Sec. 10, 48 Stat. 891, as amended; 15 U.S.C. 78j)
[27 FR 9943, Oct. 10, 1962]
Sec. 240.10b-10 Confirmation of transactions.
Preliminary Note. This section requires broker-dealers to disclose
specified information in writing to customers at or before completion of
a transaction. The requirements under this section that particular
information be disclosed is not determinative of a broker-dealer's
obligation under the general antifraud provisions of the federal
securities laws to disclose additional information to a customer at the
time of the customer's investment decision.
(a) Disclosure requirement. It shall be unlawful for any broker or
dealer to effect for or with an account of a customer any transaction
in, or to induce the purchase or sale by such customer of, any security
(other than U.S. Savings Bonds or municipal securities) unless such
broker or dealer, at or before completion of such transaction, gives or
sends to such customer written notification disclosing:
(1) The date and time of the transaction (or the fact that the time
of the transaction will be furnished upon written request to such
customer) and the identity, price, and number of shares or units (or
principal amount) of such security purchased or sold by such customer;
and
(2) Whether the broker or dealer is acting as agent for such
customer, as agent for some other person, as agent for both such
customer and some other person, or as principal for its own account; and
if the broker or dealer is acting as principal, whether it is a market
maker in the security (other than by reason of acting as a block
positioner); and
(i) If the broker or dealer is acting as agent for such customer,
for some other person, or for both such customer and some other person:
(A) The name of the person from whom the security was purchased, or
to whom it was sold, for such customer or the fact that the information
will be furnished upon written request of such customer; and
(B) The amount of any remuneration received or to be received by the
broker from such customer in connection with the transaction unless
remuneration paid by such customer is determined pursuant to written
agreement with such customer, otherwise than on a transaction basis; and
[[Page 102]]
(C) For a transaction in any NMS stock as defined in Sec. 242.600
of this chapter or a security authorized for quotation on an automated
interdealer quotation system that has the characteristics set forth in
section 17B of the Act (15 U.S.C. 78q-2), a statement whether payment
for order flow is received by the broker or dealer for transactions in
such securities and the fact that the source and nature of the
compensation received in connection with the particular transaction will
be furnished upon written request of the customer; provided, however,
that brokers or dealers that do not receive payment for order flow in
connection with any transaction have no disclosure obligations under
this paragraph; and
(D) The source and amount of any other remuneration received or to
be received by the broker in connection with the transaction: Provided,
however, that if, in the case of a purchase, the broker was not
participating in a distribution, or in the case of a sale, was not
participating in a tender offer, the written notification may state
whether any other remuneration has been or will be received and the fact
that the source and amount of such other remuneration will be furnished
upon written request of such customer; or
(ii) If the broker or dealer is acting as principal for its own
account:
(A) In the case where such broker or dealer is not a market maker in
an equity security and, if, after having received an order to buy from a
customer, the broker or dealer purchased the equity security from
another person to offset a contemporaneous sale to such customer or,
after having received an order to sell from a customer, the broker or
dealer sold the security to another person to offset a contemporaneous
purchase from such customer, the difference between the price to the
customer and the dealer's contemporaneous purchase (for customer
purchases) or sale price (for customer sales); or
(B) In the case of any other transaction in an NMS stock as defined
by Sec. 242.600 of this chapter, or an equity security that is traded
on a national securities exchange and that is subject to last sale
reporting, the reported trade price, the price to the customer in the
transaction, and the difference, if any, between the reported trade
price and the price to the customer.
(3) Whether any odd-lot differential or equivalent fee has been paid
by such customer in connection with the execution of an order for an
odd-lot number of shares or units (or principal amount) of a security
and the fact that the amount of any such differential or fee will be
furnished upon oral or written request: Provided, however, that such
disclosure need not be made if the differential or fee is included in
the remuneration disclosure, or exempted from disclosure, pursuant to
paragraph (a)(2)(i)(B) of this section; and
(4) In the case of any transaction in a debt security subject to
redemption before maturity, a statement to the effect that such debt
security may be redeemed in whole or in part before maturity, that such
a redemption could affect the yield represented and the fact that
additional information is available upon request; and
(5) In the case of a transaction in a debt security effected
exclusively on the basis of a dollar price:
(i) The dollar price at which the transaction was effected, and
(ii) The yield to maturity calculated from the dollar price:
Provided, however, that this paragraph (a)(5)(ii) shall not apply to a
transaction in a debt security that either:
(A) Has a maturity date that may be extended by the issuer thereof,
with a variable interest payable thereon; or
(B) Is an asset-backed security, that represents an interest in or
is secured by a pool of receivables or other financial assets that are
subject continuously to prepayment; and
(6) In the case of a transaction in a debt security effected on the
basis of yield:
(i) The yield at which the transaction was effected, including the
percentage amount and its characterization (e.g., current yield, yield
to maturity, or yield to call) and if effected at yield to call, the
type of call, the call date and call price; and
(ii) The dollar price calculated from the yield at which the
transaction was effected; and
[[Page 103]]
(iii) If effected on a basis other than yield to maturity and the
yield to maturity is lower than the represented yield, the yield to
maturity as well as the represented yield; Provided, however, that this
paragraph (a)(6)(iii) shall not apply to a transaction in a debt
security that either:
(A) Has a maturity date that may be extended by the issuer thereof,
with a variable interest rate payable thereon; or
(B) Is an asset-backed security, that represents an interest in or
is secured by a pool of receivables or other financial assets that are
subject continuously to prepayment; and
(7) In the case of a transaction in a debt security that is an
asset-backed security, which represents an interest in or is secured by
a pool of receivables or other financial assets that are subject
continuously to prepayment, a statement indicating that the actual yield
of such asset-backed security may vary according to the rate at which
the underlying receivables or other financial assets are prepaid and a
statement of the fact that information concerning the factors that
affect yield (including at a minimum estimated yield, weighted average
life, and the prepayment assumptions underlying yield) will be furnished
upon written request of such customer; and
(8) That the broker or dealer is not a member of the Securities
Investor Protection Corporation (SIPC), or that the broker or dealer
clearing or carrying the customer account is not a member of SIPC, if
such is the case: Provided, however, that this paragraph (a)(9) shall
not apply in the case of a transaction in shares of a registered open-
end investment company or unit investment trust if:
(i) The customer sends funds or securities directly to, or receives
funds or securities directly from, the registered open-end investment
company or unit investment trust, its transfer agent, its custodian, or
other designated agent, and such person is not an associated person of
the broker or dealer required by paragraph (a) of this section to send
written notification to the customer; and
(ii) The written notification required by paragraph (a) of this
section is sent on behalf of the broker or dealer to the customer by a
person described in paragraph (a)(9)(i) of this section.
(b) Alternative periodic reporting. A broker or dealer may effect
transactions for or with the account of a customer without giving or
sending to such customer the written notification described in paragraph
(a) of this section if:
(1) Such transactions are effected pursuant to a periodic plan or an
investment company plan, or effected in shares of any open-end
management investment company registered under the Investment Company
Act of 1940 that holds itself out as a money market fund and attempts to
maintain a stable net asset value per share: Provided, however, that no
sales load is deducted upon the purchase or redemption of shares in the
money market fund; and
(2) Such broker or dealer gives or sends to such customer within
five business days after the end of each quarterly period, for
transactions involving investment company and periodic plans, and after
the end of each monthly period, for other transactions described in
paragraph (b)(1) of this section, a written statement disclosing each
purchase or redemption, effected for or with, and each dividend or
distribution credited to or reinvested for, the account of such customer
during the month; the date of such transaction; the identity, number,
and price of any securities purchased or redeemed by such customer in
each such transaction; the total number of shares of such securities in
such customer's account; any remuneration received or to be received by
the broker or dealer in connection therewith; and that any other
information required by paragraph (a) of this section will be furnished
upon written request: Provided, however, that the written statement may
be delivered to some other person designated by the customer for
distribution to the customer; and
(3) Such customer is provided with prior notification in writing
disclosing the intention to send the written information referred to in
paragraph (b)(1) of this section in lieu of an immediate confirmation.
[[Page 104]]
(c) A broker or dealer shall give or send to a customer information
requested pursuant to this rule within 5 business days of receipt of the
request: Provided, however, That in the case of information pertaining
to a transaction effected more than 30 days prior to receipt of the
request, the information shall be given or sent to the customer within
15 business days.
(d) Definitions. For the purposes of this section:
(1) Customer shall not include a broker or dealer;
(2) Completion of the transaction shall have the meaning provided in
rule 15c1-1 under the Act;
(3) Time of the transaction means the time of execution, to the
extent feasible, of the customer's order;
(4) Debt security as used in paragraphs (a)(3), (4), and (5) only,
means any security, such as a bond, debenture, note, or any other
similar instrument which evidences a liability of the issuer (including
any such security that is convertible into stock or a similar security)
and fractional or participation interests in one or more of any of the
foregoing: Provided, however, That securities issued by an investment
company registered under the Investment Company Act of 1940 shall not be
included in this definition;
(5) Periodic plan means any written authorization for a broker
acting as agent to purchase or sell for a customer a specific security
or securities (other than securities issued by an open end investment
company or unit investment trust registered under the Investment Company
Act of 1940), in specific amounts (calculated in security units or
dollars), at specific time intervals and setting forth the commissions
or charges to be paid by the customer in connection therewith (or the
manner of calculating them); and
(6) Investment company plan means any plan under which securities
issued by an open-end investment company or unit investment trust
registered under the Investment Company Act of 1940 are purchased by a
customer (the payments being made directly to, or made payable to, the
registered investment company, or the principal underwriter, custodian,
trustee, or other designated agent of the registered investment
company), or sold by a customer pursuant to:
(i) An individual retirement or individual pension plan qualified
under the Internal Revenue Code;
(ii) A contractual or systematic agreement under which the customer
purchases at the applicable public offering price, or redeems at the
applicable redemption price, such securities in specified amounts
(calculated in security units or dollars) at specified time intervals
and setting forth the commissions or charges to be paid by such customer
in connection therewith (or the manner of calculating them; or
(iii) Any other arrangement involving a group of two or more
customers and contemplating periodic purchases of such securities by
each customer through a person designated by the group: Provided, That
such arrangement requires the registered investment company or its
agent--
(A) To give or send to the designated person, at or before the
completion of the transaction for the purchase of such securities, a
written notification of the receipt of the total amount paid by the
group;
(B) To send to anyone in the group who was a customer in the prior
quarter and on whose behalf payment has not been received in the current
quarter a quarterly written statement reflecting that a payment was not
received on his behalf; and
(C) To advise each customer in the group if a payment is not
received from the designated person on behalf of the group within 10
days of a date certain specified in the arrangement for delivery of that
payment by the designated person and thereafter to send to each such
customer the written notification described in paragraph (a) of this
section for the next three succeeding payments.
(7) NMS stock shall have the meaning provided in Sec. 242.600 of
this chapter.
(8) Payment for order flow shall mean any monetary payment, service,
property, or other benefit that results in remuneration, compensation,
or consideration to a broker or dealer from any broker or dealer,
national securities exchange, registered securities association, or
exchange member in return for the routing of customer orders by such
[[Page 105]]
broker or dealer to any broker or dealer, national securities exchange,
registered securities association, or exchange member for execution,
including but not limited to: research, clearance, custody, products or
services; reciprocal agreements for the provision of order flow;
adjustment of a broker or dealer's unfavorable trading errors; offers to
participate as underwriter in public offerings; stock loans or shared
interest accrued thereon; discounts, rebates, or any other reductions of
or credits against any fee to, or expense or other financial obligation
of, the broker or dealer routing a customer order that exceeds that fee,
expense or financial obligation.
(9) Asset-backed security means a security that is primarily
serviced by the cashflows of a discrete pool of receivables or other
financial assets, either fixed or revolving, that by their terms convert
into cash within a finite time period plus any rights or other assets
designed to assure the servicing or timely distribution of proceeds to
the security holders.
(e) Security futures products. The provisions of paragraphs (a) and
(b) of this section shall not apply to a broker or dealer registered
pursuant to section 15(b)(11)(A) of the Act (15 U.S.C. 78o(b)(11)(A)) to
the extent that it effects transactions for customers in security
futures products in a futures account (as that term is defined in Sec.
240.15c3-3(a)(15)) and a broker or dealer registered pursuant to section
15(b)(1) of the Act (15 U.S.C. 78o(b)(1)) that is also a futures
commission merchant registered pursuant to section 4f(a)(1) of the
Commodity Exchange Act (7 U.S.C. 6f(a)(1)), to the extent that it
effects transactions for customers in security futures products in a
futures account (as that term is defined in Sec. 240.15c3-3(a)(15)),
Provided that:
(1) The broker or dealer that effects any transaction for a customer
in security futures products in a futures account gives or sends to the
customer no later than the next business day after execution of any
futures securities product transaction, written notification disclosing:
(i) The date the transaction was executed, the identity of the
single security or narrow-based security index underlying the contract
for the security futures product, the number of contracts of such
security futures product purchased or sold, the price, and the delivery
month;
(ii) The source and amount of any remuneration received or to be
received by the broker or dealer in connection with the transaction,
including, but not limited to, markups, commissions, costs, fees, and
other charges incurred in connection with the transaction, provided,
however, that if no remuneration is to be paid for an initiating
transaction until the occurrence of the corresponding liquidating
transaction, that the broker or dealer may disclose the amount of
remuneration only on the confirmation for the liquidating transaction;
(iii) The fact that information about the time of the execution of
the transaction, the identity of the other party to the contract, and
whether the broker or dealer is acting as agent for such customer, as
agent for some other person, as agent for both such customer and some
other person, or as principal for its own account, and if the broker or
dealer is acting as principal, whether it is engaging in a block
transaction or an exchange of security futures products for physical
securities, will be available upon written request of the customer; and
(iv) Whether payment for order flow is received by the broker or
dealer for such transactions, the amount of this payment and the fact
that the source and nature of the compensation received in connection
with the particular transaction will be furnished upon written request
of the customer; provided, however, that brokers or dealers that do not
receive payment for order flow have no disclosure obligation under this
paragraph.
(2) Transitional provision. (i) Broker-dealers are not required to
comply with paragraph (e)(1)(iii) of this section until June 1, 2003,
Provided that, if, not withstanding the absence of the disclosure
required in that paragraph, the broker-dealer receives a written request
from a customer for the information described in paragraph (e)(1)(iii)
of this section, the broker-dealer must
[[Page 106]]
make the information available to the customer; and
(ii) Broker-dealers are not required to comply with paragraph
(e)(1)(iv) of this section until June 1, 2003.
(f) The Commission may exempt any broker or dealer from the
requirements of paragraphs (a) and (b) of this section with regard to
specific transactions of specific classes of transactions for which the
broker or dealer will provide alternative procedures to effect the
purposes of this section; any such exemption may be granted subject to
compliance with such alternative procedures and upon such other stated
terms and conditions as the Commission may impose.
[43 FR 47503, Oct. 16, 1978, as amended at 48 FR 17585, Apr. 25, 1983;
50 FR 37654, Sept. 17, 1985; 53 FR 40721, Oct. 18, 1988; 59 FR 55012,
Nov. 2, 1994; 59 FR 59620, Nov. 17, 1994; 59 FR 60555, Nov. 25, 1994; 67
FR 58312, Sept. 13, 2002; 70 FR 37618, June 29, 2005; 79 FR 1549, Jan.
8, 2014]
Sec. 240.10b-13 [Reserved]
Sec. 240.10b-16 Disclosure of credit terms in margin transactions.
(a) It shall be unlawful for any broker or dealer to extend credit,
directly or indirectly, to any customer in connection with any
securities transaction unless such broker or dealer has established
procedures to assure that each customer:
(1) Is given or sent at the time of opening the account, a written
statement or statements disclosing (i) the conditions under which an
interest charge will be imposed; (ii) the annual rate or rates of
interest that can be imposed; (iii) the method of computing interest;
(iv) if rates of interest are subject to change without prior notice,
the specific conditions under which they can be changed; (v) the method
of determining the debit balance or balances on which interest is to be
charged and whether credit is to be given for credit balances in cash
accounts; (vi) what other charges resulting from the extension of
credit, if any, will be made and under what conditions; and (vii) the
nature of any interest or lien retained by the broker or dealer in the
security or other property held as collateral and the conditions under
which additional collateral can be required: Provided, however, That the
requirements of this subparagraph will be met in any case where the
account is opened by telephone if the information required to be
disclosed is orally communicated to the customer at that time and the
required written statement or statements are sent to the customer
immediately thereafter: And provided, further, That in the case of
customers to whom credit is already being extended on the effective date
of this section, the written statement or statements required hereunder
must be given or sent to said customers within 90 days after the
effective date of this section; and
(2) Is given or sent a written statement or statements, at least
quarterly, for each account in which credit was extended, disclosing (i)
the balance at the beginning of the period; the date, amount and a brief
description of each debit and credit entered during such period; the
closing balance; and, if interest is charged for a period different from
the period covered by the statement, the balance as of the last day of
the interest period; (ii) the total interest charge for the period
during which interest is charged (or, if interest is charged separately
for separate accounts, the total interest charge for each such account),
itemized to show the dates on which the interest period began and ended;
the annual rate or rates of interest charged and the interest charge for
each such different annual rate of interest; and either each different
debit balance on which an interest calculation was based or the average
debit balance for the interest period, except that if an average debit
balance is used, a separate average debit balance must be disclosed for
each interest rate applied; and (iii) all other charges resulting from
the extension of credit in that account: Provided, however, That if the
interest charge disclosed on a statement is for a period different from
the period covered by the statement, there must be printed on the
statement appropriate language to the effect that it should be retained
for use in conjunction with the next statement containing the remainder
of the required information: And provided further, That in the case of
``equity funding programs'' registered under
[[Page 107]]
the Securities Act of 1933, the requirements of this paragraph will be
met if the broker or dealer furnishes to the customer, within 1 month
after each extension of credit, a written statement or statements
containing the information required to be disclosed under this
paragraph.
(b) It shall be unlawful for any broker or dealer to make any
changes in the terms and conditions under which credit charges will be
made (as described in the initial statement made under paragraph (a) of
this section), unless the customer shall have been given not less than
thirty (30) days written notice of such changes, except that no such
prior notice shall be necessary where such changes are required by law:
Provided, however, That if any change for which prior notice would
otherwise be required under this paragraph results in a lower interest
charge to the customer than would have been imposed before the change,
notice of such change may be given within a reasonable time after the
effective date of the change.
(15 U.S.C. 78j)
[34 FR 19718, Dec. 16, 1969]
Sec. 240.10b-17 Untimely announcements of record dates.
(a) It shall constitute a ``manipulative or deceptive device or
contrivance'' as used in section 10(b) of the Act for any issuer of a
class of securities publicly traded by the use of any means or
instrumentality of interstate commerce or of the mails or of any
facility of any national securities exchange to fail to give notice in
accordance with paragraph (b) of this section of the following actions
relating to such class of securities:
(1) A dividend or other distribution in cash or in kind, except an
ordinary interest payment on a debt security, but including a dividend
or distribution of any security of the same or another issuer;
(2) A stock split or reverse split; or
(3) A rights or other subscription offering.
(b) Notice shall be deemed to have been given in accordance with
this section only if:
(1) Given to the National Association of Securities Dealers, Inc.,
no later than 10 days prior to the record date involved or, in case of a
rights subscription or other offering if such 10 days advance notice is
not practical, on or before the record date and in no event later than
the effective date of the registration statement to which the offering
relates, and such notice includes:
(i) Title of the security to which the declaration relates;
(ii) Date of declaration;
(iii) Date of record for determining holders entitled to receive the
dividend or other distribution or to participate in the stock or reverse
split;
(iv) Date of payment or distribution or, in the case of a stock or
reverse split or rights or other subscription offering, the date of
delivery;
(v) For a dividend or other distribution including a stock or
reverse split or rights or other subscription offering:
(a) In cash, the amount of cash to be paid or distributed per share,
except if exact per share cash distributions cannot be given because of
existing conversion rights which may be exercised during the notice
period and which may affect the per share cash distribution, then a
reasonable approximation of the per share distribution may be provided
so long as the actual per share distribution is subsequently provided on
the record date,
(b) In the same security, the amount of the security outstanding
immediately prior to and immediately following the dividend or
distribution and the rate of the dividend or distribution,
(c) In any other security of the same issuer, the amount to be paid
or distributed and the rate of the dividend or distribution,
(d) In any security of another issuer, the name of the issuer and
title of that security, the amount to be paid or distributed, and the
rate of the dividend or distribution and if that security is a right or
a warrant, the subscription price,
(e) In any other property (including securities not covered under
paragraphs (b)(1)(v) (b) through (d) of this section) the identity of
the property and its value and basis for assigning that value;
[[Page 108]]
(vi) Method of settlement of fractional interests;
(vii) Details of any condition which must be satisfied or Government
approval which must be secured to enable payment of distribution; and in
(viii) The case of stock or reverse split in addition to the
aforementioned information;
(a) The name and address of the transfer or exchange agent; or
(2) The Commission, upon written request or upon its own motion,
exempts the issuer from compliance with paragraph (b)(1) of this section
either unconditionally or on specified terms or conditions, as not
constituting a manipulative or deceptive device or contrivance
comprehended within the purpose of this section; or
(3) Given in accordance with procedures of the national securities
exchange or exchanges upon which a security of such issuer is registered
pursuant to section 12 of the Act which contain requirements
substantially comparable to those set forth in paragraph (b)(1) of this
section.
(c) The provisions of this rule shall not apply, however, to
redeemable securities issued by open-end investment companies and unit
investment trusts registered with the Commission under the Investment
Company Act of 1940.
(Secs. 10(b), 23(a), 48 Stat. 891, as amended, 49 Stat. 1379, 15 U.S.C.
78j)
[36 FR 11514, June 15, 1971, as amended at 37 FR 4330, Mar. 2, 1972]
Sec. 240.10b-18 Purchases of certain equity securities by the issuer
and others.
Preliminary Notes to Sec. 240.10b-18
1. Section 240.10b-18 provides an issuer (and its affiliated
purchasers) with a ``safe harbor'' from liability for manipulation under
sections 9(a)(2) of the Act and Sec. 240.10b-5 under the Act solely by
reason of the manner, timing, price, and volume of their repurchases
when they repurchase the issuer's common stock in the market in
accordance with the section's manner, timing, price, and volume
conditions. As a safe harbor, compliance with Sec. 240.10b-18 is
voluntary. To come within the safe harbor, however, an issuer's
repurchases must satisfy (on a daily basis) each of the section's four
conditions. Failure to meet any one of the four conditions will remove
all of the issuer's repurchases from the safe harbor for that day. The
safe harbor, moreover, is not available for repurchases that, although
made in technical compliance with the section, are part of a plan or
scheme to evade the federal securities laws.
2. Regardless of whether the repurchases are effected in accordance
with Sec. 240.10b-18, reporting issuers must report their repurchasing
activity as required by Item 703 of Regulations S-K and S-B (17 CFR
229.703 and 228.703) and Item 15(e) of Form 20-F (17 CFR 249.220f)
(regarding foreign private issuers), and closed-end management
investment companies that are registered under the Investment Company
Act of 1940 must report their repurchasing activity as required by Item
8 of Form N-CSR (17 CFR 249.331; 17 CFR 274.128).
(a) Definitions. Unless otherwise provided, all terms used in this
section shall have the same meaning as in the Act. In addition, the
following definitions shall apply:
(1) ADTV means the average daily trading volume reported for the
security during the four calendar weeks preceding the week in which the
Rule 10b-18 purchase is to be effected.
(2) Affiliate means any person that directly or indirectly controls,
is controlled by, or is under common control with, the issuer.
(3) Affiliated purchaser means:
(i) A person acting, directly or indirectly, in concert with the
issuer for the purpose of acquiring the issuer's securities; or
(ii) An affiliate who, directly or indirectly, controls the issuer's
purchases of such securities, whose purchases are controlled by the
issuer, or whose purchases are under common control with those of the
issuer; Provided, however, that ``affiliated purchaser'' shall not
include a broker, dealer, or other person solely by reason of such
broker, dealer, or other person effecting Rule 10b-18 purchases on
behalf of the issuer or for its account, and shall not include an
officer or director of the issuer solely by reason of that officer or
director's participation in the decision to authorize Rule 10b-18
purchases by or on behalf of the issuer.
(4) Agent independent of the issuer has the meaning contained in
Sec. 242.100 of this chapter.
(5) Block means a quantity of stock that either:
(i) Has a purchase price of $200,000 or more; or
(ii) Is at least 5,000 shares and has a purchase price of at least
$50,000; or
[[Page 109]]
(iii) Is at least 20 round lots of the security and totals 150
percent or more of the trading volume for that security or, in the event
that trading volume data are unavailable, is at least 20 round lots of
the security and totals at least one-tenth of one percent (.001) of the
outstanding shares of the security, exclusive of any shares owned by any
affiliate; Provided, however, That a block under paragraph (a)(5)(i),
(ii), and (iii) shall not include any amount a broker or dealer, acting
as principal, has accumulated for the purpose of sale or resale to the
issuer or to any affiliated purchaser of the issuer if the issuer or
such affiliated purchaser knows or has reason to know that such amount
was accumulated for such purpose, nor shall it include any amount that a
broker or dealer has sold short to the issuer or to any affiliated
purchaser of the issuer if the issuer or such affiliated purchaser knows
or has reason to know that the sale was a short sale.
(6) Consolidated system means a consolidated transaction or
quotation reporting system that collects and publicly disseminates on a
current and continuous basis transaction or quotation information in
common equity securities pursuant to an effective transaction reporting
plan or an effective national market system plan (as those terms are
defined in Sec. 242.600 of this chapter).
(7) Market-wide trading suspension means a market-wide trading halt
of 30 minutes or more that is:
(i) Imposed pursuant to the rules of a national securities exchange
or a national securities association in response to a market-wide
decline during a single trading session; or
(ii) Declared by the Commission pursuant to its authority under
section 12(k) of the Act (15 U.S.C. 78l (k)).
(8) Plan has the meaning contained in Sec. 242.100 of this chapter.
(9) Principal market for a security means the single securities
market with the largest reported trading volume for the security during
the six full calendar months preceding the week in which the Rule 10b-18
purchase is to be effected.
(10) Public float value has the meaning contained in Sec. 242.100
of this chapter.
(11) Purchase price means the price paid per share as reported,
exclusive of any commission paid to a broker acting as agent, or
commission equivalent, mark-up, or differential paid to a dealer.
(12) Riskless principal transaction means a transaction in which a
broker or dealer after having received an order from an issuer to buy
its security, buys the security as principal in the market at the same
price to satisfy the issuer's buy order. The issuer's buy order must be
effected at the same price per-share at which the broker or dealer
bought the shares to satisfy the issuer's buy order, exclusive of any
explicitly disclosed markup or markdown, commission equivalent, or other
fee. In addition, only the first leg of the transaction, when the broker
or dealer buys the security in the market as principal, is reported
under the rules of a self-regulatory organization or under the Act. For
purposes of this section, the broker or dealer must have written
policies and procedures in place to assure that, at a minimum, the
issuer's buy order was received prior to the offsetting transaction; the
offsetting transaction is allocated to a riskless principal account or
the issuer's account within 60 seconds of the execution; and the broker
or dealer has supervisory systems in place to produce records that
enable the broker or dealer to accurately and readily reconstruct, in a
time-sequenced manner, all orders effected on a riskless principal
basis.
(13) Rule 10b-18 purchase means a purchase (or any bid or limit
order that would effect such purchase) of an issuer's common stock (or
an equivalent interest, including a unit of beneficial interest in a
trust or limited partnership or a depository share) by or for the issuer
or any affiliated purchaser (including riskless principal transactions).
However, it does not include any purchase of such security:
(i) Effected during the applicable restricted period of a
distribution that is subject to Sec. 242.102 of this chapter;
(ii) Effected by or for an issuer plan by an agent independent of
the issuer;
(iii) Effected as a fractional share purchase (a fractional interest
in a security) evidenced by a script certificate, order form, or similar
document;
[[Page 110]]
(iv) Effected during the period from the time of public announcement
(as defined in Sec. 230.165(f)) of a merger, acquisition, or similar
transaction involving a recapitalization, until the earlier of the
completion of such transaction or the completion of the vote by target
shareholders. This exclusion does not apply to Rule 10b-18 purchases:
(A) Effected during such transaction in which the consideration is
solely cash and there is no valuation period; or
(B) Where:
(1) The total volume of Rule 10b-18 purchases effected on any single
day does not exceed the lesser of 25% of the security's four-week ADTV
or the issuer's average daily Rule 10b-18 purchases during the three
full calendar months preceding the date of the announcement of such
transaction;
(2) The issuer's block purchases effected pursuant to paragraph
(b)(4) of this section do not exceed the average size and frequency of
the issuer's block purchases effected pursuant to paragraph (b)(4) of
this section during the three full calendar months preceding the date of
the announcement of such transaction; and
(3) Such purchases are not otherwise restricted or prohibited;
(v) Effected pursuant to Sec. 240.13e-1;
(vi) Effected pursuant to a tender offer that is subject to Sec.
240.13e-4 or specifically excepted from Sec. 240.13e-4; or
(vii) Effected pursuant to a tender offer that is subject to section
14(d) of the Act (15 U.S.C. 78n(d)) and the rules and regulations
thereunder.
(b) Conditions to be met. Rule 10b-18 purchases shall not be deemed
to have violated the anti-manipulation provisions of sections 9(a)(2) or
10(b) of the Act (15 U.S.C. 78i(a)(2) or 78j(b)), or Sec. 240.10b-5
under the Act, solely by reason of the time, price, or amount of the
Rule 10b-18 purchases, or the number of brokers or dealers used in
connection with such purchases, if the issuer or affiliated purchaser of
the issuer effects the Rule 10b-18 purchases according to each of the
following conditions:
(1) One broker or dealer. Rule 10b-18 purchases must be effected
from or through only one broker or dealer on any single day; Provided,
however, that:
(i) The ``one broker or dealer'' condition shall not apply to Rule
10b-18 purchases that are not solicited by or on behalf of the issuer or
its affiliated purchaser(s);
(ii) Where Rule 10b-18 purchases are effected by or on behalf of
more than one affiliated purchaser of the issuer (or the issuer and one
or more of its affiliated purchasers) on a single day, the issuer and
all affiliated purchasers must use the same broker or dealer; and
(iii) Where Rule 10b-18 purchases are effected on behalf of the
issuer by a broker-dealer that is not an electronic communication
network (ECN) or other alternative trading system (ATS), that broker-
dealer can access ECN or other ATS liquidity in order to execute
repurchases on behalf of the issuer (or any affiliated purchaser of the
issuer) on that day.
(2) Time of purchases. Rule 10b-18 purchases must not be:
(i) The opening (regular way) purchase reported in the consolidated
system;
(ii) Effected during the 10 minutes before the scheduled close of
the primary trading session in the principal market for the security,
and the 10 minutes before the scheduled close of the primary trading
session in the market where the purchase is effected, for a security
that has an ADTV value of $1 million or more and a public float value of
$150 million or more; and
(iii) Effected during the 30 minutes before the scheduled close of
the primary trading session in the principal market for the security,
and the 30 minutes before the scheduled close of the primary trading
session in the market where the purchase is effected, for all other
securities;
(iv) However, for purposes of this section, Rule 10b-18 purchases
may be effected following the close of the primary trading session until
the termination of the period in which last sale prices are reported in
the consolidated system so long as such purchases are effected at prices
that do not exceed the lower of the closing price of the primary trading
session in the principal market for the security and any lower bids or
sale prices subsequently reported in the consolidated system,
[[Page 111]]
and all of this section's conditions are met. However, for purposes of
this section, the issuer may use one broker or dealer to effect Rule
10b-18 purchases during this period that may be different from the
broker or dealer that it used during the primary trading session.
However, the issuer's Rule 10b-18 purchase may not be the opening
transaction of the session following the close of the primary trading
session.
(3) Price of purchases. Rule 10b-18 purchases must be effected at a
purchase price that:
(i) Does not exceed the highest independent bid or the last
independent transaction price, whichever is higher, quoted or reported
in the consolidated system at the time the Rule 10b-18 purchase is
effected;
(ii) For securities for which bids and transaction prices are not
quoted or reported in the consolidated system, Rule 10b-18 purchases
must be effected at a purchase price that does not exceed the highest
independent bid or the last independent transaction price, whichever is
higher, displayed and disseminated on any national securities exchange
or on any inter-dealer quotation system (as defined in Sec. 240.15c2-
11) that displays at least two priced quotations for the security, at
the time the Rule 10b-18 purchase is effected; and
(iii) For all other securities, Rule 10b-18 purchases must be
effected at a price no higher than the highest independent bid obtained
from three independent dealers.
(4) Volume of purchases. The total volume of Rule 10b-18 purchases
effected by or for the issuer and any affiliated purchasers effected on
any single day must not exceed 25 percent of the ADTV for that security;
However, once each week, in lieu of purchasing under the 25 percent of
ADTV limit for that day, the issuer or an affiliated purchaser of the
issuer may effect one block purchase if:
(i) No other Rule 10b-18 purchases are effected that day, and
(ii) The block purchase is not included when calculating a
security's four week ADTV under this section.
(c) Alternative conditions. The conditions of paragraph (b) of this
section shall apply in connection with Rule 10b-18 purchases effected
during a trading session following the imposition of a market-wide
trading suspension, except:
(1) That the time of purchases condition in paragraph (b)(2) of this
section shall not apply, either:
(i) From the reopening of trading until the scheduled close of
trading on the day that the market-wide trading suspension is imposed;
or
(ii) At the opening of trading on the next trading day until the
scheduled close of trading that day, if a market-wide trading suspension
was in effect at the close of trading on the preceding day; and
(2) The volume of purchases condition in paragraph (b)(4) of this
section is modified so that the amount of Rule 10b-18 purchases must not
exceed 100 percent of the ADTV for that security.
(d) Other purchases. No presumption shall arise that an issuer or an
affiliated purchaser has violated the anti-manipulation provisions of
sections 9(a)(2) or 10(b) of the Act (15 U.S.C. 78i(a)(2) or 78j(b)), or
Sec. 240.10b-5 under the Act, if the Rule 10b-18 purchases of such
issuer or affiliated purchaser do not meet the conditions specified in
paragraph (b) or (c) of this section.
[68 FR 64970, Nov. 17, 2003, as amended at 70 FR 37618, June 29, 2005]
Sec. 240.10b-21 Deception in connection with a seller's ability or
intent to deliver securities on the date delivery is due.
Preliminary Note to Sec. 240.10b-21: This rule is not intended to
limit, or restrict, the applicability of the general antifraud
provisions of the federal securities laws, such as section 10(b) of the
Act and rule 10b-5 thereunder.
(a) It shall also constitute a ``manipulative or deceptive device or
contrivance'' as used in section 10(b) of this Act for any person to
submit an order to sell an equity security if such person deceives a
broker or dealer, a participant of a registered clearing agency, or a
purchaser about its intention or ability to deliver the security on or
before the settlement date, and such person fails to deliver the
security on or before the settlement date.
(b) For purposes of this rule, the term settlement date shall mean
the
[[Page 112]]
business day on which delivery of a security and payment of money is to
be made through the facilities of a registered clearing agency in
connection with the sale of a security.
[73 FR 61677, Oct. 17, 2008]
Sec. 240.10c-1a Securities lending transparency.
(a) Reporting requirements for covered persons. Any covered person
who agrees to a covered securities loan on behalf of itself or another
person shall:
(1) Provide to a registered national securities association
(``RNSA'') the information in paragraphs (c) through (e) of this section
(``Rule 10c-1a information''), in the format and manner required by the
applicable rule(s) of such RNSA, and within the time periods specified
in paragraphs (c) through (e) of this section.
(2) Provided, however, a covered person may rely on a reporting
agent to fulfill its reporting obligations under paragraph (a)(1) of
this section if such covered person:
(i) Enters into a written agreement with a reporting agent that
agrees to provide the Rule 10c-1a information to an RNSA on behalf of
such covered person in accordance with the requirements in paragraph (b)
of this section; and,
(ii) Provides such reporting agent with timely access to the Rule
10c-1a information.
(b) Reporting agent requirements. Any reporting agent that assumes
the reporting obligation on behalf of a covered person pursuant to
paragraph (a)(2) of this section shall:
(1) Provide such Rule 10c-1a information to an RNSA, in the format
and manner required by the applicable rule(s) of such RNSA, and within
the time periods specified in paragraphs (c) through (e) of this
section;
(2) Establish, maintain, and enforce written policies and procedures
that are reasonably designed to provide Rule 10c-1a information to an
RNSA on behalf of a covered person in the format and manner required by
the applicable rule(s) of an RNSA, and within the time periods specified
in paragraphs (c) through (e) of this section;
(3) Enter into a written agreement with an RNSA that permits the
reporting agent to provide Rule 10c-1a information to an RNSA on behalf
of a covered person;
(4) Provide an RNSA with a list naming each covered person on whose
behalf the reporting agent is providing Rule 10c-1a information to an
RNSA and provide an RNSA with any updates to the list of such persons by
the end of the day such list changes; and
(5) Preserve for a period of not less than three years, the first
two years in an easily accessible place:
(i) The Rule 10c-1a information obtained by the reporting agent from
the covered person pursuant to paragraph (a)(2) of this section,
including the time of receipt, and the corresponding Rule 10c-1a
information provided by the reporting agent to an RNSA, including the
time of transmission to an RNSA; and
(ii) The written agreements under paragraphs (a)(2) and (b)(3) of
this section.
(c) Data elements. A covered person shall provide the following
information, if applicable, to an RNSA, by the end of the day on which a
covered securities loan is effected:
(1) The legal name of the security issuer, and the Legal Entity
Identifier (``LEI'') of the issuer, if the issuer has a non-lapsed LEI;
(2) The ticker symbol, International Securities Identification
Number (``ISIN''), Committee on Uniform Securities Identification
Procedures (``CUSIP''), or Financial Instrument Global Identifier
(``FIGI'') of the security, or other security identifier;
(3) The date the covered securities loan was effected;
(4) The time the covered securities loan was effected;
(5) The name of the platform or venue where the covered securities
loan was effected;
(6) The amount, such as size, volume, or both, of the reportable
securities loaned;
(7) The type of collateral used to secure the covered securities
loan;
(8) For a covered securities loan collateralized by cash, the rebate
rate or any other fee or charges;
(9) For a covered securities loan not collateralized by cash, the
securities
[[Page 113]]
lending fee or rate, or any other fee or charges;
(10) The percentage of collateral to value of reportable securities
loaned required to secure such covered securities loan;
(11) The termination date of the covered securities loan; and
(12) Whether the borrower is a broker or dealer, a customer (if the
person lending securities is a broker or dealer), a clearing agency, a
bank, a custodian, or other person.
(d) Loan modification data elements. A covered person shall provide
the following information to an RNSA by the end of the day on which a
covered securities loan is modified:
(1) If the modification occurs after the data elements under
paragraph (c) of this section for such covered securities loan are
provided to an RNSA, and results in a change to information previously
required to be provided to an RNSA under paragraph (c) of this section:
(i) The date and time of the modification;
(ii) The specific modification and the specific data element in
paragraph (c) of this section being modified; and
(iii) The unique identifier assigned to the original covered
securities loan under paragraph (g)(1) or (g)(3) of this section;
(2) If the modification is to a covered securities loan for which
reporting under paragraph (a) was not required on the date the loan was
agreed to or last modified and results in a change to any of the data
elements in paragraphs (c)(1) through (12) of this section:
(i) The data elements in paragraphs (c)(1) through (12) of this
section as of the date of modification and the date and time of the
modification.
(ii) [Reserved]
(e) Confidential data elements. A covered person shall provide the
following information to an RNSA, if applicable, by the end of the day
on which a covered securities loan is effected:
(1) If known, the legal name of each party to the covered securities
loan, other than the customer from whom a broker or dealer borrows fully
paid or excess margin securities pursuant to Sec. 240.15c3-3(b)(3)
(``Rule 15c3-3(b)(3)'') of the Exchange Act, Central Registration
Depository (``CRD'') or Investment Adviser Registration Depository
(``IARD'') Number, market participant identification (``MPID''), and the
LEI of each party to the covered securities loan, and whether such
person is the lender, the borrower, or an intermediary between the
lender and the borrower;
(2) If the person lending securities is a broker or dealer and the
borrower is its customer, whether the security is loaned from a broker's
or dealer's securities inventory to a customer of such broker or dealer;
and
(3) If known, whether the covered securities loan is being used to
close out a fail to deliver pursuant to Sec. 242.204 of this chapter
(``Rule 204 of Regulation SHO'') or to close out a fail to deliver
outside of Sec. Sec. 242.200 through 242.204 of this chapter
(``Regulation SHO'').
(f) RNSA rules. An RNSA shall implement rules regarding the format
and manner of its collection of information described in paragraphs (c)
through (e) of this section and make publicly available such information
in accordance with rules promulgated pursuant to 15 U.S.C. 78s(b)
(``section 19(b)'') and Sec. 240.19b-4 (``Rule 19b-4'') of the Exchange
Act.
(g) RNSA publication of data. An RNSA shall:
(1) Following receipt of information pursuant to paragraph (c) of
this section, as soon as practicable, and not later than the morning of
the business day after the covered securities loan is effected, assign a
unique identifier to the covered securities loan and make publicly
available the following information:
(i) For each covered securities loan effected on the previous
business day:
(A) The unique identifier assigned by an RNSA;
(B) The information it receives under paragraphs (c)(1) through (5)
and (7) through (12) of this section; and
(C) The security identifier(s) under paragraphs (c)(1) or (2) of
this section that an RNSA determines is appropriate to identify the
relevant reportable security.
(2) Following receipt of information pursuant to paragraph (c) of
this section, on the twentieth business day
[[Page 114]]
after the covered securities loan is effected, make publicly available
the information specified in paragraph (c)(6) of this section along with
the loan and security identifying information specified in paragraphs
(g)(1)(i)(A) and (C) of this section.
(3) Following receipt of information pursuant to paragraph (d) of
this section, assign a unique identifier to the covered securities loan
if one was not assigned pursuant to paragraph (g)(1)(i)(A) of this
section; and:
(i) As soon as practicable, and not later than the morning of the
business day after the covered securities loan is modified, make
publicly available information pertaining to any modification to the
data specified in paragraphs (c)(1) through (5) and (7) through (12) of
this section; provided however, for a covered securities loan for which
paragraph (c) information is reported to an RNSA pursuant to paragraph
(d)(2) of this section, make publicly available the data specified in
paragraphs (c)(1) through (5) and (7) through (12); and
(ii) On the twentieth business day after the covered securities loan
is modified, make publicly available the data specified in paragraph
(c)(6) of this section along with the loan and security identifying
information specified in paragraphs (g)(1)(i)(A) or (g)(3), as
applicable, and (g)(1)(i)(C) of this section.
(4) Following receipt of information pursuant to paragraph (e) of
this section, keep such information confidential, in accordance with the
provisions of paragraph (h) of this section and applicable law.
(5) Following the receipt of information specified in paragraphs (c)
and (d) of this section, as soon as practicable, and not later than the
morning of the business day after covered securities loans are effected
or modified, make publicly available, on a daily basis, information
pertaining to the aggregate transaction activity and distribution of
loan rates for each reportable security and the security identifier(s)
under paragraphs (c)(1) or (2) of this section for which an RNSA
determines is appropriate to identify.
(h) Data retention and availability. An RNSA shall:
(1) Retain the information collected pursuant to paragraphs (c)
through (e) of this section in a convenient and usable standard
electronic data format that is machine readable and text searchable
without any manual intervention for a period of five years;
(2) Make the information collected pursuant to paragraphs (b)(4) and
(c) through (e) of this section available to the Commission; or other
persons as the Commission may designate by order upon a demonstrated
regulatory need;
(3) Make the information collected under paragraphs (c) and (d) of
this section available to the public in the same manner such information
is maintained pursuant to paragraph (h)(1) of this section on an RNSA's
website or similar means of electronic distribution, without use
restrictions, for a period of at least five years; and
(4) Establish, maintain, and enforce reasonably designed written
policies and procedures to maintain the security and confidentiality of
confidential information required by paragraph (e) of this section.
(i) RNSA fees. An RNSA may establish and collect reasonable fees,
pursuant to rules that are promulgated pursuant to section 19(b) and
Rule 19b-4 of the Exchange Act.
(j) Definitions. For purposes of this section:
(1) The term covered person means:
(i) Any person that agrees to a covered securities loan on behalf of
a lender (``intermediary'') other than a clearing agency when providing
only the functions of a central counterparty pursuant to Sec. 240.17Ad-
22(a)(2) (``Rule 17Ad-22(a)(2)'') of the Exchange Act or a central
securities depository pursuant to Sec. 240.17Ad-22(a)(3) (``Rule 17Ad-
22(a)(3)'') of the Exchange Act; or
(ii) Any person that agrees to a covered securities loan as a lender
when an intermediary is not used unless paragraph (j)(1)(iii) of this
section applies; or
(iii) A broker or dealer when borrowing fully paid or excess margin
securities pursuant to Rule 15c3-3(b)(3) of the Exchange Act.
(2) The term covered securities loan means:
[[Page 115]]
(i) A transaction in which any person on behalf of itself or one or
more other persons, lends a reportable security to another person.
(ii) Notwithstanding paragraph (j)(2)(i) of this section, a position
at a clearing agency that results from central counterparty services
pursuant to Rule 17Ad-22(a)(2) of the Exchange Act or central securities
depository services pursuant to Rule 17Ad-22(a)(3) of the Exchange Act
will not be a covered securities loan for purposes of this rule.
(iii) Notwithstanding paragraph (j)(2)(i) of this section, the use
of margin securities, as defined in Sec. 240.15c3-3(a)(4) (``Rule 15c3-
3(a)(4)'') of the Exchange Act, by a broker or dealer will not be a
covered securities loan for purposes of this rule.
(A) Provided, however, if a broker or dealer lends such margin
securities to another person, the loan to the other person is a covered
securities loan for purposes of this rule.
(B) [Reserved]
(3) The term reportable security means any security or class of an
issuer's securities for which information is reported or required to be
reported to the consolidated audit trail as required by Sec. 242.613
(``Rule 613'') of the Exchange Act and the CAT NMS Plan (``CAT''), the
Financial Industry Regulatory Authority's Trade Reporting and Compliance
Engine (``TRACE''), or the Municipal Securities Rulemaking Board's Real-
Time Transaction Reporting System (``RTRS''), or any reporting system
that replaces one of these systems.
(4) The term reporting agent means a broker, dealer, or registered
clearing agency that enters into a written agreement with a covered
person under paragraph (a)(2) of this section.
(5) The term RNSA means an association of brokers and dealers that
is registered as a national securities association pursuant to 15 U.S.C.
78o-3 (``section 15A'') of the Exchange Act.
[88 FR 75740, Nov. 3, 2023]
Reports Under Section 10A
Sec. 240.10A-1 Notice to the Commission Pursuant to Section 10A of the Act.
(a)(1) If any issuer with a reporting obligation under the Act
receives a report requiring a notice to the Commission in accordance
with section 10A(b)(3) of the Act, 15 U.S.C. 78j-1(b)(3), the issuer
shall submit such notice to the Commission's Office of the Chief
Accountant within the time period prescribed in that section. The notice
may be provided by facsimile, telegraph, personal delivery, or any other
means, provided it is received by the Office of the Chief Accountant
within the required time period.
(2) The notice specified in paragraph (a)(1) of this section shall
be in writing and:
(i) Shall identify the issuer (including the issuer's name, address,
phone number, and file number assigned to the issuer's filings by the
Commission) and the independent accountant (including the independent
accountant's name and phone number, and the address of the independent
accountant's principal office);
(ii) Shall state the date that the issuer received from the
independent accountant the report specified in section 10A(b)(2) of the
Act, 15 U.S.C. 78j-1(b)(2);
(iii) Shall provide, at the election of the issuer, either:
(A) A summary of the independent accountant's report, including a
description of the act that the independent accountant has identified as
a likely illegal act and the possible effect of that act on all affected
financial statements of the issuer or those related to the most current
three-year period, whichever is shorter; or
(B) A copy of the independent accountant's report; and
(iv) May provide additional information regarding the issuer's views
of and response to the independent accountant's report.
(3) Reports of the independent accountant submitted by the issuer to
the Commission's Office of the Chief Accountant in accordance with
paragraph (a)(2)(iii)(B) of this section shall be deemed to have been
made pursuant to section 10A(b)(3) or section 10A(b)(4) of the Act, 15
U.S.C. 78j-1(b)(3) or 78j-1(b)(4), for purposes of the safe harbor
provided by section 10A(c) of the Act, 15 U.S.C. 78j-1(c).
(4) Submission of the notice in paragraphs (a)(1) and (a)(2) of this
section
[[Page 116]]
shall not relieve the issuer from its obligations to comply fully with
all other reporting requirements, including, without limitation:
(i) The filing requirements of Form 8-K, Sec. 249.308 of this
chapter, and Form N-CSR, Sec. 274.128 of this chapter, regarding a
change in the issuer's certifying accountant and
(ii) The disclosure requirements of Item 304 of Regulation S-K,
Sec. 229.304 of this chapter.
(b)(1) Any independent accountant furnishing to the Commission a
copy of a report (or the documentation of any oral report) in accordance
with section 10A(b)(3) or section 10A(b)(4) of the Act, 15 U.S.C. 78j-
1(b)(3) or 78j-1(b)(4), shall submit that report (or documentation) to
the Commission's Office of the Chief Accountant within the time period
prescribed by the appropriate section of the Act. The report (or
documentation) may be submitted to the Commission's Office of the Chief
Accountant by facsimile, telegraph, personal delivery, or any other
means, provided it is received by the Office of the Chief Accountant
within the time period set forth in section 10A(b)(3) or 10A(b)(4) of
the Act, 15 U.S.C. 78j-1(b)(3) or 78j-(b)(4), whichever is applicable in
the circumstances.
(2) If the report (or documentation) submitted to the Office of the
Chief Accountant in accordance with paragraph (b)(1) of this section
does not clearly identify both the issuer (including the issuer's name,
address, phone number, and file number assigned to the issuer's filings
with the Commission) and the independent accountant (including the
independent accountant's name and phone number, and the address of the
independent accountant's principal office), then the independent
accountant shall place that information in a prominent attachment to the
report (or documentation) and shall submit that attachment to the Office
of the Chief Accountant at the same time and in the same manner as the
report (or documentation) is submitted to that Office.
(3) Submission of the report (or documentation) by the independent
accountant as described in paragraphs (b)(1) and (2) of this section
shall not replace, or otherwise satisfy the need for, the newly engaged
and former accountants' letters under Sec. Sec. 229.304(a)(2)(D) and
229.304(a)(3) of this chapter (Items 304(a)(2)(D) and 304(a)(3) of
Regulation S-K, respectively) and shall not limit, reduce, or affect in
any way the independent accountant's obligations to comply fully with
all other legal and professional responsibilities, including, without
limitation, those under the standards of the Public Company Accounting
Oversight Board (United States) (``PCAOB'') and the rules or
interpretations of the Commission that modify or supplement those
auditing standards.
(c) A notice or report submitted to the Office of the Chief
Accountant in accordance with paragraphs (a) and (b) of this section
shall be deemed to be an investigative record and shall be nonpublic and
exempt from disclosure pursuant to the Freedom of Information Act to the
same extent and for the same periods of time that the Commission's
investigative records are nonpublic and exempt from disclosure under,
among other applicable provisions, 5 U.S.C. 552(b)(7). Nothing in this
paragraph, however, shall relieve, limit, delay, or affect in any way,
the obligation of any issuer or any independent accountant to make all
public disclosures required by law, by any Commission disclosure item,
rule, report, or form, or by any applicable accounting, auditing, or
professional standard.
Instruction to paragraph (c): Issuers and independent accountants
may apply for additional bases for confidential treatment for a notice,
report, or part thereof, in accordance with Sec. 200.83 of this
chapter. That section indicates, in part, that any person who, pursuant
to any requirement of law, submits any information or causes or permits
any information to be submitted to the Commission, may request that the
Commission afford it confidential treatment by reason of personal
privacy or business confidentiality, or for any other reason permitted
by Federal law.
[62 FR 12749, Mar. 18, 1997, as amended at 73 FR 973, Jan. 4, 2008; 81
FR 82020, Nov. 18, 2016; 83 FR 50221, Oct. 4, 2018; 84 FR 50739, Sept.
26, 2019]
Sec. 240.10A-2 Auditor independence.
It shall be unlawful for an auditor not to be independent under
Sec. 210.2-
[[Page 117]]
01(c)(2)(iii)(B), (c)(4), (c)(6), (c)(7), and Sec. 210.2-07.
[68 FR 6048, Feb. 5, 2003]
Sec. 240.10A-3 Listing standards relating to audit committees.
(a) Pursuant to section 10A(m) of the Act (15 U.S.C. 78j-1(m)) and
section 3 of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7202):
(1) National securities exchanges. The rules of each national
securities exchange registered pursuant to section 6 of the Act (15
U.S.C. 78f) must, in accordance with the provisions of this section,
prohibit the initial or continued listing of any security of an issuer
that is not in compliance with the requirements of any portion of
paragraph (b) or (c) of this section.
(2) National securities associations. The rules of each national
securities association registered pursuant to section 15A of the Act (15
U.S.C. 78o-3) must, in accordance with the provisions of this section,
prohibit the initial or continued listing in an automated inter-dealer
quotation system of any security of an issuer that is not in compliance
with the requirements of any portion of paragraph (b) or (c) of this
section.
(3) Opportunity to cure defects. The rules required by paragraphs
(a)(1) and (a)(2) of this section must provide for appropriate
procedures for a listed issuer to have an opportunity to cure any
defects that would be the basis for a prohibition under paragraph (a) of
this section, before the imposition of such prohibition. Such rules also
may provide that if a member of an audit committee ceases to be
independent in accordance with the requirements of this section for
reasons outside the member's reasonable control, that person, with
notice by the issuer to the applicable national securities exchange or
national securities association, may remain an audit committee member of
the listed issuer until the earlier of the next annual shareholders
meeting of the listed issuer or one year from the occurrence of the
event that caused the member to be no longer independent.
(4) Notification of noncompliance. The rules required by paragraphs
(a)(1) and (a)(2) of this section must include a requirement that a
listed issuer must notify the applicable national securities exchange or
national securities association promptly after an executive officer of
the listed issuer becomes aware of any material noncompliance by the
listed issuer with the requirements of this section.
(5) Implementation. (i) The rules of each national securities
exchange or national securities association meeting the requirements of
this section must be operative, and listed issuers must be in compliance
with those rules, by the following dates:
(A) July 31, 2005 for foreign private issuers and smaller reporting
companies (as defined in Sec. 240.12b-2); and
(B) For all other listed issuers, the earlier of the listed issuer's
first annual shareholders meeting after January 15, 2004, or October 31,
2004.
(ii) Each national securities exchange and national securities
association must provide to the Commission, no later than July 15, 2003,
proposed rules or rule amendments that comply with this section.
(iii) Each national securities exchange and national securities
association must have final rules or rule amendments that comply with
this section approved by the Commission no later than December 1, 2003.
(b) Required standards--(1) Independence. (i) Each member of the
audit committee must be a member of the board of directors of the listed
issuer, and must otherwise be independent; provided that, where a listed
issuer is one of two dual holding companies, those companies may
designate one audit committee for both companies so long as each member
of the audit committee is a member of the board of directors of at least
one of such dual holding companies.
(ii) Independence requirements for non-investment company issuers.
In order to be considered to be independent for purposes of this
paragraph (b)(1), a member of an audit committee of a listed issuer that
is not an investment company may not, other than in his or her capacity
as a member of the audit committee, the board of directors, or any other
board committee:
(A) Accept directly or indirectly any consulting, advisory, or other
compensatory fee from the issuer or any subsidiary thereof, provided
that, unless
[[Page 118]]
the rules of the national securities exchange or national securities
association provide otherwise, compensatory fees do not include the
receipt of fixed amounts of compensation under a retirement plan
(including deferred compensation) for prior service with the listed
issuer (provided that such compensation is not contingent in any way on
continued service); or
(B) Be an affiliated person of the issuer or any subsidiary thereof.
(iii) Independence requirements for investment company issuers. In
order to be considered to be independent for purposes of this paragraph
(b)(1), a member of an audit committee of a listed issuer that is an
investment company may not, other than in his or her capacity as a
member of the audit committee, the board of directors, or any other
board committee:
(A) Accept directly or indirectly any consulting, advisory, or other
compensatory fee from the issuer or any subsidiary thereof, provided
that, unless the rules of the national securities exchange or national
securities association provide otherwise, compensatory fees do not
include the receipt of fixed amounts of compensation under a retirement
plan (including deferred compensation) for prior service with the listed
issuer (provided that such compensation is not contingent in any way on
continued service); or
(B) Be an ``interested person'' of the issuer as defined in section
2(a)(19) of the Investment Company Act of 1940 (15 U.S.C. 80a-2(a)(19)).
(iv) Exemptions from the independence requirements. (A) For an
issuer listing securities pursuant to a registration statement under
section 12 of the Act (15 U.S.C. 78l), or for an issuer that has a
registration statement under the Securities Act of 1933 (15 U.S.C. 77a
et seq.) covering an initial public offering of securities to be listed
by the issuer, where in each case the listed issuer was not, immediately
prior to the effective date of such registration statement, required to
file reports with the Commission pursuant to section 13(a) or 15(d) of
the Act (15 U.S.C. 78m(a) or 78o(d)):
(1) All but one of the members of the listed issuer's audit
committee may be exempt from the independence requirements of paragraph
(b)(1)(ii) of this section for 90 days from the date of effectiveness of
such registration statement; and
(2) A minority of the members of the listed issuer's audit committee
may be exempt from the independence requirements of paragraph (b)(1)(ii)
of this section for one year from the date of effectiveness of such
registration statement.
(B) An audit committee member that sits on the board of directors of
a listed issuer and an affiliate of the listed issuer is exempt from the
requirements of paragraph (b)(1)(ii)(B) of this section if the member,
except for being a director on each such board of directors, otherwise
meets the independence requirements of paragraph (b)(1)(ii) of this
section for each such entity, including the receipt of only ordinary-
course compensation for serving as a member of the board of directors,
audit committee or any other board committee of each such entity.
(C) An employee of a foreign private issuer who is not an executive
officer of the foreign private issuer is exempt from the requirements of
paragraph (b)(1)(ii) of this section if the employee is elected or named
to the board of directors or audit committee of the foreign private
issuer pursuant to the issuer's governing law or documents, an employee
collective bargaining or similar agreement or other home country legal
or listing requirements.
(D) An audit committee member of a foreign private issuer may be
exempt from the requirements of paragraph (b)(1)(ii)(B) of this section
if that member meets the following requirements:
(1) The member is an affiliate of the foreign private issuer or a
representative of such an affiliate;
(2) The member has only observer status on, and is not a voting
member or the chair of, the audit committee; and
(3) Neither the member nor the affiliate is an executive officer of
the foreign private issuer.
(E) An audit committee member of a foreign private issuer may be
exempt from the requirements of paragraph (b)(1)(ii)(B) of this section
if that member meets the following requirements:
(1) The member is a representative or designee of a foreign
government or
[[Page 119]]
foreign governmental entity that is an affiliate of the foreign private
issuer; and
(2) The member is not an executive officer of the foreign private
issuer.
(F) In addition to paragraphs (b)(1)(iv)(A) through (E) of this
section, the Commission may exempt from the requirements of paragraphs
(b)(1)(ii) or (b)(1)(iii) of this section a particular relationship with
respect to audit committee members, as the Commission determines
appropriate in light of the circumstances.
(2) Responsibilities relating to registered public accounting firms.
The audit committee of each listed issuer, in its capacity as a
committee of the board of directors, must be directly responsible for
the appointment, compensation, retention and oversight of the work of
any registered public accounting firm engaged (including resolution of
disagreements between management and the auditor regarding financial
reporting) for the purpose of preparing or issuing an audit report or
performing other audit, review or attest services for the listed issuer,
and each such registered public accounting firm must report directly to
the audit committee.
(3) Complaints. Each audit committee must establish procedures for:
(i) The receipt, retention, and treatment of complaints received by
the listed issuer regarding accounting, internal accounting controls, or
auditing matters; and
(ii) The confidential, anonymous submission by employees of the
listed issuer of concerns regarding questionable accounting or auditing
matters.
(4) Authority to engage advisers. Each audit committee must have the
authority to engage independent counsel and other advisers, as it
determines necessary to carry out its duties.
(5) Funding. Each listed issuer must provide for appropriate
funding, as determined by the audit committee, in its capacity as a
committee of the board of directors, for payment of:
(i) Compensation to any registered public accounting firm engaged
for the purpose of preparing or issuing an audit report or performing
other audit, review or attest services for the listed issuer;
(ii) Compensation to any advisers employed by the audit committee
under paragraph (b)(4) of this section; and
(iii) Ordinary administrative expenses of the audit committee that
are necessary or appropriate in carrying out its duties.
(c) General exemptions. (1) At any time when an issuer has a class
of securities that is listed on a national securities exchange or
national securities association subject to the requirements of this
section, the listing of other classes of securities of the listed issuer
on a national securities exchange or national securities association is
not subject to the requirements of this section.
(2) At any time when an issuer has a class of common equity
securities (or similar securities) that is listed on a national
securities exchange or national securities association subject to the
requirements of this section, the listing of classes of securities of a
direct or indirect consolidated subsidiary or an at least 50%
beneficially owned subsidiary of the issuer (except classes of equity
securities, other than non-convertible, non-participating preferred
securities, of such subsidiary) is not subject to the requirements of
this section.
(3) The listing of securities of a foreign private issuer is not
subject to the requirements of paragraphs (b)(1) through (b)(5) of this
section if the foreign private issuer meets the following requirements:
(i) The foreign private issuer has a board of auditors (or similar
body), or has statutory auditors, established and selected pursuant to
home country legal or listing provisions expressly requiring or
permitting such a board or similar body;
(ii) The board or body, or statutory auditors is required under home
country legal or listing requirements to be either:
(A) Separate from the board of directors; or
(B) Composed of one or more members of the board of directors and
one or more members that are not also members of the board of directors;
[[Page 120]]
(iii) The board or body, or statutory auditors, are not elected by
management of such issuer and no executive officer of the foreign
private issuer is a member of such board or body, or statutory auditors;
(iv) Home country legal or listing provisions set forth or provide
for standards for the independence of such board or body, or statutory
auditors, from the foreign private issuer or the management of such
issuer;
(v) Such board or body, or statutory auditors, in accordance with
any applicable home country legal or listing requirements or the
issuer's governing documents, are responsible, to the extent permitted
by law, for the appointment, retention and oversight of the work of any
registered public accounting firm engaged (including, to the extent
permitted by law, the resolution of disagreements between management and
the auditor regarding financial reporting) for the purpose of preparing
or issuing an audit report or performing other audit, review or attest
services for the issuer; and
(vi) The audit committee requirements of paragraphs (b)(3), (b)(4)
and (b)(5) of this section apply to such board or body, or statutory
auditors, to the extent permitted by law.
(4) The listing of a security futures product cleared by a clearing
agency that is registered pursuant to section 17A of the Act (15 U.S.C.
78q-1) or that is exempt from the registration requirements of section
17A pursuant to paragraph (b)(7)(A) of such section is not subject to
the requirements of this section.
(5) The listing of a standardized option, as defined in Sec.
240.9b-1(a)(4), issued by a clearing agency that is registered pursuant
to section 17A of the Act (15 U.S.C. 78q-1) is not subject to the
requirements of this section.
(6) The listing of securities of the following listed issuers are
not subject to the requirements of this section:
(i) Asset-Backed Issuers (as defined in Sec. 229.1101 of this
chapter);
(ii) Unit investment trusts (as defined in 15 U.S.C. 80a-4(2)); and
(iii)Foreign governments (as defined in Sec. 240.3b-4(a)).
(7) The listing of securities of a listed issuer is not subject to
the requirements of this section if:
(i) The listed issuer, as reflected in the applicable listing
application, is organized as a trust or other unincorporated association
that does not have a board of directors or persons acting in a similar
capacity; and
(ii) The activities of the listed issuer that is described in
paragraph (c)(7)(i) of this section are limited to passively owning or
holding (as well as administering and distributing amounts in respect
of) securities, rights, collateral or other assets on behalf of or for
the benefit of the holders of the listed securities.
(d) Disclosure. Any listed issuer availing itself of an exemption
from the independence standards contained in paragraph (b)(1)(iv) of
this section (except paragraph (b)(1)(iv)(B) of this section), the
general exemption contained in paragraph (c)(3) of this section or the
last sentence of paragraph (a)(3) of this section, must:
(1) Disclose its reliance on the exemption and its assessment of
whether, and if so, how, such reliance would materially adversely affect
the ability of the audit committee to act independently and to satisfy
the other requirements of this section in any proxy or information
statement for a meeting of shareholders at which directors are elected
that is filed with the Commission pursuant to the requirements of
section 14 of the Act (15 U.S.C. 78n); and
(2) Disclose the information specified in paragraph (d)(1) of this
section in, or incorporate such information by reference from such proxy
or information statement filed with the Commission into, its annual
report filed with the Commission pursuant to the requirements of section
13(a) or 15(d) of the Act (15 U.S.C. 78m(a) or 78o(d)).
(e) Definitions. Unless the context otherwise requires, all terms
used in this section have the same meaning as in the Act. In addition,
unless the context otherwise requires, the following definitions apply
for purposes of this section:
(1)(i) The term affiliate of, or a person affiliated with, a
specified person,
[[Page 121]]
means 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.
(ii)(A) A person will be deemed not to be in control of a specified
person for purposes of this section if the person:
(1) Is not the beneficial owner, directly or indirectly, of more
than 10% of any class of voting equity securities of the specified
person; and
(2) Is not an executive officer of the specified person.
(B) Paragraph (e)(1)(ii)(A) of this section only creates a safe
harbor position that a person does not control a specified person. The
existence of the safe harbor does not create a presumption in any way
that a person exceeding the ownership requirement in paragraph
(e)(1)(ii)(A)(1) of this section controls or is otherwise an affiliate
of a specified person.
(iii) The following will be deemed to be affiliates:
(A) An executive officer of an affiliate;
(B) A director who also is an employee of an affiliate;
(C) A general partner of an affiliate; and
(D) A managing member of an affiliate.
(iv) For purposes of paragraph (e)(1)(i) of this section, dual
holding companies will not be deemed to be affiliates of or persons
affiliated with each other by virtue of their dual holding company
arrangements with each other, including where directors of one dual
holding company are also directors of the other dual holding company, or
where directors of one or both dual holding companies are also directors
of the businesses jointly controlled, directly or indirectly, by the
dual holding companies (and, in each case, receive only ordinary-course
compensation for serving as a member of the board of directors, audit
committee or any other board committee of the dual holding companies or
any entity that is jointly controlled, directly or indirectly, by the
dual holding companies).
(2) In the case of foreign private issuers with a two-tier board
system, the term board of directors means the supervisory or non-
management board.
(3) In the case of a listed issuer that is a limited partnership or
limited liability company where such entity does not have a board of
directors or equivalent body, the term board of directors means the
board of directors of the managing general partner, managing member or
equivalent body.
(4) 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.
(5) The term dual holding companies means two foreign private
issuers that:
(i) Are organized in different national jurisdictions;
(ii) Collectively own and supervise the management of one or more
businesses which are conducted as a single economic enterprise; and
(iii) Do not conduct any business other than collectively owning and
supervising such businesses and activities reasonably incidental
thereto.
(6) The term executive officer has the meaning set forth in Sec.
240.3b-7.
(7) The term foreign private issuer has the meaning set forth in
Sec. 240.3b-4(c).
(8) The term indirect acceptance by a member of an audit committee
of any consulting, advisory or other compensatory fee includes
acceptance of such a fee by a spouse, a minor child or stepchild or a
child or stepchild sharing a home with the member or by an entity in
which such member is a partner, member, an officer such as a managing
director occupying a comparable position or executive officer, or
occupies a similar position (except limited partners, non-managing
members and those occupying similar positions who, in each case, have no
active role in providing services to the entity) and which provides
accounting, consulting, legal, investment banking or financial advisory
services to the issuer or any subsidiary of the issuer.
(9) The terms listed and listing refer to securities listed on a
national securities exchange or listed in an automated
[[Page 122]]
inter-dealer quotation system of a national securities association or to
issuers of such securities.
Instructions to Sec. 240.10A-3: 1. The requirements in paragraphs
(b)(2) through (b)(5), (c)(3)(v) and (c)(3)(vi) of this section do not
conflict with, and do not affect the application of, any requirement or
ability under a listed issuer's governing law or documents or other home
country legal or listing provisions that requires or permits
shareholders to ultimately vote on, approve or ratify such requirements.
The requirements instead relate to the assignment of responsibility as
between the audit committee and management. In such an instance,
however, if the listed issuer provides a recommendation or nomination
regarding such responsibilities to shareholders, the audit committee of
the listed issuer, or body performing similar functions, must be
responsible for making the recommendation or nomination.
2. The requirements in paragraphs (b)(2) through (b)(5), (c)(3)(v),
(c)(3)(vi) and Instruction 1 of this section do not conflict with any
legal or listing requirement in a listed issuer's home jurisdiction that
prohibits the full board of directors from delegating such
responsibilities to the listed issuer's audit committee or limits the
degree of such delegation. In that case, the audit committee, or body
performing similar functions, must be granted such responsibilities,
which can include advisory powers, with respect to such matters to the
extent permitted by law, including submitting nominations or
recommendations to the full board.
3. The requirements in paragraphs (b)(2) through (b)(5), (c)(3)(v)
and (c)(3)(vi) of this section do not conflict with any legal or listing
requirement in a listed issuer's home jurisdiction that vests such
responsibilities with a government entity or tribunal. In that case, the
audit committee, or body performing similar functions, must be granted
such responsibilities, which can include advisory powers, with respect
to such matters to the extent permitted by law.
4. For purposes of this section, the determination of a person's
beneficial ownership must be made in accordance with Sec. 240.13d-3.
[68 FR 18818, Apr. 16, 2003, as amended at 70 FR 1620, Jan. 7, 2005; 73
FR 973, Jan. 4, 2008]
Requirements Under Section 10C
Sec. 240.10C-1 Listing standards relating to compensation committees.
(a) Pursuant to section 10C(a) of the Act (15 U.S.C. 78j-3(a)) and
section 952 of the Dodd-Frank Wall Street Reform and Consumer Protection
Act of 2010 (Pub. L. 111-203, 124 Stat. 1900):
(1) National securities exchanges. The rules of each national
securities exchange registered pursuant to section 6 of the Act (15
U.S.C. 78f), to the extent such national securities exchange lists
equity securities, must, in accordance with the provisions of this
section, prohibit the initial or continued listing of any equity
security of an issuer that is not in compliance with the requirements of
any portion of paragraph (b) or (c) of this section.
(2) National securities associations. The rules of each national
securities association registered pursuant to section 15A of the Act (15
U.S.C. 78o-3), to the extent such national securities association lists
equity securities in an automated inter-dealer quotation system, must,
in accordance with the provisions of this section, prohibit the initial
or continued listing in an automated inter-dealer quotation system of
any equity security of an issuer that is not in compliance with the
requirements of any portion of paragraph (b) or (c) of this section.
(3) Opportunity to cure defects. The rules required by paragraphs
(a)(1) and (a)(2) of this section must provide for appropriate
procedures for a listed issuer to have a reasonable opportunity to cure
any defects that would be the basis for a prohibition under paragraph
(a) of this section, before the imposition of such prohibition. Such
rules may provide that if a member of a compensation committee ceases to
be independent in accordance with the requirements of this section for
reasons outside the member's reasonable control, that person, with
notice by the issuer to the applicable national securities exchange or
national securities association, may remain a compensation committee
member of the listed issuer until the earlier of the next annual
shareholders meeting of the listed issuer or one year from the
occurrence of the event that caused the member to be no longer
independent.
(4) Implementation. (i) Each national securities exchange and
national securities association that lists equity securities must
provide to the Commission, no later than 90 days after publication of
this section in the Federal Register, proposed rules or rule
[[Page 123]]
amendments that comply with this section. Each submission must include,
in addition to any other information required under section 19(b) of the
Act (15 U.S.C. 78s(b)) and the rules thereunder, a review of whether and
how existing or proposed listing standards satisfy the requirements of
this rule, a discussion of the consideration of factors relevant to
compensation committee independence conducted by the national securities
exchange or national securities association, and the definition of
independence applicable to compensation committee members that the
national securities exchange or national securities association proposes
to adopt or retain in light of such review.
(ii) Each national securities exchange and national securities
association that lists equity securities must have rules or rule
amendments that comply with this section approved by the Commission no
later than one year after publication of this section in the Federal
Register.
(b) Required standards. The requirements of this section apply to
the compensation committees of listed issuers.
(1) Independence. (i) Each member of the compensation committee must
be a member of the board of directors of the listed issuer, and must
otherwise be independent.
(ii) Independence requirements. In determining independence
requirements for members of compensation committees, the national
securities exchanges and national securities associations shall consider
relevant factors, including, but not limited to:
(A) The source of compensation of a member of the board of directors
of an issuer, including any consulting, advisory or other compensatory
fee paid by the issuer to such member of the board of directors; and
(B) Whether a member of the board of directors of an issuer is
affiliated with the issuer, a subsidiary of the issuer or an affiliate
of a subsidiary of the issuer.
(iii) Exemptions from the independence requirements. (A) The listing
of equity securities of the following categories of listed issuers is
not subject to the requirements of paragraph (b)(1) of this section:
(1) Limited partnerships;
(2) Companies in bankruptcy proceedings;
(3) Open-end management investment companies registered under the
Investment Company Act of 1940; and
(4) Any foreign private issuer that discloses in its annual report
the reasons that the foreign private issuer does not have an independent
compensation committee.
(B) In addition to the issuer exemptions set forth in paragraph
(b)(1)(iii)(A) of this section, a national securities exchange or a
national securities association, pursuant to section 19(b) of the Act
(15 U.S.C. 78s(b)) and the rules thereunder, may exempt from the
requirements of paragraph (b)(1) of this section a particular
relationship with respect to members of the compensation committee, as
each national securities exchange or national securities association
determines is appropriate, taking into consideration the size of an
issuer and any other relevant factors.
(2) Authority to retain compensation consultants, independent legal
counsel and other compensation advisers. (i) The compensation committee
of a listed issuer, in its capacity as a committee of the board of
directors, may, in its sole discretion, retain or obtain the advice of a
compensation consultant, independent legal counsel or other adviser.
(ii) The compensation committee shall be directly responsible for
the appointment, compensation and oversight of the work of any
compensation consultant, independent legal counsel and other adviser
retained by the compensation committee.
(iii) Nothing in this paragraph (b)(2) shall be construed:
(A) To require the compensation committee to implement or act
consistently with the advice or recommendations of the compensation
consultant, independent legal counsel or other adviser to the
compensation committee; or
(B) To affect the ability or obligation of a compensation committee
to exercise its own judgment in fulfillment of the duties of the
compensation committee.
[[Page 124]]
(3) Funding. Each listed issuer must provide for appropriate
funding, as determined by the compensation committee, in its capacity as
a committee of the board of directors, for payment of reasonable
compensation to a compensation consultant, independent legal counsel or
any other adviser retained by the compensation committee.
(4) Independence of compensation consultants and other advisers. The
compensation committee of a listed issuer may select a compensation
consultant, legal counsel or other adviser to the compensation committee
only after taking into consideration the following factors, as well as
any other factors identified by the relevant national securities
exchange or national securities association in its listing standards:
(i) The provision of other services to the issuer by the person that
employs the compensation consultant, legal counsel or other adviser;
(ii) The amount of fees received from the issuer by the person that
employs the compensation consultant, legal counsel or other adviser, as
a percentage of the total revenue of the person that employs the
compensation consultant, legal counsel or other adviser;
(iii) The policies and procedures of the person that employs the
compensation consultant, legal counsel or other adviser that are
designed to prevent conflicts of interest;
(iv) Any business or personal relationship of the compensation
consultant, legal counsel or other adviser with a member of the
compensation committee;
(v) Any stock of the issuer owned by the compensation consultant,
legal counsel or other adviser; and
(vi) Any business or personal relationship of the compensation
consultant, legal counsel, other adviser or the person employing the
adviser with an executive officer of the issuer.
Instruction to paragraph (b)(4) of this section: A listed issuer's
compensation committee is required to conduct the independence
assessment outlined in paragraph (b)(4) of this section with respect to
any compensation consultant, legal counsel or other adviser that
provides advice to the compensation committee, other than in-house legal
counsel.
(5) General exemptions. (i) The national securities exchanges and
national securities associations, pursuant to section 19(b) of the Act
(15 U.S.C. 78s(b)) and the rules thereunder, may exempt from the
requirements of this section certain categories of issuers, as the
national securities exchange or national securities association
determines is appropriate, taking into consideration, among other
relevant factors, the potential impact of such requirements on smaller
reporting issuers.
(ii) The requirements of this section shall not apply to any
controlled company or to any smaller reporting company.
(iii) The listing of a security futures product cleared by a
clearing agency that is registered pursuant to section 17A of the Act
(15 U.S.C. 78q-1) or that is exempt from the registration requirements
of section 17A(b)(7)(A) (15 U.S.C. 78q-1(b)(7)(A)) is not subject to the
requirements of this section.
(iv) The listing of a standardized option, as defined in Sec.
240.9b-1(a)(4), issued by a clearing agency that is registered pursuant
to section 17A of the Act (15 U.S.C. 78q-1) is not subject to the
requirements of this section.
(c) Definitions. Unless the context otherwise requires, all terms
used in this section have the same meaning as in the Act and the rules
and regulations thereunder. In addition, unless the context otherwise
requires, the following definitions apply for purposes of this section:
(1) In the case of foreign private issuers with a two-tier board
system, the term board of directors means the supervisory or non-
management board.
(2) The term compensation committee means:
(i) A committee of the board of directors that is designated as the
compensation committee; or
(ii) In the absence of a committee of the board of directors that is
designated as the compensation committee, a committee of the board of
directors performing functions typically
[[Page 125]]
performed by a compensation committee, including oversight of executive
compensation, even if it is not designated as the compensation committee
or also performs other functions; or
(iii) For purposes of this section other than paragraphs (b)(2)(i)
and (b)(3), in the absence of a committee as described in paragraphs
(c)(2)(i) or (ii) of this section, the members of the board of directors
who oversee executive compensation matters on behalf of the board of
directors.
(3) The term controlled company means an issuer:
(i) That is listed on a national securities exchange or by a
national securities association; and
(ii) Of which more than 50 percent of the voting power for the
election of directors is held by an individual, a group or another
company.
(4) The terms listed and listing refer to equity securities listed
on a national securities exchange or listed in an automated inter-dealer
quotation system of a national securities association or to issuers of
such securities.
(5) The term open-end management investment company means an open-
end company, as defined by Section 5(a)(1) of the Investment Company Act
of 1940 (15 U.S.C. 80a-5(a)(1)), that is registered under that Act.
[77 FR 38454, June 27, 2012]
Requirements Under Section 10D
Sec. 240.10D-1 Listing standards relating to recovery of erroneously
awarded compensation.
(a) Each national securities exchange registered pursuant to section
6 of the Act (15 U.S.C. 78f) and each national securities association
registered pursuant to section 15A of the Act (15 U.S.C. 78o-3), to the
extent such national securities exchange or association lists
securities, must:
(1) In accordance with the provisions of this section, prohibit the
initial or continued listing of any security of an issuer that is not in
compliance with the requirements of any portion of this section;
(2) No later than February 27, 2023, propose rules or rule
amendments that comply with this section. Such rules or rule amendments
that comply with this section must be effective no later than one year
after November 28, 2022;
(3) Require that each listed issuer:
(i) Adopt the recovery policy required by this section no later than
60 days following the effective date of the listing standard referenced
in paragraph (a)(2) of this section to which the issuer is subject;
(ii) Comply with that recovery policy for all incentive-based
compensation received (as defined in paragraph (d) of this section) by
executive officers on or after the effective date of the applicable
listing standard;
(iii) Provide the disclosures required by this section and in the
applicable Commission filings required on or after the effective date of
the listing standard referenced in paragraph (a)(2) of this section to
which the issuer is subject.
(b) Recovery of Erroneously Awarded Compensation. The issuer must:
(1) Adopt and comply with a written policy providing that the issuer
will recover reasonably promptly the amount of erroneously awarded
incentive-based compensation in the event that the issuer is required to
prepare an accounting restatement due to the material noncompliance of
the issuer with any financial reporting requirement under the securities
laws, including any required accounting restatement to correct an error
in previously issued financial statements that is material to the
previously issued financial statements, or that would result in a
material misstatement if the error were corrected in the current period
or left uncorrected in the current period.
(i) The issuer's recovery policy must apply to all incentive-based
compensation received by a person:
(A) After beginning service as an executive officer;
(B) Who served as an executive officer at any time during the
performance period for that incentive-based compensation;
(C) While the issuer has a class of securities listed on a national
securities exchange or a national securities association; and
(D) During the three completed fiscal years immediately preceding
the date that the issuer is required to prepare
[[Page 126]]
an accounting restatement as described in paragraph (b)(1) of this
section. In addition to these last three completed fiscal years, the
recovery policy must apply to any transition period (that results from a
change in the issuer's fiscal year) within or immediately following
those three completed fiscal years. However, a transition period between
the last day of the issuer's previous fiscal year end and the first day
of its new fiscal year that comprises a period of nine to 12 months
would be deemed a completed fiscal year. An issuer's obligation to
recover erroneously awarded compensation is not dependent on if or when
the restated financial statements are filed.
(ii) For purposes of determining the relevant recovery period, the
date that an issuer is required to prepare an accounting restatement as
described in paragraph (b)(1) of this section is the earlier to occur
of:
(A) The date the issuer's board of directors, a committee of the
board of directors, or the officer or officers of the issuer authorized
to take such action if board action is not required, concludes, or
reasonably should have concluded, that the issuer is required to prepare
an accounting restatement as described in paragraph (b)(1) of this
section; or
(B) The date a court, regulator, or other legally authorized body
directs the issuer to prepare an accounting restatement as described in
paragraph (b)(1) of this section.
(iii) The amount of incentive-based compensation that must be
subject to the issuer's recovery policy (``erroneously awarded
compensation'') is the amount of incentive-based compensation received
that exceeds the amount of incentive-based compensation that otherwise
would have been received had it been determined based on the restated
amounts, and must be computed without regard to any taxes paid. For
incentive-based compensation based on stock price or total shareholder
return, where the amount of erroneously awarded compensation is not
subject to mathematical recalculation directly from the information in
an accounting restatement:
(A) The amount must be based on a reasonable estimate of the effect
of the accounting restatement on the stock price or total shareholder
return upon which the incentive-based compensation was received; and
(B) The issuer must maintain documentation of the determination of
that reasonable estimate and provide such documentation to the exchange
or association.
(iv) The issuer must recover erroneously awarded compensation in
compliance with its recovery policy except to the extent that the
conditions of paragraphs (b)(1)(iv)(A), (B), or (C) of this section are
met, and the issuer's committee of independent directors responsible for
executive compensation decisions, or in the absence of such a committee,
a majority of the independent directors serving on the board, has made a
determination that recovery would be impracticable.
(A) The direct expense paid to a third party to assist in enforcing
the policy would exceed the amount to be recovered. Before concluding
that it would be impracticable to recover any amount of erroneously
awarded compensation based on expense of enforcement, the issuer must
make a reasonable attempt to recover such erroneously awarded
compensation, document such reasonable attempt(s) to recover, and
provide that documentation to the exchange or association.
(B) Recovery would violate home country law where that law was
adopted prior to November 28, 2022. Before concluding that it would be
impracticable to recover any amount of erroneously awarded compensation
based on violation of home country law, the issuer must obtain an
opinion of home country counsel, acceptable to the applicable national
securities exchange or association, that recovery would result in such a
violation, and must provide such opinion to the exchange or association.
(C) Recovery would likely cause an otherwise tax-qualified
retirement plan, under which benefits are broadly available to employees
of the registrant, to fail to meet the requirements of26 U.S.C.
401(a)(13) or 26 U.S.C. 411(a) and regulations thereunder.
(v) The issuer is prohibited from indemnifying any executive officer
or former executive officer against the
[[Page 127]]
loss of erroneously awarded compensation.
(2) File all disclosures with respect to such recovery policy in
accordance with the requirements of the Federal securities laws,
including the disclosure required by the applicable Commission filings.
(c) General Exemptions. The requirements of this section do not
apply to the listing of:
(1) A security futures product cleared by a clearing agency that is
registered pursuant to section 17A of the Act (15 U.S.C. 78q-1) or that
is exempt from the registration requirements of section 17A(b)(7)(A) (15
U.S.C. 78q-1(b)(7)(A));
(2) A standardized option, as defined in 17 CFR 240.9b-1(a)(4),
issued by a clearing agency that is registered pursuant to section 17A
of the Act (15 U.S.C. 78q-1);
(3) Any security issued by a unit investment trust, as defined in 15
U.S.C. 80a-4(2);
(4) Any security issued by a management company, as defined in 15
U.S.C. 80a-4(3), that is registered under section 8 of the Investment
Company Act of 1940 (15 U.S.C. 80a-8), if such management company has
not awarded incentive-based compensation to any executive officer of the
company in any of the last three fiscal years, or in the case of a
company that has been listed for less than three fiscal years, since the
listing of the company.
(d) Definitions. Unless the context otherwise requires, the
following definitions apply for purposes of this section:
Executive Officer. An executive officer is the issuer's president,
principal financial officer, principal accounting officer (or if there
is no such accounting officer, the controller), any vice-president of
the issuer 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 issuer. Executive officers of
the issuer's parent(s) or subsidiaries are deemed executive officers of
the issuer if they perform such policy making functions for the issuer.
In addition, when the issuer is a limited partnership, officers or
employees of the general partner(s) who perform policy-making functions
for the limited partnership are deemed officers of the limited
partnership. When the issuer is a trust, officers, or employees of the
trustee(s) who perform policy-making functions for the trust are deemed
officers of the trust. Policy-making function is not intended to include
policy-making functions that are not significant. Identification of an
executive officer for purposes of this section would include at a
minimum executive officers identified pursuant to 17 CFR 229.401(b).
Financial reporting measures. Financial reporting measures are
measures that are determined and presented in accordance with the
accounting principles used in preparing the issuer's financial
statements, and any measures that are derived wholly or in part from
such measures. Stock price and total shareholder return are also
financial reporting measures. A financial reporting measure need not be
presented within the financial statements or included in a filing with
the Commission.
Incentive-based compensation. Incentive-based compensation is any
compensation that is granted, earned, or vested based wholly or in part
upon the attainment of a financial reporting measure.
Received. Incentive-based compensation is deemed received in the
issuer's fiscal period during which the financial reporting measure
specified in the incentive-based compensation award is attained, even if
the payment or grant of the incentive-based compensation occurs after
the end of that period.
[87 FR 73138, Nov. 28, 2022]
Adoption of Floor Trading Regulation (Rule 11a-1)
Sec. 240.11a-1 Regulation of floor trading.
(a) No member of a national securities exchange, while on the floor
of such exchange, shall initiate, directly or indirectly, any
transaction in any security admitted to trading on such exchange, for
any account in which such member has an interest, or for any such
account with respect to which such member has discretion as to the
[[Page 128]]
time of execution, the choice of security to be bought or sold, the
total amount of any security to be bought or sold, or whether any such
transaction shall be one of purchase or sale.
(b) The provisions of paragraph (a) of this section shall not apply
to:
(1) Any transaction by a registered specialist in a security in
which he is so registered on such exchange;
(2) Any transaction for the account of an odd-lot dealer in a
security in which he is so registered on such exchange;
(3) Any stabilizing transaction effected in compliance with Sec.
242.104 of this chapter to facilitate a distribution of such security in
which such member is participating;
(4) Any bona fide arbitrage transaction;
(5) Any transaction made with the prior approval of a floor official
of such exchange to permit such member to contribute to the maintenance
of a fair and orderly market in such security, or any purchase or sale
to reverse any such transaction;
(6) Any transaction to offset a transaction made in error; or
(7) Any transaction effected in conformity with a plan designed to
eliminate floor trading activities which are not beneficial to the
market and which plan has been adopted by an exchange and declared
effective by the Commission. For the purpose of this rule, a plan filed
with the Commission by a national securities exchange shall not become
effective unless the Commission, having due regard for the maintenance
of fair and orderly markets, for the public interest, and for the
protection of investors, declares the plan to be effective.
(c) For the purpose of this rule the term ``on the floor of such
exchange'' shall include the trading floor; the rooms, lobbies, and
other premises immediately adjacent thereto for use of members
generally; other rooms, lobbies and premises made available primarily
for use by members generally; and the telephone and other facilities in
any such place.
(d) Any national securities exchange may apply for an exemption from
the provisions of this rule in compliance with the provisions of section
11(c) of the Act.
(Sec. 11, 48 Stat. 891; 15 U.S.C. 78k)
[29 FR 7381, June 6, 1964, as amended at 62 FR 544, Jan. 3, 1997]
Note 1: The Commission finding that the floor trading plan of the
New York Stock Exchange filed on May 25, 1964 is designed to eliminate
floor trading activities not beneficial to the market hereby declares
such plan effective August 3, 1964 subject to suspension or termination
on sixty days written notice from the Commission, 29 FR 7381, June 6,
1964.
Note 2: The text of the Commission's action declaring effective the
amendments to the Floor Trading Plan of the American Stock Exchange (33
FR 1073, Jan. 27, 1968) is as follows:
The Securities and Exchange Commission acting pursuant to the
Securities Exchange Act of 1934, particularly sections 11(a) and 23(a)
thereof, and Rule 11a-1 (17 CFR 240.11a-1) under the Act, deeming it
necessary for the exercise of the functions vested in it, and having due
regard for the maintenance of fair and orderly markets, for the public
interest, and for the protection of investors, hereby declares the Floor
Trading Plan of the American Stock Exchange, as amended by amendments
filed on May 11, 1967, effective January 31, 1968. If at any time it
appears to the Commission to be necessary or appropriate in the public
interest, for the protection of investors, or for the maintenance of
fair and orderly markets, or that floor trading activities which are not
beneficial to the market have not been eliminated by the Floor Trading
Plan of the American Stock Exchange, the Commission may suspend or
terminate the effectiveness of the plan by sending at least 60 days
written notice to the American Stock Exchange. The American Stock
Exchange shall have the opportunity to submit any written data, facts,
arguments, or modifications in its plan within such 60-day period in
such form as the Commission deems appropriate under the circumstances.
The Commission has been informed that all persons subject to the Floor
Trading Plan of the American Stock Exchange, as amended, have had actual
notice thereof, and the Commission finds that notice and procedure
pursuant to section 4 of the Administrative Procedure Act (5 U.S.C.
section 553) are impracticable and unnecessary and that such Plan, as
amended, may be, and is hereby, declared effective on January 31, 1968.
[[Page 129]]
Sec. 240.11a1-1(T) Transactions yielding priority, parity, and precedence.
(a) A transaction effected on a national securities exchange for the
account of a member which meets the requirements of section
11(a)(1)(G)(i) of the Act shall be deemed, in accordance with the
requirements of section 11(a)(1)(G)(ii), to be not inconsistent with the
maintenance of fair and orderly markets and to yield priority, parity,
and precedence in execution to orders for the account of persons who are
not members or associated with members of the exchange if such
transaction is effected in compliance with each of the following
requirements:
(1) A member shall disclose that a bid or offer for its account is
for its account to any member with whom such bid or offer is placed or
to whom it is communicated, and any such member through whom that bid or
offer is communicated shall disclose to others participating in
effecting the order that it is for the account of a member.
(2) Immediately before executing the order, a member (other than the
specialist in such security) presenting any order for the account of a
member on the exchange shall clearly announce or otherwise indicate to
the specialist and to other members then present for the trading in such
security on the exchange that he is presenting an order for the account
of a member.
(3) Notwithstanding rules of priority, parity, and precedence
otherwise applicable, any member presenting for execution a bid or offer
for its own account or for the account of another member shall grant
priority to any bid or offer at the same price for the account of a
person who is not, or is not associated with, a member, irrespective of
the size of any such bid or offer or the time when entered.
(b) A member shall be deemed to meet the requirements of section
11(a)(1)(G)(i) of the Act if during its preceding fiscal year more than
50 percent of its gross revenues was derived from one or more of the
sources specified in that section. In addition to any revenue which
independently meets the requirements of section 11(a)(1)(G)(i), revenue
derived from any transaction specified in paragraph (A), (B), or (D) of
section 11(a)(1) of the Act or specified in 17 CFR 240.11a1-4(T) shall
be deemed to be revenue derived from one or more of the sources
specified in section 11(a)(1)(G)(i). A member may rely on a list of
members which are stated to meet the requirements of section
11(a)(1)(G)(i) if such list is prepared, and updated at least annually,
by the exchange. In preparing any such list, an exchange may rely on a
report which sets forth a statement of gross revenues of a member if
covered by a report of independent accountants for such member to the
effect that such report has been prepared in accordance with generally
accepted accounting principles.
(Secs. 2, 3, 6, 11, 11A, and 23, 89 Stat. 97, 104, 110, 111, 156 (15
U.S.C. 78b, 78c, 78f, 78k, 78k-1, 78w); secs. 2, 3, 11, 23, 48 Stat.
881, 882, 885, 891, 901, as amended)
[43 FR 11553, Mar. 17, 1978, as amended at 43 FR 18562, May 1, 1978; 44
FR 6093, Jan. 31, 1979]
Sec. 240.11a1-2 Transactions for certain accounts of associated persons
of members.
A transaction effected by a member of a national securities exchange
for the account of an associated person thereof shall be deemed to be of
a kind which is consistent with the purposes of section 11(a)(1) of the
Act, the protection of investors, and the maintenance of fair and
orderly markets if the transaction is effected:
(a) For the account of and for the benefit of an associated person,
if, assuming such transaction were for the account of a member, or
(b) For the account of an associated person but for the benefit of
an account carried by such associated person, if, assuming such account
were carried on the same basis by a member.
The member would have been permitted, under section 11(a) of the Act and
the other rules thereunder, to effect the transaction: Provided,
however, That a transaction may not be effected by a member for the
account of and for the benefit of an associated person under section
11(a)(1)(G) of the Act and Rule 11a1-1(T) thereunder unless the
associated person derived, during its preceding fiscal year, more than
50 percent of its gross revenues from one or
[[Page 130]]
more of the sources specified in section 11(a)(1)(G)(i) of the Act.
(Secs. 2, 3, 4, 6, 7, 11, 18, 89 Stat. 97, 104, 110, 111, 121, 155 (15
U.S.C. 78b, 78c, 78f, 78k, 78k-1, 78o, 78w); secs. 2, 3, 10, 23, 48
Stat. 881, 882, 891, 901, as amended (15 U.S.C. 78j))
[43 FR 11553, Mar. 17, 1978; 43 FR 14451, Apr. 6, 1978]
Sec. 240.11a1-3(T) Bona fide hedge transactions in certain securities.
A bona fide hedge transaction effected on a national securities
exchange by a member for its own account or an account of an associated
person thereof and involving a long or short position in a security
entitling the holder to acquire or sell an equity security, and a long
or short position in one or more other securities entitling the holder
to acquire or sell such equity security, shall be deemed to be of a kind
which is consistent with the purposes of section 11(a)(1) of the Act,
the protection of investors, and the maintenance of fair and orderly
markets.
(Secs. 2, 3, 6, 11, 11A, and 23, 89 Stat. 97, 104, 110, 111, 156 (15
U.S.C. 78b, 78c, 78f, 78k, 78k-1, 78w); secs. 2, 3, 11, 23, 48 Stat.
881, 882, 885, 891, 901, as amended)
[44 FR 6093, Jan. 31, 1979]
Sec. 240.11a1-4(T) Bond transactions on national securities exchanges.
A transaction in a bond, note, debenture, or other form of
indebtedness effected on a national securities exchange by a member for
its own account or the account of an associated person thereof shall be
deemed to be of a kind which is consistent with the purposes of section
11(a)(1) of the Act, the protection of investors, and the maintenance of
fair and orderly markets.
(Secs. 2, 3, 6, 10, 11, 11A, 15 and 23 of the Securities Exchange Act of
1934 (15 U.S.C. 78b, 78c, 78f, 78j, 78k, 78k-1, 78o, and 78w))
[43 FR 18562, May 1, 1978]
Sec. 240.11a1-5 Transactions by registered competitive market makers
and registered equity market makers.
Any transaction by a New York Stock Exchange registered competitive
market maker or an American Stock Exchange registered equity market
maker effected in compliance with their respective governing rules shall
be deemed to be of a kind which is consistent with the purposes of
section 11(a)(1) of the Act, the protection of investors, and the
maintenance of fair and orderly markets.
[46 FR 14889, Mar. 3, 1981]
Sec. 240.11a1-6 Transactions for certain accounts of OTC derivatives dealers.
A transaction effected by a member of a national securities exchange
for the account of an OTC derivatives dealer that is an associated
person of that member shall be deemed to be of a kind that is consistent
with the purposes of section 11(a)(1) of the Act (15 U.S.C. 78k(a)(1)),
the protection of investors, and the maintenance of fair and orderly
markets if, assuming such transaction were for the account of a member,
the member would have been permitted, under section 11(a) of the Act and
the other rules thereunder (with the exception of Sec. 240.11a1-2), to
effect the transaction.
[63 FR 59396, Nov. 3, 1998]
Sec. 240.11a2-2(T) Transactions effected by exchange members through
other members.
(a) A member of a national securities exchange (the ``initiating
member'') may not effect a transaction on that exchange for its own
account, the account of an associated person, or an account with respect
to which it or an associated person thereof exercises investment
discretion unless:
(1) The transaction is of a kind described in paragraphs A through H
of section 11(a)(1) of the Act and is effected in accordance with
applicable rules and regulations thereunder; or
(2) The transaction is effected in compliance with each of the
following conditions:
(i) The transaction is executed on the floor, or through use of the
facilities, of the exchange by a member (the ``executing member'') which
is not an associated person of the initiating member;
(ii) The order for the transaction is transmitted from off the
exchange floor;
[[Page 131]]
(iii) Neither the initiating member nor an associated person of the
initiating member participates in the execution of the transaction at
any time after the order for the transaction has been so transmitted;
and
(iv) In the case of a transaction effected for an account with
respect to which the initiating member or an associated person thereof
exercises investment discretion, neither the initiating member nor any
associated person thereof retains any compensation in connection with
effecting the transaction: Provided, however, That this condition shall
not apply to the extent that the person or persons authorized to
transact business for the account have expressly provided otherwise by
written contract referring to section 11(a) of the Act and this section
executed on or after March 15, 1978, by each of them and by such
exchange member or associated person exercising investment discretion.
(b) For purposes of this section, a member ``effects'' a securities
transaction when it performs any function in connection with the
processing of that transaction, including, but not limited to, (1)
transmission of an order for execution, (2) execution of the order, (3)
clearance and settlement of the transaction, and (4) arranging for the
performance of any such function.
(c) For purposes of this section, the term ``compensation in
connection with effecting the transaction'' refers to compensation
directly or indirectly received or calculated on a transaction-related
basis for the performance of any function involved in effecting a
securities transaction.
(d) A member, or an associated person of a member, authorized by
written contract to retain compensation in connection with effecting
transactions pursuant to paragraph (a)(2)(iv) of this section shall
furnish at least annually to the person or persons authorized to
transact business for the account a statement setting forth the total
amount of all compensation retained by the member or any associated
person thereof in connection with effecting transactions for that
account during the period covered by the statement, which amount shall
be exclusive of all amounts paid to others during that period for
services rendered in effecting such transactions.
(e) A transaction effected in compliance with the requirements of
this section shall be deemed to be of a kind which is consistent with
the purposes of section 11(a)(1) of the Act, the protection of
investors, and the maintenance of fair and orderly markets.
(f) The provisions of this section shall not apply to transactions
by exchange members to which, by operation of section 11(a)(3) of the
Act, section 11(a)(1) of the Act is not effective.
(Secs. 2, 3, 4, 6, 7, 11, 18, 89 Stat. 97, 104, 110, 111, 121, 155 (15
U.S.C. 78b, 78c, 78f, 78k, 78k-1, 78o, 78w); secs. 2, 3, 10, 23, 48
Stat. 881, 882, 891, 901, as amended (15 U.S.C. 78j))
[43 FR 11554, Mar. 17, 1978, as amended at 43 FR 18562, May 1, 1978]
Adoption of Regulation on Conduct of Specialists
Sec. 240.11b-1 Regulation of specialists.
(a)(1) The rules of a national securities exchange may permit a
member of such exchange to register as a specialist and to act as a
dealer.
(2) The rules of a national securities exchange permitting a member
of such exchange to register as a specialist and to act as a dealer
shall include:
(i) Adequate minimum capital requirements in view of the markets for
securities on such exchange;
(ii) Requirements, as a condition of a specialist's registration,
that a specialist engage in a course of dealings for his own account to
assist in the maintenance, so far as practicable, of a fair and orderly
market, and that a finding by the exchange of any substantial or
continued failure by a specialist to engage in such a course of dealings
will result in the suspension or cancellation of such specialist's
registration in one or more of the securities in which such specialist
is registered;
(iii) Provisions restricting his dealings so far as practicable to
those reasonably necessary to permit him to maintain a fair and orderly
market or necessary to permit him to act as an odd-lot dealer;
(iv) Provisions stating the responsibilities of a specialist acting
as a
[[Page 132]]
broker in securities in which he is registered; and
(v) Procedures to provide for the effective and systematic
surveillance of the activities of specialists.
(b) If after appropriate notice and opportunity for hearing the
Commission finds that a member of a national securities exchange
registered with such exchange as a specialist in specified securities
has, for any account in which he, his member organization, or any
participant therein has any beneficial interest, direct or indirect,
effected transactions in such securities which were not part of a course
of dealings reasonably necessary to permit such specialist to maintain a
fair and orderly market, or to act as an odd-lot dealer, in the
securities in which he is registered and were not effected in a manner
consistent with the rules adopted by such exchange pursuant to paragraph
(a)(2)(iii) of this section, the Commission may by order direct such
exchange to cancel, or to suspend for such period as the Commission may
determine, such specialist's registration in one or more of the
securities in which such specialist is registered: Provided, however, If
such exchange has itself suspended or cancelled such specialist's
registration in one or more of the securities in which such specialist
is registered, no further sanction shall be imposed pursuant to this
paragraph (b) except in a case where the Commission finds substantial or
continued misconduct by a specialist: And provided, further, That the
provisions of this paragraph (b) shall not apply to a member of a
national securities exchange exempted pursuant to the provisions of
paragraph (d) of this section.
(c) For the purposes of this section, the term rules of an exchange
shall mean its constitution, articles of incorporation, by-laws, or
rules or instruments corresponding thereto, whatever the name, and its
stated policies.
(d) Any national securities exchange may apply for an exemption from
the provisions of this section in compliance with the provisions of
section 11(c) of the Act.
(Sec. 11, 48 Stat. 891, 892; 15 U.S.C. 78k)
[29 FR 15863, Nov. 26, 1964, as amended at 46 FR 15135, Mar. 4, 1981]
Exemption of Certain Securities From Section 11(d)(1)
Sec. 240.11d1-1 Exemption of certain securities from section 11(d)(1).
A security shall be exempt from the provisions of section 11(d)(1)
with respect to any transaction by a broker and dealer who, directly or
indirectly extends or maintains or arranges for the extension or
maintenance of credit on the security to or for a customer if:
(a) The broker and dealer has not sold the security to the customer
or bought the security for the customer's account; or
(b) The security is acquired by the customer in exchange with the
issuer thereof for an outstanding security of the same issuer on which
credit was lawfully maintained for the customer at the time of the
exchange; or
(c) The customer is a broker or dealer or bank; or
(d) The security is acquired by the customer through the exercise of
a right evidenced by a warrant or certificate expiring within 90 days
after issuance, provided such right was originally issued to the
customer as a stockholder of the corporation issuing the security upon
which credit is to be extended. The right shall be deemed to be issued
to the customer as a stockholder if he actually owned the stock giving
rise to the right when such right accrued, even though such stock was
not registered in his name; and in determining such fact the broker and
dealer may rely upon a signed statement of the customer which the broker
and dealer accepts in good faith; or
(e) Such broker and dealer would otherwise be subject to the
prohibition of section 11(d)(1) with respect to 50 percent or less of
all the securities of the same class which are outstanding or currently
being distributed, and such broker and dealer sold the security to the
customer or bought the security for the customer's account on a day when
he was not participating in the distribution of any new issue of such
security. A brokerdealer shall be deemed to be participating in a
distribution of a new issue if (1) he owns, directly or indirectly, any
undistributed security of such issue, or (2) he is engaged in any
stabilizing activities to
[[Page 133]]
facilitate a distribution of such issue, or (3) he is a party to any
syndicate agreement under which such stabilizing activities are being or
may be undertaken, or (4) he is a party to an executory agreement to
purchase or distribute such issue.
[13 FR 8184, Dec. 22, 1948, as amended at 76 FR 71876, Nov. 21, 2011]
Sec. 240.11d1-2 Exemption from section 11(d)(1) for certain investment
company securities held by broker-dealers as collateral in margin accounts.
Any securities issued by a registered open-end investment company or
unit investment trust as defined in the Investment Company Act of 1940
shall be exempted from the provisions of section 11(d)(1) with respect
to any transaction by a person who is a broker and a dealer who,
directly or indirectly, extends or maintains or arranges for the
extension or maintenance of credit on such security, provided such
security has been owned by the person to whom credit would be provided
for more than 30 days, or purchased by such person pursuant to a plan
for the automatic reinvestment of the dividends of such company or
trust.
(Secs. 2, 3, 11, and 23, Exchange Act, 15 U.S.C. 78b, 78c, 78k and 78w)
[49 FR 50174, Dec. 27, 1984]
Sec. 240.11d2-1 Exemption from Section 11(d)(2) for certain
broker-dealers effecting transactions for customers security futures
products in futures accounts.
A broker or dealer registered pursuant to section 15(b)(1) of the
Act (15 U.S.C. 78o(b)(1)) that is also a futures commission merchant
registered pursuant to section 4f(a)(1) of the Commodity Exchange Act (7
U.S.C. 6f(a)(1)), to the extent that it effects transactions for
customers in security futures products in a futures account (as that
term is defined in Sec. 240.15c3-3(a)(15)), is exempt from section
11(d)(2) of the Act (15 U.S.C. 78k(d)(2)).
[67 FR 58313, Sept. 13, 2002]
Securities Exempted From Registration
Sec. 240.12a-4 Exemption of certain warrants from section 12(a).
(a) When used in this section, the following terms shall have the
meaning indicated unless the context otherwise requires:
(1) The term warrant means any warrant or certificate evidencing a
right to subscribe to or otherwise acquire another security, issued or
unissued.
(2) The term beneficiary security means a security to the holders of
which a warrant or right to subscribe to or otherwise acquire another
security is granted.
(3) The term subject security means a security which is the subject
of a warrant or right to subscribe to or otherwise acquire such
security.
(4) The term in the process of admission to dealing, in respect of a
specified security means that (i) an application has been filed pursuant
to section 12 (b) and (c) of the Act for the registration of such
security on a national securities exchange; or (ii) the Commission has
granted an application made pursuant to section 12(f) of the Act to
continue or extend unlisted trading privileges to such security on a
national securities exchange; or (iii) written notice has been filed
with the Commission by a national securities exchange to the effect that
such security has been approved for admission to dealing as a security
exempted from the operation of section 12(a) of the Act.
(b) Any issued or unissued warrant granted to the holders of a
security admitted to dealing on a national securities exchange, shall be
exempt from the operation of section 12(a) of the Act to the extent
necessary to render lawful the effecting of transactions therein on any
national securities exchange (i) on which the beneficiary security is
admitted to dealing or (ii) on which the subject security is admitted to
dealing or is in the process of admission to dealing, subject to the
following terms and conditions:
(1) Such warrant by its terms expires within 90 days after the
issuance thereof;
(2) A registration statement under the Securities Act of 1933 is in
effect as
[[Page 134]]
to such warrant and as to each subject security, or the applicable terms
of any exemption from such registration have been met in respect to such
warrant and each subject security; and
(3) Within five days after the exchange has taken official action to
admit such warrant to dealing, it shall notify the Commission of such
action.
(c) Notwithstanding paragraph (b) of this section, no exemption
pursuant to this section shall be available for transactions in any such
warrant on any exchange on which the beneficiary security is admitted to
dealing unless:
(1) Each subject security is admitted to dealing or is in process of
admission to dealing on a national securities exchange; or
(2) There is available from a registration statement and periodic
reports or other data filed by the issuer of the subject security,
pursuant to any act administered by the Commission, information
substantially equivalent to that available with respect to a security
listed and registered on a national securities exchange.
(d) Notwithstanding the foregoing, an unissued warrant shall not be
exempt pursuant to this section unless:
(1) Formal or official announcement has been made by the issuer
specifying (i) the terms upon which such warrant and each subject
security is to be issued, (ii) the date, if any, as of which the
security holders entitled to receive such warrant will be determined,
(iii) the approximate date of the issuance of such warrant, and (iv) the
approximate date of the issuance of each subject security; and,
(2) The members of the exchange are subject to rules which provide
that the performance of the contract to purchase and sell an unissued
warrant shall be conditioned upon the issuance of such warrant.
(e) The Commission may by order deny or revoke the exemption of a
warrant under this section, if, after appropriate notice and opportunity
for hearing to the issuer of such warrant and to the exchange or
exchanges on which such warrant is admitted to dealing as an exempted
security, it finds that:
(1) Any of the terms or conditions of this section have not been met
with respect to such exemption, or
(2) At any time during the period of such exemption transactions
have been effected on any such exchanges in such warrant which (i)
create or induce a false, misleading or artificial appearance of
activity, (ii) unduly or improperly influence the market price, or (iii)
make a price which does not reflect the true state of the market; or
(3) Any other facts exist which make such denial or revocation
necessary or appropriate in the public interest or for the protection of
investors.
(f) If it appears necessary or appropriate in the public interest or
for the protection of investors, the Commission may summarily suspend
the exemption of such warrant pending the determination by the
Commission whether such exemption shall be denied or revoked.
(g) Section 240.10b-1 shall be applicable to any warrant exempted by
this section.
(Secs. 3, 12, 48 Stat. 882, as amended, 892; 15 U.S.C. 78c, 78l)
[15 FR 3450, June 2, 1950, as amended at 18 FR 128, Jan. 7, 1953]
Sec. 240.12a-5 Temporary exemption of substituted or additional
securities.
(a)(1) Subject to the conditions of paragraph (a)(2) of this
section, whenever the holders of a security admitted to trading on a
national securities exchange (hereinafter called the original security)
obtain the right, by operation of law or otherwise, to acquire all or
any part of a class of another or substitute security of the same or
another issuer, or an additional amount of the original security, then:
(i) All or any part of the class of such other or substituted
security shall be temporarily exempted from the operation of section
12(a) to the extent necessary to render lawful transactions therein on
an issued or ``when-issued'' basis on any national securities exchange
on which the original, the other or the substituted security is lawfully
admitted to trading; and
(ii) The additional amount of the original security shall be
temporarily exempted from the operation of section 12(a) to the extent
necessary to render lawful transactions therein on a ``when-issued''
basis on any national
[[Page 135]]
securities exchange on which the original security is lawfully admitted
to trading.
(2) The exemptions provided by paragraph (a)(1) of this section
shall be available only if the following conditions are met:
(i) A registration statement is in effect under the Securities Act
of 1933 to the extent required as to the security which is the subject
of such exemption, or the terms of any applicable exemption from
registration under such act have been complied with, if required;
(ii) Any stockholder approval necessary to the issuance of the
security which is the subject of the exemption, has been obtained; and
(iii) All other necessary official action, other than the filing or
recording of charter amendments or other documents with the appropriate
State authorities, has been taken to authorize and assure the issuance
of the security which is the subject of such exemption.
(b) The exemption provided by this section shall terminate on the
earliest of the following dates:
(1) When registration of the exempt security on the exchange become
effective;
(2) When the exempt security is granted unlisted trading privileges
on the exchange;
(3) The close of business on the tenth day after (i) withdrawal of
an application for registration of the exempt security on the exchange;
(ii) withdrawal by the exchange of its certification of approval of the
exempt security for listing and registration; (iii) withdrawal of an
application for admission of the exempt security to unlisted trading
privileges on the exchange; or (iv) the sending to the exchange of
notice of the entry of an order by the Commission denying any
application for admission of the exempt security to unlisted trading
privileges on the exchange;
(4) The close of business on the one hundred and twentieth day after
the date on which the exempt security was admitted by action of the
exchange to trading thereon as a security exempted from the operation of
section 12 (a) by this section, unless prior thereto an application for
registration of the exempt security or for admission of the exempt
security to unlisted trading privileges on the exchange has been filed.
(c) Notwithstanding paragraph (b) of this section, the Commission,
having due regard for the public interest and the protection of
investors, may at any time extend the period of exemption of any
security by this rule or may sooner terminate the exemption upon notice
to the exchange and to the issuer of the extension or termination
thereof.
(d) The Exchange shall file with the Commission a notification on
Form 26 \1\ promptly after taking action to admit any security to
trading under this section: Provided, however, That no notification need
be filed under this section concerning the admission or proposed
admission to trading of additional amounts of a class of security
admitted to trading on such exchange.
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\1\ Copy filed with the Federal Register Division.
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(e) Section 240.10b-1 shall be applicable to all securities exempted
from the operation of section 12(a) of the act by this section.
(Secs. 3, 12, 48 Stat. 882, 892; 15 U.S.C. 78c (12), 78l)
[13 FR 8185, Dec. 22, 1948, as amended at 19 FR 669, Feb. 5, 1954; 20 FR
2081, Apr. 2, 1955; 53 FR 41206, Oct. 20, 1988]
Sec. 240.12a-6 Exemption of securities underlying certain options from
section 12(a).
(a) When used in this rule, the following terms shall have the
meanings indicated unless the context otherwise requires:
(1) The term option shall include any put, call, spread, straddle,
or other option or privilege of buying a security from or selling a
security to another without being bound to do so, but such term shall
not include any such option where the writer is: The issuer of the
security which may be purchased or sold upon exercise of the option, or
is a person that directly, or indirectly, through one or more
intermediaries, controls, or is controlled by, or is under common
control with such issuer;
(2) The term underlying security means a security which relates to
or is the subject of an option.
[[Page 136]]
(b) Any underlying security shall be exempt from the operation of
section 12(a) of the Act if all of the following terms and conditions
are met:
(1) The related option is duly listed and registered on a national
securities exchange;
(2) The only transactions on such exchange with respect to such
underlying securities consist of the delivery of and payment for such
underlying securities pursuant to the terms of such options relating to
the exercise thereof; and
(3) Such underlying security is (i) duly listed and registered on
another national securities exchange at the time the option is issued;
or (ii) duly quoted on the National Association of Securities Dealers
Automated Quotation System (``NASDAQ'') at the time the option is
issued.
(Secs. 3(a)(12); 48 Stat. 882, 84 Stat. 718, 1435, 1499 (15 U.S.C.
78(c)))
[38 FR 11449, May 8, 1973, as amended at 50 FR 20203, May 15, 1985]
Sec. 240.12a-7 Exemption of stock contained in standardized market
baskets from section 12(a) of the Act.
(a) Any component stock of a standardized market basket shall be
exempt from the registration requirement of section 12(a) of the Act,
solely for the purpose of inclusion in a standardized market basket,
provided that all of the following terms and conditions are met:
(1) The standardized market basket has been duly approved by the
Commission for listing on a national securities exchange pursuant to the
requirements of section 19(b) of the Act; and
(2) The stock is an NMS stock as defined in Sec. 242.600 of this
chapter and is either:
(i) Listed and registered for trading on a national securities
exchange by the issuer or
(ii) Quoted on the National Association of Securities Dealers
Automated Quotation System;
(b) When used in this rule, the term standardized market basket
means a group of at least 100 stocks purchased or sold in a single
execution and at a single trading location with physical delivery and
transfer of ownership of each component stock resulting from such
execution.
[56 FR 28322, June 20, 1991, as amended at 70 FR 37618, June 29, 2005]
Sec. 240.12a-8 Exemption of depositary shares.
Depositary shares (as that term is defined in Sec. 240.12b-2)
registered on Form F-6 (Sec. 239.36 of this chapter), but not the
underlying deposited securities, shall be exempt from the operation of
section 12(a) of the Act (15 U.S.C. 78l(a)).
[62 FR 39766, July 24, 1997]
Sec. 240.12a-9 Exemption of standardized options from section 12(a)
of the Act.
The provisions of section 12(a) of the Act (15 U.S.C. 78l(a)) do not
apply in respect of any standardized option, as defined by section
240.9b-1(a)(4), issued by a clearing agency registered under section 17A
of the Act (15 U.S.C. 78q-1) and traded on a national securities
exchange registered pursuant to section 6(a) of the Act (15 U.S.C.
78f(a)).
[68 FR 192, Jan. 2, 2003]
Sec. 240.12a-10 Exemption of security-based swaps from section 12(a)
of the Act.
The provisions of Section 12(a) of the Act (15 U.S.C. 78l(a)) do not
apply to any security-based swap that:
(a) Is issued or will be issued by a clearing agency registered as a
clearing agency under Section 17A of the Act (15 U.S.C. 78q-1) or exempt
from registration under Section 17A of the Act pursuant to a rule,
regulation, or order of the Commission, in its function as a central
counterparty with respect to the security-based swap;
(b) The Commission has determined is required to be cleared or that
is permitted to be cleared pursuant to the clearing agency's rules;
(c) Is sold to an eligible contract participant (as defined in
Section 1a(18) of the Commodity Exchange Act (7 U.S.C. 1a(18))) in
reliance on Rule 239 under the Securities Act of 1933 (17 CFR 230.239);
and
[[Page 137]]
(d) Is traded on a national securities exchange registered pursuant
to Section 6(a) of the Act (15 U.S.C. 78f(a)).
[77 FR 20549, Apr. 5, 2012]
Sec. 240.12a-11 Exemption of security-based swaps sold in reliance on
Securities Act of 1933 Rule 240 (Sec. 230.240) from section 12(a) of
the Act.
(a) The provisions of Section 12(a) of the Act (15 U.S.C. 78l(a)) do
not apply to any security-based swap offered and sold in reliance on
Sec. 230.240 of this chapter.
(b) This section will expire on February 11, 2018.
[82 FR 10707, Feb. 15, 2017]
Regulation 12B: Registration and Reporting
Source: Sections 240.12b-1 through 240.12b-36 appear at 13 FR 9321,
Dec. 31, 1948, unless otherwise noted.
ATTENTION ELECTRONIC FILERS
THIS REGULATION SHOULD BE READ IN CONJUNCTION WITH REGULATION S-T (PART
232 OF THIS CHAPTER), WHICH GOVERNS THE PREPARATION AND SUBMISSION OF
DOCUMENTS IN ELECTRONIC FORMAT. MANY PROVISIONS RELATING TO THE
PREPARATION AND SUBMISSION OF DOCUMENTS IN PAPER FORMAT CONTAINED IN
THIS REGULATION ARE SUPERSEDED BY THE PROVISIONS OF REGULATION S-T FOR
DOCUMENTS REQUIRED TO BE FILED IN ELECTRONIC FORMAT.
General
Sec. 240.12b-1 Scope of regulation.
The rules contained in this regulation shall govern all registration
statements pursuant to sections 12(b) and 12(g) of the Act and all
reports filed pursuant to sections 13 and 15(d) of the Act, including
all amendments to such statements and reports, except that any provision
in a form covering the same subject matter as any such rule shall be
controlling.
[47 FR 11464, Mar. 16, 1982]
Sec. 240.12b-2 Definitions.
Unless the context otherwise requires, the following terms, when
used in the rules contained in this regulation or in Regulation 13A or
15D or in the forms for statements and reports filed pursuant to
sections 12, 13 or 15(d) of the act, shall have the respective meanings
indicated in this rule:
Accelerated filer and large accelerated filer--(1) Accelerated
filer. The term accelerated filer means an issuer after it first meets
the following conditions as of the end of its fiscal year:
(i) The issuer had an aggregate worldwide market value of the voting
and non-voting common equity held by its non-affiliates of $75 million
or more, but less than $700 million, as of the last business day of the
issuer's most recently completed second fiscal quarter;
(ii) The issuer has been subject to the requirements of section
13(a) or 15(d) of the Act (15 U.S.C. 78m or 78o(d)) for a period of at
least twelve calendar months; and
(iii) The issuer has filed at least one annual report pursuant to
section 13(a) or 15(d) of the Act; and
(iv) The issuer is not eligible to use the requirements for smaller
reporting companies under the revenue test in paragraph (2) or
(3)(iii)(B) of the ``smaller reporting company'' definition in this
section, as applicable.
(2) Large accelerated filer. The term large accelerated filer means
an issuer after it first meets the following conditions as of the end of
its fiscal year:
(i) The issuer had an aggregate worldwide market value of the voting
and non-voting common equity held by its non-affiliates of $700 million
or more, as of the last business day of the issuer's most recently
completed second fiscal quarter;
(ii) The issuer has been subject to the requirements of section
13(a) or 15(d) of the Act for a period of at least twelve calendar
months; and
(iii) The issuer has filed at least one annual report pursuant to
section 13(a) or 15(d) of the Act; and
(iv) The issuer is not eligible to use the requirements for smaller
reporting companies under the revenue test in paragraph (2) or
(3)(iii)(B) of the ``smaller reporting company'' definition in this
section, as applicable.
(3) Entering and exiting accelerated filer and large accelerated
filer status.
[[Page 138]]
(i) The determination at the end of the issuer's fiscal year for
whether a non-accelerated filer becomes an accelerated filer, or whether
a non-accelerated filer or accelerated filer becomes a large accelerated
filer, governs the deadlines for the annual report to be filed for that
fiscal year, the quarterly and annual reports to be filed for the
subsequent fiscal year and all annual and quarterly reports to be filed
thereafter while the issuer remains an accelerated filer or large
accelerated filer.
(ii) Once an issuer becomes an accelerated filer, it will remain an
accelerated filer unless: The issuer determines, at the end of a fiscal
year, that the aggregate worldwide market value of the voting and non-
voting common equity held by its non-affiliates was less than $60
million, as of the last business day of the issuer's most recently
completed second fiscal quarter; or it determines that it is eligible to
use the requirements for smaller reporting companies under the revenue
test in paragraph (2) or (3)(iii)(B) of the ``smaller reporting
company'' definition in this section, as applicable. An issuer that
makes either of these determinations becomes a non-accelerated filer.
The issuer will not become an accelerated filer again unless it
subsequently meets the conditions in paragraph (1) of this definition.
(iii) Once an issuer becomes a large accelerated filer, it will
remain a large accelerated filer unless: It determines, at the end of a
fiscal year, that the aggregate worldwide market value of the voting and
non-voting common equity held by its non-affiliates (``aggregate
worldwide market value'') was less than $560 million, as of the last
business day of the issuer's most recently completed second fiscal
quarter or it determines that it is eligible to use the requirements for
smaller reporting companies under the revenue test in paragraph (2) or
(3)(iii)(B) of the ``smaller reporting company'' definition in this
section, as applicable. If the issuer's aggregate worldwide market value
was $60 million or more, but less than $560 million, as of the last
business day of the issuer's most recently completed second fiscal
quarter, and it is not eligible to use the requirements for smaller
reporting companies under the revenue test in paragraph (2) or
(3)(iii)(B) of the ``smaller reporting company'' definition in this
section, as applicable, it becomes an accelerated filer. If the issuer's
aggregate worldwide market value was less than $60 million, as of the
last business day of the issuer's most recently completed second fiscal
quarter, or it is eligible to use the requirements for smaller reporting
companies under the revenue test in paragraph (2) or (3)(iii)(B) of the
``smaller reporting company'' definition in this section, it becomes a
non-accelerated filer. An issuer will not become a large accelerated
filer again unless it subsequently meets the conditions in paragraph (2)
of this definition.
(iv) The determination at the end of the issuer's fiscal year for
whether an accelerated filer becomes a non-accelerated filer, or a large
accelerated filer becomes an accelerated filer or a non-accelerated
filer, governs the deadlines for the annual report to be filed for that
fiscal year, the quarterly and annual reports to be filed for the
subsequent fiscal year and all annual and quarterly reports to be filed
thereafter while the issuer remains an accelerated filer or non-
accelerated filer.
Note to paragraphs (1), (2) and (3): The aggregate worldwide market
value of the issuer's outstanding voting and non-voting common equity
shall be computed by use of the price at which the common equity was
last sold, or the average of the bid and asked prices of such common
equity, in the principal market for such common equity.
(4) For purposes of paragraphs (1), (2), and (3) of this definition
only, a business development company is considered to be eligible to use
the requirements for smaller reporting companies under the revenue test
in paragraph (2) or (3)(iii)(B) of the ``smaller reporting company''
definition in this section, provided that the business development
company meets the requirements of the test using annual investment
income under Rule 6-07.1 of Regulation S-X (17 CFR 210.6-07.1) as the
measure of its ``annual revenues'' for purposes of the test.
Affiliate. An ``affiliate'' of, or a person ``affiliated'' with, a
specified person, is a person that directly, or indirectly through one
or more intermediaries, controls, or is controlled by,
[[Page 139]]
or is under common control with, the person specified.
Amount. The term ``amount,'' when used in regard to securities,
means the principal amount if relating to evidences of indebtedness, the
number of shares if relating to shares, and the number of units if
relating to any other kind of security.
Associate. The term ``associate'' used to indicate a relationship
with any person, means (1) any corporation or organization (other than
the registrant or a majority-owned subsidiary of the registrant) of
which such person is an officer or partner or is, directly or
indirectly, the beneficial owner of 10 percent or more of any class of
equity securities, (2) any trust or other estate in which such person
has a substantial beneficial interest or as to which such person serves
as trustee or in a similar fiduciary capacity, and (3) any relative or
spouse of such person, or any relative of such spouse, who has the same
home as such person or who is a director or officer of the registrant or
any of its parents or subsidiaries.
Business combination related shell company: The term business
combination related shell company means a shell company (as defined in
Sec. 240.12b-2) that is:
(1) Formed by an entity that is not a shell company solely for the
purpose of changing the corporate domicile of that entity solely within
the United States; or
(2) Formed by an entity that is not a shell company solely for the
purpose of completing a business combination transaction (as defined in
Sec. 230.165(f) of this chapter) among one or more entities other than
the shell company, none of which is a shell company.
Certified. The term ``certified,'' when used in regard to financial
statements, means examined and reported upon with an opinion expressed
by an independent public or certified public accountant.
Charter. The term ``charter'' includes articles of incorporation,
declarations of trust, articles of association or partnership, or any
similar instrument, as amended, effecting (either with or without filing
with any governmental agency) the organization or creation of an
incorporated or unincorporated person.
Common equity. The term ``common equity'' means any class of common
stock or an equivalent interest, including but not limited to a unit of
beneficial interest in a trust or a limited partnership interest.
Control. The term ``control'' (including the terms ``controlling,''
``controlled by'' and ``under common control with'') means the
possession, direct or indirect, of the power to direct or cause the
direction of the management and policies of a person, whether through
the ownership of voting securities, by contract, or otherwise.
Depositary share. The term ``depositary share'' means a security,
evidenced by an American Depositary Receipt, that represents a foreign
security or a multiple of or fraction thereof deposited with a
depositary.
Emerging growth company. (1) The term emerging growth company means
an issuer that had total annual gross revenues of less than
$1,235,000,000 during its most recently completed fiscal year.
(2) An issuer that is an emerging growth company as of the first day
of that fiscal year shall continue to be deemed an emerging growth
company until the earliest of:
(i) The last day of the fiscal year of the issuer during which it
had total annual gross revenues of $1,235,000,000 or more;
(ii) The last day of the fiscal year of the issuer following the
fifth anniversary of the date of the first sale of common equity
securities of the issuer pursuant to an effective registration statement
under the Securities Act of 1933;
(iii) The date on which such issuer has, during the previous three
year period, issued more than $1,000,000,000 in non-convertible debt; or
(iv) The date on which such issuer is deemed to be a large
accelerated filer, as defined in Rule 12b-2 (Sec. 240.12b-2 of this
chapter).
Employee. The term ``employee'' does not include a director,
trustee, or officer.
Fiscal year. The term ``fiscal year'' means the annual accounting
period or, if no closing date has been adopted, the calendar year ending
on December 31.
Majority-owned subsidiary. The term ``majority-owned subsidiary''
means a
[[Page 140]]
subsidiary more than 50 percent of whose outstanding securities
representing the right, other than as affected by events of default, to
vote for the election of directors, is owned by the subsidiary's parent
and/or one or more of the parent's other majority-owned subsidiaries.
Managing underwriter. The term ``managing underwriter'' includes an
underwriter (or underwriters) who, by contract or otherwise, deals with
the registrant; organizes the selling effort; receives some benefit
directly or indirectly in which all other underwriters similarly
situated do not share in proportion to their respective interests in the
underwriting; or represents any other underwriters in such matters as
maintaining the records of the distribution, arranging the allotments of
securities offered or arranging for appropriate stabilization
activities, if any.
Material. The term ``material,'' when used to qualify a requirement
for the furnishing of information as to any subject, limits the
information required to those matters to which there is a substantial
likelihood that a reasonable investor would attach importance in
determining whether to buy or sell the securities registered.
Material weakness. The term material weakness is a deficiency, or a
combination of deficiencies, in internal control over financial
reporting such that there is a reasonable possibility that a material
misstatement of the registrant's annual or interim financial statements
will not be prevented or detected on a timely basis.
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.
Previously filed or reported. The terms ``previously filed'' and
``previously reported'' mean previously filed with, or reported in, a
statement under section 12, a report under section 13 or 15(d), a
definitive proxy statement or information statement under section 14 of
the act, or a registration statement under the Securities Act of 1933:
Provided, That information contained in any such document shall be
deemed to have been previously filed with, or reported to, an exchange
only if such document is filed with such exchange.
Principal underwriter. The term ``principal underwriter'' means an
underwriter in privity of contract with the issuer of the securities as
to which he is underwriter.
Promoter. (1) The term ``promoter'' includes:
(i) Any person who, acting alone or in conjunction with one or more
other persons, directly or indirectly takes initiative in founding and
organizing the business or enterprise of an issuer; or
(ii) Any person who, in connection with the founding and organizing
of the business or enterprise of an issuer, directly or indirectly
receives in consideration of services or property, or both services and
property, 10 percent or more of any class of securities of the issuer or
10 percent or more of the proceeds from the sale of any class of such
securities. However, a person who receives such securities or proceeds
either solely as underwriting commissions or solely in consideration of
property shall not be deemed a promoter within the meaning of this
paragraph if such person does not otherwise take part in founding and
organizing the enterprise.
(2) All persons coming within the definition of ``promoter'' in
paragraph (1) of this definition may be referred to as ``founders'' or
``organizers'' or by another term provided that such term is reasonably
descriptive of those persons' activities with respect to the issuer.
Prospectus. Unless otherwise specified or the context otherwise
requires, the term ``prospectus'' means a prospectus meeting the
requirements of section 10(a) of the Securities Act of 1933 as amended.
Registrant. The term ``registrant'' means an issuer of securities
with respect to which a registration statement or report is to be filed.
[[Page 141]]
Registration statement. The term ``registration statement'' or
``statement'', when used with reference to registration pursuant to
section 12 of the act, includes both an application for registration of
securities on a national securities exchange pursuant to section 12(b)
of the act and a registration statement filed pursuant to section 12(g)
of the act.
Share. The term ``share'' means a share of stock in a corporation or
unit of interest in an unincorporated person.
Shell company: The term shell company means a registrant, other than
an asset-backed issuer as defined in Item 1101(b) of Regulation AB
(Sec. 229.1101(b) of this chapter), that has:
(1) No or nominal operations; and
(2) Either:
(i) No or nominal assets;
(ii) Assets consisting solely of cash and cash equivalents; or
(iii) Assets consisting of any amount of cash and cash equivalents
and nominal other assets.
Note: For purposes of this definition, the determination of a
registrant's assets (including cash and cash equivalents) is based
solely on the amount of assets that would be reflected on the
registrant's balance sheet prepared in accordance with generally
accepted accounting principles on the date of that determination.
Significant deficiency. The term significant deficiency is a
deficiency, or a combination of deficiencies, in internal control over
financial reporting that is less severe than a material weakness, yet
important enough to merit attention by those responsible for oversight
of the registrant's financial reporting.
Significant subsidiary. The term significant subsidiary means a
subsidiary, including its subsidiaries, which meets any of the
conditions in paragraph (1), (2), or (3) of this definition; however, if
the registrant is a registered investment company or a business
development company, the tested subsidiary meets any of the conditions
in paragraph (4) of this definition instead of any of the conditions in
paragraph (1), (2), or (3) of this definition. A registrant that files
its financial statements in accordance with or provides a reconciliation
to U.S. Generally Accepted Accounting Principles (U.S. GAAP) must use
amounts determined under U.S. GAAP. A foreign private issuer that files
its financial statements in accordance with International Financial
Reporting Standards as issued by the International Accounting Standards
Board (IFRS-IASB) must use amounts determined under IFRS-IASB.
(1) Investment test. (i) For acquisitions, other than those
described in paragraph (1)(ii) of this definition, and dispositions this
test is met when the registrant's and its other subsidiaries'
investments in and advances to the tested subsidiary exceed 10 percent
of the aggregate worldwide market value of the registrant's voting and
non-voting common equity, or if the registrant has no such aggregate
worldwide market value, the total assets of the registrant and its
subsidiaries consolidated as of the end of the most recently completed
fiscal year.
(A) For acquisitions, the ``investments in'' the tested subsidiary
is the consideration transferred, adjusted to exclude the registrant's
and its subsidiaries' proportionate interest in the carrying value of
assets transferred by the registrant and its subsidiaries consolidated
to the tested subsidiary that will remain with the combined entity after
the acquisition. It must include the fair value of contingent
consideration if required to be recognized at fair value by the
registrant at the acquisition date under U.S. GAAP or IFRS-IASB, as
applicable; however if recognition at fair value is not required, it
must include all contingent consideration, except contingent
consideration for which the likelihood of payment is remote.
(B) For dispositions, the ``investments in'' the tested subsidiary
is the fair value of the consideration, including contingent
consideration, for the disposed subsidiary when comparing to the
aggregate worldwide market value of the registrant's voting and non-
voting common equity, or, when the registrant has no such aggregate
worldwide market value, the carrying value of the disposed subsidiary
when comparing to total assets of the registrant.
[[Page 142]]
(C) When determining the aggregate worldwide market value of the
registrant's voting and non-voting common equity, use the average of
such aggregate worldwide market value calculated daily for the last five
trading days of the registrant's most recently completed month ending
prior to the earlier of the registrant's announcement date or agreement
date of the acquisition or disposition.
(ii) For a combination between entities or businesses under common
control, this test is met when either the net book value of the tested
subsidiary exceeds 10 percent of the registrant's and its subsidiaries'
consolidated total assets or 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.
(iii) In all other cases, this test is met when the registrant's and
its other subsidiaries' investments in and advances to the tested
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.
(2) Asset test. This test is met when the registrant's and its other
subsidiaries' proportionate share of the tested subsidiary's
consolidated total assets (after intercompany eliminations) exceeds 10
percent of such total assets of the registrant and its subsidiaries
consolidated as of the end of the most recently completed fiscal year.
(3) Income test. (i) This test is met when:
(A) The absolute value of the registrant's and its other
subsidiaries' equity in the tested subsidiary's consolidated income or
loss from continuing operations before income taxes (after intercompany
eliminations) attributable to the controlling interests exceeds 10
percent of the absolute value of such income or loss of the registrant
and its subsidiaries consolidated for the most recently completed fiscal
year; and
(B) The registrant's and its other subsidiaries' proportionate share
of the tested subsidiary's consolidated total revenue from continuing
operations (after intercompany eliminations) exceeds 10 percent of such
total revenue of the registrant and its subsidiaries consolidated for
the most recently completed fiscal year. This paragraph (3)(i)(B) does
not apply if either the registrant and its subsidiaries consolidated or
the tested subsidiary did not have material revenue in each of the two
most recently completed fiscal years.
(ii) When determining the income component in paragraph (3)(i)(A) of
this definition:
(A) If a net loss from continuing operations before income taxes
(after intercompany eliminations) attributable to the controlling
interest has been incurred by either the registrant and its subsidiaries
consolidated or the tested subsidiary, but not both, exclude the equity
in the income or loss from continuing operations before income taxes
(after intercompany eliminations) of the tested subsidiary attributable
to the controlling interest from such income or loss of the registrant
and its subsidiaries consolidated for purposes of the computation;
(B) Compute the test using the average described in this paragraph
(3)(ii)(B) if the revenue component in paragraph (3)(i)(B) in this
definition does not apply and the absolute value of the registrant's and
its subsidiaries' consolidated income or loss from continuing operations
before income taxes (after intercompany eliminations) attributable to
the controlling interests for the most recent fiscal year is at least 10
percent lower than the average of the absolute value of such amounts for
each of its last five fiscal years; and
(C) Entities reporting losses must not be aggregated with entities
reporting income where the test involves combined entities, as in the
case of determining whether summarized financial data must be presented
or whether the aggregate impact specified in Sec. Sec. 210.3-
05(b)(2)(iv) and 210.3-14(b)(2)(i)(C) of this chapter is met, except
when determining whether related businesses meet this test for purposes
of Sec. Sec. 210.3-05 and 210.8-04 of this chapter.
(4) Registered investment company or business development company.
For a registrant that is a registered investment company or a business
development company, the term significant
[[Page 143]]
subsidiary means a subsidiary, including its subsidiaries, which meets
any of the following conditions using amounts determined under U.S. GAAP
and, if applicable, section 2(a)(41) of the Investment Company Act of
1940 (15 U.S.C. 80a-2(a)(41)):
(i) Investment test. The value of the registrant's and its other
subsidiaries' investments in and advances to the tested subsidiary
exceed 10 percent of the value of the total investments of the
registrant and its subsidiaries consolidated as of the end of the most
recently completed fiscal year; or
(ii) Income test. The absolute value of the sum of combined
investment income from dividends, interest, and other income, the net
realized gains and losses on investments, and the net change in
unrealized gains and losses on investments from the tested subsidiary
(except, for purposes of Sec. 210.6-11 of this chapter, the absolute
value of the change in net assets resulting from operations of the
tested subsidiary), for the most recently completed fiscal year exceeds:
(A) 80 percent of the absolute value of the change in net assets
resulting from operations of the registrant and its subsidiaries
consolidated for the most recently completed fiscal year; or
(B) 10 percent of the absolute value of the change in net assets
resulting from operations of the registrant and its subsidiaries
consolidated for the most recently completed fiscal year and the
investment test (paragraph (4)(i) of this definition) condition exceeds
5 percent. However, if the absolute value of the change in net assets
resulting from operations of the registrant and its subsidiaries
consolidated is at least 10 percent lower than the average of the
absolute value of such amounts for each of its last five fiscal years,
then the registrant may compute both conditions of the income test using
the average of the absolute value of such amounts for the registrant and
its subsidiaries consolidated for each of its last five fiscal years.
Smaller reporting company. As used in this part, the term smaller
reporting company means an issuer that is not an investment company, an
asset-backed issuer (as defined in Sec. 229.1101 of this chapter), or a
majority-owned subsidiary of a parent that is not a smaller reporting
company and that:
(1) Had a public float of less than $250 million; or
(2) Had annual revenues of less than $100 million and either:
(i) No public float; or
(ii) A public float of less than $700 million.
(3) Whether an issuer is a smaller reporting company is determined
on an annual basis.
(i) For issuers that are required to file reports under section
13(a) or 15(d) of the Exchange Act:
(A) Public float is measured as of the last business day of the
issuer's most recently completed second fiscal quarter and computed by
multiplying the aggregate worldwide number of shares of its voting and
non-voting common equity held by non-affiliates by the price at which
the common equity was last sold, or the average of the bid and asked
prices of common equity, in the principal market for the common equity;
(B) Annual revenues are as of the most recently completed fiscal
year for which audited financial statements are available; and
(C) An issuer must reflect the determination of whether it came
within the definition of smaller reporting company in its quarterly
report on Form 10-Q for the first fiscal quarter of the next year,
indicating on the cover page of that filing, and in subsequent filings
for that fiscal year, whether it is a smaller reporting company, except
that, if a determination based on public float indicates that the issuer
is newly eligible to be a smaller reporting company, the issuer may
choose to reflect this determination beginning with its first quarterly
report on Form 10-Q following the determination, rather than waiting
until the first fiscal quarter of the next year.
(ii) For determinations based on an initial registration statement
under the Securities Act or Exchange Act for shares of its common
equity:
(A) Public float is measured as of a date within 30 days of the date
of the filing of the registration statement and computed by multiplying
the aggregate worldwide number of shares of its voting and non-voting
common equity
[[Page 144]]
held by non-affiliates before the registration plus, in the case of a
Securities Act registration statement, the number of shares of its
voting and non-voting common equity included in the registration
statement by the estimated public offering price of the shares;
(B) Annual revenues are as of the most recently completed fiscal
year for which audited financial statements are available; and
(C) The issuer must reflect the determination of whether it came
within the definition of smaller reporting company in the registration
statement and must appropriately indicate on the cover page of the
filing, and subsequent filings for the fiscal year in which the filing
is made, whether it is a smaller reporting company. The issuer must re-
determine its status at the end of its second fiscal quarter and then
reflect any change in status as provided in paragraph (3)(i)(C) of this
definition. In the case of a determination based on an initial
Securities Act registration statement, an issuer that was not determined
to be a smaller reporting company has the option to re-determine its
status at the conclusion of the offering covered by the registration
statement based on the actual offering price and number of shares sold.
(iii) Once an issuer determines that it does not qualify for smaller
reporting company status because it exceeded one or more of the current
thresholds, it will remain unqualified unless when making its annual
determination either:
(A) It determines that its public float was less than $200 million;
or
(B) It determines that its public float and its annual revenues meet
the requirements for subsequent qualification included in the following
chart:
------------------------------------------------------------------------
Prior public float
-------------------------------------------
Prior annual revenues None or less than
$700 million $700 million or more
------------------------------------------------------------------------
Less than $100 million...... Neither threshold Public float--Less
exceeded. than $560 million;
and
Revenues--Less than
$100 million.
$100 million or more........ Public float--None Public float--Less
or less than $700 than $560 million;
million; and. and
Revenues--Less than Revenues--Less than
$80 million. $80 million.
------------------------------------------------------------------------
Instruction 1 to definition of ``smaller reporting company'': A
registrant that qualifies as a smaller reporting company under the
public float thresholds identified in paragraphs (1) and (3)(iii)(A) of
this definition will qualify as a smaller reporting company regardless
of its revenues.
Instruction 2 to definition of ``smaller reporting company'': A
foreign private issuer is not eligible to use the requirements for
smaller reporting companies unless it uses the forms and rules
designated for domestic issuers and provides financial statements
prepared in accordance with U.S. Generally Accepted Accounting
Principles.
Succession: The term succession means the direct acquisition of the
assets comprising a going business, whether by merger, consolidation,
purchase, or other direct transfer; or the acquisition of control of a
shell company in a transaction required to be reported on Form 8-K
(Sec. 249.308 of this chapter) in compliance with Item 5.01 of that
Form or on Form 20-F (Sec. 249.220f of this chapter) in compliance with
Rule 13a-19 (Sec. 240.13a-19) or Rule 15d-19 (Sec. 240.15d-19). Except
for an acquisition of control of a shell company, 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
[[Page 145]]
of which are presently entitled to vote for the election of directors.
Wholly-owned subsidiary. The term ``wholly-owned subsidiary'' means
a subsidiary substantially all of whose outstanding voting securities
are owned by its parent and/or the parent's other wholly-owned
subsidiaries.
[13 FR 9321, Dec. 31, 1948]
Editorial Note: For Federal Register citations affecting Sec.
240.12b-2, see the List of CFR Sections Affected, which appears in the
Finding Aids section of the printed volume and at www.govinfo.gov.
Effective Date Note: At 89 FR 14323, Feb. 26, 2024, Sec. 240.12b-2
was amended by adding in alphabetical order the definition for ``Blank
check company'' and adding paragraph (3)(iv) to the definition of
``Smaller reporting company'', effective July 1, 2024. For the
convenience of the user, the added text is set forth as follows:
Sec. 240.12b-2 Definitions.
* * * * *
Blank check company. For purposes of section 21E of the Securities
and Exchange Act of 1934 (15 U.S.C. 78u-5), the term blank check company
means a 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.
* * * * *
Smaller reporting company. * * *
(3) * * *
(iv) Upon the consummation of a de-SPAC transaction, as defined in
Sec. 229.1601(a) of this chapter (Item 1601(a) of Regulation S-K), an
issuer must re-determine its status as a smaller reporting company
pursuant to the thresholds set forth in paragraphs (1) and (2) of this
definition prior to its first filing, other than pursuant to Items
2.01(f), 5.01(a)(8), and/or 9.01(c) of Form 8-K, following the de-SPAC
transaction and reflect this re-determination in its filings, beginning
45 days after consummation of the de-SPAC transaction.
(A) Public float is measured as of a date within four business days
after the consummation of the de-SPAC transaction and is computed by
multiplying the aggregate worldwide number of shares of its voting and
non-voting common equity held by non-affiliates as of that date by the
price at which the common equity was last sold, or the average of the
bid and asked prices of common equity, in the principal market for the
common equity; and
(B) Annual revenues are the annual revenues of the target company,
as defined in Sec. 229.1601(d) of this chapter (Item 1601(d) of
Regulation S-K), as of the most recently completed fiscal year reported
in the Form 8-K filed pursuant to Items 2.01(f), 5.01(a)(8), and/or
9.01(c) of Form 8-K.
Sec. 240.12b-3 Title of securities.
Wherever the title of securities is required to be stated there
shall be given such information as will indicate the type and general
character of the securities, including the following:
(a) In the case of shares, the par or stated value, if any; the rate
of dividends, if fixed, and whether cumulative or noncumulative; a brief
indication of the preference, if any; and if convertible, a statement to
that effect.
(b) In the case of funded debt, the rate of interest; the date of
maturity, or if the issue matures serially, a brief indication of the
serial maturities, such as ``maturing serially from 1950 to 1960''; if
the payment of principal or interest is contingent, an appropriate
indication of such contingency; a brief indication of the priority of
the issue; and if convertible, a statement to that effect.
(c) In the case of any other kind of security, appropriate
information of comparable character.
Sec. 240.12b-4 Supplemental information.
The Commission or its staff may, where it is deemed appropriate,
request supplemental information concerning the registrant, a
registration statement or a periodic or other report under the Act. This
information shall not be required to be filed with or deemed part of the
registration statement or report. The information shall be returned to
the registrant upon request, provided that:
(a) Such request is made at the time such information is furnished
to the staff;
(b) The return of such information is consistent with the protection
of investors; and
(c) The return of such information is consistent with the provisions
of the Freedom of Information Act (5 U.S.C. 552).
[47 FR 11465, Mar. 16, 1982]
[[Page 146]]
Sec. 240.12b-5 Determination of affiliates of banks.
In determining whether a person is an ``affiliate'' or ``parent'' of
a bank or whether a bank is a ``subsidiary'' or ``majority-owner
subsidiary'' of a person within the meaning of those terms as defined in
Sec. 240.12b-2, voting securities of the bank held by a corporation all
of the stock of which is directly owned by the United States Government
shall not be taken into consideration.
Sec. 240.12b-6 When securities are deemed to be registered.
A class of securities with respect to which a registration statement
has been filed pursuant to section 12 of the act shall be deemed to be
registered for the purposes of sections 13, 14, 15(d) and 16 of the act
and the rules and regulations thereunder only when such statement has
become effective as provided in section 12, and securities of said class
shall not be subject to sections 13, 14 and 16 of the act until such
statement has become effective as provided in section 12.
(Secs. 3, 14, 16, 48 Stat. 882, 895, 896, sec. 3(d), 78 Stat. 568; 15
U.S.C. 78c, 78n, 78p, 78l)
[30 FR 482, Jan. 14, 1965]
Sec. 240.12b-7 [Reserved]
Formal Requirements
Sec. 240.12b-10 Requirements as to proper form.
Every statement or report shall be on the form prescribed therefor
by the Commission, as in effect on the date of filing. Any statement or
report shall be deemed to be filed on the proper form unless objection
to the form is made by the Commission within thirty days after the date
of filing.
(Secs. 4, 16, 19, 24, 48 Stat. 77, 896, 85, as amended, 901; 15 U.S.C.
77d, 78p, 77s, 78x)
[30 FR 2022, Feb. 13, 1965]
Sec. 240.12b-11 Number of copies; signatures; binding.
(a) Except as provided in a particular form, three complete copies
of each statement or report, including exhibits and all other papers and
documents filed as a part thereof, shall be filed with the Commission.
At least one complete copy of each statement shall be filed with each
exchange on which the securities covered thereby are to be registered.
At least one complete copy of each report under section 13 of the Act
shall be filed with each exchange on which the registrant has securities
registered.
(b) At least one copy of each statement or report filed with the
Commission and one copy thereof filed with each exchange shall be signed
in the manner prescribed by the appropriate form.
(c) Each copy of a statement or report filed with the Commission or
with an exchange shall be bound in one or more parts. Copies filed with
the Commission shall be bound without stiff covers. The statement or
report shall be bound on the left side in such a manner as to leave the
reading matter legible.
(d) Signatures. Where the Act or the rules, forms, reports or
schedules thereunder, including paragraph (b) of this section, require a
document filed with or furnished to the Commission to be signed, such
document shall be manually signed, or signed using either typed
signatures or duplicated or facsimile versions of manual signatures.
Where typed, duplicated, or facsimile signatures are used, each
signatory to the filing shall manually or electronically sign a
signature page or other document authenticating, acknowledging, or
otherwise adopting his or her signature that appears in the filing
(``authentication document''). Such authentication document shall be
executed before or at the time the filing is made and shall be retained
by the filer for a period of five years. The requirements set forth in
Sec. 232.302(b) must be met with regards to the use of an
electronically signed authentication document pursuant to this paragraph
(d). Upon request, the filer shall furnish to the Commission or its
staff a copy of any or all documents retained pursuant to this section.
[47 FR 11465, Mar. 16, 1982, as amended at 60 FR 26622, May 17, 1995; 61
FR 30403, June 14, 1996; 85 FR 78229, Dec. 4, 2020]
[[Page 147]]
Sec. 240.12b-12 Requirements as to paper, printing and language.
(a) Statements and reports shall be filed on good quality, unglazed
white paper, no larger than 8\1/2\ x 11 inches in size, insofar as
practicable. To the extent that the reduction of larger documents would
render them illegible, such documents may be filed on paper larger than
8\1/2\ x 11 inches in size.
(b) The statement or report and, insofar as practicable, all papers
and documents filed as a part thereof, shall be printed, lithographed,
mimeographed, or typewritten. However, the statement or report or any
portion thereof may be prepared by any similar process which, in the
opinion of the Commission, produces copies suitable for a permanent
record and microfilming. Irrespective of the process used, all copies of
any such material shall be clear, easily readable and suitable for
repeated photocopying. Debits in credit categories and credits in debit
categories shall be designated so as to be clearly distinguishable as
such on photocopies.
(c) The body of all printed statements and reports and all notes to
financial statements and other tabular data included therein shall be in
roman type at least as large and as legible as 10-point modern type.
However, to the extent necessary for convenient presentation, financial
statements and other tabular data, including tabular data in notes, may
be in roman type at least as large and as legible as 8-point modern
type. All such type shall be leaded at least 2 points.
(d)(1) All Exchange Act filings and submissions must be in the
English language, except as otherwise provided by 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 entire foreign language document, except as
provided by paragraph (d)(3) of this section.
(2) If a 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, a party 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, report
or other document 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. 240.24b-2 or Sec. 230.406 of this
chapter.
(3)(i) A party may submit an English summary instead of an English
translation of a foreign language document as an exhibit or attachment
to a filing or submission 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 (d)(2) of this section; or
(B) The applicable form permits the use of an English summary.
(ii) Any English summary submitted under paragraph (d)(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 party must identify the
submission as either an English summary or English translation. A party
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 or submission. A party must provide a copy
of any foreign language
[[Page 148]]
document upon the request of Commission staff.
(5) A foreign government or its political subdivision must provide a
fair and accurate 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) only if one is
available. If no English translation is available, a filer must provide
a copy of the foreign language version of its latest annual budget as an
exhibit.
(6) A Canadian issuer may file an exhibit, attachment or other part
of a Form 40-F registration statement or annual report (Sec. 249.240f
of this chapter), Schedule 13E-4F (Sec. 240.13e-102), Schedule 14D-1F
(Sec. 240.14d-102), or Schedule 14D-9F (Sec. 240.14d-103), 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
(17 CFR 232.11).
(e) Where a statement or report is distributed to investors through
an electronic medium, issuers may satisfy legibility requirements
applicable to printed documents, such as paper size and type size and
font, by presenting all required information in a format readily
communicated to investors.
[47 FR 11466, Mar. 16, 1982, as amended at 47 FR 58238, Dec. 30, 1982;
61 FR 24656, May 15, 1996; 67 FR 36704, May 24, 2002]
Sec. 240.12b-13 Preparation of statement or report.
The statement or report shall contain the numbers and captions of
all items of the appropriate form, but the text of the items may be
omitted provided the answers thereto are so prepared as to indicate to
the reader the coverage of the items without the necessity of his
referring to the text of the items or instructions thereto. However,
where any item requires information to be given in tabular form, it
shall be given in substantially the tabular form specified in the item.
All instructions, whether appearing under the items of the form or
elsewhere therein, are to be omitted. Unless expressly provided
otherwise, if any item is inapplicable or the answer thereto is in the
negative, an appropriate statement to that effect shall be made.
(Secs. 4, 16, 19, 24, 48 Stat. 77, 896, 85, as amended, 901; 15 U.S.C.
77d, 78p, 77s, 78x)
[30 FR 2023, Feb. 13, 1965]
Sec. 240.12b-14 Riders; inserts.
Riders shall not be used. If the statement or report is typed on a
printed form, and the space provided for the answer to any given item is
insufficient, reference shall be made in such space to a full insert
page or pages on which the item number and caption and the complete
answer are given.
(Secs. 4, 16, 19, 24, 48 Stat. 77, 896, 85, as amended, 901; 15 U.S.C.
77d, 78p, 77s, 78x)
[30 FR 2023, Feb. 13, 1965]
Sec. 240.12b-15 Amendments.
All amendments must be filed under cover of the form amended, marked
with the letter ``A'' to designate the document as an amendment, e.g.,
``10-K/A,'' and in compliance with pertinent requirements applicable to
statements and reports. Amendments filed pursuant to this section must
set forth the complete text of each item as amended. Amendments must be
numbered sequentially and be filed separately for each statement or
report amended. Amendments to a statement may be filed either before or
after registration becomes effective. Amendments must be signed on
behalf of the registrant by a duly authorized representative of the
registrant. An amendment to any report required to include the
certifications as specified in Sec. 240.13a-14(a) or Sec. 240.15d-
14(a) must include new certifications by each principal executive and
principal financial officer of the registrant, and an amendment to any
report required to be accompanied by the certifications as specified in
Sec. 240.13a-14(b) or Sec. 240.15d-14(b) must be accompanied by new
certifications by each principal executive and principal financial
officer of the registrant. An amendment to any report required to
include the certifications as specified in Sec. 240.13a-14(d) or Sec.
240.15d-14(d) must include a new certification by an individual
specified in Sec. 240.13a-14(e) or
[[Page 149]]
Sec. 240.15d-14(e), as applicable. The requirements of the form being
amended will govern the number of copies to be filed in connection with
a paper format amendment. Electronic filers satisfy the provisions
dictating the number of copies by filing one copy of the amendment in
electronic format. See Sec. 232.309 of this chapter (Rule 309 of
Regulation S-T).
[68 FR 36665, June 18, 2003, as amended at 70 FR 1620, Jan. 7, 2005]
General Requirements as to Contents
Sec. 240.12b-20 Additional information.
In addition to the information expressly required to be included in
a statement or report, there shall be added such further material
information, if any, as may be necessary to make the required
statements, in the light of the circumstances under which they are made
not misleading.
(Secs. 4, 16, 19, 24, 48 Stat. 77, 896, 85, as amended, 901; 15 U.S.C.
77d, 78p, 77s, 78x)
[30 FR 2023, Feb. 13, 1965]
Sec. 240.12b-21 Information unknown or not available.
Information required need be given only insofar as it is known or
reasonably available to the registrant. If any required information is
unknown and not reasonably available to the registrant, either because
the obtaining thereof would involve unreasonable effort or expense, or
because it rests peculiarly within the knowledge of another person not
affiliated with the registrant, the information may be omitted, subject
to the following conditions.
(a) The registrant shall give such information on the subject as it
possesses or can acquire without unreasonable effort or expense,
together with the sources thereof.
(b) The registrant shall include a statement either showing that
unreasonable effort or expense would be involved or indicating the
absence of any affiliation with the person within whose knowledge the
information rests and stating the result of a request made to such
person for the information.
Sec. 240.12b-22 Disclaimer of control.
If the existence of control is open to reasonable doubt in any
instance, the registrant may disclaim the existence of control and any
admission thereof; in such case, however, the registrant shall state the
material facts pertinent to the possible existence of control.
Sec. 240.12b-23 Incorporation by reference.
(a) Registration statement or report. Except as provided by this
section or in the appropriate form, information may be incorporated by
reference in answer, or partial answer, to any item of a registration
statement or report.
(b) Financial information. Except as provided in the Commission's
rules, financial information required to be given in comparative form
for two or more fiscal years or periods must not be incorporated by
reference unless the information incorporated by reference includes the
entire period for which the comparative data is given. In the financial
statements, incorporating by reference, or cross-referencing to,
information outside of the financial statements is not permitted unless
otherwise specifically permitted or required by the Commission's rules
or by U.S. Generally Accepted Accounting Principles or International
Financial Reporting Standards as issued by the International Accounting
Standards Board, whichever is applicable.
(c) Exhibits. Any document or part thereof filed with the Commission
pursuant to any Act administered by the Commission may be incorporated
by reference as an exhibit to any statement or report filed with the
Commission by the same or any other person. Any document or part thereof
filed with an exchange pursuant to the Act may be incorporated by
reference as an exhibit to any statement or report filed with the
exchange by the same or any other person. If any modification has
occurred in the text of any document incorporated by reference since the
filing thereof, the registrant must file with the reference a statement
containing the text of any such modification and the date thereof.
(d) Hyperlinks. You must include an active hyperlink to information
incorporated into a registration statement
[[Page 150]]
or report by reference if such information is publicly available on the
Commission's Electronic Data Gathering, Analysis and Retrieval System
(``EDGAR'') at the time the registration statement or form is filed. For
hyperlinking to exhibits, please refer to Item 601 of Regulation S-K
(Sec. 229.601 of this chapter) or the appropriate form.
(e) General. Include an express statement clearly describing the
specific location of the information you are incorporating by reference.
The statement must identify the document where the information was
originally filed or submitted and the location of the information within
that document. The statement must be made at the particular place where
the information is required, if applicable. Information must not be
incorporated by reference in any case where such incorporation would
render the disclosure incomplete, unclear, or confusing. For example,
unless expressly permitted or required, disclosure must not be
incorporated by reference from a second document if that second document
incorporates information pertinent to such disclosure by reference to a
third document.
[84 FR 12727, Apr. 2, 2019]
Sec. 240.12b-24 [Reserved]
Sec. 240.12b-25 Notification of inability to timely file all or any
required portion of a Form 10-K, 20-F, 11-K, N-CEN , N-CSR, 10-Q,
or 10-D.
(a) If all or any required portion of an annual or transition report
on Form 10-K, 20-F or 11-K (17 CFR 249.310, 249.220f or 249.311), a
quarterly or transition report on Form 10-Q (17 CFR 249.308a), or a
distribution report on Form 10-D (17 CFR 249.312) required to be filed
pursuant to Section 13 or 15(d) of the Act (15 U.S.C. 78m or 78o(d)) and
rules thereunder, or if all or any required portion of a semi-annual,
annual or transition report on Form N-CSR (17 CFR 249.331; 17 CFR
274.128) or Form N-CEN (17 CFR 249.330; 17 CFR 274.101) required to be
filed pursuant to Section 13 or 15(d) of the Act or section 30 of the
Investment Company Act of 1940 (15 U.S.C. 80a-29) and the rules
thereunder, is not filed within the time period prescribed for such
report, the registrant, no later than one business day after the due
date for such report, shall file a Form 12b-25 (17 CFR 249.322) with the
Commission which shall contain disclosure of its inability to file the
report timely and the reasons therefore in reasonable detail.
(b) With respect to any report or portion of any report described in
paragraph (a) of this section which is not timely filed because the
registrant is unable to do so without unreasonable effort or expense,
such report shall be deemed to be filed on the prescribed due date for
such report if:
(1) The registrant files the Form 12b-25 in compliance with
paragraph (a) of this section and, when applicable, furnishes the
exhibit required by paragraph (c) of this section;
(2) The registrant represents in the Form 12b-25 that:
(i) The reason(s) causing the inability to file timely could not be
eliminated by the registrant without unreasonable effort or expense; and
(ii) The subject annual report, semi-annual report or transition
report on Form 10-K, 20-F, 11-K, N-CEN , or N-CSR, or portion thereof,
will be filed no later than the fifteenth calendar day following the
prescribed due date; or the subject quarterly report or transition
report on Form 10-Q or distribution report on Form 10-D, or portion
thereof, will be filed no later than the fifth calendar day following
the prescribed due date; and
(3) The report/portion thereof is actually filed within the period
specified by paragraph (b)(2)(ii) of this section.
(c) If paragraph (b) of this section is applicable and the reason
the subject report/portion thereof cannot be filed timely without
unreasonable effort or expense relates to the inability of any person,
other than the registrant, to furnish any required opinion, report or
certification, the Form 12b-25 shall have attached as an exhibit a
statement signed by such person stating the specific reasons why such
person is unable to furnish the required opinion, report or
certification on or before the date such report must be filed.
[[Page 151]]
(d) Notwithstanding paragraph (b) of this section, a registrant will
not be eligible to use any registration statement form under the
Securities Act of 1933 the use of which is predicated on timely filed
reports until the subject report is actually filed pursuant to paragraph
(b)(3) of this section.
(e) If a Form 12b-25 filed pursuant to paragraph (a) of this sectin
relates only to a portion of a subject report, the registrant shall:
(1) File the balance of such report and indicate on the cover page
thereof which disclosure items are omitted; and
(2) Include, on the upper right corner of the amendment to the
report which includes the previously omitted information, the following
statement:
The following items were the subject of a Form 12b-25 and are
included herein: (List Item Numbers)
(f) The provisions of this section shall not apply to financial
statements to be filed by amendment to a form 10-K as provided for by
paragraph (a) of Sec. 210.3-09 or schedules to be filed by amendment in
accordance with General Instruction A to form 10-K.
(g) Electronic filings. The provisions of this section shall not
apply to reports required to be filed in electronic format if the sole
reason the report is not filed within the time period prescribed is that
the filer is unable to file the report in electronic format. Filers
unable to submit a report in electronic format within the time period
prescribed solely due to difficulties with electronic filing should
comply with either Rule 201 or 202 of Regulation S-T (Sec. Sec. 232.201
and 232.202 of this chapter), or apply for an adjustment of filing date
pursuant to Rule 13(b) of Regulation S-T (Sec. 232.13(c) of this
chapter).
(h) Interactive data submissions. The provisions of this section
shall not apply to the submission or posting of an Interactive Data File
(Sec. 232.11 of this chapter). Filers unable to submit or post an
Interactive Data File within the time period prescribed should comply
with either Rule 201 or 202 of Regulation S-T (Sec. Sec. 232.201 and
232.202 of this chapter).
[45 FR 23652, Apr. 8, 1980, as amended at 50 FR 1449, Jan. 11, 1985; 50
FR 2957, Jan. 23, 1985; 54 FR 10316, Mar. 13, 1989; 58 FR 14683, Mar.
18, 1993; 58 FR 21349, Apr. 21, 1993; 59 FR 67764, Dec. 30, 1994; 68 FR
5364, Feb. 3, 2003; 70 FR 1620, Jan. 7, 2005; 73 FR 974, Jan. 4, 2008;
74 FR 6818, Feb. 10, 2009; 81 82020, Nov. 18, 2016]
Exhibits
Sec. 240.12b-30 Additional exhibits.
The registrant may file such exhibits as it may desire, in addition
to those required by the appropriate form. Such exhibits shall be so
marked as to indicate clearly the subject matters to which they refer.
Sec. 240.12b-31 Omission of substantially identical documents.
In any case where two or more indentures, contracts, franchises, or
other documents required to be filed as exhibits are substantially
identical in all material respects except as to the parties thereto, the
dates of execution, or other details, the registrant need file a copy of
only one of such documents, with a schedule identifying the other
documents omitted and setting forth the material details in which such
documents differ from the document of which a copy is filed. The
Commission may at any time in its discretion require the filing of
copies of any documents so omitted.
Sec. 240.12b-32 [Reserved]
Sec. 240.12b-33 Annual reports to other Federal agencies.
Notwithstanding any rule or other requirement to the contrary,
whenever copies of an annual report by a registrant to any other Federal
agency are required or permitted to be filed as an exhibit to an
application or report filed by such registrant with the Commission or
with a securities exchange, only one copy of such annual report need be
filed with the Commission and one copy thereof with each such exchange,
provided appropriate reference to such
[[Page 152]]
copy is made in each copy of the application or report filed with the
Commission or with such exchange.
[18 FR 1441, Mar. 13, 1953]
Special Provisions
Sec. 240.12b-35 [Reserved]
Sec. 240.12b-36 Use of financial statements filed under other acts.
Where copies of certified financial statements filed under other
acts administered by the Commission are filed with a statement or
report, the accountant's certificate shall be manually signed or
manually signed copies of the certificate shall be filed with the
financial statements. Where such financial statements are incorporated
by reference in a statement or report, the written consent of the
accountant to such incorporation by reference shall be filed with the
statement or report. Such consent shall be dated and signed manually.
(Secs. 4, 16, 19, 24, 48 Stat. 77, 896, 85, as amended, 901; 15 U.S.C.
77d, 78p, 77s, 78x)
[30 FR 2023, Feb. 13, 1965]
Sec. 240.12b-37 Satisfaction of filing requirements.
With regard to issuers eligible to rely on Release No. 34-45589
(March 18, 2002) or Release No. IC-25463 (March 18, 2002) (each of which
may be viewed on the Commission's website at www.sec.gov), filings made
in accordance with the provisions of those Releases shall satisfy the
issuer's requirement to make such a filing under Section 13(a), 14 or
15(d) of the Act (15 U.S.C. 77m(a), 78n or 78o(d)), as applicable, and
the Commission's rules and regulations thereunder.
[67 FR 13537, Mar. 22, 2002]
Certification by Exchanges and Effectiveness of Registration
Source: Sections 240.12d1-1 through 240.12d-6 appear at 19 FR 670,
Feb. 5, 1954, unless otherwise noted.
Sec. 240.12d1-1 Registration effective as to class or series.
(a) An application filed pursuant to section 12 (b) and (c) of the
act for registration of a security on a national securities exchange
shall be deemed to apply for registration of the entire class of such
security. Registration shall become effective, as provided in section
12(d) of the act, (1) as to the shares or amounts of such class then
issued, and (2), without further application for registration, upon
issuance as to additional shares or amounts of such class then or
thereafter authorized.
(b) This section shall apply to classes of securities of which a
specified number of shares or amounts was registered or registered upon
notice of issuance, and to applications for registration filed, prior to
the close of business on January 28, 1954, as well as to classes
registered, or applications filed, thereafter.
(c) This section shall not affect the right of a national securities
exchange to require the issuer of a registered security to file
documents with or pay fees to the exchange in connection with the
modification of such security or the issuance of additional shares or
amounts.
(d) If a class of security is issuable in two or more series with
different terms, each such series shall be deemed a separate class for
the purposes of this section.
(Sec. 12, 48 Stat. 892, as amended; 15 U.S.C. 78l)
Sec. 240.12d1-2 Effectiveness of registration.
(a) A request for acceleration of the effective date of registration
pursuant to section 12(d) of the act and Sec. 240.12d1-1 shall be made
in writing by either the registrant, the exchange, or both and shall
briefly describe the reasons therefor.
(b) A registration statement on Form 8-A (17 CFR 249.208a) for the
registration of a class of securities under Section 12(b) of the Act (15
U.S.C. 78l(b)) shall become effective:
(1) If a class of securities is not concurrently being registered
under the Securities Act of 1933 (``Securities Act''), upon the later of
receipt by the Commission of certification from the national securities
exchange or the filing of the Form 8-A with the Commission; or
[[Page 153]]
(2) If a class of securities is concurrently being registered under
the Securities Act, upon the later of the filing of the Form 8-A with
the Commission, receipt by the Commission of certification from the
national securities exchange listed on the Form 8-A or effectiveness of
the Securities Act registration statement relating to the class of
securities.
(c) A registration statement on Form 8-A (17 CFR 249.208a) for the
registration of a class of securities under Section 12(g) of the Act (15
U.S.C. 78l(g)) shall become effective:
(1) If a class of securities is not concurrently being registered
under the Securities Act, upon the filing of the Form 8-A with the
Commission; or
(2) If class of securities is concurrently being registered under
the Securities Act, upon the later of the filing of the Form 8-A with
the Commission or the effectiveness of the Securities Act registration
statement relating to the class of securities.
(Sec. 12, 48 Stat. 892, as amended; 15 U.S.C. 78l)
[19 FR 670, Feb. 5, 1954, as amended at 59 FR 55347, Nov. 7, 1994; 62 FR
39766, July 24, 1997]
Sec. 240.12d1-3 Requirements as to certification.
(a) Certification that a security has been approved by an exchange
for listing and registration pursuant to section 12(d) of the act and
Sec. 240.12d1-1 shall be made by the governing committee or other
corresponding authority of the exchange.
(b) The certification shall specify (1) the approval of the exchange
for listing and registration; (2) the title of the security so approved;
(3) the date of filing with the exchange of the application for
registration and of any amendments thereto; and (4) any conditions
imposed on such certification. The exchange shall promptly notify the
Commission of the partial or complete satisfaction of any such
conditions.
(c) The certification must be filed in electronic format via the
Commission's Electronic Data Gathering, Analysis, and Retrieval (EDGAR)
system in accordance with the EDGAR rules set forth in Sec. 232 of this
chapter (Regulation S-T).
(Sec. 12, 48 Stat. 892, as amended; 15 U.S.C. 78l)
[19 FR 670, Feb. 5, 1954, as amended at 87 FR 35413, June 10, 2022]
Sec. 240.12d1-4 Date of receipt of certification by Commission.
The date of receipt by the Commission of the certification approving
a security for listing and registration shall be the date on which the
certification is actually received by the Commission or the date on
which the application for registration to which the certification
relates is actually received by the Commission, whichever date is later.
(Sec. 12, 48 Stat. 892, as amended; 15 U.S.C. 78l)
Sec. 240.12d1-5 Operation of certification on subsequent amendments.
If an amendment to the application for registration of a security is
filed with the exchange and with the Commission after the receipt by the
Commission of the certification of the exchange approving the security
for listing and registration, the certification, unless withdrawn, shall
be deemed made with reference to the application as amended.
(Sec. 12, 48 Stat. 892, as amended; 15 U.S.C. 78l)
Sec. 240.12d1-6 Withdrawal of certification.
An exchange may, by notice to the Commission, withdraw its
certification prior to the time that the registration to which it
relates first becomes effective pursuant to Sec. 240.12d1-1.
(Sec. 12, 48 Stat. 892, as amended; 15 U.S.C. 78l)
Suspension of Trading, Withdrawal, and Striking From Listing and
Registration
Sec. 240.12d2-1 Suspension of trading.
(a) A national securities exchange may suspend from trading a
security listed and registered thereon in accordance with its rules.
Such exchange shall promptly notify the Commission
[[Page 154]]
of any such suspension, the effective date thereof, and the reasons
therefor.
(b) Any such suspension may be continued until such time as it shall
appear to the Commission that such suspension is designed to evade the
provisions of section 12(d) and the rules and regulations thereunder
relating to the withdrawal and striking of a security from listing and
registration. During the continuance of such suspension the exchange
shall notify the Commission promptly of any change in the reasons for
the suspension. Upon the restoration to trading of any security
suspended under this rule, the exchange shall notify the Commission
promptly of the effective date thereof.
(c) Suspension of trading shall not terminate the registration of
any security.
(Sec. 12, 48 Stat. 892, as amended; 15 U.S.C. 78l)
[28 FR 1506, Feb. 16, 1963]
Sec. 240.12d2-2 Removal from listing and registration.
Preliminary Notes: 1. The filing of the Form 25 (Sec. 249.25 of this
chapter) by an issuer relates solely to the withdrawal of a class of
securities from listing on a national securities exchange and/or from
registration under section 12(b) of the Act (15 U.S.C. 78l(b)), and
shall not affect its obligation to be registered under section 12(g) of
the Act and/or reporting obligations under section 15(d) of the Act (15
U.S.C. 78o(d)).
2. Implementation. The rules of each national securities exchange
must be designed to meet the requirements of this section and must be
operative no later than April 24, 2006. Each national securities
exchange must submit to the Commission a proposed rule change that
complies with section 19(b) of the Act (15 U.S.C. 78s) and Rule 19b-4
(17 CFR 240.19b-4) thereunder, and this section no later than October
24, 2005.
(a) A national securities exchange must file with the Commission an
application on Form 25 (17 CFR 249.25) to strike a class of securities
from listing on a national securities exchange and/or registration under
section 12(b) of the Act within a reasonable time after the national
securities exchange is reliably informed that any of the following
conditions exist with respect to such a security:
(1) The entire class of the security has been called for redemption,
maturity or retirement; appropriate notice thereof has been given; funds
sufficient for the payment of all such securities have been deposited
with an agency authorized to make such payments; and such funds have
been made available to security holders.
(2) The entire class of the security has been redeemed or paid at
maturity or retirement.
(3) The instruments representing the securities comprising the
entire class have come to evidence, by operation of law or otherwise,
other securities in substitution therefor and represent no other right,
except, if such be the fact, the right to receive an immediate cash
payment (the right of dissenters to receive the appraised or fair value
of their holdings shall not prevent the application of this provision).
(4) All rights pertaining to the entire class of the security have
been extinguished; provided, however, that where such an event occurs as
a result of an order of a court or other governmental authority, the
order shall be final, all applicable appeal periods shall have expired,
and no appeals shall be pending.
Effective Date: Such an application shall be deemed to be granted
and shall become effective at the opening of business on such date as
the exchange shall specify in said application, but not less than 10
days following the date on which said application is filed with the
Commission; Provided, however, That in the event removal is being
effected under paragraph (a)(3) of this section and the exchange has
admitted or intends to admit a successor security to trading under the
temporary exemption provided for by Sec. 240.12a-5, such date shall not
be earlier than the date on which the successor security is removed from
its exempt status.
(b)(1) In cases not provided for in paragraph (a) of this section, a
national securities exchange may file an application on Form 25 to
strike a class of securities from listing and/or withdraw the
registration of such securities, in accordance with its rules, if the
rules of such exchange, at a minimum, provide for:
(i) Notice to the issuer of the exchange's decision to delist its
securities;
(ii) An opportunity for appeal to the national securities exchange's
board of directors, or to a committee designated by the board; and
[[Page 155]]
(iii) Public notice of the national securities exchange's final
determination to remove the security from listing and/or registration,
by issuing a press release and posting notice on its Web site. Public
notice under this paragraph shall be disseminated no fewer than 10 days
before the delisting becomes effective pursuant to paragraph (d)(1) of
this section, and must remain posted on its Web site until the delisting
is effective.
(2) A national securities exchange must promptly deliver a copy of
the application on Form 25 to the issuer.
(c)(1) The issuer of a class of securities listed on a national
securities exchange and/or registered under section 12(b) of the Act may
file an application on Form 25 to notify the Commission of its
withdrawal of such securities from listing on such national securities
exchange and its intention to withdraw the securities from registration
under section 12(b) of the Act.
(2) An issuer filing Form 25 under this paragraph must satisfy the
requirements in paragraph (c)(2) of this section and represent on the
Form 25 that such requirements have been met:
(i) The issuer must comply with all applicable laws in effect in the
state in which it is incorporated and with the national securities
exchange's rules governing an issuer's voluntary withdrawal of a class
of securities from listing and/or registration.
(ii) No fewer than 10 days before the issuer files an application on
Form 25 with the Commission, the issuer must provide written notice to
the national securities exchange of its determination to withdraw the
class of securities from listing and/or registration on such exchange.
Such written notice must set forth a description of the security
involved, together with a statement of all material facts relating to
the reasons for withdrawal from listing and/or registration.
(iii) Contemporaneous with providing written notice to the exchange
of its intent to withdraw a class of securities from listing and/or
registration, the issuer must publish notice of such intention, along
with its reasons for such withdrawal, via a press release and, if it has
a publicly accessible Web site, posting such notice on that Web site.
Any notice provided on an issuer's Web site under this paragraph shall
remain available until the delisting on Form 25 has become effective
pursuant to paragraph (d)(1) of this section. If the issuer has not
arranged for listing and/or registration on another national securities
exchange or for quotation of its security in a quotation medium (as
defined in Sec. 240.15c2-11), then the press release and posting on the
Web site must contain this information.
(3) A national securities exchange, that receives, pursuant to
paragraph (c)(2)(ii) of this section, written notice from an issuer that
such issuer has determined to withdraw a class of securities from
listing and/or registration on such exchange, must provide notice on its
Web site of the issuer's intent to delist and/or withdraw from
registration its securities by the next business day. Such notice must
remain posted on the exchange's Web site until the delisting on Form 25
is effective pursuant to paragraph (d)(1) of this section.
(d)(1) An application on Form 25 to strike a class of securities
from listing on a national securities exchange will be effective 10 days
after Form 25 is filed with the Commission.
(2) An application on Form 25 to withdraw the registration of a
class of securities under section 12(b) of the Act will be effective 90
days, or such shorter period as the Commission may determine, after
filing with the Commission.
(3) Notwithstanding paragraphs (d)(1) and (d)(2) of this section,
the Commission may, by written notice to the exchange and issuer,
postpone the effectiveness of an application to delist and/or to
deregister to determine whether the application on Form 25 to strike the
security from registration under section 12(b) of the Act has been made
in accordance with the rules of the exchange, or what terms should be
imposed by the Commission for the protection of investors.
(4) Notwithstanding paragraph (d)(2) of this section, whenever the
Commission commences a proceeding against an issuer under section 12 of
the Act
[[Page 156]]
prior to the withdrawal of the registration of a class of securities,
such security will remain registered under section 12(b) of the Act
until the final decision of such proceeding or until the Commission
otherwise determines to suspend the effective date of, or revoke, the
registration of a class of securities.
(5) An issuer's duty to file any reports under section 13(a) of the
Act (15 U.S.C. 78m(a)) and the rules and regulations thereunder solely
because of such security's registration under section 12(b) of the Act
will be suspended upon the effective date for the delisting pursuant to
paragraph (d)(1) of this section. If, following the effective date of
delisting on Form 25, the Commission, an exchange, or an issuer delays
the withdrawal of a security's registration under section 12(b) of the
Act, an issuer shall, within 60 days of such delay, file any reports
that would have been required under section 13(a) of the Act and the
rules and regulations thereunder, had the Form 25 not been filed. The
issuer also shall timely file any subsequent reports required under
section 13(a) of the Act for the duration of the delay.
(6) An issuer whose reporting responsibilities under section 13(a)
of the Act are suspended for a class of securities under paragraph
(d)(5) of this section is, nevertheless, required to file any reports
that an issuer with such a class of securities registered under section
12 of the Act would be required to file under section 13(a) of the Act
if such class of securities:
(i) Is registered under section 12(g) of the Act; or
(ii) Would be registered, or would be required to be registered,
under section 12(g) of the Act but for the exemption from registration
under section 12(g) of the Act provided by section 12(g)(2)(A) of the
Act.
(7)(i) An issuer whose reporting responsibilities under section
13(a) of the Act are suspended under paragraph (d)(5) of this section
is, nevertheless, required to file any reports that would be required
under section 15(d) of the Act but for the fact that the reporting
obligations are:
(A) Suspended for a class of securities under paragraph (d)(5) of
this section; and
(B) Suspended, terminated, or otherwise absent under section 12(g)
of the Act.
(ii) The reporting responsibilities of an issuer under section 15(d)
of the Act shall continue until the issuer is required to file reports
under section 13(a) of the Act or the issuer's reporting
responsibilities under section 15(d) of the Act are otherwise suspended.
(8) In the event removal is being effected under paragraph (a)(3) of
this section and the national securities exchange has admitted or
intends to admit a successor security to trading under the temporary
exemption provided for by Sec. 240.12a-5, the effective date of the
Form 25, as set forth in paragraph (d)(1) of this section, shall not be
earlier than the date the successor security is removed from its exempt
status.
(e) The following are exempt from section 12(d) of the Act and the
provisions of this section:
(1) Any standardized option, as defined in Sec. 240.9b-1, that is:
(i) Issued by a clearing agency registered under section 17A of the
Act (15 U.S.C. 78q-1); and
(ii) Traded on a national securities exchange registered pursuant to
section 6(a) of the Act (15 U.S.C. 78f(a)); and
(2) Any security futures product that is:
(i) Traded on a national securities exchange registered under
section 6(a) of the Act or on a national securities association
registered pursuant to section 15A(a) of the Act (15 U.S.C. 78o-3(a));
and
(ii) Cleared by a clearing agency registered as a clearing agency
pursuant to section 17A of the Act or is exempt from registration under
section 17A(b)(7) of the Act.
[28 FR 1506, Feb. 16, 1963, as amended at 70 FR 42468, July 22, 2005]
[[Page 157]]
Unlisted Trading
Sec. 240.12f-1 Applications for permission to reinstate unlisted
trading privileges.
(a) An application to reinstate unlisted trading privileges may be
made to the Commission by any national securities exchange for the
extension of unlisted trading privileges to any security for which such
unlisted trading privileges have been suspended by the Commission,
pursuant to section 12(f)(2)(A) of the Act (15 U.S.C. 78l(2)(A)). One
copy of such application, executed by a duly authorized officer of the
exchange, shall be filed and shall set forth:
(1) Name of issuer;
(2) Title of security;
(3) The name of each national securities exchange, if any, on which
such security is listed or admitted to unlisted trading privileges;
(4) Whether transaction information concerning such security is
reported pursuant to an effective transaction reporting plan
contemplated by Sec. 242.601 of this chapter;
(5) The date of the Commission's suspension of unlisted trading
privileges in the security on the exchange;
(6) Any other information which is deemed pertinent to the question
of whether the reinstatement of unlisted trading privileges in such
security is consistent with the maintenance of fair and orderly markets
and the protection of investors; and
(7) That a copy of the instant application has been mailed, or
otherwise personally provided, to the issuer of the securities for which
unlisted trading privileges are sought and to each exchange listed in
item (3) of this section.
[44 FR 75134, Dec. 19, 1979, as amended at 45 FR 12390, Feb. 26, 1980;
45 FR 36076, May 29, 1980; 60 FR 20896, Apr. 28, 1995; 70 FR 37618, June
29, 2005]
Sec. 240.12f-2 Extending unlisted trading privileges to a security that
is the subject of an initial public offering.
(a) General provision. A national securities exchange may extend
unlisted trading privileges to a subject security when at least one
transaction in the subject security has been effected on the national
securities exchange upon which the security is listed and the
transaction has been reported pursuant to an effective transaction
reporting plan, as defined in Sec. 242.600 of this chapter.
(b) The extension of unlisted trading privileges pursuant to this
section shall be subject to all the provisions set forth in Section
12(f) of the Act (15 U.S.C. 78l(f)), as amended, and any rule or
regulation promulgated thereunder, or which may be promulgated
thereunder while the extension is in effect.
(c) Definitions. For the purposes of this section:
(1) The term subject security shall mean a security that is the
subject of an initial public offering, as that term is defined in
section 12(f)(1)(G)(i) of the Act (15 U.S.C. 78l(f)(1)(G)(i)), and
(2) An initial public offering commences at such time as is
described in section 12(f)(1)(G)(ii) of the Act (15 U.S.C.
78l(f)(1)(G)(ii)).
[60 FR 20896, Apr. 28, 1995, as amended at 65 FR 53565, Sept. 5, 2000;
70 FR 37618, June 29, 2005]
Sec. 240.12f-3 Termination or suspension of unlisted trading privileges.
(a) The issuer of any security for which unlisted trading privileges
on any exchange have been continued or extended, or any broker or dealer
who makes or creates a market for such security, or any other person
having a bona fide interest in the question of termination or suspension
of such unlisted trading privileges, may make application to the
Commission for the termination or suspension of such unlisted trading
privileges. One duly executed copy of such application shall be filed,
and it shall contain the following information:
(1) Name and address of applicant;
(2) A brief statement of the applicant's interest in the question of
termination or suspension of such unlisted trading privileges;
(3) Title of security;
(4) Names of issuer;
(5) Amount of such security issued and outstanding (number of shares
of stock or principal amount of bonds), stating source of information;
(6) Annual volume of public trading in such security (number of
shares of
[[Page 158]]
stock or principal amount of bonds) on such exchange for each of the
three calendar years immediately preceding the date of such application,
and monthly volume of trading in such security for each of the twelve
calendar months immediately preceding the date of such application;
(7) Price range on such exchange for each of the twelve calendar
months immediately preceding the date of such application; and
(8) A brief statement of the information in the applicant's
possession, and the source thereof, with respect to (i) the extent of
public trading in such security on such exchange, and (ii) the character
of trading in such security on such exchange; and
(9) A brief statement that a copy of the instant application has
been mailed, or otherwise personally provided, to the exchange from
which the suspension or termination of unlisted trading privileges is
sought, and to any other exchange on which such security is listed or
traded pursuant to unlisted trading privileges.
(b) Unlisted trading privileges in any security on any national
securities exchange may be suspended or terminated by such exchange in
accordance with its rules.
(Secs. 12(f) and 23, 15 U.S.C. 78l and 78w)
[20 FR 6702, Sept. 13, 1955, as amended at 44 FR 75135, Dec. 19, 1979;
45 FR 36076, May 29, 1980; 60 FR 20896, Apr. 28, 1995]
Sec. 240.12f-4 Exemption of securities admitted to unlisted trading
privileges from sections 13, 14 and 16.
(a) Any security for which unlisted trading privileges on any
national securities exchange have been continued or extended pursuant to
section 12(f) of the Act shall be exempt from section 13 of the Act
unless (1) such security or another security of the same issuer is
listed and registered on a national securities exchange or registered
pursuant to section 12(g) of the Act, or (2) such issuer would be
required to file information, documents and reports pursuant to section
15(d) of the Act but for the fact that securities of the issuer are
deemed to be ``registered on a national securities exchange'' within the
meaning of section 12(f)(6) of the Act.
(b) Any security for which unlisted trading privileges on any
national securities exchange have been continued or extended pursuant to
section 12(f) of the Act shall be exempt from section 14 of the Act
unless such security is also listed and registered on a national
securities exchange or registered pursuant to section 12(g) of the Act.
(c)(1) Any equity security for which unlisted trading privileges on
any national securities exchange have been continued or extended
pursuant to section 12(f) of the Act shall be exempt from section 16 of
the act unless such security or another equity security of the same
issuer is listed and registered on a national securities exchange or
registered pursuant to section 12(g) of the Act.
(2) Any equity security for which unlisted trading privileges on any
national securities exchange have been continued or extended pursuant to
section 12(f) of the Act and which is not listed and registered on any
other such exchange or registered pursuant to section 12(g) of the Act
shall be exempt from section 16 of the Act insofar as that section would
otherwise apply to any person who is directly or indirectly the
beneficial owner of more than 10 percent of such security, unless
another equity security of the issuer of such unlisted security is so
listed or registered and such beneficial owner is a director or officer
of such issuer or directly or indirectly the beneficial owner of more
than 10 percent of any such listed security.
(d) Any reference in this section to a security registered pursuant
to section 12(g) of the Act shall include, and any reference to a
security not so registered shall exclude, any security as to which a
registration statement pursuant to such section is at the time required
to be effective.
(Sec. 3, 78 Stat. 565, 15 U.S.C. 78l)
[30 FR 482, Jan. 14, 1965]
Sec. 240.12f-5 Exchange rules for securities to which unlisted trading
privileges are extended.
A national securities exchange shall not extend unlisted trading
privileges to any security unless the national securities exchange has
in effect a rule or rules providing for transactions in the
[[Page 159]]
class or type of security to which the exchange extends unlisted trading
privileges.
[60 FR 20896, Apr. 28, 1995]
Sec. 240.12f-6 [Reserved]
Extensions and Temporary Exemptions; Definitions
Sec. 240.12g-1 Registration of securities; exemption from section 12(g).
An issuer is not required to register a class of equity securities
pursuant to section 12(g)(1) of the Act (15 U.S.C. 78l(g)(1)) if on the
last day of its most recent fiscal year:
(a) The issuer had total assets not exceeding $10 million; or
(b)(1) The class of equity securities was held of record by fewer
than 2,000 persons and fewer than 500 of those persons were not
accredited investors (as such term is defined in Sec. 230.501(a) of
this chapter, determined as of such day rather than at the time of the
sale of the securities); or
(2) The class of equity securities was held of record by fewer than
2,000 persons in the case of a bank; a savings and loan holding company,
as such term is defined in section 10 of the Home Owners' Loan Act (12
U.S.C. 1461); or a bank holding company, as such term is defined in
section 2 of the Bank Holding Company Act of 1956 (12 U.S.C. 1841).
81 FR 28705, May 10, 2016, as amended at 81 FR 95458, Dec. 28, 2016]
Sec. 240.12g-2 Securities deemed to be registered pursuant to
section 12(g)(1) upon termination of exemption pursuant to
section 12(g)(2)(A) or (B).
Any class of securities that would have been required to be
registered pursuant to section 12(g)(1) of the Act (15 U.S.C. 78l(g)(1))
except for the fact that it was exempt from such registration by section
12(g)(2)(A) of the Act (15 U.S.C. 78l(g)(2)(A)) because it was listed
and registered on a national securities exchange, or by section
12(g)(2)(B) of the Act (15 U.S.C. 78l(g)(2)(B)) because it was issued by
an investment company registered pursuant to section 8 of the Investment
Company Act of 1940 (15 U.S.C. 80a-8), shall upon the termination of the
listing and registration of such class or the termination of the
registration of such company and without the filing of an additional
registration statement be deemed to be registered pursuant to section
12(g)(1) of the Act if at the time of such termination:
(a) The issuer of such class of securities has elected to be
regulated as a business development company pursuant to sections 55
through 65 of the Investment Company Act of 1940 (15 U.S.C. 80a-54
through 64) and such election has not been withdrawn; or
(b) Securities of the class are not exempt from such registration
pursuant to section 12 of the Act (15 U.S.C. 78l) or rules thereunder
and all securities of such class are held of record by 300 or more
persons, or 1,200 or more persons in the case of a bank; a savings and
loan holding company, as such term is defined in section 10 of the Home
Owners' Loan Act (12 U.S.C. 1461); or a bank holding company, as such
term is defined in section 2 of the Bank Holding Company Act of 1956 (12
U.S.C. 1841).
[81 FR 28705, May 10, 2016]
Sec. 240.12g-3 Registration of securities of successor issuers under
section 12(b) or 12(g).
(a) Where in connection with a succession by merger, consolidation,
exchange of securities, acquisition of assets or otherwise, securities
of an issuer that are not already registered pursuant to section 12 of
the Act (15 U.S.C. 78l) are issued to the holders of any class of
securities of another issuer that is registered pursuant to either
section 12 (b) or (g) of the Act (15 U.S.C. 78l (b) or (g)), the class
of securities so issued shall be deemed to be registered under the same
paragraph of section 12 of the Act unless upon consummation of the
succession:
(1) Such class is exempt from such registration other than by Sec.
240.12g3-2;
(2) All securities of such class are held of record by fewer than
300 persons, or 1,200 persons in the case of a bank; a savings and loan
holding company, as such term is defined in section 10 of the Home
Owners' Loan Act (12 U.S.C. 1461); or a bank holding company, as such
term is defined in section
[[Page 160]]
2 of the Bank Holding Company Act of 1956 (12 U.S.C. 1841); or
(3) The securities issued in connection with the succession were
registered on Form F-8 or Form F-80 (Sec. 239.38 or Sec. 239.41 of
this chapter) and following succession the successor would not be
required to register such class of securities under section 12 of the
Act (15 U.S.C. 78l) but for this section.
(b) Where in connection with a succession by merger, consolidation,
exchange of securities, acquisition of assets or otherwise, securities
of an issuer that are not already registered pursuant to section 12 of
the Act (15 U.S.C. 78l) are issued to the holders of any class of
securities of another issuer that is required to file a registration
statement pursuant to either section 12(b) or (g) of the Act (15 U.S.C.
78l(b) or (g)) but has not yet done so, the duty to file such statement
shall be deemed to have been assumed by the issuer of the class of
securities so issued. The successor issuer shall file a registration
statement pursuant to the same paragraph of section 12 of the Act with
respect to such class within the period of time the predecessor issuer
would have been required to file such a statement unless upon
consummation of the succession:
(1) Such class is exempt from such registration other than by Sec.
240.12g3-2;
(2) All securities of such class are held of record by fewer than
300 persons, or 1,200 persons in the case of a bank; a savings and loan
holding company, as such term is defined in section 10 of the Home
Owners' Loan Act (12 U.S.C. 1461); or a bank holding company, as such
term is defined in section 2 of the Bank Holding Company Act of 1956 (12
U.S.C. 1841); or
(3) The securities issued in connection with the succession were
registered on Form F-8 or Form F-80 (Sec. 239.38 or Sec. 239.41 of
this chapter) and following the succession the successor would not be
required to register such class of securities under section 12 of the
Act (15 U.S.C. 78l) but for this section.
(c) Where in connection with a succession by merger, consolidation,
exchange of securities, acquisition of assets or otherwise, securities
of an issuer that are not already registered pursuant to section 12 of
the Act (15 U.S.C. 78l) are issued to the holders of classes of
securities of two or more other issuers that are each registered
pursuant to section 12 of the Act, the class of securities so issued
shall be deemed to be registered under section 12 of the Act unless upon
consummation of the succession:
(1) Such class is exempt from such registration other than by Sec.
240.12g3-2;
(2) All securities of such class are held of record by fewer than
300 persons, or 1,200 persons in the case of a bank; a savings and loan
holding company, as such term is defined in section 10 of the Home
Owners' Loan Act (12 U.S.C. 1461); or a bank holding company, as such
term is defined in section 2 of the Bank Holding Company Act of 1956 (12
U.S.C. 1841); or
(3) The securities issued in connection with the succession were
registered on Form F-8 or Form F-80 (Sec. 239.38 or Sec. 239.41 of
this chapter) and following succession the successor would not be
required to register such class of securities under section 12 of the
Act (15 U.S.C. 78l) but for this section.
(d) If the classes of securities issued by two or more predecessor
issuers (as described in paragraph (c) of this section) are registered
under the same paragraph of section 12 of the Act (15 U.S.C. 78l), the
class of securities issued by the successor issuer shall be deemed
registered under the same paragraph of section 12 of the Act. If the
classes of securities issued by the predecessor issuers are not
registered under the same paragraph of section 12 of the Act, the class
of securities issued by the successor issuer shall be deemed registered
under section 12(g) of the Act (15 U.S.C. 78l(g)).
(e) An issuer that is deemed to have a class of securities
registered pursuant to section 12 of the Act (15 U.S.C. 78l) according
to paragraph (a), (b), (c) or (d) of this section shall file reports on
the same forms and such class of securities shall be subject to the
provisions of sections 14 and 16 of the Act (15 U.S.C. 78n and 78p) to
the same extent as the predecessor issuers, except as follows:
[[Page 161]]
(1) An issuer that is not a foreign issuer shall not be eligible to
file on Form 20-F (Sec. 249.220f of this chapter) or to use the
exemption in Sec. 240.3a12-3.
(2) A foreign private issuer shall be eligible to file on Form 20-F
(Sec. 249.220f of this chapter) and to use the exemption in Sec.
240.3a12-3.
(f) An issuer that is deemed to have a class of securities
registered pursuant to section 12 of the Act (15 U.S.C. 78l) according
to paragraphs (a), (b), (c) or (d) of this section shall indicate in the
Form 8-K (Sec. 249.308 of this chapter) report filed with the
Commission in connection with the succession, pursuant to the
requirements of Form 8-K, the paragraph of section 12 of the Act under
which the class of securities issued by the successor issuer is deemed
registered by operation of paragraphs (a), (b), (c) or (d) of this
section. If a successor issuer that is deemed registered under section
12(g) of the Act (15 U.S.C. 78l(g)) by paragraph (d) of this section
intends to list a class of securities on a national securities exchange,
it must file a registration statement pursuant to section 12(b) of the
Act (15 U.S.C. 78l(b)) with respect to that class of securities.
(g) An issuer that is deemed to have a class of securities
registered pursuant to section 12 of the Act (15 U.S.C. 78l) according
to paragraph (a), (b), (c) or (d) of this section shall file an annual
report for each fiscal year beginning on or after the date as of which
the succession occurred. Annual reports shall be filed within the period
specified in the appropriate form. Each such issuer shall file an annual
report for each of its predecessors that had securities registered
pursuant to section 12 of the Act (15 U.S.C. 78l) covering the last full
fiscal year of the predecessor before the registrant's succession,
unless such report has been filed by the predecessor. Such annual report
shall contain information that would be required if filed by the
predecessor.
[62 FR 39767, July 24, 1997, as amended at 81 FR 28706, May 10, 2016; 83
FR 50221, Oct. 4, 2018]
Sec. 240.12g-4 Certifications of termination of registration under
section 12(g).
(a) Termination of registration of a class of securities under
section 12(g) of the Act (15 U.S.C. 78l(g)) shall take effect 90 days,
or such shorter period as the Commission may determine, after the issuer
certifies to the Commission on Form 15 (Sec. 249.323 of this chapter)
that the class of securities is held of record by:
(1) Fewer than 300 persons, or in the case of a bank; a savings and
loan holding company, as such term is defined in section 10 of the Home
Owners' Loan Act (12 U.S.C. 1461); or a bank holding company, as such
term is defined in section 2 of the Bank Holding Company Act of 1956 (12
U.S.C. 1841), 1,200 persons; or
(2) Fewer than 500 persons, where the total assets of the issuer
have not exceeded $10 million on the last day of each of the issuer's
most recent three fiscal years.
(b) The issuer's duty to file any reports required under section
13(a) shall be suspended immediately upon filing a certification on Form
15; Provided, however, That if the certification on Form 15 is
subsequently withdrawn or denied, the issuer shall, within 60 days after
the date of such withdrawal or denial, file with the Commission all
reports which would have been required had the certification on Form 15
not been filed. If the suspension resulted from the issuer's merger
into, or consolidation with, another issuer or issuers, the
certification shall be filed by the successor issuer.
[49 FR 12689, Mar. 30, 1984, as amended at 51 FR 25362, July 14, 1986;
61 FR 21356, May 9, 1996; 72 FR 16956, Apr. 5, 2007; 81 FR 28706, May
10, 2016]
Sec. 240.12g-6 Exemption for securities issued pursuant to
section 4(a)(6) of the Securities Act of 1933 or Regulation Crowdfunding.
(a) For purposes of determining whether an issuer is required to
register a security with the Commission pursuant to section 12(g)(1) of
the Act (15 U.S.C. 78l(g)(1)), the definition of
[[Page 162]]
held of record shall not include securities issued pursuant to the
offering exemption under section 4(a)(6) of the Securities Act (15
U.S.C. 77d(a)(6)) or Sec. Sec. 227.100 through 227.504 (Regulation
Crowdfunding) by an issuer that:
(1) Is current in filing its ongoing annual reports required
pursuant to Sec. 227.202 of this chapter;
(2) Has total assets not in excess of $25 million as of the end of
its most recently completed fiscal year; and
(3) Has engaged a transfer agent registered pursuant to Section
17A(c) of the Act to perform the function of a transfer agent with
respect to such securities.
(b) An issuer that would be required to register a class of
securities under Section 12(g) of the Act as a result of exceeding the
asset threshold in paragraph (a)(2) of this section may continue to
exclude the relevant securities from the definition of ``held of
record'' for a transition period ending on the penultimate day of the
fiscal year two years after the date it became ineligible. The
transition period terminates immediately upon the failure of an issuer
to timely file any periodic report due pursuant to Sec. 227.202 at
which time the issuer must file a registration statement that registers
that class of securities under the Act within 120 days.
[80 FR 71750, Nov. 16, 2015, as amended at 86 FR 3601, Jan. 14, 2021]
Sec. 240.12g3-2 Exemptions for American depositary receipts and certain
foreign securities.
(a) Securities of any class issued by any foreign private issuer
shall be exempt from section 12(g) (15 U.S.C. 78l(g)) of the Act if the
class has fewer than 300 holders resident in the United States. This
exemption shall continue until the next fiscal year end at which the
issuer has a class of equity securities held by 300 or more persons
resident in the United States. For the purpose of determining whether a
security is exempt pursuant to this paragraph:
(1) Securities held of record by persons resident in the United
States shall be determined as provided in Sec. 240.12g5-1 except that
securities held of record by a broker, dealer, bank or nominee for any
of them for the accounts of customers resident in the United States
shall be counted as held in the United States by the number of separate
accounts for which the securities are held. The issuer may rely in good
faith on information as to the number of such separate accounts supplied
by all owners of the class of its securities which are brokers, dealers,
or banks or a nominee for any of them.
(2) Persons in the United States who hold the security only through
a Canadian Retirement Account (as that term is defined in rule 237(a)(2)
under the Securities Act of 1933 (Sec. 230.237(a)(2) of this chapter)),
shall not be counted as holders resident in the United States.
(b)(1) A foreign private issuer shall be exempt from the requirement
to register a class of equity securities under section 12(g) of the Act
(15 U.S.C. 78l(g)) if:
(i) The issuer is not required to file or furnish reports under
section 13(a) of the Act (15 U.S.C. 78m(a)) or section 15(d) of the Act
(15 U.S.C. 78o(d));
(ii) The issuer currently maintains a listing of the subject class
of securities on one or more exchanges in a foreign jurisdiction that,
either singly or together with the trading of the same class of the
issuer's securities in another foreign jurisdiction, constitutes the
primary trading market for those securities; and
(iii) The issuer has published in English, on its Internet Web site
or through an electronic information delivery system generally available
to the public in its primary trading market, information that, since the
first day of its most recently completed fiscal year, it:
(A) Has made public or been required to make public pursuant to the
laws of the country of its incorporation, organization or domicile;
(B) Has filed or been required to file with the principal stock
exchange in its primary trading market on which its securities are
traded and which has been made public by that exchange; and
(C) Has distributed or been required to distribute to its security
holders.
Note 1 to paragraph (b)(1): For the purpose of paragraph (b) of this
section, primary trading market means that at least 55 percent
[[Page 163]]
of the trading in the subject class of securities on a worldwide basis
took place in, on or through the facilities of a securities market or
markets in a single foreign jurisdiction or in no more than two foreign
jurisdictions during the issuer's most recently completed fiscal year.
If a foreign private issuer aggregates the trading of its subject class
of securities in two foreign jurisdictions for the purpose of this
paragraph, the trading for the issuer's securities in at least one of
the two foreign jurisdictions must be larger than the trading in the
United States for the same class of the issuer's securities. When
determining an issuer's primary trading market under this paragraph,
calculate average daily trading volume in the United States and on a
worldwide basis as under Rule 12h-6 under the Act (Sec. 240.12h-6).
Note 2 to paragraph (b)(1): Paragraph (b)(1)(iii) of this section
does not apply to an issuer when claiming the exemption under paragraph
(b) of this section upon the effectiveness of the termination of its
registration of a class of securities under section 12(g) of the Act, or
the termination of its obligation to file or furnish reports under
section 15(d) of the Act.
Note 3 to paragraph (b)(1): Compensatory stock options for which the
underlying securities are in a class exempt under paragraph (b) of this
section are also exempt under that paragraph.
(2)(i) In order to maintain the exemption under paragraph (b) of
this section, a foreign private issuer shall publish, on an ongoing
basis and for each subsequent fiscal year, in English, on its Internet
Web site or through an electronic information delivery system generally
available to the public in its primary trading market, the information
specified in paragraph (b)(1)(iii) of this section.
(ii) An issuer must electronically publish the information required
by paragraph (b)(2) of this section promptly after the information has
been made public.
(3)(i) The information required to be published electronically under
paragraph (b) of this section is information that is material to an
investment decision regarding the subject securities, such as
information concerning:
(A) Results of operations or financial condition;
(B) Changes in business;
(C) Acquisitions or dispositions of assets;
(D) The issuance, redemption or acquisition of securities;
(E) Changes in management or control;
(F) The granting of options or the payment of other remuneration to
directors or officers; and
(G) Transactions with directors, officers or principal security
holders.
(ii) At a minimum, a foreign private issuer shall electronically
publish English translations of the following documents required to be
published under paragraph (b) of this section if in a foreign language:
(A) Its annual report, including or accompanied by annual financial
statements;
(B) Interim reports that include financial statements;
(C) Press releases; and
(D) All other communications and documents distributed directly to
security holders of each class of securities to which the exemption
relates.
(c) The exemption under paragraph (b) of this section shall remain
in effect until:
(1) The issuer no longer satisfies the electronic publication
condition of paragraph (b)(2) of this section;
(2) The issuer no longer maintains a listing of the subject class of
securities on one or more exchanges in a primary trading market, as
defined under paragraph (b)(1) of this section; or
(3) The issuer registers a class of securities under section 12 of
the Act or incurs reporting obligations under section 15(d) of the Act.
(d) Depositary shares registered on Form F-6 (Sec. 239.36 of this
chapter), but not the underlying deposited securities, are exempt from
section 12(g) of the Act under this paragraph.
[48 FR 46739, Oct. 14, 1983, as amended at 49 FR 12689, Mar. 30, 1984;
56 FR 30068, July 1, 1991; 65 FR 37676, June 15, 2000; 72 FR 16955, Apr.
5, 2007; 73 FR 52768, Sept. 10, 2008]
Sec. 240.12g5-1 Definition of securities ``held of record''.
(a) For the purpose of determining whether an issuer is subject to
the provisions of sections 12(g) and 15(d) of the Act, securities shall
be deemed to be ``held of record'' by each person who is identified as
the owner of such securities on records of security holders maintained
by or on behalf of the issuer, subject to the following:
[[Page 164]]
(1) In any case where the records of security holders have not been
maintained in accordance with accepted practice, any additional person
who would be identified as such an owner on such records if they had
been maintained in accordance with accepted practice shall be included
as a holder of record.
(2) Except as specified in paragraph (a)(9) of this section,
securities identified as held of record by a corporation, a partnership,
a trust whether or not the trustees are named, or other organization
shall be included as so held by one person.
(3) Securities identified as held of record by one or more persons
as trustees, executors, guardians, custodians or in other fiduciary
capacities with respect to a single trust, estate or account shall be
included as held of record by one person.
(4) Securities held by two or more persons as coowners shall be
included as held by one person.
(5) Each outstanding unregistered or bearer certificate shall be
included as held of record by a separate person, except to the extent
that the issuer can establish that, if such securities were registered,
they would be held of record, under the provisions of this rule, by a
lesser number of persons.
(6) Securities registered in substantially similar names where the
issuer has reason to believe because of the address or other indications
that such names represent the same person, may be included as held of
record by one person.
(7) Other than when determining compliance with Rule 257(d)(2) of
Regulation A (Sec. 230.257(d)(2) of this chapter), the definition of
``held of record'' shall not include securities issued in a Tier 2
offering pursuant to Regulation A by an issuer that:
(i) Is required to file reports pursuant to Rule 257(b) of
Regulation A (Sec. 230.257(b) of this chapter);
(ii) Is current in filing annual, semiannual and special financial
reports pursuant to such rule as of its most recently completed fiscal
year end;
(iii) Has engaged a transfer agent registered pursuant to Section
17A(c) of the Act to perform the function of a transfer agent with
respect to such securities; and
(iv) Had a public float of less than $75 million as of the last
business day of its most recently completed semiannual period, computed
by multiplying the aggregate worldwide number of shares of its common
equity securities held by non-affiliates by the price at which such
securities were last sold (or the average bid and asked prices of such
securities) in the principal market for such securities or, in the event
the result of such public float calculation was zero, had annual
revenues of less than $50 million as of its most recently completed
fiscal year. An issuer that would be required to register a class of
securities under Section 12(g) of the Act as a result of exceeding the
applicable threshold in this paragraph (a)(7)(iv), may continue to
exclude the relevant securities from the definition of ``held of
record'' for a transition period ending on the penultimate day of the
fiscal year two years after the date it became ineligible. The
transition period terminates immediately upon the failure of an issuer
to timely file any periodic report due pursuant to Rule 257 (Sec.
230.257 of this chapter) at which time the issuer must file a
registration statement that registers that class of securities under the
Act within 120 days.
(8)(i) For purposes of determining whether an issuer is required to
register a class of equity securities with the Commission pursuant to
section 12(g)(1) of the Act (15 U.S.C. 78l(g)(1)), an issuer may exclude
securities:
(A) Held by persons who received the securities pursuant to an
employee compensation plan in transactions exempt from, or not subject
to, the registration requirements of section 5 of the Securities Act of
1933 (15 U.S.C. 77e); and
(B) Held by persons who received the securities in a transaction
exempt from, or not subject to, the registration requirements of section
5 of the Securities Act (15 U.S.C. 77e) from the issuer, a predecessor
of the issuer or an acquired company in substitution or exchange for
excludable securities under paragraph (a)(8)(i)(A) of this section, as
long as the persons were eligible to receive securities pursuant to
[[Page 165]]
Sec. 230.701(c) of this chapter at the time the excludable securities
were originally issued to them.
(ii) As a non-exclusive safe harbor under this paragraph (a)(8):
(A) An issuer may deem a person to have received the securities
pursuant to an employee compensation plan if such plan and the person
who received the securities pursuant to the plan met the plan and
participant conditions of Sec. 230.701(c) of this chapter; and
(B) An issuer may, solely for the purposes of Section 12(g) of the
Act (15 U.S.C. 78l(g)(1)), deem the securities to have been issued in a
transaction exempt from, or not subject to, the registration
requirements of Section 5 of the Securities Act (15 U.S.C. 77e) if the
issuer had a reasonable belief at the time of the issuance that the
securities were issued in such a transaction.
(9) For purposes of determining whether a crowdfunding issuer, as
defined in Sec. 270.3a-9(b)(1) of this chapter, or a crowdfunding
vehicle, as defined in Sec. 270.3a-9(b)(2) of this chapter, is required
to register a class of equity securities with the Commission pursuant to
section 12(g)(1) of the Act, both the crowdfunding issuer and the
crowdfunding vehicle:
(i) May exclude securities issued by a crowdfunding vehicle, as
defined in Sec. 270.3a-9(b)(2) of this chapter, in an offering under
Sec. Sec. 227.100 through 227.504 (Regulation Crowdfunding) in which
the crowdfunding vehicle and the crowdfunding issuer are deemed to be
co-issuers under the Securities Act (15 U.S.C. 77a et seq.) and that are
held by natural persons; and
(ii) Shall include securities issued by a crowdfunding vehicle, as
defined in Sec. 270.3a-9(b)(2) of this chapter, in an offering under
Regulation Crowdfunding in which the crowdfunding vehicle and the
crowdfunding issuer are deemed to be co-issuers under the Securities Act
and that are held by investors that are not natural persons.
(b) Notwithstanding paragraph (a) of this section:
(1) Securities held, to the knowledge of the issuer, subject to a
voting trust, deposit agreement or similar arrangement shall be included
as held of record by the record holders of the voting trust
certificates, certificates of deposit, receipts or similar evidences of
interest in such securities: Provided, however, That the issuer may rely
in good faith on such information as is received in response to its
request from a non-affiliated issuer of the certificates or evidences of
interest.
(2) Whole or fractional securities issued by a savings and loan
association, building and loan association, cooperative bank, homestead
association, or similar institution for the sole purpose of qualifying a
borrower for membership in the issuer, and which are to be redeemed or
repurchased by the issuer when the borrower's loan is terminated, shall
not be included as held of record by any person.
(3) If the issuer knows or has reason to know that the form of
holding securities of record is used primarily to circumvent the
provisions of section 12(g) or 15(d) of the Act, the beneficial owners
of such securities shall be deemed to be the record owners thereof.
(Sec. 3, 48 Stat. 882, as amended, sec. 3, 78 Stat. 566; 15 U.S.C. 78c,
78l)
[30 FR 484, Jan. 14, 1965, as amended at 80 FR 21922, Apr. 20, 2015; 81
FR 28706, May 10, 2016; 86 FR 3601, Jan. 14, 2021]
Sec. 240.12g5-2 Definition of ``total assets''.
For the purpose of section 12(g)(1) of the Act, the term total
assets shall mean the total assets as shown on the issuer's balance
sheet or the balance sheet of the issuer and its subsidiaries
consolidated, whichever is larger, as required to be filed on the form
prescribed for registration under this section and prepared in
accordance with the pertinent provisions of Regulation S-X (17 CFR part
210). Where the security is a certificate of deposit, voting trust
certificate, or certificate or other evidence of interest in a similar
trust or agreement, the ``total assets'' of the issuer of the security
held under the trust or agreement shall be deemed to be the ``total
assets'' of the issuer of such certificate or evidence of interest.
(Sec. 3, 48 Stat. 882, as amended, sec. 3, 78 Stat. 566; 15 U.S.C. 78c,
78l)
[30 FR 484, Jan. 14, 1965]
[[Page 166]]
Sec. 240.12h-1 Exemptions from registration under section 12(g) of the Act.
Issuers shall be exempt from the provisions of section 12(g) of the
Act with respect to the following securities:
(a) Any interest or participation in an employee stock bonus, stock
purchase, profit sharing, pension, retirement, incentive, thrift,
savings or similar plan which is not transferable by the holder except
in the event of death or mental incompetency, or any security issued
solely to fund such plans;
(b) Any interest or participation in any common trust fund or
similar fund maintained by a bank exclusively for the collective
investment and reinvestment of monies contributed thereto by the bank in
its capacity as a trustee, executor, administrator, or guardian. For
purposes of this paragraph (b), the term ``common trust fund'' shall
include a common trust fund which is maintained by a bank which is a
member of an affiliated group, as defined in section 1504(a) of the
Internal Revenue Code of 1954 (26 U.S.C. 1504(a)), and which is
maintained exclusively for the investment and reinvestment of monies
contributed thereto by one or more bank members of such affilated group
in the capacity of trustee, executor, administrator, or guardian;
Provided, That:
(1) The common trust fund is operated in compliance with the same
state and Federal regulatory requirements as would apply if the bank
maintaining such fund as any other contributing banks were the same
entity; and
(2) The rights of persons for whose benefit a contributiong bank
acts as trustee, executor, administrator or guardian would not be
diminished by reason of the maintenance of such common trust fund by
another bank member of the affiliated group;
(c) Any class of equity security which would not be outstanding 60
days after a registration statement would be required to be filed with
respect thereto;
(d) Any standardized option, as that term is defined in section
240.9b-1(a)(4), that is issued by a clearing agency registered under
section 17A of the Act (15 U.S.C. 78q-1) and traded on a national
securities exchange registered pursuant to section 6(a) of the Act (15
U.S.C. 78f(a)) or on a national securities association registered
pursuant to section 15A(a) of the Act (15 U.S.C. 780-3(a));
(e) Any security futures product that is traded on a national
securities exchange registered pursuant to section 6 of the Act (15
U.S.C. 78f) or on a national securities association registered pursuant
to section 15A(a) of the Act (15 U.S.C. 780-3(a)) and cleared by a
clearing agency that is registered pursuant to section 17A of the Act
(15 U.S.C. 78q-1) or is exempt from registration under section 17A(b)(7)
of the Act (15 U.S.C. 78q-1(b)(7)).
(f)(1) Stock options issued under written compensatory stock option
plans under the following conditions:
(i) The issuer of the equity security underlying the stock options
does not have a class of security registered under section 12 of the Act
and is not required to file reports pursuant to section 15(d) of the
Act;
(ii) The stock options have been issued pursuant to one or more
written compensatory stock option plans established by the issuer, its
parents, its majority-owned subsidiaries or majority-owned subsidiaries
of the issuer's parents;
Note to paragraph (f)(1)(ii): All stock options issued under all
written compensatory stock option plans on the same class of equity
security of the issuer will be considered part of the same class of
equity security for purposes of the provisions of paragraph (f) of this
section.
(iii) The stock options are held only by those persons described in
Rule 701(c) under the Securities Act (17 CFR 230.701(c)) or their
permitted transferees as provided in paragraph (f)(1)(iv) of this
section;
(iv) The stock options and, prior to exercise, the shares to be
issued on exercise of the stock options are restricted as to transfer by
the optionholder other than to persons who are family members (as
defined in Rule 701(c)(3) under the Securities Act (17 CFR
230.701(c)(3)) through gifts or domestic relations orders, or to an
executor or guardian of the optionholder upon the death or disability of
the optionholder until the issuer becomes subject to the reporting
requirements of section 13 or 15(d) of the Act or is no longer relying
on the exemption pursuant to this section; provided that the
[[Page 167]]
optionholder may transfer the stock options to the issuer, or in
connection with a change of control or other acquisition transaction
involving the issuer, if after such transaction the stock options no
longer will be outstanding and the issuer no longer will be relying on
the exemption pursuant to this section;
Note to paragraph (f)(1)(iv): For purposes of this section,
optionholders may include any permitted transferee under paragraph
(f)(1)(iv) of this section; provided that such permitted transferees may
not further transfer the stock options.
(v) The stock options and the shares issuable upon exercise of such
stock options are restricted as to any pledge, hypothecation, or other
transfer, including any short position, any ``put equivalent position''
(as defined in Sec. 240.16a-1(h) of this chapter), or any ``call
equivalent position'' (as defined in Sec. 240.16a-1(b) of this chapter)
by the optionholder prior to exercise of an option, except in the
circumstances permitted in paragraph (f)(1)(iv) of this section, until
the issuer becomes subject to the reporting requirements of section 13
or 15(d) of the Act or is no longer relying on the exemption pursuant
paragraph (f)(1) of this section; and
Note to paragraphs (f)(1)(iv) and (f)(1)(v): The transferability
restrictions in paragraphs (f)(1)(iv) and (f)(1)(v) of this section must
be contained in a written compensatory stock option plan, individual
written compensatory stock option agreement, other stock purchase or
stockholder agreement to which the issuer and the optionholder are a
signatory or party, other enforceable agreement by or against the issuer
and the optionholder, or in the issuer's by-laws or certificate or
articles of incorporation.
(vi) The issuer has agreed in the written compensatory stock option
plan, the individual written compensatory stock option agreement, or
another agreement enforceable against the issuer to provide the
following information to optionholders once the issuer is relying on the
exemption pursuant to paragraph (f)(1) of this section until the issuer
becomes subject to the reporting requirements of section 13 or 15(d) of
the Act or is no longer relying on the exemption pursuant paragraph
(f)(1) of this section:
The information described in Rules 701(e)(3), (4), and (5) under the
Securities Act (17 CFR 230.701(e)(3), (4), and (5)), every six months
with the financial statements being not more than 180 days old and with
such information provided either by physical or electronic delivery to
the optionholders or by written notice to the optionholders of the
availability of the information on an Internet site that may be
password-protected and of any password needed to access the information.
Note to paragraph (f)(1)(vi): The issuer may request that the
optionholder agree to keep the information to be provided pursuant to
this section confidential. If an optionholder does not agree to keep the
information to be provided pursuant to this section confidential, then
the issuer is not required to provide the information.
(2) If the exemption provided by paragraph (f)(1) of this section
ceases to be available, the issuer of the stock options that is relying
on the exemption provided by this section must file a registration
statement to register the class of stock options under section 12 of the
Act within 120 calendar days after the exemption provided by paragraph
(f)(1) of this section ceases to be available; and
(g)(1) Stock options issued under written compensatory stock option
plans under the following conditions:
(i) The issuer of the equity security underlying the stock options
has registered a class of security under section 12 of the Act or is
required to file periodic reports pursuant to section 15(d) of the Act;
(ii) The stock options have been issued pursuant to one or more
written compensatory stock option plans established by the issuer, its
parents, its majority-owned subsidiaries or majority-owned subsidiaries
of the issuer's parents;
Note to paragraph (g)(1)(ii): All stock options issued under all of
the written compensatory stock option plans on the same class of equity
security of the issuer will be considered part of the same class of
equity security of the issuer for purposes of the provisions of
paragraph (g) of this section.
(iii) The stock options are held only by those persons described in
Rule 701(c) under the Securities Act (17 CFR 230.701(c)) or those
persons specified in
[[Page 168]]
General Instruction A.1(a) of Form S-8 (17 CFR 239.16b); provided that
an issuer can still rely on this exemption if there is an insignificant
deviation from satisfaction of the condition in this paragraph
(g)(1)(iii) and after December 7, 2007 the issuer has made a good faith
and reasonable attempt to comply with the conditions of this paragraph
(g)(1)(iii). For purposes of this paragraph (g)(1)(iii), an
insignificant deviation exists if the number of optionholders that do
not meet the condition in this paragraph (g)(1)(iii) are insignificant
both as to the aggregate number of optionholders and number of
outstanding stock options.
(2) If the exemption provided by paragraph (g)(1) of this section
ceases to be available, the issuer of the stock options that is relying
on the exemption provided by this section must file a registration
statement to register the class of stock options or a class of security
under section 12 of the Act within 60 calendar days after the exemption
provided in paragraph (g)(1) of this section ceases to be available.
(h) Any security-based swap that is issued by a clearing agency
registered as a clearing agency under Section 17A of the Act (15 U.S.C.
78q-1) or exempt from registration under Section 17A of the Act pursuant
to a rule, regulation, or order of the Commission in its function as a
central counterparty that the Commission has determined must be cleared
or that is permitted to be cleared pursuant to the clearing agency's
rules, and that was sold to an eligible contract participant (as defined
in Section 1a(18) of the Commodity Exchange Act (7 U.S.C. 1a(18))) in
reliance on Rule 239 under the Securities Act of 1933 (17 CFR 230.239).
(i) Any security-based swap offered and sold in reliance on Sec.
230.240 of this chapter. This section will expire on February 11, 2018.
[30 FR 6114, Apr. 30, 1965, as amended at 43 FR 2392, Jan. 17, 1978.
Redesignated at 47 FR 17052, Apr. 21, 1982; 68 FR 192, Jan. 2, 2003; 72
FR 69566, Dec. 7, 2007; 76 FR 40612, July 11, 2011; 77 FR 20549, Apr. 5,
2012; 78 FR 7659, Feb. 4, 2013; 79 FR 7576, Feb. 10, 2014; 82 FR 10707,
Feb. 15, 2017]
Sec. 240.12h-2 [Reserved]
Sec. 240.12h-3 Suspension of duty to file reports under section 15(d).
(a) Subject to paragraphs (c) and (d) of this section, the duty
under section 15(d) to file reports required by section 13(a) of the Act
with respect to a class of securities specified in paragraph (b) of this
section shall be suspended for such class of securities immediately upon
filing with the Commission a certification on Form 15 (17 CFR 249.323)
if the issuer of such class has filed all reports required by section
13(a), without regard to Rule 12b-25 (17 CFR 249.322), for the shorter
of its most recent three fiscal years and the portion of the current
year preceding the date of filing Form 15, or the period since the
issuer became subject to such reporting obligation. If the certification
on Form 15 is subsequently withdrawn or denied, the issuer shall, within
60 days, file with the Commission all reports which would have been
required if such certification had not been filed.
(b) The classes of securities eligible for the suspension provided
in paragraph (a) of this section are:
(1) Any class of securities, other than any class of asset-backed
securities, held of record by:
(i) Fewer than 300 persons, or in the case of a bank; a savings and
loan holding company, as such term is defined in section 10 of the Home
Owners' Loan Act (12 U.S.C. 1461); or a bank holding company, as such
term is defined in section 2 of the Bank Holding Company Act of 1956 (12
U.S.C. 1841), 1,200 persons; or
(ii) Fewer than 500 persons, where the total assets of the issuer
have not exceeded $10 million on the last day of each of the issuer's
three most recent fiscal years; and
(2) Any class or securities deregistered pursuant to section 12(d)
of the Act if such class would not thereupon be deemed registered under
section 12(g) of the Act or the rules thereunder.
Note to paragraph (b): The suspension of classes of asset-backed
securities is addressed in Sec. 240.15d-22.
(c) This section shall not be available for any class of securities
for a fiscal
[[Page 169]]
year in which a registration statement relating to that class becomes
effective under the Securities Act of 1933, or is required to be updated
pursuant to section 10(a)(3) of the Act, and, in the case of paragraph
(b)(1)(ii), the two succeeding fiscal years; Provided, however, That
this paragraph shall not apply to the duty to file reports which arises
solely from a registration statement filed by an issuer with no
significant assets, for the reorganization of a non-reporting issuer
into a one subsidiary holding company in which equity security holders
receive the same proportional interest in the holding company as they
held in the non-reporting issuer, except for changes resulting from the
exercise of dissenting shareholder rights under state law.
(d) The suspension provided by this rule relates only to the
reporting obligation under section 15(d) with respect to a class of
securities, does not affect any other duties imposed on that class of
securities, and shall continue as long as either criteria (i) or (ii) of
paragraph (b)(1) is met on the first day of any subsequent fiscal year;
Provided, however, That such criteria need not be met if the duty to
file reports arises solely from a registration statement filed by an
issuer with no significant assets in a reorganization of a non-reporting
company into a one subsidiary holding company in which equity security
holders receive the same proportional interest in the holding company as
they held in the non-reporting issuer except for changes resulting from
the exercise of dissenting shareholder rights under state law.
(e) If the suspension provided by this section is discontinued
because a class of securities does not meet the eligibility criteria of
paragraph (b) of this section on the first day of an issuer's fiscal
year, then the issuer shall resume periodic reporting pursuant to
section 15(d) of the Act by filing an annual report on Form 10-K for its
preceding fiscal year, not later than 120 days after the end of such
fiscal year.
[49 FR 12689, Mar. 30, 1984, as amended at 51 FR 25362, July 14, 1986;
61 FR 21356, May 9, 1996; 72 FR 16956, Apr. 5, 2007; 73 FR 975, Jan. 4,
2008; 76 FR 52555, Aug. 23, 2011; 81 FR 28706, May 10, 2016]
Sec. 240.12h-4 Exemption from duty to file reports under section 15(d).
An issuer shall be exempt from the duty under section 15(d) of the
Act to file reports required by section 13(a) of the Act with respect to
securities registered under the Securities Act of 1933 on Form F-7, Form
F-8 or Form F-80, provided that the issuer is exempt from the
obligations of Section 12(g) of the Act pursuant to Rule 12g3-2(b).
[56 FR 30068, July 1, 1991]
Sec. 240.12h-5 Exemption for subsidiary issuers of guaranteed securities
and subsidiary guarantors.
Any issuer of a guaranteed security, or guarantor of a security,
that is permitted to omit financial statements by Sec. 210.3-10 (Rule
3-10 of Regulation S-X) of this chapter is exempt from the requirements
of 15 U.S.C. 78m(a) (Section 13(a) of the Act) or 78o(d) (Section 15(d)
of the Act).
[85 FR 22006, Apr. 20, 2020]
Sec. 240.12h-6 Certification by a foreign private issuer regarding
the termination of registration of a class of securities under
section 12(g) or the duty to file reports under section 13(a) or
section 15(d).
(a) A foreign private issuer may terminate the registration of a
class of securities under section 12(g) of the Act (15 U.S.C. 78l(g)),
or terminate the obligation under section 15(d) of the Act (15 U.S.C.
78o(d)) to file or furnish reports required by section 13(a) of the Act
(15 U.S.C. 78m(a)) with respect to a class of equity securities, or
both, after certifying to the Commission on Form 15F (17 CFR 249.324)
that:
(1) The foreign private issuer has had reporting obligations under
section 13(a) or section 15(d) of the Act for at least the 12 months
preceding the filing of the Form 15F, has filed or furnished all reports
required for this period, and has filed at least one annual report
pursuant to section 13(a) of the Act;
(2) The foreign private issuer's securities have not been sold in
the United States in a registered offering under the Securities Act of
1933 (15 U.S.C. 77a et seq.) during the 12 months preceding the filing
of the Form 15F, other than securities issued:
(i) To the issuer's employees;
[[Page 170]]
(ii) By selling security holders in non-underwritten offerings;
(iii) Upon the exercise of outstanding rights granted by the issuer
if the rights are granted pro rata to all existing security holders of
the class of the issuer's securities to which the rights attach;
(iv) Pursuant to a dividend or interest reinvestment plan; or
(v) Upon the conversion of outstanding convertible securities or
upon the exercise of outstanding transferable warrants issued by the
issuer;
Note to paragraph (a)(2): The exceptions in paragraphs (a)(2)(iii)
through (v) do not apply to securities issued pursuant to a standby
underwritten offering or other similar arrangement in the United States.
(3) The foreign private issuer has maintained a listing of the
subject class of securities for at least the 12 months preceding the
filing of the Form 15F on one or more exchanges in a foreign
jurisdiction that, either singly or together with the trading of the
same class of the issuer' s securities in another foreign jurisdiction,
constitutes the primary trading market for those securities; and
(4)(i) The average daily trading volume of the subject class of
securities in the United States for a recent 12-month period has been no
greater than 5 percent of the average daily trading volume of that class
of securities on a worldwide basis for the same period; or
(ii) On a date within 120 days before the filing date of the Form
15F, a foreign private issuer's subject class of equity securities is
either held of record by:
(A) Less than 300 persons on a worldwide basis; or
(B) Less than 300 persons resident in the United States.
Note to paragraph (a)(4): If an issuer's equity securities trade in
the form of American Depositary Receipts in the United States, for
purposes of paragraph (a)(4)(i), it must calculate the trading volume of
its American Depositary Receipts in terms of the number of securities
represented by those American Depositary Receipts.
(b) A foreign private issuer must wait at least 12 months before it
may file a Form 15F to terminate its section 13(a) or 15(d) reporting
obligations in reliance on paragraph (a)(4)(i) of this section if:
(1) The issuer has delisted a class of equity securities from a
national securities exchange or inter-dealer quotation system in the
United States, and at the time of delisting, the average daily trading
volume of that class of securities in the United States exceeded 5
percent of the average daily trading volume of that class of securities
on a worldwide basis for the preceding 12 months; or
(2) The issuer has terminated a sponsored American Depositary
Receipts facility, and at the time of termination the average daily
trading volume in the United States of the American Depositary Receipts
exceeded 5 percent of the average daily trading volume of the underlying
class of securities on a worldwide basis for the preceding 12 months.
(c) A foreign private issuer may terminate its duty to file or
furnish reports pursuant to section 13(a) or section 15(d) of the Act
with respect to a class of debt securities after certifying to the
Commission on Form 15F that:
(1) The foreign private issuer has filed or furnished all reports
required by section 13(a) or section 15(d) of the Act, including at
least one annual report pursuant to section 13(a) of the Act; and
(2) On a date within 120 days before the filing date of the Form
15F, the class of debt securities is either held of record by:
(i) Less than 300 persons on a worldwide basis; or
(ii) Less than 300 persons resident in the United States.
(d)(1) Following a merger, consolidation, exchange of securities,
acquisition of assets or otherwise, a foreign private issuer that has
succeeded to the registration of a class of securities under section
12(g) of the Act of another issuer pursuant to Sec. 240.12g-3, or to
the reporting obligations of another issuer under section 15(d) of the
Act pursuant to Sec. 240.15d-5, may file a Form 15F to terminate that
registration or those reporting obligations if:
(i) Regarding a class of equity securities, the successor issuer
meets the conditions under paragraph (a) of this section; or
[[Page 171]]
(ii) Regarding a class of debt securities, the successor issuer
meets the conditions under paragraph (c) of this section.
(2) When determining whether it meets the prior reporting
requirement under paragraph (a)(1) or paragraph (c)(1) of this section,
a successor issuer may take into account the reporting history of the
issuer whose reporting obligations it has assumed pursuant to Sec.
240.12g-3 or Sec. 240.15d-5.
(e) Counting method. When determining under this section the number
of United States residents holding a foreign private issuer's equity or
debt securities:
(1)(i) Use the method for calculating record ownership Sec.
240.12g3-2(a), except that you may limit your inquiry regarding the
amount of securities represented by accounts of customers resident in
the United States to brokers, dealers, banks and other nominees located
in:
(A) The United States;
(B) The foreign private issuer's jurisdiction of incorporation,
legal organization or establishment; and
(C) The foreign private issuer's primary trading market, if
different from the issuer's jurisdiction of incorporation, legal
organization or establishment.
(ii) If you aggregate the trading volume of the issuer's securities
in two foreign jurisdictions for the purpose of complying with paragraph
(a)(3) of this section, you must include both of those foreign
jurisdictions when conducting your inquiry under paragraph (e)(1)(i) of
this section.
(2) If, after reasonable inquiry, you are unable without
unreasonable effort to obtain information about the amount of securities
represented by accounts of customers resident in the United States, for
purposes of this section, you may assume that the customers are the
residents of the jurisdiction in which the nominee has its principal
place of business.
(3) You must count securities as owned by United States holders when
publicly filed reports of beneficial ownership or other reliable
information that is provided to you indicates that the securities are
held by United States residents.
(4) When calculating under this section the number of your United
States resident security holders, you may rely in good faith on the
assistance of an independent information services provider that in the
regular course of its business assists issuers in determining the number
of, and collecting other information concerning, their security holders.
(f) Definitions. For the purpose of this section:
(1) Debt security means any security other than an equity security
as defined under Sec. 240.3a11-1, including:
(i) 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
(ii) Notwithstanding Sec. 240.3a11-1, any debt security described
in paragraph (f)(3)(i) and (ii) of this section;
(2) Employee has the same meaning as the definition of employee
provided in Form S-8 (Sec. 239.16b of this chapter).
(3) Equity security means the same as under Sec. 240.3a11-1, but,
for purposes of paragraphs (a)(3) and (a)(4)(i) of this section, does
not include:
(i) Any debt security that is convertible into an equity security,
with or without consideration;
(ii) Any debt security that includes a warrant or right to subscribe
to or purchase an equity security;
(iii) Any such warrant or right; or
(iv) 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.
(4) Foreign private issuer has the same meaning as under Sec.
240.3b-4.
(5) Primary trading market means that:
(i) At least 55 percent of the trading in a foreign private issuer's
class of securities that is the subject of Form 15F took place in, on or
through the facilities of a securities market or markets in a single
foreign jurisdiction or in no more than two foreign jurisdictions during
a recent 12-month period; and
(ii) If a foreign private issuer aggregates the trading of its
subject class of
[[Page 172]]
securities in two foreign jurisdictions for the purpose of paragraph
(a)(3) of this section, the trading for the issuer's securities in at
least one of the two foreign jurisdictions must be larger than the
trading in the United States for the same class of the issuer's
securities.
(6) Recent 12-month period means a 12-calendar-month period that
ended no more than 60 days before the filing date of the Form 15F.
(g)(1) Suspension of a foreign private issuer's duty to file reports
under section 13(a) or section 15(d) of the Act shall occur immediately
upon filing the Form 15F with the Commission if filing pursuant to
paragraph (a), (c) or (d) of this section. If there are no objections
from the Commission, 90 days, or such shorter period as the Commission
may determine, after the issuer has filed its Form 15F, the
effectiveness of any of the following shall occur:
(i) The termination of registration of a class of securities under
section 12(g); and
(ii) The termination of a foreign private issuer's duty to file
reports under section 13(a) or section 15(d) of the Act.
(2) If the Form 15F is subsequently withdrawn or denied, the issuer
shall, within 60 days after the date of the withdrawal or denial, file
with or submit to the Commission all reports that would have been
required had the issuer not filed the Form 15F.
(h) As a condition to termination of registration or reporting under
paragraph (a), (c) or (d) of this section, a foreign private issuer
must, either before or on the date that it files its Form 15F, publish a
notice in the United States that discloses its intent to terminate its
registration of a class of securities under section 12(g) of the Act, or
its reporting obligations under section 13(a) or section 15(d) of the
Act, or both. The issuer must publish the notice through a means
reasonably designed to provide broad dissemination of the information to
the public in the United States. The issuer must also submit a copy of
the notice to the Commission, either under cover of a Form 6-K (17 CFR
249.306) before or at the time of filing of the Form 15F, or as an
exhibit to the Form 15F.
(i)(1) A foreign private issuer that, before the effective date of
this section, terminated the registration of a class of securities under
section 12(g) of the Act or suspended its reporting obligations
regarding a class of equity or debt securities under section 15(d) of
the Act may file a Form 15F in order to:
(i) Terminate under this section the registration of a class of
equity securities that was the subject of a Form 15 (Sec. 249.323 of
this chapter) filed by the issuer pursuant to Sec. 240.12g-4; or
(ii) Terminate its reporting obligations under section 15(d) of the
Act, which had been suspended by the terms of that section or by the
issuer's filing of a Form 15 pursuant to Sec. 240.12h-3, regarding a
class of equity or debt securities.
(2) In order to be eligible to file a Form 15F under this paragraph:
(i) If a foreign private issuer terminated the registration of a
class of securities pursuant to Sec. 240.12g-4 or suspended its
reporting obligations pursuant to Sec. 240.12h-3 or section 15(d) of
the Act regarding a class of equity securities, the issuer must meet the
requirements under paragraph (a)(3) and paragraph (a)(4)(i) or
(a)(4)(ii) of this section; or
(ii) If a foreign private issuer suspended its reporting obligations
pursuant to Sec. 240.12h-3 or section 15(d) of the Act regarding a
class of debt securities, the issuer must meet the requirements under
paragraph (c)(2) of this section.
(3)(i) If the Commission does not object, 90 days after the filing
of a Form 15F under this paragraph, or such shorter period as the
Commission may determine, the effectiveness of any of the following
shall occur:
(A) The termination under this section of the registration of a
class of equity securities, which was the subject of a Form 15 filed
pursuant to Sec. 240.12g-4, and the duty to file reports required by
section 13(a) of the Act regarding that class of securities; or
(B) The termination of a foreign private issuer's reporting
obligations under section 15(d) of the Act, which had previously been
suspended by the terms of that section or by the issuer's filing of a
Form 15 pursuant to
[[Page 173]]
Sec. 240.12h-3, regarding a class of equity or debt securities.
(ii) If the Form 15F is subsequently withdrawn or denied, the
foreign private issuer shall, within 60 days after the date of the
withdrawal or denial, file with or submit to the Commission all reports
that would have been required had the issuer not filed the Form 15F.
Note to Sec. 240.12h-6: The suspension of classes of asset-backed
securities is addressed in Sec. 240.15d-22.
[72 FR 16956, Apr. 5, 2007, as amended at 76 FR 52555, Aug. 23, 2011]
Sec. 240.12h-7 Exemption for issuers of securities that are subject
to insurance regulation.
An issuer shall be exempt from the duty under section 15(d) of the
Act (15 U.S.C. 78o(d)) to file reports required by section 13(a) of the
Act (15 U.S.C. 78m(a)) with respect to securities registered under the
Securities Act of 1933 (15 U.S.C. 77a et seq.), provided that:
(a) The issuer is a corporation subject to the supervision of the
insurance commissioner, bank commissioner, or any agency or officer
performing like functions, of any State;
(b) The securities do not constitute an equity interest in the
issuer and are either subject to regulation under the insurance laws of
the domiciliary State of the issuer or are guarantees of securities that
are subject to regulation under the insurance laws of that jurisdiction;
(c) The issuer files an annual statement of its financial condition
with, and is supervised and its financial condition examined
periodically by, the insurance commissioner, bank commissioner, or any
agency or officer performing like functions, of the issuer's domiciliary
State;
(d) The securities are not listed, traded, or quoted on an exchange,
alternative trading system (as defined in Sec. 242.300(a) of this
chapter), inter-dealer quotation system (as defined in Sec. 240.15c2-
11(e)(2)), electronic communications network, or any other similar
system, network, or publication for trading or quoting;
(e) The issuer takes steps reasonably designed to ensure that a
trading market for the securities does not develop, including, except to
the extent prohibited by the law of any State or by action of the
insurance commissioner, bank commissioner, or any agency or officer
performing like functions of any State, requiring written notice to, and
acceptance by, the issuer prior to any assignment or other transfer of
the securities and reserving the right to refuse assignments or other
transfers at any time on a non-discriminatory basis; and
(f) The prospectus for the securities contains a statement
indicating that the issuer is relying on the exemption provided by this
rule.
[74 FR 3175, Jan. 16, 2009]
Regulation 13A: Reports of Issuers of Securities Registered Pursuant to
Section 12
Annual Reports
Sec. 240.13a-1 Requirements of annual reports.
Every issuer having securities registered pursuant to section 12 of
the Act (15 U.S.C. 78l) shall file an annual report on the appropriate
form authorized or prescribed therefor for each fiscal year after the
last full fiscal year for which financial statements were filed in its
registration statement. Annual reports shall be filed within the period
specified in the appropriate form.
[62 FR 39767, July 24, 1997]
Sec. 240.13a-2 [Reserved]
Sec. 240.13a-3 Reporting by Form 40-F registrant.
A registrant that is eligible to use Forms 40-F and 6-K and files
reports in accordance therewith shall be deemed to satisfy the
requirements of Regulation 13A (Sec. Sec. 240.13a-1 through 240.13a-17
of this chapter).
[56 FR 30068, July 1, 1991]
Other Reports
Sec. 240.13a-10 Transition reports.
(a) Every issuer that changes its fiscal closing date shall file a
report covering the resulting transition period between the closing date
of its most recent fiscal year and the opening date of
[[Page 174]]
its new fiscal year; Provided, however, that an issuer shall file an
annual report for any fiscal year that ended before the date on which
the issuer determined to change its fiscal year end. In no event shall
the transition report cover a period of 12 or more months.
(b) The report pursuant to this section shall be filed for the
transition period not more than the number of days specified in
paragraph (j) of this section after either the close of the transition
period or the date of the determination to change the fiscal closing
date, whichever is later. The report shall be filed on the form
appropriate for annual reports of the issuer, shall cover the period
from the close of the last fiscal year end and shall indicate clearly
the period covered. The financial statements for the transition period
filed therewith shall be audited. Financial statements, which may be
unaudited, shall be filed for the comparable period of the prior year,
or a footnote, which may be unaudited, shall state for the comparable
period of the prior year, revenues, gross profits, income taxes, income
or loss from continuing operations and net income or loss. The effects
of any discontinued operations as classified under the provisions of
generally accepted accounting principles also shall be shown, if
applicable. Per share data based upon such income or loss and net income
or loss shall be presented in conformity with applicable accounting
standards. Where called for by the time span to be covered, the
comparable period financial statements or footnote shall be included in
subsequent filings.
(c) If the transition period covers a period of less than six
months, in lieu of the report required by paragraph (b) of this section,
a report may be filed for the transition period on Form 10-Q (Sec.
249.308a of this chapter) not more than the number of days specified in
paragraph (j) of this section after either the close of the transition
period or the date of the determination to change the fiscal closing
date, whichever is later. The report on Form 10-Q shall cover the period
from the close of the last fiscal year end and shall indicate clearly
the period covered. The financial statements filed therewith need not be
audited but, if they are not audited, the issuer shall file with the
first annual report for the newly adopted fiscal year separate audited
statements of income and cash flows covering the transition period. The
notes to financial statements for the transition period included in such
first annual report may be integrated with the notes to financial
statements for the full fiscal period. A separate audited balance sheet
as of the end of the transition period shall be filed in the annual
report only if the audited balance sheet as of the end of the fiscal
year prior to the transition period is not filed. Schedules need not be
filed in transition reports on Form 10-Q.
(d) Notwithstanding the foregoing in paragraphs (a), (b), and (c) of
this section, if the transition period covers a period of one month or
less, the issuer need not file a separate transition report if either:
(1) The first report required to be filed by the issuer for the
newly adopted fiscal year after the date of the determination to change
the fiscal year end is an annual report, and that report covers the
transition period as well as the fiscal year; or
(2)(i) The issuer files with the first annual report for the newly
adopted fiscal year separate audited statements of income and cash flows
covering the transition period; and
(ii) The first report required to be filed by the issuer for the
newly adopted fiscal year after the date of the determination to change
the fiscal year end is a quarterly report on Form 10-Q; and
(iii) Information on the transition period is included in the
issuer's quarterly report on Form 10-Q for the first quarterly period
(except the fourth quarter) of the newly adopted fiscal year that ends
after the date of the determination to change the fiscal year. The
information covering the transition period required by Part II and Item
2 of Part I may be combined with the information regarding the quarter.
However, the financial statements required by Part I, which may be
unaudited, shall be furnished separately for the transition period.
(e) Every issuer required to file quarterly reports on Form 10-Q
pursuant to
[[Page 175]]
Sec. 240.13a-13 of this chapter that changes its fiscal year end shall:
(1) File a quarterly report on Form 10-Q within the time period
specified in General Instruction A.1. to that form for any quarterly
period (except the fourth quarter) of the old fiscal year that ends
before the date on which the issuer determined to change its fiscal year
end, except that the issuer need not file such quarterly report if the
date on which the quarterly period ends also is the date on which the
transition period ends;
(2) File a quarterly report on Form 10-Q within the time specified
in General Instruction A.1. to that form for each quarterly period of
the old fiscal year within the transition period. In lieu of a quarterly
report for any quarter of the old fiscal year within the transition
period, the issuer may file a quarterly report on Form 10-Q for any
period of three months within the transition period that coincides with
a quarter of the newly adopted fiscal year if the quarterly report is
filed within the number of days specified in paragraph (j) of this
section after the end of such three month period, provided the issuer
thereafter continues filing quarterly reports on the basis of the
quarters of the newly adopted fiscal year;
(3) Commence filing quarterly reports for the quarters of the new
fiscal year no later than the quarterly report for the first quarter of
the new fiscal year that ends after the date on which the issuer
determined to change the fiscal year end; and
(4) Unless such information is or will be included in the transition
report, or the first annual report on Form 10-K for the newly adopted
fiscal year, include in the initial quarterly report on Form 10-Q for
the newly adopted fiscal year information on any period beginning on the
first day subsequent to the period covered by the issuer's final
quarterly report on Form 10-Q or annual report on Form 10-K for the old
fiscal year. The information covering such period required by Part II
and Item 2 of Part I may be combined with the information regarding the
quarter. However, the financial statements required by Part I, which may
be unaudited, shall be furnished separately for such period.
Note to paragraphs (c) and (e): If it is not practicable or cannot
be cost-justified to furnish in a transition report on Form 10-Q or a
quarterly report for the newly adopted fiscal year financial statements
for corresponding periods of the prior year where required, financial
statements may be furnished for the quarters of the preceding fiscal
year that most nearly are comparable if the issuer furnishes an adequate
discussion of seasonal and other factors that could affect the
comparability of information or trends reflected, an assessment of the
comparability of the data, and a representation as to the reason
recasting has not been undertaken.
(f) Every successor issuer with securities registered under Section
12 of this Act that has a different fiscal year from that of its
predecessor(s) shall file a transition report pursuant to this section,
containing the required information about each predecessor, for the
transition period, if any, between the close of the fiscal year covered
by the last annual report of each predecessor and the date of
succession. The report shall be filed for the transition period on the
form appropriate for annual reports of the issuer not more than the
number of days specified in paragraph (j) of this section after the date
of the succession, with financial statements in conformity with the
requirements set forth in paragraph (b) of this section. If the
transition period covers a period of less than six months, in lieu of a
transition report on the form appropriate for the issuer's annual
reports, the report may be filed for the transition period on Form 10-Q
and Form 10-QSB not more than the number of days specified in paragraph
(j) of this section after the date of the succession, with financial
statements in conformity with the requirements set forth in paragraph
(c) of this section. Notwithstanding the foregoing, if the transition
period covers a period of one month or less, the successor issuer need
not file a separate transition report if the information is reported by
the successor issuer in conformity with the requirements set forth in
paragraph (d) of this section.
(g)(1) Paragraphs (a) through (f) of this section shall not apply to
foreign private issuers.
[[Page 176]]
(2) Every foreign private issuer that changes its fiscal closing
date shall file a report covering the resulting transition period
between the closing date of its most recent fiscal year and the opening
date of its new fiscal year. In no event shall a transition report cover
a period longer than 12 months.
(3) The report for the transition period shall be filed on Form 20-F
(Sec. 249.220f of this chapter) responding to all items to which such
issuer is required to respond when Form 20-F is used as an annual
report. The financial statements for the transition period filed
therewith shall be audited. The report shall be filed within four months
after either the close of the transition period or the date on which the
issuer made the determination to change the fiscal closing date,
whichever is later.
(4) If the transition period covers a period of six or fewer months,
in lieu of the report required by paragraph (g)(3) of this section, a
report for the transition period may be filed on Form 20-F responding to
Items 5, 8.A.7., 13, 14, and 17 or 18 within three months after either
the close of the transition period or the date on which the issuer made
the determination to change the fiscal closing date, whichever is later.
The financial statements required by either Item 17 or Item 18 shall be
furnished for the transition period. Such financial statements may be
unaudited and condensed as permitted in Article 10 of Regulation S-X
(Sec. 210.10-01 of this chapter), but if the financial statements are
unaudited and condensed, the issuer shall file with the first annual
report for the newly adopted fiscal year separate audited statements of
income and cash flows covering the transition period.
(5) Notwithstanding the foregoing in paragraphs (g)(2), (g)(3), and
(g)(4) of this section, if the transition period covers a period of one
month or less, a foreign private issuer need not file a separate
transition report if the first annual report for the newly adopted
fiscal year covers the transition period as well as the fiscal year.
(h) The provisions of this rule shall not apply to investment
companies required to file reports pursuant to Rule 30a-1 (Sec.
270.30a-1 of this chapter) under the Investment Company Act of 1940 (15
U.S.C. 80a-1 et seq.).
(i) No filing fee shall be required for a transition report filed
pursuant to this section.
(j)(1) For transition reports to be filed on the form appropriate
for annual reports of the issuer, the number of days shall be:
(i) 60 days (75 days for fiscal years ending before December 15,
2006) for large accelerated filers (as defined in Sec. 240.12b-2);
(ii) 75 days for accelerated filers (as defined in Sec. 240.12b-2);
and
(iii) 90 days for all other issuers; and
(2) For transition reports to be filed on Form 10-Q (Sec. 249.308a
of this chapter) the number of days shall be:
(i) 40 days for large accelerated filers and accelerated filers (as
defined in Sec. 240.12b-2); and
(ii) 45 days for all other issuers.
(k)(1) Paragraphs (a) through (g) of this section shall not apply to
asset-backed issuers.
(2) Every asset-backed issuer that changes its fiscal closing date
shall file a report covering the resulting transition period between the
closing date of its most recent fiscal year and the opening date of its
new fiscal year. In no event shall a transition report cover a period
longer than 12 months.
(3) The report for the transition period shall be filed on Form 10-K
(Sec. 249.310 of this chapter) responding to all items to which such
asset-backed issuer is required to respond pursuant to General
Instruction J. of Form 10-K. Such report shall be filed within 90 days
after the later of either the close of the transition period or the date
on which the issuer made the determination to change the fiscal closing
date.
(4) Notwithstanding the foregoing in paragraphs (k)(2) and (k)(3) of
this section, if the transition period covers a period of one month or
less, an asset-backed issuer need not file a separate transition report
if the first annual report for the newly adopted fiscal year covers the
transition period as well as the fiscal year.
(5) Any obligation of the asset-backed issuer to file distribution
reports pursuant to Sec. 240.13a-17 will continue to apply regardless
of a change in
[[Page 177]]
the asset-backed issuer's fiscal closing date.
Note 1: In addition to the report or reports required to be filed
pursuant to this section, every issuer, except a foreign private issuer
or an investment company required to file reports pursuant to Sec.
270.30a-1 of this chapter, that changes its fiscal closing date is
required to file a Form 8-K (Sec. 249.308 of this chapter) report that
includes the information required by Item 5.03 of Form 8-K within the
period specified in General Instruction B.1. to that form.
Note 2: The report or reports to be filed pursuant to this section
must include the certification required by Sec. 240.13a-14.
[54 FR 10316, Mar. 13, 1989, as amended at 56 FR 30068, July 1, 1991; 64
FR 53912, Oct. 5, 1999; 67 FR 57288, Sept. 9, 2002; 67 FR 58505, Sept.
16, 2002; 69 FR 15618, Mar. 25, 2004; 69 FR 68325, Nov. 23, 2004; 70 FR
1621, Jan. 7, 2005; 70 FR 76641, Dec. 27, 2005; 73 FR 975, Jan. 4, 2008;
73 FR 58323, Oct. 6, 2008; 81 FR 82020, Nov. 18, 2016; 83 FR 50221, Oct.
4, 2018]
Sec. 240.13a-11 Current reports on Form 8-K
(Sec. 249.308 of this chapter).
(a) Except as provided in paragraph (b) of this section, every
registrant subject to Sec. 240.13a-1 shall file a current report on
Form 8-K within the period specified in that form unless substantially
the same information as that required by Form 8-K has been previously
reported by the registrant.
(b) This section shall not apply to foreign governments, foreign
private issuers required to make reports on Form 6-K (17 CFR 249.306)
pursuant to Sec. 240.13a-16, issuers of American Depositary Receipts
for securities of any foreign issuer, or investment companies required
to file reports pursuant to Sec. 270.30a-1 of this chapter under the
Investment Company Act of 1940, except where such an investment company
is required to file:
(1) Notice of a blackout period pursuant to Sec. 245.104 of this
chapter;
(2) Disclosure pursuant to Instruction 2 to Sec. 240.14a-11(b)(1)
of information concerning outstanding shares and voting; or
(3) Disclosure pursuant to Instruction 2 to Sec. 240.14a-11(b)(10)
of the date by which a nominating shareholder or nominating shareholder
group must submit the notice required pursuant to Sec. 240.14a-
11(b)(10).
(c) No failure to file a report on Form 8-K that is required solely
pursuant to Item 1.01, 1.02, 1.05, 2.03, 2.04, 2.05, 2.06, 4.02(a),
5.02(e), or 6.03 of Form 8-K shall be deemed to be a violation of 15
U.S.C. 78j(b) and Sec. 240.10b-5.
[42 FR 4428, Jan. 25, 1977, as amended at 50 FR 27939, July 9, 1985; 68
FR 4355, Jan. 28, 2003; 69 FR 15618, Mar. 25, 2004; 70 FR 1621, Jan. 7,
2005; 71 FR 53260, Sept. 8, 2006; 75 FR 56780, Sept. 16, 2010; 81 FR
82020, Nov. 18, 2016; 88 FR 51493, Aug. 4, 2023]
Sec. 240.13a-13 Quarterly reports on Form 10-Q
(Sec. 249.308a of this chapter).
(a) Except as provided in paragraphs (b) and (c) of this section,
every issuer that has securities registered pursuant to section 12 of
the Act and is required to file annual reports pursuant to section 13 of
the Act, and has filed or intends to file such reports on Form 10-K
(Sec. 249.310 of this chapter), shall file a quarterly report on Form
10-Q (Sec. 249.308a of this chapter) within the period specified in
General Instruction A.1. to that form for each of the first three
quarters of each fiscal year of the issuer, commencing with the first
fiscal quarter following the most recent fiscal year for which full
financial statements were included in the registration statement, or, if
the registration statement included financial statements for an interim
period subsequent to the most recent fiscal year end meeting the
requirements of Article 10 of Regulation S-X and Rule 8-03 of Regulation
S-X for smaller reporting companies, for the first fiscal quarter
subsequent to the quarter reported upon in the registration statement.
The first quarterly report of the issuer shall be filed either within 45
days after the effective date of the registration statement or on or
before the date on which such report would have been required to be
filed if the issuer has been required to file reports on Form 10-Q as of
its last fiscal quarter, whichever is later.
(b) The provisions of this rule shall not apply to the following
issuers:
(1) Investment companies required to file reports pursuant to Sec.
270.30a-1;
(2) Foreign private issuers required to file reports pursuant to
Sec. 240.13a-16; and
(3) Asset-backed issuers required to file reports pursuant to Sec.
240.13a-17.
[[Page 178]]
(c) Part I of the quarterly reports on Form 10-Q need not be filed
by:
(1) Mutual life insurance companies; or
(2) Mining companies not in the production stage but engaged
primarily in the exploration for the development of mineral deposits
other than oil, gas or coal, if all of the following conditions are met:
(i) The registrant has not been in production during the current
fiscal year or the two years immediately prior thereto; except that
being in production for an aggregate period of not more than eight
months over the three-year period shall not be a violation of this
condition.
(ii) Receipts from the sale of mineral products or from the
operations of mineral producing properties by the registrant and its
subsidiaries combined have not exceeded $500,000 in any of the most
recent six years and have not aggregated more than $1,500,000 in the
most recent six fiscal years.
(d) Notwithstanding the foregoing provisions of this section, the
financial information required by Part I of Form 10-Q shall not be
deemed to be ``filed'' for the purpose of Section 18 of the Act or
otherwise subject to the liabilities of that section of the Act, but
shall be subject to all other provisions of the Act.
[42 FR 24064, May 12, 1977, as amended at 48 FR 19877, May 3, 1983; 50
FR 27939, July 9, 1985; 54 FR 10317, Mar. 13, 1989; 57 FR 10615, Mar.
27, 1992; 61 FR 30403, June 14, 1996; 70 FR 1621, Jan. 7, 2005; 73 FR
975, Jan. 4, 2008; 81 FR 82020, Nov. 18, 2016]
Sec. 240.13a-14 Certification of disclosure in annual and quarterly
reports.
(a) Each report, including transition reports, filed on Form 10-Q,
Form 10-K, Form 20-F or Form 40-F (Sec. 249.308a, Sec. 249.310, Sec.
249.220f or Sec. 249.240f of this chapter) under Section 13(a) of the
Act (15 U.S.C. 78m(a)), other than a report filed by an Asset-Backed
Issuer (as defined in Sec. 229.1101 of this chapter) or a report on
Form 20-F filed under Sec. 240.13a-19, must include certifications in
the form specified in the applicable exhibit filing requirements of such
report and such certifications must be filed as an exhibit to such
report. Each principal executive and principal financial officer of the
issuer, or persons performing similar functions, at the time of filing
of the report must sign a certification. The principal executive and
principal financial officers of an issuer may omit the portion of the
introductory language in paragraph 4 as well as language in paragraph
4(b) of the certification that refers to the certifying officers'
responsibility for designing, establishing and maintaining internal
control over financial reporting for the issuer until the issuer becomes
subject to the internal control over financial reporting requirements in
Sec. 240.13a-15 or Sec. 240.15d-15.
(b) Each periodic report containing financial statements filed by an
issuer pursuant to section 13(a) of the Act (15 U.S.C. 78m(a)) must be
accompanied by the certifications required by Section 1350 of Chapter 63
of Title 18 of the United States Code (18 U.S.C. 1350) and such
certifications must be furnished as an exhibit to such report as
specified in the applicable exhibit requirements for such report. Each
principal executive and principal financial officer of the issuer (or
equivalent thereof) must sign a certification. This requirement may be
satisfied by a single certification signed by an issuer's principal
executive and principal financial officers.
(c) A person required to provide a certification specified in
paragraph (a), (b) or (d) of this section may not have the certification
signed on his or her behalf pursuant to a power of attorney or other
form of confirming authority.
(d) Each annual report and transition report filed on Form 10-K
(Sec. 249.310 of this chapter) by an asset-backed issuer under section
13(a) of the Act (15 U.S.C. 78m(a)) must include a certification in the
form specified in the applicable exhibit filing requirements of such
report and such certification must be filed as an exhibit to such
report. Terms used in paragraphs (d) and (e) of this section have the
same meaning as in Item 1101 of Regulation AB (Sec. 229.1101 of this
chapter).
(e) With respect to asset-backed issuers, the certification required
by paragraph (d) of this section must be signed by either:
[[Page 179]]
(1) The senior officer in charge of securitization of the depositor
if the depositor is signing the report; or
(2) The senior officer in charge of the servicing function of the
servicer if the servicer is signing the report on behalf of the issuing
entity. If multiple servicers are involved in servicing the pool assets,
the senior officer in charge of the servicing function of the master
servicer (or entity performing the equivalent function) must sign if a
representative of the servicer is to sign the report on behalf of the
issuing entity.
(f) The certification requirements of this section do not apply to
an Interactive Data File, as defined in Sec. 232.11 of this chapter
(Rule 11 of Regulation S-T).
[67 FR 57288, Sept. 9, 2002, as amended at 68 FR 36665, June 18, 2003;
70 FR 1621, Jan. 7, 2005; 70 FR 6572, Feb. 8, 2005; 70 FR 42247, July
21, 2005; 71 FR 76596, Dec. 21, 2006; 73 FR 976, Jan. 4, 2008; 74 FR
6818, Feb. 10, 2009; 83 FR 40878, Aug. 16, 2018]
Sec. 240.13a-15 Controls and procedures.
(a) Every issuer that has a class of securities registered pursuant
to section 12 of the Act (15 U.S.C. 781), other than an Asset-Backed
Issuer (as defined in Sec. 229.1101 of this chapter), a small business
investment company registered on Form N-5 (Sec. Sec. 239.24 and 274.5
of this chapter), or a unit investment trust as defined in section 4(2)
of the Investment Company Act of 1940 (15 U.S.C. 80a-4(2)), must
maintain disclosure controls and procedures (as defined in paragraph (e)
of this section) and, if the issuer either had been required to file an
annual report pursuant to section 13(a) or 15(d) of the Act (15 U.S.C.
78m(a) or 78o(d)) for the prior fiscal year or had filed an annual
report with the Commission for the prior fiscal year, internal control
over financial reporting (as defined in paragraph (f) of this section).
(b) Each such issuer's management must evaluate, with the
participation of the issuer's principal executive and principal
financial officers, or persons performing similar functions, the
effectiveness of the issuer's disclosure controls and procedures, as of
the end of each fiscal quarter, except that management must perform this
evaluation:
(1) In the case of a foreign private issuer (as defined in Sec.
240.3b-4) as of the end of each fiscal year; and
(2) In the case of an investment company registered under section 8
of the Investment Company Act of 1940 (15 U.S.C. 80a-8), within the 90-
day period prior to the filing date of each report requiring
certification under Sec. 270.30a-2 of this chapter.
(c) The management of each such issuer, that either had been
required to file an annual report pursuant to section 13(a) or 15(d) of
the Act (15 U.S.C. 78m(a) or 78o(d)) for the prior fiscal year or
previously had filed an annual report with the Commission for the prior
fiscal year, other than an investment company registered under section 8
of the Investment Company Act of 1940, must evaluate, with the
participation of the issuer's principal executive and principal
financial officers, or persons performing similar functions, the
effectiveness, as of the end of each fiscal year, of the issuer's
internal control over financial reporting. The framework on which
management's evaluation of the issuer's internal control over financial
reporting is based must be a suitable, recognized control framework that
is established by a body or group that has followed due-process
procedures, including the broad distribution of the framework for public
comment. Although there are many different ways to conduct an evaluation
of the effectiveness of internal control over financial reporting to
meet the requirements of this paragraph, an evaluation that is conducted
in accordance with the interpretive guidance issued by the Commission in
Release No. 34-55929 will satisfy the evaluation required by this
paragraph.
(d) The management of each such issuer that either had been required
to file an annual report pursuant to section 13(a) or 15(d) of the Act
(15 U.S.C. 78m(a) or 78o(d) for the prior fiscal year or had filed an
annual report with the Commission for the prior fiscal year, other than
an investment company registered under section 8 of the Investment
Company Act of 1940 (15 U.S.C. 80a-8), must evaluate, with the
participation of the issuer's principal executive and principal
financial officers, or persons performing similar
[[Page 180]]
functions, any change in the issuer's internal control over financial
reporting, that occurred during each of the issuer's fiscal quarters, or
fiscal year in the case of a foreign private issuer, that has materially
affected, or is reasonably likely to materially affect, the issuer's
internal control over financial reporting.
(e) For purposes of this section, the term disclosure controls and
procedures means controls and other procedures of an issuer that are
designed to ensure that information required to be disclosed by the
issuer in the reports that it files or submits under the Act (15 U.S.C.
78a et seq.) is recorded, processed, summarized and reported, within the
time periods specified in the Commission's rules and forms. Disclosure
controls and procedures include, without limitation, controls and
procedures designed to ensure that information required to be disclosed
by an issuer in the reports that it files or submits under the Act is
accumulated and communicated to the issuer's management, including its
principal executive and principal financial officers, or persons
performing similar functions, as appropriate to allow timely decisions
regarding required disclosure.
(f) The term internal control over financial reporting is defined as
a process designed by, or under the supervision of, the issuer's
principal executive and principal financial officers, or persons
performing similar functions, and effected by the issuer's board of
directors, management and other personnel, to provide reasonable
assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance
with generally accepted accounting principles and includes those
policies and procedures that:
(1) Pertain to the maintenance of records that in reasonable detail
accurately and fairly reflect the transactions and dispositions of the
assets of the issuer;
(2) Provide reasonable assurance that transactions are recorded as
necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that receipts and
expenditures of the issuer are being made only in accordance with
authorizations of management and directors of the issuer; and
(3) Provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use or disposition of the
issuer's assets that could have a material effect on the financial
statements.
[68 FR 36666, June 18, 2003, as amended at 70 FR 1621, Jan. 7, 2005; 71
FR 76596, Dec. 21, 2006; 72 FR 35321, June 27, 2007]
Sec. 240.13a-16 Reports of foreign private issuers on Form 6-K
(17 CFR 249.306).
(a) Every foreign private issuer which is subject to Rule 13a-1 (17
CFR 240.13a-1) shall make reports on Form 6-K, except that this rule
shall not apply to:
(1) Investment companies required to file reports pursuant to Sec.
270.30a-1 of this chapter ;
(2) Issuers of American depositary receipts for securities of any
foreign issuer;
(3) Issuers filing periodic reports on Form 10-K, Form 10-Q, and
Form 8-K; or
(4) Asset-backed issuers, as defined in Sec. 229.1101 of this
chapter.
(b) Such reports shall be transmitted promptly after the information
required by Form 6-K is made public by the issuer, by the country of its
domicile or under the laws of which it was incorporated or organized, or
by a foreign securities exchange with which the issuer has filed the
information.
(c) Reports furnished pursuant to this rule shall not be deemed to
be ``filed'' for the purpose of section 18 of the Act or otherwise
subject to the liabilities of that section.
[32 FR 7849, May 30, 1967, as amended at 44 FR 70137, Dec. 6, 1979; 47
FR 54781, Dec. 6, 1982; 50 FR 27939, July 9, 1985; 57 FR 10615, Mar. 27,
1991; 70 FR 1621, Jan. 7, 2005; 73 FR 976, Jan. 4, 2008; 81 FR 82020,
Nov. 18, 2016]
Sec. 240.13a-17 Reports of asset-backed issuers on Form 10-D
(Sec. 249.312 of this chapter).
Every asset-backed issuer subject to Sec. 240.13a-1 shall make
reports on Form 10-D (Sec. 249.312 of this chapter). Such reports shall
be filed within the period specified in Form 10-D.
[70 FR 1621, Jan. 7, 2005]
[[Page 181]]
Sec. 240.13a-18 Compliance with servicing criteria for asset-backed
securities.
(a) This section applies to every class of asset-backed securities
subject to the reporting requirements of section 13(a) of the Act (15
U.S.C. 78m(a)). Terms used in this section have the same meaning as in
Item 1101 of Regulation AB (Sec. 229.1101 of this chapter).
(b) Reports on assessments of compliance with servicing criteria for
asset-backed securities required. With regard to a class of asset-backed
securities subject to the reporting requirements of section 13(a) of the
Act, the annual report on Form 10-K (Sec. 249.308 of this chapter) for
such class must include from each party participating in the servicing
function a report regarding its assessment of compliance with the
servicing criteria specified in paragraph (d) of Item 1122 of Regulation
AB (Sec. 229.1122(d) of this chapter), as of and for the period ending
the end of each fiscal year, with respect to asset-backed securities
transactions taken as a whole involving the party participating in the
servicing function and that are backed by the same asset type backing
the class of asset-backed securities (including the asset-backed
securities transaction that is to be the subject of the report on Form
10-K for that fiscal year).
(c) Attestation reports on assessments of compliance with servicing
criteria for asset-backed securities required. With respect to each
report included pursuant to paragraph (b) of this section, the annual
report on Form 10-K must also include a report by a registered public
accounting firm that attests to, and reports on, the assessment made by
the asserting party. The attestation report on assessment of compliance
with servicing criteria for asset-backed securities must be made in
accordance with standards for attestation engagements issued or adopted
by the Public Company Accounting Oversight Board.
Note to Sec. 240.13a-18. If multiple parties are participating in
the servicing function, a separate assessment report and attestation
report must be included for each party participating in the servicing
function. A party participating in the servicing function means any
entity (e.g., master servicer, primary servicers, trustees) that is
performing activities that address the criteria in paragraph (d) of Item
1122 of Regulation AB (Sec. 229.1122(d) of this chapter), unless such
entity's activities relate only to 5% or less of the pool assets.
[70 FR 1621, Jan. 7, 2005]
Sec. 240.13a-19 Reports by shell companies on Form 20-F.
Every foreign private issuer that was a shell company, other than a
business combination related shell company, immediately before a
transaction that causes it to cease to be a shell company shall, within
four business days of completion of that transaction, file a report on
Form 20-F (Sec. 249.220f of this chapter) containing the information
that would be required if the issuer were filing a form for registration
of securities on Form 20-F to register under the Act all classes of the
issuer's securities subject to the reporting requirements of section 13
(15 U.S.C. 78m) or section 15(d) (15 U.S.C. 78o(d)) of the Act upon
consummation of the transaction, with such information reflecting the
registrant and its securities upon consummation of the transaction.
[70 FR 42247, July 21, 2005]
Sec. 240.13a-20 Plain English presentation of specified information.
(a) Any information included or incorporated by reference in a
report filed under section 13(a) of the Act (15 U.S.C. 78m(a)) that is
required to be disclosed pursuant to Item 402, 403, 404 or 407 of
Regulation S-K (Sec. 229.402, Sec. 229.403, Sec. 229.404 or Sec.
229.407 of this chapter) must be presented in a clear, concise and
understandable manner. You must prepare the disclosure using the
following standards:
(1) Present information in clear, concise sections, paragraphs and
sentences;
(2) Use short sentences;
(3) Use definite, concrete, everyday words;
(4) Use the active voice;
(5) Avoid multiple negatives;
(6) Use descriptive headings and subheadings;
(7) Use a tabular presentation or bullet lists for complex material,
wherever possible;
[[Page 182]]
(8) Avoid legal jargon and highly technical business and other
terminology;
(9) Avoid frequent reliance on glossaries or defined terms as the
primary means of explaining information. 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
(10) In designing the presentation of the information you may
include pictures, logos, charts, graphs and 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 that present relevant data in an understandable manner, so
long as such presentations are consistent with applicable disclosure
requirements and consistent with other information in the document. You
must draw graphs and charts to scale. Any information you provide must
not be misleading.
(b) [Reserved]
Note to Sec. 240.13a-20: 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.
[71 FR 53261, Sept. 8, 2006, as amended at 73 FR 976, Jan. 4, 2008]
Sec. 240.13a-21 Purchases of equity securities by a foreign private
issuer and affiliated purchasers.
(a) Every foreign private issuer that has a class of equity
securities registered pursuant to section 12 of the Act (15 U.S.C. 78l)
and that does not file quarterly reports on Form 10-Q (Sec. 249.308a of
this chapter) and annual reports on Form 10-K (Sec. 249.310 of this
chapter) must file a Form F-SR (Sec. 249.333 of this chapter)
disclosing, for the period covered by the form and as specified by the
form, the aggregate purchases during each day made by or on behalf of
the issuer or any ``affiliated purchaser,'' as defined in Sec. 240.10b-
18(a)(3), of shares or other units of any class of the issuer's equity
securities that is registered by the issuer pursuant to section 12 of
the Act, within the time period specified in General Instruction I to
Form F-SR. The information provided pursuant to the form must be
provided in an Interactive Data File as required by Sec. 232.405 of
this chapter (Rule 405 of Regulation S-T) in accordance with the EDGAR
Filer Manual.
(b) Paragraph (a) of this section shall not apply to an investment
company registered under the Investment Company Act of 1940 (15 U.S.C.
80a-1 et. seq.).
[88 FR 36508, June 1, 2023]
Regulation 13b-2: Maintenance of Records and Preparation of Required
Reports
Sec. 240.13b2-1 Falsification of accounting records.
No person shall directly or indirectly, falsify or cause to be
falsified, any book, record or account subject to section 13(b)(2)(A) of
the Securities Exchange Act.
(15 U.S.C. 78m(b)(2); 15 U.S.C. 78m(a), 78m(b)(1), 78o(d), 78j(b),
78n(a), 78t(b), 78t(c))
[44 FR 10970, Feb. 23, 1979]
Sec. 240.13b2-2 Representations and conduct in connection with the
preparation of required reports and documents.
(a) No director or officer of an issuer shall, directly or
indirectly:
(1) Make or cause to be made a materially false or misleading
statement to an accountant in connection with; or
(2) Omit to state, or cause another person to omit to state, any
material fact necessary in order to make statements made, in light of
the circumstances under which such statements were made, not misleading,
to an accountant in connection with:
(i) Any audit, review or examination of the financial statements of
the issuer required to be made pursuant to this subpart; or
[[Page 183]]
(ii) The preparation or filing of any document or report required to
be filed with the Commission pursuant to this subpart or otherwise.
(b)(1) No officer or director of an issuer, or any other person
acting under the direction thereof, shall directly or indirectly take
any action to coerce, manipulate, mislead, or fraudulently influence any
independent public or certified public accountant engaged in the
performance of an audit or review of the financial statements of that
issuer that are required to be filed with the Commission pursuant to
this subpart or otherwise if that person knew or should have known that
such action, if successful, could result in rendering the issuer's
financial statements materially misleading.
(2) For purposes of paragraphs (b)(1) and (c)(2) of this section,
actions that, ``if successful, could result in rendering the issuer's
financial statements materially misleading'' include, but are not
limited to, actions taken at any time with respect to the professional
engagement period to coerce, manipulate, mislead, or fraudulently
influence an auditor:
(i) To issue or reissue a report on an issuer's financial statements
that is not warranted in the circumstances (due to material violations
of generally accepted accounting principles, the standards of the PCAOB,
or other professional or regulatory standards);
(ii) Not to perform audit, review or other procedures required by
the standards of the PCAOB or other professional standards;
(iii) Not to withdraw an issued report; or
(iv) Not to communicate matters to an issuer's audit committee.
(c) In addition, in the case of an investment company registered
under section 8 of the Investment Company Act of 1940 (15 U.S.C. 80a-8),
or a business development company as defined in section 2(a)(48) of the
Investment Company Act of 1940 (15 U.S.C. 80a-2(a)(48)), no officer or
director of the company's investment adviser, sponsor, depositor,
trustee, or administrator (or, in the case of paragraph (c)(2) of this
section, any other person acting under the direction thereof) shall,
directly or indirectly:
(1)(i) Make or cause to be made a materially false or misleading
statement to an accountant in connection with; or
(ii) Omit to state, or cause another person to omit to state, any
material fact necessary in order to make statements made, in light of
the circumstances under which such statements were made, not misleading
to an accountant in connection with:
(A) Any audit, review, or examination of the financial statements of
the investment company required to be made pursuant to this subpart; or
(B) The preparation or filing of any document or report required to
be filed with the Commission pursuant to this subpart or otherwise; or
(2) Take any action to coerce, manipulate, mislead, or fraudulently
influence any independent public or certified public accountant engaged
in the performance of an audit or review of the financial statements of
that investment company that are required to be filed with the
Commission pursuant to this subpart or otherwise if that person knew or
should have known that such action, if successful, could result in
rendering the investment company's financial statements materially
misleading.
[68 FR 31830, May 28, 2003, as amended at 83 FR 50222, Oct. 4, 2018]
Regulation 13D-G
Source: Sections 240.13d-1 through 240.13f-1 appear at 43 FR 18495,
Apr. 28, 1978, 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.
Sec. 240.13d-1 Filing of Schedules 13D and 13G.
(a) Any person who, after acquiring directly or indirectly the
beneficial
[[Page 184]]
ownership of any equity security of a class which is specified in
paragraph (i)(1) of this section, is directly or indirectly the
beneficial owner of more than five percent of the class shall, within
five business days after the date of the acquisition, file with the
Commission, a statement containing the information required by Schedule
13D (Sec. 240.13d-101).
(b)(1) A person who would otherwise be obligated under paragraph (a)
of this section to file a statement on Schedule 13D (Sec. 240.13d-101)
may, in lieu thereof, file with the Commission, a short-form statement
on Schedule 13G (Sec. 240.13d-102), Provided, That:
(i) Such person has acquired such securities in the ordinary course
of the person's business and not with the purpose nor with the effect of
changing or influencing the control of the issuer, nor in connection
with or as a participant in any transaction having such purpose or
effect, including any transaction subject to Sec. 240.13d-3(b), other
than activities solely in connection with a nomination under Sec.
240.14a-11; and
(ii) Such person is:
(A) A broker or dealer registered under section 15 of the Act (15
U.S.C. 78o);
(B) A bank as defined in section 3(a)(6) of the Act (15 U.S.C. 78c);
(C) An insurance company as defined in section 3(a)(19) of the Act
(15 U.S.C. 78c);
(D) An investment company registered under section 8 of the
Investment Company Act of 1940 (15 U.S.C. 80a-8);
(E) Any person registered as an investment adviser under Section 203
of the Investment Advisers Act of 1940 (15 U.S.C. 80b-3) or under the
laws of any state;
(F) An employee benefit plan as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended, 29 U.S.C.
1001 et seq. (``ERISA'') that is subject to the provisions of ERISA, or
any such plan that is not subject to ERISA that is maintained primarily
for the benefit of the employees of a state or local government or
instrumentality, or an endowment fund;
(G) A parent holding company or control person, provided the
aggregate amount held directly by the parent or control person, and
directly and indirectly by their subsidiaries or affiliates that are not
persons specified in Sec. 240.13d-1(b)(1)(ii)(A) through (J), does not
exceed one percent of the securities of the subject class;
(H) A savings association as defined in Section 3(b) of the Federal
Deposit Insurance Act (12 U.S.C. 1813);
(I) A church plan that is excluded from the definition of an
investment company under section 3(c)(14) of the Investment Company Act
of 1940 (15 U.S.C. 80a-3);
(J) A non-U.S. institution that is the functional equivalent of any
of the institutions listed in Sec. 240.13d-1 (b)(1)(ii)(A) through (I),
so long as the non-U.S. institution is subject to a regulatory scheme
that is substantially comparable to the regulatory scheme applicable to
the equivalent U.S. institution; and
(K) A group, provided that all the members are persons specified in
Sec. 240.13d-1(b)(1)(ii)(A) through (J).
(iii) Such person has promptly notified any other person (or group
within the meaning of section 13(d)(3) of the Act) on whose behalf it
holds, on a discretionary basis, securities exceeding five percent of
the class, of any acquisition or transaction on behalf of such other
person which might be reportable by that person under section 13(d) of
the Act. This paragraph (b)(1)(iii) only requires notice to the account
owner of information which the filing person reasonably should be
expected to know and which would advise the account owner of an
obligation such account owner may have to file a statement, or an
amendment thereto, pursuant to section 13(d) of the Act.
Instruction 1 to paragraph (b)(1). For purposes of paragraph
(b)(1)(i) of this section, the exception for activities solely in
connection with a nomination under Sec. 240.14a-11 will not be
available after the election of directors.
(2) The Schedule 13G filed pursuant to paragraph (b)(1) of this
section shall be filed within 45 days after the end of the calendar
quarter in which the person became obligated under paragraph
[[Page 185]]
(b)(1) of this section to report the person's beneficial ownership as of
the last day of the calendar quarter, provided, that it shall not be
necessary to file a Schedule 13G unless the percentage of the class of
equity security specified in paragraph (i)(1) of this section
beneficially owned as of the end of the calendar quarter is more than
five percent; however, if the person's direct or indirect beneficial
ownership exceeds 10 percent of the class of equity securities prior to
the end of the calendar quarter, the initial Schedule 13G shall be filed
within five business days after the end of the first month in which the
person's direct or indirect beneficial ownership exceeds 10 percent of
the class of equity securities, computed as of the last day of the
month.
(c) A person who would otherwise be obligated under paragraph (a) of
this section to file a statement on Schedule 13D (Sec. 240.13d-101)
may, in lieu thereof, file with the Commission, within five business
days after the date of an acquisition described in paragraph (a) of this
section, a short-form statement on Schedule 13G (Sec. 240.13d-102).
Provided, that the person:
(1) Has not acquired the securities with any purpose, or with the
effect, of changing or influencing the control of the issuer, or in
connection with or as a participant in any transaction having that
purpose or effect, including any transaction subject to Sec. 240.13d-
3(b), other than activities solely in connection with a nomination under
Sec. 240.14a-11;
Instruction 1 to paragraph (c)(1). For purposes of paragraph (c)(1)
of this section, the exception for activities solely in connection with
a nomination under Sec. 240.14a-11 will not be available after the
election of directors.
(2) Is not a person reporting pursuant to paragraph (b)(1) of this
section; and
(3) Is not directly or indirectly the beneficial owner of 20 percent
or more of the class.
(d) Any person who, as of the end of any calendar quarter, is or
becomes directly or indirectly the beneficial owner of more than five
percent of any equity security of a class specified in paragraph (i)(1)
of this section and who is not required to file a statement under
paragraph (a) of this section by virtue of the exemption provided by
section 13(d)(6)(A) or (B) of the Act (15 U.S.C. 78m(d)(6)(A) or
78m(d)(6)(B)), or because the beneficial ownership was acquired prior to
December 22, 1970, or because the person otherwise (except for the
exemption provided by section 13(d)(6)(C) of the Act (15 U.S.C.
78m(d)(6)(C))) is not required to file a statement, shall file with the
Commission, within 45 days after the end of the calendar quarter in
which the person became obligated to report under this paragraph (d), a
statement containing the information required by Schedule 13G (Sec.
240.13d-102).
(e)(1) Notwithstanding paragraphs (b) and (c) of this section and
Sec. 240.13d-2(b), a person that has reported that it is the beneficial
owner of more than five percent of a class of equity securities in a
statement on Schedule 13G (Sec. 240.13d-102) pursuant to paragraph (b)
or (c) of this section, or is required to report the acquisition but has
not yet filed the schedule, shall immediately become subject to
paragraph (a) of this section and Sec. 240.13d-2(a) and shall file a
statement on Schedule 13D (Sec. 240.13d-101) within five business days
if, and shall remain subject to those requirements for so long as, the
person:
(i) Has acquired or holds the securities with a purpose or effect of
changing or influencing control of the issuer, or in connection with or
as a participant in any transaction having that purpose or effect,
including any transaction subject to Sec. 240.13d-3(b); and
(ii) Is at that time the beneficial owner of more than five percent
of a class of equity securities described in paragraph (i)(1) of this
section.
(2) From the time the person has acquired or holds the securities
with a purpose or effect of changing or influencing control of the
issuer, or in connection with or as a participant in any transaction
having that purpose or effect until the expiration of the tenth day from
the date of the filing of the Schedule 13D (Sec. 240.13d-101) pursuant
to this section, that person shall not:
(i) Vote or direct the voting of the securities described therein;
or
(ii) Acquire an additional beneficial ownership interest in any
equity securities of the issuer of the securities,
[[Page 186]]
nor of any person controlling the issuer.
(f)(1) Notwithstanding paragraph (c) of this section and Sec.
240.13d-2(b), persons reporting on Schedule 13G (Sec. 240.13d-102)
pursuant to paragraph (c) of this section shall immediately become
subject to paragraph (a) of this section and Sec. 240.13d-2(a) and
shall remain subject to those requirements for so long as, and shall
file a statement on Schedule 13D (Sec. 240.13d-101) within five
business days after the date on which the person's beneficial ownership
equals or exceeds 20 percent of the class of equity securities.
(2) From the time of the acquisition of 20 percent or more of the
class of equity securities until the expiration of the tenth day from
the date of the filing of the Schedule 13D (Sec. 240.13d-101) pursuant
to this section, the person shall not:
(i) Vote or direct the voting of the securities described therein,
or
(ii) Acquire an additional beneficial ownership interest in any
equity securities of the issuer of the securities, nor of any person
controlling the issuer.
(g) Any person who has reported an acquisition of securities in a
statement on Schedule 13G (Sec. 240.13d-102) pursuant to paragraph (b)
of this section, or has become obligated to report on Schedule 13G
(Sec. 240.13d-102) but has not yet filed the Schedule, and thereafter
ceases to be a person specified in paragraph (b)(1)(ii) of this section
or determines that it no longer has acquired or holds the securities in
the ordinary course of business shall immediately become subject to
paragraph (a) or (c) of this section (if the person satisfies the
requirements specified in paragraph (c)) and Sec. 240.13d-2(a), (b), or
(d), and shall file, within five business days thereafter, a statement
on Schedule 13D (Sec. 240.13d-101) or amendment to Schedule 13G, as
applicable, if the person is a beneficial owner at that time of more
than five percent of the class of equity securities.
(h) Any person who has filed a Schedule 13D (Sec. 240.13d-101)
pursuant to paragraph (e), (f) or (g) of this section may again report
its beneficial ownership on Schedule 13G (Sec. 240.13d-102) pursuant to
paragraphs (b) or (c) of this section provided the person qualifies
thereunder, as applicable, by filing a Schedule 13G (Sec. 240.13d-102)
once the person determines that the provisions of paragraph (e), (f) or
(g) of this section no longer apply.
(i)(1) For the purpose of this section, the term equity security
means any equity security of a class which is registered pursuant to
section 12 of the Act, or any equity security of any insurance company
which would have been required to be so registered except for the
exemption contained in section 12(g)(2)(G) of the Act, or any equity
security issued by a closed-end investment company registered under the
Investment Company Act of 1940; provided, such term shall not include
securities of a class of non-voting securities.
(2) For the purpose of this section, the term business day means any
day, other than Saturday, Sunday, or a Federal holiday, from 12 a.m. to
11:59 p.m., Eastern Time.
(j) For the purpose of sections 13(d) and 13(g) of the Act, any
person, in determining the amount of outstanding securities of a class
of equity securities, may rely upon information set forth in the
issuer's most recent quarterly or annual report, and any current report
subsequent thereto, filed with the Commission pursuant to the Act,
unless such person knows or has reason to believe that the information
contained therein is inaccurate.
(k)(1) Whenever two or more persons are required to file a statement
containing the information required by Schedule 13D or Schedule 13G with
respect to the same securities, only one statement need be filed:
Provided, That:
(i) Each person on whose behalf the statement is filed is
individually eligible to use the Schedule on which the information is
filed;
(ii) Each person on whose behalf the statement is filed is
responsible for the timely filing of such statement and any amendments
thereto, and for the completeness and accuracy of the information
concerning such person contained therein; such person is not responsible
for the completeness or accuracy of the information concerning the other
persons making the filing, unless
[[Page 187]]
such person knows or has reason to believe that such information is
inaccurate; and
(iii) Such statement identifies all such persons, contains the
required information with regard to each such person, indicates that
such statement is filed on behalf of all such persons, and includes, as
an exhibit, their agreement in writing that such a statement is filed on
behalf of each of them.
(2) A group's filing obligation may be satisfied either by a single
joint filing or by each of the group's members making an individual
filing. If the group's members elect to make their own filings, each
such filing should identify all members of the group but the information
provided concerning the other persons making the filing need only
reflect information which the filing person knows or has reason to know.
[43 FR 18495, Apr. 28, 1978, as amended at 43 FR 29768, July 11, 1978;
43 FR 55755, Nov. 29, 1978; 44 FR 10703, Feb. 23, 1979; 63 FR 2865, Jan.
16, 1998; 63 FR 15287, Mar. 31, 1998; 73 FR 60089, Oct. 9, 2008; 75 FR
56780, Sept. 16, 2010; 88 FR 76981, Nov. 7, 2023]
Sec. 240.13d-2 Filing of amendments to Schedules 13D or 13G.
(a) If any material change occurs in the facts set forth in the
Schedule 13D (Sec. 240.13d-101) required by Sec. 240.13d-1(a),
including, but not limited to, any material increase or decrease in the
percentage of the class beneficially owned, the person or persons who
were required to file the statement shall file or cause to be filed with
the Commission an amendment disclosing that change within two business
days after the date of such change. An acquisition or disposition of
beneficial ownership of securities in an amount equal to one percent or
more of the class of securities shall be deemed ``material'' for
purposes of this section; acquisitions or dispositions of less than
those amounts may be material, depending upon the facts and
circumstances.
(b) Notwithstanding paragraph (a) of this section, and provided that
the person filing a Schedule 13G (Sec. 240.13d-102) pursuant to Sec.
240.13d-1(b) or (c) continues to meet the requirements set forth
therein, any person who has filed a Schedule 13G (Sec. 240.13d-102)
pursuant to Sec. 240.13d-1(b), (c), or (d) shall amend the statement
within 45 days after the end of each calendar quarter if, as of the end
of the calendar quarter, there are any material changes in the
information reported in the previous filing on that Schedule; provided,
however, that an amendment need not be filed with respect to a change in
the percent of the class outstanding previously reported if the change
results solely from a change in the aggregate number of securities
outstanding. Once an amendment has been filed reflecting beneficial
ownership of five percent or less of the class of securities, no
additional filings are required unless the person thereafter becomes the
beneficial owner of more than five percent of the class and is required
to file pursuant to Sec. 240.13d-1.
(c) Any person relying on Sec. 240.13d-1(b) that has filed its
initial Schedule 13G (Sec. 240.13d-102) pursuant to Sec. 240.13d-1(b)
shall, in addition to filing any amendments pursuant to paragraph (b) of
this section, file an amendment on Schedule 13G (Sec. 240.13d-102)
within five business days after the end of the first month in which the
person's direct or indirect beneficial ownership, computed as of the
last day of the month, exceeds 10 percent of the class of equity
securities. Thereafter, that person shall, in addition to filing any
amendments pursuant to paragraph (b) of this section, file an amendment
on Schedule 13G (Sec. 240.13d-102) within five business days after the
end of the first month in which the person's direct or indirect
beneficial ownership, computed as of the last day of the month,
increases or decreases by more than five percent of the class of equity
securities. Once an amendment has been filed reflecting beneficial
ownership of five percent or less of the class of securities, no
additional filings are required by this paragraph (c).
(d) Any person relying on Sec. 240.13d-1(c) that has filed its
initial Schedule 13G (Sec. 240.13d-102) pursuant to Sec. 240.13d-1(c)
shall, in addition to filing any amendments pursuant to paragraph (b) of
this section, file an amendment on Schedule 13G (Sec. 240.13d-102)
within two business days after acquiring, directly or indirectly,
greater than 10 percent of a class of equity securities specified in
[[Page 188]]
Sec. 240.13d-1(d), and thereafter within two business days after
increasing or decreasing its beneficial ownership by more than five
percent of the class of equity securities. Once an amendment has been
filed reflecting beneficial ownership of five percent or less of the
class of securities, no additional filings are required by this
paragraph (d).
(e) 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 of Regulation S-T
(Sec. 232.102 of this chapter) 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.
Note to Sec. 240.13d-2: For persons filing a short-form statement
pursuant to Rule 13d-1(b) or (c), see also Rules 13d-1(e), (f), and (g).
[43 FR 18495, Apr. 28, 1978, as amended at 45 FR 81558, Dec. 11, 1980;
47 FR 49964, Nov. 4, 1982; 58 FR 14683, Mar. 18, 1993; 59 FR 67764, Dec.
30, 1994; 62 FR 36459, July 8, 1997; 63 FR 2866, Jan. 16, 1998; 88 FR
76982, Nov. 7, 2023]
Sec. 240.13d-3 Determination of beneficial owner.
(a) For the purposes of sections 13(d) and 13(g) of the Act a
beneficial owner of a security includes any person who, directly or
indirectly, through any contract, arrangement, understanding,
relationship, or otherwise has or shares:
(1) Voting power which includes the power to vote, or to direct the
voting of, such security; and/or,
(2) Investment power which includes the power to dispose, or to
direct the disposition of, such security.
(b) Any person who, directly or indirectly, creates or uses a trust,
proxy, power of attorney, pooling arrangement or any other contract,
arrangement, or device with the purpose of effect of divesting such
person of beneficial ownership of a security or preventing the vesting
of such beneficial ownership as part of a plan or scheme to evade the
reporting requirements of section 13(d) or (g) of the Act shall be
deemed for purposes of such sections to be the beneficial owner of such
security.
(c) All securities of the same class beneficially owned by a person,
regardless of the form which such beneficial ownership takes, shall be
aggregated in calculating the number of shares beneficially owned by
such person.
(d) Notwithstanding the provisions of paragraphs (a) and (c) of this
rule:
(1)(i) A person shall be deemed to be the beneficial owner of a
security, subject to the provisions of paragraph (b) of this rule, if
that person has the right to acquire beneficial ownership of such
security, as defined in Rule 13d-3(a) (Sec. 240.13d-3(a)) within sixty
days, including but not limited to any right to acquire: (A) Through the
exercise of any option, warrant or right; (B) through the conversion of
a security; (C) pursuant to the power to revoke a trust, discretionary
account, or similar arrangement; or (D) pursuant to the automatic
termination of a trust, discretionary account or similar arrangement;
provided, however, any person who acquires a security or power specified
in paragraphs (d)(1)(i)(A), (B) or (C), of this section, with the
purpose or effect of changing or influencing the control of the issuer,
or in connection with or as a participant in any transaction having such
purpose or effect, immediately upon such acquisition shall be deemed to
be the beneficial owner of the securities which may be acquired through
the exercise or conversion of such security or power. Any securities not
outstanding which are subject to such options, warrants, rights or
conversion privileges shall be deemed to be outstanding for the purpose
of computing the percentage of outstanding securities of the class owned
by such person but shall not be deemed to be outstanding for the purpose
of computing the percentage of the class by any other person.
(ii) Paragraph (d)(1)(i) of this section remains applicable for the
purpose of determining the obligation to file with respect to the
underlying security even though the option, warrant, right or
[[Page 189]]
convertible security is of a class of equity security, as defined in
Sec. 240.13d-1(i), and may therefore give rise to a separate obligation
to file.
(2) A member of a national securities exchange shall not be deemed
to be a beneficial owner of securities held directly or indirectly by it
on behalf of another person solely because such member is the record
holder of such securities and, pursuant to the rules of such exchange,
may direct the vote of such securities, without instruction, on other
than contested matters or matters that may affect substantially the
rights or privileges of the holders of the securities to be voted, but
is otherwise precluded by the rules of such exchange from voting without
instruction.
(3) A person who in the ordinary course of such person's business is
a pledgee of securities under a written pledge agreement shall not be
deemed to be the beneficial owner of such pledged securities until the
pledgee has taken all formal steps necessary which are required to
declare a default and determines that the power to vote or to direct the
vote or to dispose or to direct the disposition of such pledged
securities will be exercised, provided, that:
(i) The pledgee agreement is bona fide and was not entered into with
the purpose nor with the effect of changing or influencing the control
of the issuer, nor in connection with any transaction having such
purpose or effect, including any transaction subject to Rule 13d-3(b);
(ii) The pledgee is a person specified in Rule 13d-1(b)(ii),
including persons meeting the conditions set forth in paragraph (G)
thereof; and
(iii) The pledgee agreement, prior to default, does not grant to the
pledgee;
(A) The power to vote or to direct the vote of the pledged
securities; or
(B) The power to dispose or direct the disposition of the pledged
securities, other than the grant of such power(s) pursuant to a pledge
agreement under which credit is extended subject to regulation T (12 CFR
220.1 to 220.8) and in which the pledgee is a broker or dealer
registered under section 15 of the act.
(4) A person engaged in business as an underwriter of securities who
acquires securities through such person's participation in good faith in
a firm commitment underwriting registered under the Securities Act of
1933 shall not be deemed to be the beneficial owner of such securities
until the expiration of 40 days after the date of such acquisition.
[43 FR 18495, Apr. 28, 1978, as amended at 43 FR 29768, July 11, 1978;
63 FR 2867, Jan. 16, 1998; 88 FR 76983, Nov. 7, 2023]
Sec. 240.13d-4 Disclaimer of beneficial ownership.
Any person may expressly declare in any statement filed that the
filing of such statement shall not be construed as an admission that
such person is, for the purposes of sections 13(d) or 13(g) of the Act,
the beneficial owner of any securities covered by the statement.
(Secs. 3(b), 13(d)(1), 13(d)(2), 13(d)(5), 13(d)(6), 14(d)(1), 23; 48
Stat. 882, 894, 895, 901; sec. 203(a), 49 Stat. 704, sec. 8, 49 Stat.
1379; sec. 10, 78 Stat. 88a; secs. 2, 3, 82 Stat. 454, 455; secs. 1, 2,
3-5, 84 Stat. 1497; secs. 3, 18, 89 Stat. 97, 155 (15 U.S.C. 78c(b),
78m(d)(1), 89m(d)(2), 78m(d)(5), 78m(d)(6), 78n(d)(1), 78w)
Sec. 240.13d-5 Acquisition of beneficial ownership.
(a) A person who becomes a beneficial owner of securities shall be
deemed to have acquired such beneficial ownership for purposes of
section 13(d)(1) of the Act, whether such acquisition was through
purchase or otherwise. However, executors or administrators of a
decedent's estate generally will be presumed not to have acquired the
beneficial ownership held by the decedent's estate until such time as
such executors or administrators are qualified under local law to
perform their duties.
(b)(1)(i) When two or more persons agree to act together for the
purpose of acquiring, holding, voting or disposing of equity securities
of an issuer, the group formed thereby shall be deemed to have acquired
beneficial ownership, for purposes of sections 13(d) and (g) of the Act,
as of the date of such agreement, of all equity securities of that
issuer beneficially owned by any such persons.
(ii) A group regulated as a person pursuant to section 13(d)(3) of
the Act
[[Page 190]]
shall be deemed to have acquired beneficial ownership, as determined
under paragraph (a) of this section and for purposes of sections
13(d)(1) and (2) of the Act, if any member of the group becomes the
beneficial owner of additional equity securities in the same class
beneficially owned by the group after the group's formation. The
beneficial ownership so acquired shall be reported as being held by the
group through the earlier of {x{time} the date of the group's
dissolution or {y{time} the date of that member's withdrawal from the
group.
(iii) Notwithstanding paragraph (b)(1)(ii) of this section, a group
regulated under section 13(d)(3) of the Act shall not be deemed to have
acquired beneficial ownership, as determined under paragraph (a) of this
section, if, after the group's formation, a member of the group becomes
the beneficial owner of additional equity securities in the same class
beneficially owned by the group through a sale by or transfer from
another member of the group.
(2)(i) A group regulated as a person pursuant to section 13(g)(3) of
the Act shall be deemed to have become the beneficial owner, for
purposes of sections 13(g)(1) and (2) of the Act, if any member of the
group becomes a beneficial owner of additional equity securities in the
same class held by the group after the group's formation and through the
earlier of {x{time} the date of the group's dissolution or {y{time}
the date of that member's withdrawal from the group.
(ii) Notwithstanding paragraph (b)(2)(i) of this section, a group
regulated under section 13(g)(3) of the Act shall not be deemed to have
become the beneficial owner of additional equity securities in the same
class beneficially owned by the group if, after the group's formation, a
member of the group becomes the beneficial owner of additional equity
securities in the same class beneficially owned by the group through a
sale by or transfer from another member of the group.
[88 FR 76983, Nov. 7, 2023]
Sec. 240.13d-6 Exemption of certain acquisitions.
(a) The acquisition of securities of an issuer by a person who,
prior to such acquisition, was a beneficial owner of more than five
percent of the outstanding securities of the same class as those
acquired shall be exempt from section 13(d) of the Act; provided, that:
(1) The acquisition is made pursuant to preemptive subscription
rights in an offering made to all holders of securities of the class to
which the preemptive subscription rights pertain;
(2) Such person does not acquire additional securities except
through the exercise of such person's pro rata share of the preemptive
subscription rights; and
(3) The acquisition is duly reported, if required, pursuant to
section 16(a) of the Act and the rules and regulations thereunder in
this part.
(b) A group shall be deemed not to have acquired any equity
securities beneficially owned by the other members of the group solely
by virtue of their concerted actions relating to the purchase of equity
securities directly from an issuer in a transaction not involving a
public offering; provided, that:
(1) All the members of the group are persons specified in Sec.
240.13d-1(b)(1)(ii);
(2) The purchase is in the ordinary course of each member's business
and not with the purpose nor with the effect of changing or influencing
control of the issuer, nor in connection with or as a participant in any
transaction having such purpose or effect, including any transaction
subject to Sec. 240.13d-3(b);
(3) There is no agreement among or between any members of the group
to act together with respect to the issuer or its securities except for
the purpose of facilitating the specific purchase involved; and
(4) The only actions among or between any members of the group with
respect to the issuer or its securities subsequent to the closing date
of the non-public offering are those which are necessary to conclude
ministerial matters directly related to the completion of the offer or
sale of the securities.
[88 FR 76984, Nov. 7, 2023]
[[Page 191]]
Sec. 240.13d-7 [Reserved]
Sec. 240.13d-101 Schedule 13D--Information to be included in statements
to Sec. 240.13d-2(a).
Securities and Exchange Commission, Washington, D.C. 20549
Schedule 13D
Under the Securities Exchange Act of 1934
(Amendment No.__)*
________________________________________________________________________
(Name of Issuer)
________________________________________________________________________
(Title of Class of Securities)
________________________________________________________________________
(CUSIP Number)
________________________________________________________________________
(Name, Address and Telephone Number of Person Authorized to Receive
Notices and Communications)
________________________________________________________________________
(Date of Event Which Requires Filing of This Statement)
If the filing person has previously filed a statement on Schedule
13G to report the acquisition that is the subject of this Schedule 13D,
and is filing this schedule because of Sec. Sec. 240.13d-1(e), 240.13d-
1(f) or 240.13d-1(g), check the following box. [squ]
* The remainder of this cover page shall be filled out for a
reporting person's initial filing on this form with respect to the
subject class of securities, and for any subsequent amendment containing
information which would alter disclosures provided in a prior cover
page.
The information required on the remainder of this cover page shall
not be deemed to be ``filed'' for the purpose of section 18 of the
Securities Exchange Act of 1934 (``Act'') or otherwise subject to the
liabilities of that section of the Act but shall be subject to all other
provisions of the Act (however, see the Notes).
------------------------------------------------------------------------
------------------------------------------------------------------------
CUSIP No.______
------------------------------------------------------------------------
(1) Names of reporting persons.........
(2) Check the appropriate box if a (a)
member of a group
--------------------------------
(see instructions) (b)
------------------------------------------------------------------------
(3) SEC use only.......................
------------------------------------------------------------------------
(4) Source of funds (see instructions).
------------------------------------------------------------------------
(5) Check if disclosure of legal
proceedings is required pursuant to
Items 2(d) or 2(e).
------------------------------------------------------------------------
(6) Citizenship or place of
organization.
------------------------------------------------------------------------
Number of shares beneficially owned by
each reporting person with:
(7) Sole voting power................
--------------------------------
(8) Shared voting power..............
--------------------------------
(9) Sole dispositive power...........
--------------------------------
(10) Shared dispositive power........
------------------------------------------------------------------------
(11) Aggregate amount beneficially
owned by each reporting person.
------------------------------------------------------------------------
(12) Check if the aggregate amount in
Row (11) excludes certain shares (see
instructions).
------------------------------------------------------------------------
(13) Percent of class represented by
amount in Row (11).
------------------------------------------------------------------------
(14) Type of reporting person (see
instructions).
------------------------------------------------------------------------
Page __ of __ Pages
Instructions for Cover Page
(1) Names of Reporting Persons--Furnish the full legal name of each
person for whom the report is filed--i.e., each person required to sign
the schedule itself--including each member of a group. Do not include
the name of a person required to be identified in the report but who is
not a reporting person.
(2) If any of the shares beneficially owned by a reporting person
are held as a member of the group and the membership is expressly
[[Page 192]]
affirmed, please check row 2(a). If the reporting person disclaims
membership in a group or describes a relationship with other person but
does not affirm the existence of a group, please check row 2(b) (unless
it is a joint filing pursuant to Rule 13d-1(k)(1) in which case it may
not be necessary to check row 2(b)).
(3) The 3rd row is for SEC internal use; please leave blank.
(4) Classify the source of funds or other consideration used or to
be used in making the purchases as required to be disclosed pursuant to
Item 3 of Schedule 13D and insert the appropriate symbol (or symbols if
more than one is necessary) in row (4):
------------------------------------------------------------------------
Category of Source Symbol
------------------------------------------------------------------------
Subject Company (Company whose securities are SC
being acquired).
Bank......................................... BK
Affiliate (of reporting person).............. AF
Working Capital (of reporting person)........ WC
Personal Funds (of reporting person)......... PF
Other........................................ OO
------------------------------------------------------------------------
(5) If disclosure of legal proceedings or actions is required
pursuant to either Items 2(d) or 2(e) of Schedule 13D, row 5 should be
checked.
(6) Citizenship or Place of Organization--Furnish citizenship if the
named reporting person is a natural person. Otherwise, Furnish place of
organization. (See Item 2 of Schedule 13D).
(7)-(11) [Reserved]
(12) Check if the aggregate amount reported as beneficially owned in
row (11) does not include shares which the reporting person discloses in
the report but as to which beneficial ownership is disclaimed pursuant
to Rule 13d-4 [17 CFR 240.13d-4] under the Securities Exchange Act of
1934.
(13) Aggregate Amount Beneficially Owned by Each Reporting Person,
Etc.--Rows (7) through (11), inclusive, and (13) are to be completed in
accordance with the provisions of Item 5 of Schedule 13D. All
percentages are to be rounded off to nearest tenth (one place after
decimal point).
(14) Type of Reporting Person--Please classify each ``reporting
person'' according to the following breakdown and place the appropriate
symbol (or symbols, i.e., if more than one is applicable, insert all
applicable symbols) on the form:
------------------------------------------------------------------------
Category Symbol
------------------------------------------------------------------------
Broker Dealer............................... BD
Bank........................................ BK
Insurance Company........................... IC
Investment Company.......................... IV
Investment Adviser.......................... IA
Employee Benefit Plan or Endowment Fund..... EP
Parent Holding Company/Control Person....... HC
Savings Association......................... SA
Church Plan................................. CP
Corporation................................. CO
Partnership................................. PN
Individual.................................. IN
Other....................................... OO
------------------------------------------------------------------------
Notes: Attach as many copies of the second part of the cover page as
are needed, one reporting person per page.
Filing persons may, in order to avoid unnecessary duplication,
answer items on the schedules (Schedule 13D, 13G or TO) by appropriate
cross references to an item or items on the cover page(s). This approach
may only be used where the cover page item or items provide all the
disclosure required by the schedule item. Moreover, such a use of a
cover page item will result in the item becoming a part of the schedule
and accordingly being considered as ``filed'' for purposes of section 18
of the Securities Exchange Act or otherwise subject to the liabilities
of that section of the Act.
Reporting persons may comply with their cover page filing
requirements by filing either completed copies of the blank forms
available from the Commission, printed or typed facsimiles, or computer
printed facsimiles, provided the documents filed have identical formats
to the forms prescribed in the Commission's regulations and meet
existing Securities Exchange Act rules as to such matters as clarity and
size (Securities Exchange Act Rule 12b-12).
Special Instructions for Complying With Schedule 13D
Under sections 13(d) and 23 of the Securities Exchange Act of 1934
and the rules and regulations thereunder, the Commission is authorized
to solicit the information required to be supplied by this schedule by
certain security holders of certain issuers.
Disclosure of the information specified in this schedule is
mandatory. The information will be used for the primary purpose of
determining and disclosing the holdings of certain beneficial owners of
certain equity securities. This statement will be made a matter of
public record. Therefore, any information given will be available for
inspection by any member of the public.
Because of the public nature of the information, the Commission can
use 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.
Failure to disclose the information requested by this schedule may
result in civil or criminal action against the persons involved for
violation of the federal securities laws and rules promulgated
thereunder.
[[Page 193]]
Instructions. A. The item numbers and captions of the items shall be
included but the text of the items is to be omitted. The answers to the
items shall be so prepared as to indicate clearly the coverage of the
items without referring to the text of the items. Answer every item. If
an item is inapplicable or the answer is in the negative, so state.
B. Information contained in exhibits to the statement may be
incorporated by reference in answer or partial answer to any item or
sub-item of the statement unless it would render such answer misleading,
incomplete, unclear or confusing. Material incorporated by reference
shall be clearly identified in the reference by page, paragraph, caption
or otherwise. An express statement that the specified matter is
incorporated by reference shall be made at the particular place in the
statement where the information is required. A copy of any information
or a copy of the pertinent pages of a document containing such
information which is incorporated by reference shall be submitted with
this statement as an exhibit and shall be deemed to be filed with the
Commission for all purposes of the Act.
C. If the statement is filed by a general or limited partnership,
syndicate, or other group, the information called for by Items 2-6,
inclusive, shall be given with respect to (i) each partner of such
general partnership; (ii) each partner who is denominated as a general
partner or who functions as a general partner of such limited
partnership; (iii) each member of such syndicate or group; and (iv) each
person controlling such partner or member. If the statement is filed by
a corporation or if a person referred to in (i), (ii), (iii) or (iv) of
this Instruction is a corporation, the information called for by the
above mentioned items shall be given with respect to (a) each executive
officer and director of such corporation; (b) each person controlling
such corporation; and (c) each executive officer and director of any
corporation or other person ultimately in control of such corporation.
Item 1. Security and Issuer. State the title of the class of equity
securities to which this statement relates and the name and address of
the principal executive offices of the issuer of such securities.
Item 2. Identity and Background. If the person filing this statement
or any person enumerated in Instruction C of this statement is a
corporation, general partnership, limited partnership, syndicate or
other group of persons, state its name, the state or other place of its
organization, its principal business, the address of its principal
office and the information required by (d) and (e) of this Item. If the
person filing this statement or any person enumerated in Instruction C
is a natural person, provide the information specified in (a) through
(f) of this Item with respect to such person(s).
(a) Name;
(b) Residence or business address;
(c) Present principal occupation or employment and the name,
principal business and address of any corporation or other organization
in which such employment is conducted;
(d) Whether or not, during the last five years, such person has been
convicted in a criminal proceeding (excluding traffic violations or
similar misdemeanors) and, if so, give the dates, nature of conviction,
name and location of court, any penalty imposed, or other disposition of
the case;
(e) Whether or not, during the last five years, such person was a
party to a civil proceeding of a judicial or administrative body of
competent jurisdiction and as a result of such proceeding was or is
subject to a judgment, decree or final order enjoining future violations
of, or prohibiting or mandating activities subject to, federal or state
securities laws or finding any violation with respect to such laws; and,
if so, identify and describe such proceedings and summarize the terms of
such judgment, decree or final order; and
(f) Citizenship.
Item 3. Source and Amount of Funds or Other Consideration. State the
source and the amount of funds or other consideration used or to be used
in making the purchases, and if any part of the purchase price is or
will be represented by funds or other consideration borrowed or
otherwise obtained for the purpose of acquiring, holding, trading or
voting the securities, a description of the transaction and the names of
the parties thereto. Where material, such information should also be
provided with respect to prior acquisitions not previously reported
pursuant to this regulation. If the source of all or any part of the
funds is a loan made in the ordinary course of business by a bank, as
defined in section 3(a)(6) of the Act, the name of the bank shall not be
made available to the public if the person at the time of filing the
statement so requests in writing and files such request, naming such
bank, with the Secretary of the Commission. If the securities were
acquired other than by purchase, describe the method of acquisition.
Item 4. Purpose of Transaction. State the purpose or purposes of the
acquisition of securities of the issuer. Describe any plans or proposals
which the reporting persons may have which relate to or would result in:
(a) The acquisition by any person of additional securities of the
issuer, or the disposition of securities of the issuer;
(b) An extraordinary corporate transaction, such as a merger,
reorganization or liquidation, involving the issuer or any of its
subsidiaries;
(c) A sale or transfer of a material amount of assets of the issuer
or any of its subsidiaries;
[[Page 194]]
(d) Any change in the present board of directors or management of
the issuer, including any plans or proposals to change the number or
term of directors or to fill any existing vacancies on the board;
(e) Any material change in the present capitalization or dividend
policy of the issuer;
(f) Any other material change in the issuer's business or corporate
structure, including but not limited to, if the issuer is a registered
closed-end investment company, any plans or proposals to make any
changes in its investment policy for which a vote is required by section
13 of the Investment Company Act of 1940;
(g) Changes in the issuer's charter, bylaws or instruments
corresponding thereto or other actions which may impede the acquisition
of control of the issuer by any person;
(h) Causing a class of securities of the issuer to be delisted from
a national securities exchange or to cease to be authorized to be quoted
in an inter-dealer quotation system of a registered national securities
association;
(i) A class of equity securities of the issuer becoming eligible for
termination of registration pursuant to section 12(g)(4) of the Act; or
(j) Any action similar to any of those enumerated above.
Item 5. Interest in Securities of the Issuer. (a) State the
aggregate number and percentage of the class of securities identified
pursuant to Item 1 (which may be based on the number of securities
outstanding as contained in the most recently available filing with the
Commission by the issuer unless the filing person has reason to believe
such information is not current) beneficially owned (identifying those
shares which there is a right to acquire) by each person named in Item
2. The above mentioned information should also be furnished with respect
to persons who, together with any of the persons named in Item 2,
comprise a group within the meaning of section 13(d)(3) of the Act;
(b) For each person named in response to paragraph (a), indicate the
number of shares as to which there is sole power to vote or to direct
the vote, sole power to dispose or to direct the disposition, or shared
power to dispose or to direct the disposition. Provide the applicable
information required by Item 2 with respect to each person with whom the
power to vote or to direct the vote or to dispose or direct the
disposition is shared;
(c) Describe any transactions in the class of securities reported on
that were effected during the past sixty days or since the most recent
filing of Schedule 13D (Sec. 240.13d-101), whichever is less, by the
persons named in response to paragraph (a).
Instruction. The description of a transaction required by Item 5(c)
shall include, but not necessarily be limited to: (1) The identity of
the person covered by Item 5(c) who effected the transaction; (2) the
date of transaction; (3) the amount of securities involved; (4) the
price per share or unit; and (5) where and how the transaction was
effected.
(d) If any other person is known to have the right to receive or the
power to direct the receipt of dividends from, or the proceeds from the
sale of, such securities, a statement to that effect should be included
in response to this item and, if such interest relates to more than five
percent of the class, such person should be identified. A listing of the
shareholders of an investment company registered under the Investment
Company Act of 1940 or the beneficiaries of an employee benefit plan,
pension fund or endowment fund is not required.
(e) If applicable, state the date on which the reporting person
ceased to be the beneficial owner of more than five percent of the class
of securities.
Instruction. For computations regarding securities which represent a
right to acquire an underlying security, see Rule 13d-3(d)(1) and the
note thereto.
Item 6. Contracts, Arrangements, Understandings or Relationships
With Respect to Securities of the Issuer. Describe any contracts,
arrangements, understandings, or relationships (legal or otherwise)
among the persons named in Item 2 and between such persons and any
person with respect to any securities of the issuer, including any class
of such issuer's securities used as a reference security, in connection
with any of the following: call options, put options, security-based
swaps or any other derivative securities, transfer or voting of any of
the securities, finder's fees, joint ventures, loan or option
arrangements, guarantees of profits, division of profits or loss, or the
giving or withholding of proxies, naming the persons with whom such
contracts, arrangements, understandings, or relationships have been
entered into. Include such information for any of the securities that
are pledged or otherwise subject to a contingency the occurrence of
which would give another person voting power or investment power over
such securities except that disclosure of standard default and similar
provisions contained in loan agreements need not be included.
Item 7. Material to be Filed as Exhibits. The following shall be
filed as exhibits: Copies of written agreements relating to the filing
of joint acquisition statements as required by Rule 13d-1(k) and copies
of all written agreements, contracts, arrangements, understanding, plans
or proposals relating to: (1) The borrowing of funds to finance the
acquisition as disclosed in Item 3; (2) the acquisition of issuer
control, liquidation, sale of assets, merger, or change in business or
corporate structure, or any other matter as disclosed in Item 4; and (3)
the transfer or voting of the securities, finder's fees, joint ventures,
options, puts, calls, guarantees of
[[Page 195]]
loans, guarantees against loss or of profit, or the giving or
withholding of any proxy as disclosed in Item 6.
Signature. After reasonable inquiry and to the best of my knowledge
and belief, I certify that the information set forth in this statement
is true, complete and correct.
Date____________________________________________________________________
Signature_______________________________________________________________
Name/Title______________________________________________________________
The original statement shall be signed by each person on whose
behalf the statement is filed or such person's authorized
representative. If the statement is signed on behalf of a person by such
person's authorized representative (other than an executive officer or
general partner of the filing person), evidence of the representative's
authority to sign on behalf of such person shall be filed with the
statement; provided, however, that a power of attorney for this purpose
which is already on file with the Commission may be incorporated by
reference. The name and any title of each person who signs the statement
shall be typed or printed beneath such person's signature.
Attention--Intentional misstatements or omissions of fact constitute
Federal criminal violations (See 18 U.S.C. 1001).
[44 FR 2145, Jan. 9, 1979; 44 FR 11751, Mar. 2, 1979; 44 FR 70340, Dec.
6, 1979; 47 FR 11466, Mar. 16, 1982; 61 FR 49959, Sept. 24, 1996; 62 FR
35340, July 1, 1997; 63 FR 2867, Jan. 16, 1998; 63 FR 15287, Mar. 31,
1998; 72 FR 45111, Aug. 10, 2007; 73 FR 17813, Apr. 1, 2008; 88 FR
76984, Nov. 7, 2023]
Sec. 240.13d-102 Schedule 13G--Information to be included in statements
filed pursuant to Sec. 240.13d-1(b), (c), and (d) and amendments thereto
filed pursuant to Sec. 240.13d-2.
Securities and Exchange Commission, Washington, D.C. 20549
Schedule 13G
Under the Securities Exchange Act of 1934
(Amendment No.__)*
________________________________________________________________________
(Name of Issuer)
________________________________________________________________________
(Title of Class of Securities)
________________________________________________________________________
(CUSIP Number)
________________________________________________________________________
(Date of Event Which Requires Filing of this Statement)
Check the appropriate box to designate the rule pursuant to which
this Schedule is filed:
[ ] Rule 13d-1(b)
[ ] Rule 13d-1(c)
[ ] Rule 13d-1(d)
* The remainder of this cover page shall be filled out for a
reporting person's initial filing on this form with respect to the
subject class of securities, and for any subsequent amendment containing
information which would alter the disclosures provided in a prior cover
page.
The information required in the remainder of this cover page shall
not be deemed to be ``filed'' for the purpose of Section 18 of the
Securities Exchange Act of 1934 (``Act'') or otherwise subject to the
liabilities of that section of the Act but shall be subject to all other
provisions of the Act (however, see the Notes).
------------------------------------------------------------------------
------------------------------------------------------------------------
CUSIP No.______
------------------------------------------------------------------------
(1) Names of reporting persons.........
(2) Check the appropriate box if a (a)
member of a group
--------------------------------
(see instructions) (b)
------------------------------------------------------------------------
(3) SEC use only.......................
------------------------------------------------------------------------
(4) Citizenship or place of
organization.
------------------------------------------------------------------------
Number of shares beneficially owned by
each reporting person with:
(5) Sole voting power................
--------------------------------
(6) Shared voting power..............
--------------------------------
(7) Sole dispositive power...........
--------------------------------
(8) Shared dispositive power.........
------------------------------------------------------------------------
(9) Aggregate amount beneficially owned
by each reporting person.
------------------------------------------------------------------------
(10) Check if the aggregate amount in
Row (9) excludes certain shares (see
instructions).
------------------------------------------------------------------------
[[Page 196]]
(11) Percent of class represented by
amount in Row (9).
------------------------------------------------------------------------
(12) Type of reporting person (see
instructions).
------------------------------------------------------------------------
Page __ of __ Pages
Instructions for Cover Page:
(1) Names of Reporting Persons--Furnish the full legal name of each
person for whom the report is filed--i.e., each person required to sign
the schedule itself--including each member of a group. Do not include
the name of a person required to be identified in the report but who is
not a reporting person.
(2) If any of the shares beneficially owned by a reporting person
are held as a member of a group and that membership is expressly
affirmed, please check row 2(a). If the reporting person disclaims
membership in a group or describes a relationship with other person but
does not affirm the existence of a group, please check row 2(b) [unless
it is a joint filing pursuant to Rule 13d-1(k)(1) in which case it may
not be necessary to check row 2(b)].
(3) The third row is for SEC internal use; please leave blank.
(4) Citizenship or Place of Organization--Furnish citizenship if the
named reporting person is a natural person. Otherwise, furnish place of
organization.
(5)-(9), (11) Aggregated Amount Beneficially Owned By Each Reporting
Person, etc.--Rows (5) through (9) inclusive, and (11) are to be
completed in accordance with the provisions of Item 4 of Schedule 13G.
All percentages are to be rounded off to the nearest tenth (one place
after decimal point).
(10) Check if the aggregate amount reported as beneficially owned in
row (9) does not include shares as to which beneficial ownership is
disclaimed pursuant to Rule 13d-4 [17 CFR 240.13d-4] under the
Securities Exchange Act of 1934.
(12) Type of Reporting Person--Please classify each ``reporting
person'' according to the following breakdown (see Item 3 of Schedule
13G) and place the appropriate Symbol on the form:
------------------------------------------------------------------------
Category Symbol
------------------------------------------------------------------------
Broker Dealer................................................ BD
Bank......................................................... BK
Insurance Company............................................ IC
Investment Company........................................... IV
Investment Adviser........................................... IA
Employee Benefit Plan or Endowment Fund...................... EP
Parent Holding Company/Control Person........................ HC
Savings Association.......................................... SA
Church Plan.................................................. CP
Corporation.................................................. CO
Partnership.................................................. PN
Individual................................................... IN
Non-U.S. Institution......................................... FI
Other........................................................ OO
------------------------------------------------------------------------
Notes: Attach as many copies of the second part of the cover page as
are needed, one reporting person per page.
Filing persons may, in order to avoid unnecessary duplication,
answer items on the schedules (Schedule 13D, 13G or TO) by appropriate
cross references to an item or items on the cover page(s). This approach
may only be used where the cover page item or items provide all the
disclosure required by the schedule item. Moreover, such a use of a
cover page item will result in the item becoming a part of the schedule
and accordingly being considered as ``filed'' for purposes of section 18
of the Securities Exchange Act or otherwise subject to the liabilities
of that section of the Act.
Reporting persons may comply with their cover page filing
requirements by filing either completed copies of the blank forms
available from the Commission, printed or typed facsimiles, or computer
printed facsimiles, provided the documents filed have identical formats
to the forms prescribed in the Commission's regulations and meet
existing Securities Exchange Act rules as to such matters as clarity and
size (Securities Exchange Act Rule 12b-12).
Special Instructions for Complying With Schedule 13G
Under Sections 13(d), 13(g) and 23 of the Securities Exchange Act of
1934 and the rules and regulations thereunder, the Commission is
authorized to solicit the information required to be supplied by this
schedule by certain security holders of certain issuers.
Disclosure of the information specified in this schedule is
mandatory. The information will be used for the primary purpose of
determining and disclosing the holdings of certain beneficial owners of
certain equity securities. This statement will be made a matter of
public record. Therefore, any information given will be available for
inspection by any member of the public.
Because of the public nature of the information, the Commission can
use 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.
Failure to disclose the information requested by this schedule may
result in civil
[[Page 197]]
or criminal action against the persons involved for violation of the
Federal securities laws and rules promulgated thereunder.
Instructions. A. Statements filed pursuant to Rule 13d-1(b)
containing the information required by this schedule shall be filed not
later than February 14 following the calendar year covered by the
statement or within the time specified in Rules 13d-1(b)(2) and 13d-
2(c). Statements filed pursuant to Rule 13d-1(d) shall be filed within
the time specified in Rules 13d-1(c), 13d-2(b) and 13d-2(d). Statements
filed pursuant to Rule 13d-1(c) shall be filed not later than February
14 following the calendar year covered by the statement pursuant to
Rules 13d-1(d) and 13d-2(b).
B. Information contained in a form which is required to be filed by
rules under section 13(f) (15 U.S.C. 78m(f)) for the same calendar year
as that covered by a statement on this schedule may be incorporated by
reference in response to any of the items of this schedule. If such
information is incorporated by reference in this schedule, copies of the
relevant pages of such form shall be filed as an exhibit to this
schedule.
C. The item numbers and captions of the items shall be included but
the text of the items is to be omitted. The answers to the items shall
be so prepared as to indicate clearly the coverage of the items without
referring to the text of the items. Answer every item. If an item is
inapplicable or the answer is in the negative, so state.
Item 1(a) Name of issuer:______
Item 1(b) Address of issuer's principal executive offices:________
2(a) Name of person filing:
________________________________________________________________________
2(b) Address or principal business office or, if none, residence:
________________________________________________________________________
2(c) Citizenship:
________________________________________________________________________
2(d) Title of class of securities:
________________________________________________________________________
2(e) CUSIP No.:
________________________________________________________________________
Item 3. If this statement is filed pursuant to Sec. Sec. 240.13d-
1(b) or 240.13d-2(b) or (c), check whether the person filing is a:
(a) [ ] Broker or dealer registered under section 15 of the Act (15
U.S.C. 78o);
(b) [ ] Bank as defined in section 3(a)(6) of the Act (15 U.S.C.
78c);
(c) [ ] Insurance company as defined in section 3(a)(19) of the Act
(15 U.S.C. 78c);
(d) [ ] Investment company registered under section 8 of the
Investment Company Act of 1940 (15 U.S.C 80a-8);
(e) [ ] An investment adviser in accordance with Sec. 240.13d-
1(b)(1)(ii)(E);
(f) [ ] An employee benefit plan or endowment fund in accordance
with Sec. 240.13d-1(b)(1)(ii)(F);
(g) [ ] A parent holding company or control person in accordance
with Sec. 240.13d-1(b)(1)(ii)(G);
(h) [ ] A savings associations as defined in Section 3(b) of the
Federal Deposit Insurance Act (12 U.S.C. 1813);
(i) [ ] A church plan that is excluded from the definition of an
investment company under section 3(c)(14) of the Investment Company Act
of 1940 (15 U.S.C. 80a-3);
(j) [ ] A non-U.S. institution in accordance with Sec. 240.13d-
1(b)(1)(ii)(J);
(k) [ ] Group, in accordance with Sec. 240.13d-1(b)(1)(ii)(K). If
filing as a non-U.S. institution in accordance with Sec. 240.13d-
1(b)(1)(ii)(J), please specify the type of institution: ________
Item 4. Ownership
Provide the following information regarding the aggregate number and
percentage of the class of securities of the issuer identified in Item
1.
(a) Amount beneficially owned: __________.
(b) Percent of class: __________.
(c) Number of shares as to which the person has:
(i) Sole power to vote or to direct the vote __________.
(ii) Shared power to vote or to direct the vote __________.
(iii) Sole power to dispose or to direct the disposition of
__________.
(iv) Shared power to dispose or to direct the disposition of
__________.
Instruction. For computations regarding securities which represent a
right to acquire an underlying security see Sec. 240.13d-3(d)(1).
Item 5. Ownership of 5 Percent or Less of a Class. If this statement
is being filed to report the fact that as of the date hereof the
reporting person has ceased to be the beneficial owner of more than 5
percent of the class of securities, check the following [ ].
Instruction. Dissolution of a group requires a response to this
item.
Item 6. Ownership of More than 5 Percent on Behalf of Another
Person. If any other person is known to have the right to receive or the
power to direct the receipt of dividends from, or the proceeds from the
sale of, such securities, a statement to that effect should be included
in response to this item and, if such interest relates to more than 5
percent of the class, such person should be identified. A listing of the
shareholders of an investment company registered under the Investment
Company Act of 1940 or the beneficiaries of employee benefit plan,
pension fund or endowment fund is not required.
Item 7. Identification and Classification of the Subsidiary Which
Acquired the Security Being Reported on by the Parent Holding Company or
Control Person. If a parent holding company or control person has filed
this schedule pursuant to Rule 13d-1(b)(1)(ii)(G),
[[Page 198]]
so indicate under Item 3(g) and attach an exhibit stating the identity
and the Item 3 classification of the relevant subsidiary. If a parent
holding company or control person has filed this schedule pursuant to
Rule 13d-1(c) or Rule 13d-1(d), attach an exhibit stating the
identification of the relevant subsidiary.
Item 8. Identification and Classification of Members of the Group
If a group has filed this schedule pursuant to Sec. 240.13d-
1(b)(1)(ii)(K), so indicate under Item 3(k) and attach an exhibit
stating the identity and Item 3 classification of each member of the
group. If a group has filed this schedule pursuant to Rule 13d-1(c) or
Rule 13d-1(d), attach an exhibit stating the identity of each member of
the group.
Item 9. Notice of Dissolution of Group. Notice of dissolution of a
group may be furnished as an exhibit stating the date of the dissolution
and that all further filings with respect to transactions in the
security reported on will be filed, if required, by members of the
group, in their individual capacity. See Item 5.
Item 10. Certifications
(a) The following certification shall be included if the statement
is filed pursuant to Sec. 240.13d-1(b):
By signing below I certify that, to the best of my knowledge and
belief, the securities referred to above were acquired and are held in
the ordinary course of business and were not acquired and are not held
for the purpose of or with the effect of changing or influencing the
control of the issuer of the securities and were not acquired and are
not held in connection with or as a participant in any transaction
having that purpose or effect, other than activities solely in
connection with a nomination under Sec. 240.14a-11.
(b) The following certification shall be included if the statement
is filed pursuant to Sec. 240.13d-1(b)(1)(ii)(J), or if the statement
is filed pursuant to Sec. 240.13d-1(b)(1)(ii)(K) and a member of the
group is a non-U.S. institution eligible to file pursuant to Sec.
240.13d-1(b)(1)(ii)(J):
By signing below I certify that, to the best of my knowledge and
belief, the foreign regulatory scheme applicable to [insert particular
category of institutional investor] is substantially comparable to the
regulatory scheme applicable to the functionally equivalent U.S.
institution(s). I also undertake to furnish to the Commission staff,
upon request, information that would otherwise be disclosed in a
Schedule 13D.
(c) The following certification shall be included if the statement
is filed pursuant to Sec. 240.13d-1(c):
By signing below I certify that, to the best of my knowledge and
belief, the securities referred to above were not acquired and are not
held for the purpose of or with the effect of changing or influencing
the control of the issuer of the securities and were not acquired and
are not held in connection with or as a participant in any transaction
having that purpose or effect, other than activities solely in
connection with a nomination under Sec. 240.14a-11.
Signature. After reasonable inquiry and to the best of my knowledge
and belief, I certify that the information set forth in this statement
is true, complete and correct.
Dated:____
__________.
Signature.
__________.
Name/Title.
The original statement shall be signed by each person on whose
behalf the statement is filed or such person's authorized
representative. If the statement is signed on behalf of a person by such
person's authorized representative other than an executive officer or
general partner of the filing person, evidence of the representative's
authority to sign on behalf of such person shall be filed with the
statement; provided, however, that a power of attorney for this purpose
which is already on file with the Commission may be incorporated by
reference. The name and any title of each person who signs the statement
shall be typed or printed beneath such person's signature.
Attention: Intentional misstatements or omissions of fact constitute
Federal criminal violations (see 18 U.S.C. 1001).
[43 FR 18499, Apr. 28, 1978, as amended at 43 FR 55756, Nov. 29, 1978;
44 FR 2148, Jan. 9, 1979; 44 FR 11751, Mar. 2, 1979; 61 FR 49959, Sept.
24, 1996; 62 FR 35340, July 1, 1997; 63 FR 2867, Jan. 16, 1998; 63 FR
15287, Mar. 31, 1998; 72 FR 45112, Aug. 10, 2007; 73 FR 17813, Apr. 1,
2008; 73 FR 60089, Oct. 9, 2008; 75 FR 56780, Sept. 16, 2010; 88 FR
76984, Nov. 7, 2023]
Sec. 240.13e-1 Purchase of securities by the issuer during a
third-party tender offer.
An issuer that has received notice that it is the subject of a
tender offer made under Section 14(d)(1) of the Act (15 U.S.C. 78n),
that has commenced under Sec. 240.14d-2 must not purchase any of its
equity securities during the tender offer unless the issuer first:
(a) Files a statement with the Commission containing the following
information:
(1) The title and number of securities to be purchased;
[[Page 199]]
(2) The names of the persons or classes of persons from whom the
issuer will purchase the securities;
(3) The name of any exchange, inter-dealer quotation system or any
other market on or through which the securities will be purchased;
(4) The purpose of the purchase;
(5) Whether the issuer will retire the securities, hold the
securities in its treasury, or dispose of the securities. If the issuer
intends to dispose of the securities, describe how it intends to do so;
(6) The source and amount of funds or other consideration to be used
to make the purchase. If the issuer borrows any funds or other
consideration to make the purchase or enters any agreement for the
purpose of acquiring, holding, or trading the securities, describe the
transaction and agreement and identify the parties; and
(7) An exhibit to the statement that sets forth the transaction
valuation, fee rate, amount of filing fee and, as applicable,
information relating to reliance on Sec. 240.0-11(a)(2) in the tabular
form indicated in Tables 1 and 2 to this paragraph (a)(7) and as further
specified in this paragraph (a)(7).
Table 1 to Paragraph (a)(7)
----------------------------------------------------------------------------------------------------------------
Transaction Amount of
valuation Fee rate filing fee
----------------------------------------------------------------------------------------------------------------
Fees to Be Paid.............................................. X X X
----------------------------------------------------------------------------------------------------------------
Fees Previously Paid......................................... X X
----------------------------------------------------------------------------------------------------------------
Total Transaction Valuation.............................. X
----------------------------------------------------------------------------------------------------------------
Total Fees Due for Filing................................ X
----------------------------------------------------------------------------------------------------------------
Total Fees Previously Paid............................... X
----------------------------------------------------------------------------------------------------------------
Total Fee Offsets........................................ X
----------------------------------------------------------------------------------------------------------------
Net Fee Due.............................................. X
----------------------------------------------------------------------------------------------------------------
Table 2 to Paragraph (a)(7)
----------------------------------------------------------------------------------------------------------------
Fee paid
Registrant Form or File Initial Filing Fee offset with fee
or filer filing number filing date claimed offset
name type date source
----------------------------------------------------------------------------------------------------------------
Fee Offset Claims........... X X X X
----------------------------------------------------------------------------------------------------------------
Fee Offset Sources.......... X X X X X
----------------------------------------------------------------------------------------------------------------
(i) General requirements--(A) Applicable table requirements. The
``X'' designation indicates the information required to be disclosed, as
applicable, in tabular format. Add as many rows of each table as
necessary.
(B) Fee rate. For the current fee rate, see https://www.sec.gov/ofm/
Article/feeamt.html.
(C) Explanations. If not otherwise explained in response to this
paragraph (a)(7), disclose specific details relating to the fee
calculation as necessary to clarify the information presented in each
table, including references to the applicable provisions of Sec. 240.0-
11 (Rule 0-11). All disclosure this paragraph (a)(7) requires that is
not specifically required to be presented in tabular format must appear
in narrative format immediately after the table(s) to which it
corresponds.
(ii) Table 1 to this paragraph (a)(7)--(A) Fees to be paid and fees
previously paid--(1) Fees to be paid. Provide the information Table 1 to
this paragraph (a)(7) requires for the line item ``Fees to Be Paid'' as
follows:
[[Page 200]]
(i) Initial filings. For an initial filing on the statement, provide
the required information for the total transaction valuation.
(ii) Amendments with then-current total transaction valuation higher
than highest total transaction valuation previously reported. For
amendments to the statement that reflect a then-current total
transaction valuation higher than the highest total transaction
valuation previously reported, provide the required information for the
incremental increase.
(2) Fees previously paid. Provide the information Table 1 to this
paragraph (a)(7) requires for the line item ``Fees Previously Paid'' for
the prior initial filing or amendment to the statement that reflected a
then-current total transaction valuation that was the highest total
transaction valuation previously reported.
(B) Other tabular information. Provide the following information in
Table 1 to this paragraph (a)(7) for the line items ``Fees to be Paid''
and ``Fees Previously Paid'', as applicable:
(1) The transaction valuation computed pursuant to Rule 0-11;
(2) The fee rate; and
(3) The filing fee due without regard to any previous payments or
offsets.
(C) Totals--(1) Total transaction valuation. Provide the sum of the
transaction valuations for the line items ``Fees to be Paid'' and ``Fees
Previously Paid''.
(2) Total fees due for filing. Provide the sum of the fees due
without regard to any previous payments or offsets for the line items
``Fees to be Paid'' and ``Fees Previously Paid.''
(3) Total fees previously paid. Provide the aggregate of filing fees
previously paid with this filing.
(4) Total fee offsets. Provide the aggregate of the fee offsets that
are claimed in Table 2 to this paragraph (a)(7) pursuant to paragraph
(a)(7)(iii) of this section.
(5) Net fee due. Provide the difference between:
(i) The total fees due for the statement from the ``Total Fees Due
for Filing'' row; and
(ii) The sum of the aggregate of filing fees previously paid from
the ``Total Fees Previously Paid'' row; and the aggregate fee offsets
claimed from the ``Total Fee Offsets'' row.
(D) Narrative disclosure. Explain how the transaction valuation was
determined.
(iii) Table 2 to this paragraph (a)(7)--(A) Terminology. For
purposes of this paragraph (a)(7)(iii) and Table 2 to this paragraph
(a)(7):
(1) The term submission means any:
(i) Initial filing of, or amendment (pre-effective or post-
effective), to a fee-bearing document; or
(ii) Fee-bearing form of prospectus filed under Sec. 230.424 of
this chapter (Rule 424 under the Securities Act), in all cases that was
accompanied by a contemporaneous fee payment.
Note 1 to paragraph (a)(7)(iii)(A). For purposes of this paragraph
(a)(7)(iii), a contemporaneous fee payment is the payment of a required
fee that is satisfied through the actual transfer of funds, and does not
include any amount of a required fee satisfied through a claimed fee
offset. Paragraph (a)(7)(iii)(B)(2) of this section requires a filer
that claims a fee offset under Rule 0-11(a)(2) to identify previous
submissions with contemporaneous fee payments that are the original
source to which the fee offsets claimed on this filing can be traced.
See Instruction 3.C to the Calculation of Filing Fee Tables in Item
16(b) of Sec. 240.13e-100 (Schedule 13E-3) for an example.
(B) Rule 0-11(a)(2). If relying on Rule 0-11(a)(2) to offset some or
all of the filing fee due on the statement by amounts paid in connection
with earlier filings (other than the statement) relating to the same
transaction, provide the following information:
(1) Fee offset claims. For each earlier filed Securities Act
registration statement or Exchange Act document relating to the same
transaction from which a fee offset is being claimed, provide the
information that Table 2 to this paragraph (a)(7) requires for the line
item ``Fee Offset Claims''. The ``Fee Offset Claimed'' column requires
the dollar amount of the previously paid filing fee to be offset against
the currently due fee.
Note 2 to paragraph (a)(7)(iii)(B)(1). If claiming an offset from a
Securities Act registration statement, provide a
[[Page 201]]
detailed explanation of the basis for the claimed offset.
(2) Fee offset sources. With respect to amounts claimed as an offset
under Rule 0-11(a)(2), identify those submissions with contemporaneous
fee payments that are the original source to which those amounts can be
traced. For each submission identified, provide the information that
Table 2 to this paragraph (a)(7) requires for the line item ``Fee Offset
Sources''. The ``Fee Paid with Fee Offset Source'' column requires the
dollar amount of the contemporaneous fee payment made with respect to
each identified submission that is the source of the fee offset claimed
pursuant to Rule 0-11(a)(2).
(b) Pays the fee required by Sec. 240.0-11 when it files the
initial statement and any amendment with respect to which an additional
fee is due.
(c) Submits to the Commission the exhibit required by paragraph
(a)(7) of this section as required by Sec. 232.408 of this chapter
(Rule 408 of Regulation S-T).
(d) This section does not apply to periodic repurchases in
connection with an employee benefit plan or other similar plan of the
issuer so long as the purchases are made in the ordinary course and not
in response to the tender offer.
Instruction to Sec. 240.13e-1: File eight copies if paper filing is
permitted.
[64 FR 61452, Nov. 10, 1999, as amended at 86 FR 70251, Dec. 9, 2021]
Sec. 240.13e-2 [Reserved]
Sec. 240.13e-3 Going private transactions by certain issuers or their
affiliates.
(a) Definitions. Unless indicated otherwise or the context otherwise
requires, all terms used in this section and in Schedule 13E-3 [Sec.
240.13e-100] shall have the same meaning as in the Act or elsewhere in
the General Rules and Regulations thereunder. In addition, the following
definitions apply:
(1) An affiliate of an issuer is a person that directly or
indirectly through one or more intermediaries controls, is controlled
by, or is under common control with such issuer. For the purposes of
this section only, a person who is not an affiliate of an issuer at the
commencement of such person's tender offer for a class of equity
securities of such issuer will not be deemed an affiliate of such issuer
prior to the stated termination of such tender offer and any extensions
thereof;
(2) The term purchase means any acquisition for value including, but
not limited to, (i) any acquisition pursuant to the dissolution of an
issuer subsequent to the sale or other disposition of substantially all
the assets of such issuer to its affiliate, (ii) any acquisition
pursuant to a merger, (iii) any acquisition of fractional interests in
connection with a reverse stock split, and (iv) any acquisition subject
to the control of an issuer or an affiliate of such issuer;
(3) A Rule 13e-3 transaction is any transaction or series of
transactions involving one or more of the transactions described in
paragraph (a)(3)(i) of this section which has either a reasonable
likelihood or a purpose of producing, either directly or indirectly, any
of the effects described in paragraph (a)(3)(ii) of this section;
(i) The transactions referred to in paragraph (a)(3) of this section
are:
(A) A purchase of any equity security by the issuer of such security
or by an affiliate of such issuer;
(B) A tender offer for or request or invitation for tenders of any
equity security made by the issuer of such class of securities or by an
affiliate of such issuer; or
(C) A solicitation subject to Regulation 14A [Sec. Sec. 240.14a-1
to 240.14b-1] of any proxy, consent or authorization of, or a
distribution subject to Regulation 14C [Sec. Sec. 240.14c-1 to 14c-101]
of information statements to, any equity security holder by the issuer
of the class of securities or by an affiliate of such issuer, in
connection with: a merger, consolidation, reclassification,
recapitalization, reorganization or similar corporate transaction of an
issuer or between an issuer (or its subsidiaries) and its affiliate; a
sale of substantially all the assets of an issuer to its affiliate or
group of affiliates; or a reverse stock split of any class of equity
securities of the issuer involving the purchase of fractional interests.
(ii) The effects referred to in paragraph (a)(3) of this section
are:
[[Page 202]]
(A) Causing any class of equity securities of the issuer which is
subject to section 12(g) or section 15(d) of the Act to become eligible
for termination of registration under Rule 12g-4 (Sec. 240.12g-4) or
Rule 12h-6 (Sec. 240.12h-6), or causing the reporting obligations with
respect to such class to become eligible for termination under Rule 12h-
6 (Sec. 240.12h-6); or suspension under Rule 12h-3 (Sec. 240.12h-3) or
section 15(d); or
(B) Causing any class of equity securities of the issuer which is
either listed on a national securities exchange or authorized to be
quoted in an inter-dealer quotation system of a registered national
securities association to be neither listed on any national securities
exchange nor authorized to be quoted on an inter-dealer quotation system
of any registered national securities association.
(4) An unaffiliated security holder is any security holder of an
equity security subject to a Rule 13e-3 transaction who is not an
affiliate of the issuer of such security.
(b) Application of section to an issuer (or an affiliate of such
issuer) subject to section 12 of the Act. (1) It shall be a fraudulent,
deceptive or manipulative act or practice, in connection with a Rule
13e-3 transaction, for an issuer which has a class of equity securities
registered pursuant to section 12 of the Act or which is a closed-end
investment company registered under the Investment Company Act of 1940,
or an affiliate of such issuer, directly or indirectly
(i) To employ any device, scheme or artifice to defraud any person;
(ii) To make any untrue statement of a material fact or to omit to
state a material fact necessary in order to make the statements made, in
light of the circumstances under which they were made, not misleading;
or
(iii) To engage in any act, practice or course of business which
operates or would operate as a fraud or deceit upon any person.
(2) As a means reasonably designed to prevent fraudulent, deceptive
or manipulative acts or practices in connection with any Rule 13e-3
transaction, it shall be unlawful for an issuer which has a class of
equity securities registered pursuant to section 12 of the Act, or an
affiliate of such issuer, to engage, directly or indirectly, in a Rule
13e-3 transaction unless:
(i) Such issuer or affiliate complies with the requirements of
paragraphs (d), (e) and (f) of this section; and
(ii) The Rule 13e-3 transaction is not in violation of paragraph
(b)(1) of this section.
(c) Application of section to an issuer (or an affiliate of such
issuer) subject to section 15(d) of the Act. (1) It shall be unlawful as
a fraudulent, deceptive or manipulative act or practice for an issuer
which is required to file periodic reports pursuant to Section 15(d) of
the Act, or an affiliate of such issuer, to engage, directly or
indirectly, in a Rule 13e-3 transaction unless such issuer or affiliate
complies with the requirements of paragraphs (d), (e) and (f) of this
section.
(2) An issuer or affiliate which is subject to paragraph (c)(1) of
this section and which is soliciting proxies or distributing information
statements in connection with a transaction described in paragraph
(a)(3)(i)(A) of this section may elect to use the timing procedures for
conducting a solicitation subject to Regulation 14A (Sec. Sec. 240.14a-
1 to 240.14b-1) or a distribution subject to Regulation 14C (Sec. Sec.
240.14c-1 to 240.14c-101) in complying with paragraphs (d), (e) and (f)
of this section, provided that if an election is made, such solicitation
or distribution is conducted in accordance with the requirements of the
respective regulations, including the filing of preliminary copies of
soliciting materials or an information statement at the time specified
in Regulation 14A or 14C, respectively.
(d) Material required to be filed. The issuer or affiliate engaging
in a Rule 13e-3 transaction must file with the Commission:
(1) A Schedule 13E-3 (Sec. 240.13e-100), including all exhibits;
(2) An amendment to Schedule 13E-3 reporting promptly any material
changes in the information set forth in the schedule previously filed;
and
(3) A final amendment to Schedule 13E-3 reporting promptly the
results of the Rule 13e-3 transaction.
(e) Disclosure of information to security holders. (1) In addition
to disclosing the
[[Page 203]]
information required by any other applicable rule or regulation under
the federal securities laws, the issuer or affiliate engaging in a Sec.
240.13e-3 transaction must disclose to security holders of the class
that is the subject of the transaction, as specified in paragraph (f) of
this section, the following:
(i) The information required by Item 1 of Schedule 13E-3 (Sec.
240.13e-100) (Summary Term Sheet);
(ii) The information required by Items 7, 8 and 9 of Schedule 13E-3,
which must be prominently disclosed in a ``Special Factors'' section in
the front of the disclosure document;
(iii) A prominent legend on the outside front cover page that
indicates that neither the Securities and Exchange Commission nor any
state securities commission has: approved or disapproved of the
transaction; passed upon the merits or fairness of the transaction; or
passed upon the adequacy or accuracy of the disclosure in the document.
The legend also must make it clear that any representation to the
contrary is a criminal offense;
(iv) The information concerning appraisal rights required by Sec.
229.1016(f) of this chapter; and
(v) The information required by the remaining items of Schedule 13E-
3, except for Sec. 229.1016 of this chapter (exhibits), or a fair and
adequate summary of the information.
Instructions to paragraph (e)(1): 1. If the Rule 13e-3 transaction
also is subject to Regulation 14A (Sec. Sec. 240.14a-1 through 240.14b-
2) or 14C (Sec. Sec. 240.14c-1 through 240.14c-101), the registration
provisions and rules of the Securities Act of 1933, Regulation 14D or
Sec. 240.13e-4, the information required by paragraph (e)(1) of this
section must be combined with the proxy statement, information
statement, prospectus or tender offer material sent or given to security
holders.
2. If the Rule 13e-3 transaction involves a registered securities
offering, the legend required by Sec. 229.501(b)(7) of this chapter
must be combined with the legend required by paragraph (e)(1)(iii) of
this section.
3. The required legend must be written in clear, plain language.
(2) If there is any material change in the information previously
disclosed to security holders, the issuer or affiliate must disclose the
change promptly to security holders as specified in paragraph
(f)(1)(iii) of this section.
(f) Dissemination of information to security holders. (1) If the
Rule 13e-3 transaction involves a purchase as described in paragraph
(a)(3)(i)(A) of this section or a vote, consent, authorization, or
distribution of information statements as described in paragraph
(a)(3)(i)(C) of this section, the issuer or affiliate engaging in the
Rule 13e-3 transaction shall:
(i) Provide the information required by paragraph (e) of this
section: (A) In accordance with the provisions of any applicable Federal
or State law, but in no event later than 20 days prior to: any such
purchase; any such vote, consent or authorization; or with respect to
the distribution of information statements, the meeting date, or if
corporate action is to be taken by means of the written authorization or
consent of security holders, the earliest date on which corporate action
may be taken: Provided, however, That if the purchase subject to this
section is pursuant to a tender offer excepted from Rule 13e-4 by
paragraph (g)(5) of Rule 13e-4, the information required by paragraph
(e) of this section shall be disseminated in accordance with paragraph
(e) of Rule 13e-4 no later than 10 business days prior to any purchase
pursuant to such tender offer, (B) to each person who is a record holder
of a class of equity securities subject to the Rule 13e-3 transaction as
of a date not more than 20 days prior to the date of dissemination of
such information.
(ii) If the issuer or affiliate knows that securities of the class
of securities subject to the Rule 13e-3 transaction are held of record
by a broker, dealer, bank or voting trustee or their nominees, such
issuer or affiliate shall (unless Rule 14a-13(a) [Sec. 240.14a-13(a)]
or 14c-7 [Sec. 240.14c-7] is applicable) furnish the number of copies
of the information required by paragraph (e) of this section that are
requested by such persons (pursuant to inquiries by or on behalf of the
issuer or affiliate), instruct such persons to forward such information
to the beneficial owners of such securities in a timely manner and
undertake to pay the reasonable expenses incurred by such persons in
forwarding such information; and
(iii) Promptly disseminate disclosure of material changes to the
information
[[Page 204]]
required by paragraph (d) of this section in a manner reasonably
calculated to inform security holders.
(2) If the Rule 13e-3 transaction is a tender offer or a request or
invitation for tenders of equity securities which is subject to
Regulation 14D [Sec. Sec. 240.14d-1 to 240.14d-101] or Rule 13e-4
[Sec. 240.13e-4], the tender offer containing the information required
by paragraph (e) of this section, and any material change with respect
thereto, shall be published, sent or given in accordance with Regulation
14D or Rule 13e-4, respectively, to security holders of the class of
securities being sought by the issuer or affiliate.
(g) Exceptions. This section shall not apply to:
(1) Any Rule 13e-3 transaction by or on behalf of a person which
occurs within one year of the date of termination of a tender offer in
which such person was the bidder and became an affiliate of the issuer
as a result of such tender offer: Provided, That the consideration
offered to unaffiliated security holders in such Rule 13e-3 transaction
is at least equal to the highest consideration offered during such
tender offer and Provided further, That:
(i) If such tender offer was made for any or all securities of a
class of the issuer;
(A) Such tender offer fully disclosed such person's intention to
engage in a Rule 13e-3 transaction, the form and effect of such
transaction and, to the extent known, the proposed terms thereof; and
(B) Such Rule 13e-3 transaction is substantially similar to that
described in such tender offer; or
(ii) If such tender offer was made for less than all the securities
of a class of the issuer:
(A) Such tender offer fully disclosed a plan of merger, a plan of
liquidation or a similar binding agreement between such person and the
issuer with respect to a Rule 13e-3 transaction; and
(B) Such Rule 13e-3 transaction occurs pursuant to the plan of
merger, plan of liquidation or similar binding agreement disclosed in
the bidder's tender offer.
(2) Any Rule 13e-3 transaction in which the security holders are
offered or receive only an equity security Provided, That:
(i) Such equity security has substantially the same rights as the
equity security which is the subject of the Rule 13e-3 transaction
including, but not limited to, voting, dividends, redemption and
liquidation rights except that this requirement shall be deemed to be
satisfied if unaffiliated security holders are offered common stock;
(ii) Such equity security is registered pursuant to section 12 of
the Act or reports are required to be filed by the issuer thereof
pursuant to section 15(d) of the Act; and
(iii) If the security which is the subject of the Rule 13e-3
transaction was either listed on a national securities exchange or
authorized to be quoted in an interdealer quotation system of a
registered national securities association, such equity security is
either listed on a national securities exchange or authorized to be
quoted in an inter-dealer quotation system of a registered national
securities association.
(3) [Reserved]
(4) Redemptions, calls or similar purchases of an equity security by
an issuer pursuant to specific provisions set forth in the instrument(s)
creating or governing that class of equity securities; or
(5) Any solicitation by an issuer with respect to a plan of
reorganization under Chapter XI of the Bankruptcy Act, as amended, if
made after the entry of an order approving such plan pursuant to section
1125(b) of that Act and after, or concurrently with, the transmittal of
information concerning such plan as required by section 1125(b) of that
Act.
(6) Any tender offer or business combination made in compliance with
Sec. 230.802 of this chapter, Sec. 240.13e-4(h)(8) or Sec. 240.14d-
1(c) or any other kind of transaction that otherwise meets the
conditions for reliance on the cross-border exemptions set forth in
Sec. 240.13e-4(h)(8), Sec. 240.14d-1(c) or Sec. 230.802 of this
chapter except for the fact that it is not technically subject to those
rules.
Instruction to Sec. 240.13e-3(g)(6): To the extent applicable, the
acquiror must comply with the conditions set forth in Sec. 230.802 of
this chapter, and Sec. Sec. 240.13e-4(h)(8) and 14d-1(c). If the
acquiror publishes or otherwise
[[Page 205]]
disseminates an informational document to the holders of the subject
securities in connection with the transaction, the acquiror must furnish
an English translation of that informational document, including any
amendments thereto, to the Commission under cover of Form CB (Sec.
239.800 of this chapter) by the first business day after publication or
dissemination. If the acquiror is a foreign entity, 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 the Form CB to appoint an agent for service in
the United States.
[44 FR 46741, Aug. 8, 1979, as amended at 47 FR 11466, Mar. 16, 1982; 48
FR 19877, May 3, 1983; 48 FR 34253, July 28, 1983; 51 FR 42059, Nov. 20,
1986; 61 FR 24656, May 15, 1996; 64 FR 61403, 64 FR 61452, Nov. 10,
1999; 73 FR 17813, Apr. 1, 2008; 73 FR 58323, Oct. 6, 2008; 73 FR 60090,
Oct. 9, 2008]
Sec. 240.13e-4 Tender offers by issuers.
(a) Definitions. Unless the context otherwise requires, all terms
used in this section and in Schedule TO (Sec. 240.14d-100) shall have
the same meaning as in the Act or elsewhere in the General Rules and
Regulations thereunder. In addition, the following definitions shall
apply:
(1) The term issuer means any issuer which has a class of equity
security registered pursuant to section 12 of the Act, or which is
required to file periodic reports pursuant to section 15(d) of the Act,
or which is a closed-end investment company registered under the
Investment Company Act of 1940.
(2) The term issuer tender offer refers to a tender offer for, or a
request or invitation for tenders of, any class of equity security, made
by the issuer of such class of equity security or by an affiliate of
such issuer.
(3) As used in this section and in Schedule TO (Sec. 240.14d-100),
the term business day means any day, other than Saturday, Sunday, or a
Federal holiday, and shall consist of the time period from 12:01 a.m.
through 12:00 midnight Eastern Time. In computing any time period under
this Rule or Schedule TO, the date of the event that begins the running
of such time period shall be included except that if such event occurs
on other than a business day such period shall begin to run on and shall
include the first business day thereafter.
(4) The term commencement means 12:01 a.m. on the date that the
issuer or affiliate has first published, sent or given the means to
tender to security holders. For purposes of this section, the means to
tender includes the transmittal form or a statement regarding how the
transmittal form may be obtained.
(5) The term termination means the date after which securities may
not be tendered pursuant to an issuer tender offer.
(6) The term security holders means holders of record and beneficial
owners of securities of the class of equity security which is the
subject of an issuer tender offer.
(7) The term security position listing means, with respect to the
securities of any issuer held by a registered clearing agency in the
name of the clearing agency or its nominee, a list of those participants
in the clearing agency on whose behalf the clearing agency holds the
issuer's securities and of the participants' respective positions in
such securities as of a specified date.
(b) Filing, disclosure and dissemination. As soon as practicable on
the date of commencement of the issuer tender offer, the issuer or
affiliate making the issuer tender offer must comply with:
(1) The filing requirements of paragraph (c)(2) of this section;
(2) The disclosure requirements of paragraph (d)(1) of this section;
and
(3) The dissemination requirements of paragraph (e) of this section.
(c) Material required to be filed. The issuer or affiliate making
the issuer tender offer must file with the Commission:
(1) All written communications made by the issuer or affiliate
relating to the issuer tender offer, from and including the first public
announcement, as soon as practicable on the date of the communication;
(2) A Schedule TO (Sec. 240.14d-100), including all exhibits;
(3) An amendment to Schedule TO (Sec. 240.14d-100) reporting
promptly any material changes in the information set forth in the
schedule previously filed; and
(4) A final amendment to Schedule TO (Sec. 240.14d-100) reporting
promptly the results of the issuer tender offer.
[[Page 206]]
Instructions to Sec. 240.13e-4(c): 1. Pre-commencement
communications must be filed under cover of Schedule TO (Sec. 240.14d-
100) and the box on the cover page of the schedule must be marked.
2. Any communications made in connection with an exchange offer
registered under the Securities Act of 1933 need only be filed under
Sec. 230.425 of this chapter and will be deemed filed under this
section.
3. Each pre-commencement written communication must include a
prominent legend in clear, plain language advising security holders to
read the tender offer statement when it is available because it contains
important information. The legend also must advise investors that they
can get the tender offer statement and other filed documents for free at
the Commission's web site and explain which documents are free from the
issuer.
4. See Sec. Sec. 230.135, 230.165 and 230.166 of this chapter for
pre-commencement communications made in connection with registered
exchange offers.
5. ``Public announcement'' is any oral or written communication by
the issuer, affiliate or any person authorized to act on their behalf
that is reasonably designed to, or has the effect of, informing the
public or security holders in general about the issuer tender offer.
(d) Disclosure of tender offer information to security holders. (1)
The issuer or affiliate making the issuer tender offer must disclose, in
a manner prescribed by paragraph (e)(1) of this section, the following:
(i) The information required by Item 1 of Schedule TO (Sec.
240.14d-100) (summary term sheet); and
(ii) The information required by the remaining items of Schedule TO
for issuer tender offers, except for Item 12 (exhibits), or a fair and
adequate summary of the information.
(2) If there are any material changes in the information previously
disclosed to security holders, the issuer or affiliate must disclose the
changes promptly to security holders in a manner specified in paragraph
(e)(3) of this section.
(3) If the issuer or affiliate disseminates the issuer tender offer
by means of summary publication as described in paragraph (e)(1)(iii) of
this section, the summary advertisement must not include a transmittal
letter that would permit security holders to tender securities sought in
the offer and must disclose at least the following information:
(i) The identity of the issuer or affiliate making the issuer tender
offer;
(ii) The information required by Sec. 229.1004(a)(1) and Sec.
229.1006(a) of this chapter;
(iii) Instructions on how security holders can obtain promptly a
copy of the statement required by paragraph (d)(1) of this section, at
the issuer or affiliate's expense; and
(iv) A statement that the information contained in the statement
required by paragraph (d)(1) of this section is incorporated by
reference.
(e) Dissemination of tender offers to security holders. An issuer
tender offer will be deemed to be published, sent or given to security
holders if the issuer or affiliate making the issuer tender offer
complies fully with one or more of the methods described in this
section.
(1) For issuer tender offers in which the consideration offered
consists solely of cash and/or securities exempt from registration under
section 3 of the Securities Act of 1933 (15 U.S.C. 77c):
(i) Dissemination of cash issuer tender offers by long-form
publication: By making adequate publication of the information required
by paragraph (d)(1) of this section in a newspaper or newspapers, on the
date of commencement of the issuer tender offer.
(ii) Dissemination of any issuer tender offer by use of stockholder
and other lists:
(A) By mailing or otherwise furnishing promptly a statement
containing the information required by paragraph (d)(1) of this section
to each security holder whose name appears on the most recent
stockholder list of the issuer;
(B) By contacting each participant on the most recent security
position listing of any clearing agency within the possession or access
of the issuer or affiliate making the issuer tender offer, and making
inquiry of each participant as to the approximate number of beneficial
owners of the securities sought in the offer that are held by the
participant;
(C) By furnishing to each participant a sufficient number of copies
of the statement required by paragraph (d)(1)
[[Page 207]]
of this section for transmittal to the beneficial owners; and
(D) By agreeing to reimburse each participant promptly for its
reasonable expenses incurred in forwarding the statement to beneficial
owners.
(iii) Dissemination of certain cash issuer tender offers by summary
publication:
(A) If the issuer tender offer is not subject to Sec. 240.13e-3, by
making adequate publication of a summary advertisement containing the
information required by paragraph (d)(3) of this section in a newspaper
or newspapers, on the date of commencement of the issuer tender offer;
and
(B) By mailing or otherwise furnishing promptly the statement
required by paragraph (d)(1) of this section and a transmittal letter to
any security holder who requests a copy of the statement or transmittal
letter.
Instruction to paragraph (e)(1): For purposes of paragraphs
(e)(1)(i) and (e)(1)(iii) of this section, adequate publication of the
issuer tender offer may require publication in a newspaper with a
national circulation, a newspaper with metropolitan or regional
circulation, or a combination of the two, depending upon the facts and
circumstances involved.
(2) For tender offers in which the consideration consists solely or
partially of securities registered under the Securities Act of 1933, a
registration statement containing all of the required information,
including pricing information, has been filed and a preliminary
prospectus or a prospectus that meets the requirements of Section 10(a)
of the Securities Act (15 U.S.C. 77j(a)), including a letter of
transmittal, is delivered to security holders. However, for going-
private transactions (as defined by Sec. 240.13e-3) and roll-up
transactions (as described by Item 901 of Regulation S-K (Sec. 229.901
of this chapter)), a registration statement registering the securities
to be offered must have become effective and only a prospectus that
meets the requirements of Section 10(a) of the Securities Act may be
delivered to security holders on the date of commencement.
Instructions to paragraph (e)(2): 1. If the prospectus is being
delivered by mail, mailing on the date of commencement is sufficient.
2. A preliminary prospectus used under this section may not omit
information under Sec. 230.430 or Sec. 230.430A of this chapter.
3. If a preliminary prospectus is used under this section and the
issuer must disseminate material changes, the tender offer must remain
open for the period specified in paragraph (e)(3) of this section.
4. If a preliminary prospectus is used under this section, tenders
may be requested in accordance with Sec. 230.162(a) of this chapter.
(3) If a material change occurs in the information published, sent
or given to security holders, the issuer or affiliate must disseminate
promptly disclosure of the change in a manner reasonably calculated to
inform security holders of the change. In a registered securities offer
where the issuer or affiliate disseminates the preliminary prospectus as
permitted by paragraph (e)(2) of this section, the offer must remain
open from the date that material changes to the tender offer materials
are disseminated to security holders, as follows:
(i) Five business days for a prospectus supplement containing a
material change other than price or share levels;
(ii) Ten business days for a prospectus supplement containing a
change in price, the amount of securities sought, the dealer's
soliciting fee, or other similarly significant change;
(iii) Ten business days for a prospectus supplement included as part
of a post-effective amendment; and
(iv) Twenty business days for a revised prospectus when the initial
prospectus was materially deficient.
(f) Manner of making tender offer. (1) The issuer tender offer,
unless withdrawn, shall remain open until the expiration of:
(i) At least twenty business days from its commencement; and
(ii) At least ten business days from the date that notice of an
increase or decrease in the percentage of the class of securities being
sought or the consideration offered or the dealer's soliciting fee to be
given is first published, sent or given to security holders.
Provided, however, That, for purposes of this paragraph, the acceptance
for payment by the issuer or affiliate of an additional amount of
securities not to exceed two percent of the class of securities that is
the subject of the tender
[[Page 208]]
offer shall not be deemed to be an increase. For purposes of this
paragraph, the percentage of a class of securities shall be calculated
in accordance with section 14(d)(3) of the Act.
(2) The issuer or affiliate making the issuer tender offer shall
permit securities tendered pursuant to the issuer tender offer to be
withdrawn:
(i) At any time during the period such issuer tender offer remains
open; and
(ii) If not yet accepted for payment, after the expiration of forty
business days from the commencement of the issuer tender offer.
(3) If the issuer or affiliate makes a tender offer for less than
all of the outstanding equity securities of a class, and if a greater
number of securities is tendered pursuant thereto than the issuer or
affiliate is bound or willing to take up and pay for, the securities
taken up and paid for shall be taken up and paid for as nearly as may be
pro rata, disregarding fractions, according to the number of securities
tendered by each security holder during the period such offer remains
open; Provided, however, That this provision shall not prohibit the
issuer or affiliate making the issuer tender offer from:
(i) Accepting all securities tendered by persons who own,
beneficially or of record, an aggregate of not more than a specified
number which is less than one hundred shares of such security and who
tender all their securities, before prorating securities tendered by
others; or
(ii) Accepting by lot securities tendered by security holders who
tender all securities held by them and who, when tendering their
securities, elect to have either all or none or at least a minimum
amount or none accepted, if the issuer or affiliate first accepts all
securities tendered by security holders who do not so elect;
(4) In the event the issuer or affiliate making the issuer tender
increases the consideration offered after the issuer tender offer has
commenced, such issuer or affiliate shall pay such increased
consideration to all security holders whose tendered securities are
accepted for payment by such issuer or affiliate.
(5) The issuer or affiliate making the tender offer shall either pay
the consideration offered, or return the tendered securities, promptly
after the termination or withdrawal of the tender offer.
(6) Until the expiration of at least ten business days after the
date of termination of the issuer tender offer, neither the issuer nor
any affiliate shall make any purchases, otherwise than pursuant to the
tender offer, of:
(i) Any security which is the subject of the issuer tender offer, or
any security of the same class and series, or any right to purchase any
such securities; and
(ii) In the case of an issuer tender offer which is an exchange
offer, any security being offered pursuant to such exchange offer, or
any security of the same class and series, or any right to purchase any
such security.
(7) The time periods for the minimum offering periods pursuant to
this section shall be computed on a concurrent as opposed to a
consecutive basis.
(8) No issuer or affiliate shall make a tender offer unless:
(i) The tender offer is open to all security holders of the class of
securities subject to the tender offer; and
(ii) The consideration paid to any security holder for securities
tendered in the tender offer is the highest consideration paid to any
other security holder for securities tendered in the tender offer.
(9) Paragraph (f)(8)(i) of this section shall not:
(i) Affect dissemination under paragraph (e) of this section; or
(ii) Prohibit an issuer or affiliate from making a tender offer
excluding all security holders in a state where the issuer or affiliate
is prohibited from making the tender offer by administrative or judicial
action pursuant to a state statute after a good faith effort by the
issuer or affiliate to comply with such statute.
(10) Paragraph (f)(8)(ii) of this section shall not prohibit the
offer of more than one type of consideration in a tender offer, provided
that:
(i) Security holders are afforded equal right to elect among each of
the types of consideration offered; and
[[Page 209]]
(ii) The highest consideration of each type paid to any security
holder is paid to any other security holder receiving that type of
consideration.
(11) If the offer and sale of securities constituting consideration
offered in an issuer tender offer is prohibited by the appropriate
authority of a state after a good faith effort by the issuer or
affiliate to register or qualify the offer and sale of such securities
in such state:
(i) The issuer or affiliate may offer security holders in such state
an alternative form of consideration; and
(ii) Paragraph (f)(10) of this section shall not operate to require
the issuer or affiliate to offer or pay the alternative form of
consideration to security holders in any other state.
(12)(i) Paragraph (f)(8)(ii) of this section shall not prohibit the
negotiation, execution or amendment of an employment compensation,
severance or other employee benefit arrangement, or payments made or to
be made or benefits granted or to be granted according to such an
arrangement, with respect to any security holder of the issuer, where
the amount payable under the arrangement:
(A) Is being paid or granted as compensation for past services
performed, future services to be performed, or future services to be
refrained from performing, by the security holder (and matters
incidental thereto); and
(B) Is not calculated based on the number of securities tendered or
to be tendered in the tender offer by the security holder.
(ii) The provisions of paragraph (f)(12)(i) of this section shall be
satisfied and, therefore, pursuant to this non-exclusive safe harbor,
the negotiation, execution or amendment of an arrangement and any
payments made or to be made or benefits granted or to be granted
according to that arrangement shall not be prohibited by paragraph
(f)(8)(ii) of this section, if the arrangement is approved as an
employment compensation, severance or other employee benefit arrangement
solely by independent directors as follows:
(A) The compensation committee or a committee of the board of
directors that performs functions similar to a compensation committee of
the issuer approves the arrangement, regardless of whether the issuer is
a party to the arrangement, or, if an affiliate is a party to the
arrangement, the compensation committee or a committee of the board of
directors that performs functions similar to a compensation committee of
the affiliate approves the arrangement; or
(B) If the issuer's or affiliate's board of directors, as
applicable, does not have a compensation committee or a committee of the
board of directors that performs functions similar to a compensation
committee or if none of the members of the issuer's or affiliate's
compensation committee or committee that performs functions similar to a
compensation committee is independent, a special committee of the board
of directors formed to consider and approve the arrangement approves the
arrangement; or
(C) If the issuer or affiliate, as applicable, is a foreign private
issuer, any or all members of the board of directors or any committee of
the board of directors authorized to approve employment compensation,
severance or other employee benefit arrangements under the laws or
regulations of the home country approves the arrangement.
Instructions to paragraph (f)(12)(ii): For purposes of determining
whether the members of the committee approving an arrangement in
accordance with the provisions of paragraph (f)(12)(ii) of this section
are independent, the following provisions shall apply:
1. If the issuer or affiliate, as applicable, is a listed issuer (as
defined in Sec. 240.10A-3 of this chapter) whose securities are listed
either on a national securities exchange registered pursuant to section
6(a) of the Exchange Act (15 U.S.C. 78f(a)) or in an inter-dealer
quotation system of a national securities association registered
pursuant to section 15A(a) of the Exchange Act (15 U.S.C. 78o-3(a)) that
has independence requirements for compensation committee members that
have been approved by the Commission (as those requirements may be
modified or supplemented), apply the issuer's or affiliate's definition
of independence that it uses for determining that the members of the
compensation committee are independent in compliance with the listing
standards applicable to compensation committee members of the listed
issuer.
2. If the issuer or affiliate, as applicable, is not a listed issuer
(as defined in Sec. 240.10A-3 of
[[Page 210]]
this chapter), apply the independence requirements for compensation
committee members of a national securities exchange registered pursuant
to section 6(a) of the Exchange Act (15 U.S.C. 78f(a)) or an inter-
dealer quotation system of a national securities association registered
pursuant to section 15A(a) of the Exchange Act (15 U.S.C. 78o-3(a)) that
have been approved by the Commission (as those requirements may be
modified or supplemented). Whatever definition the issuer or affiliate,
as applicable, chooses, it must apply that definition consistently to
all members of the committee approving the arrangement.
3. Notwithstanding Instructions 1 and 2 to paragraph (f)(12)(ii), if
the issuer or affiliate, as applicable, is a closed-end investment
company registered under the Investment Company Act of 1940, a director
is considered to be independent if the director is not, other than in
his or her capacity as a member of the board of directors or any board
committee, an ``interested person'' of the investment company, as
defined in section 2(a)(19) of the Investment Company Act of 1940 (15
U.S.C. 80a-2(a)(19)).
4. If the issuer or affiliate, as applicable, is a foreign private
issuer, apply either the independence standards set forth in
Instructions 1 and 2 to paragraph (f)(12)(ii) or the independence
requirements of the laws, regulations, codes or standards of the home
country of the issuer or affiliate, as applicable, for members of the
board of directors or the committee of the board of directors approving
the arrangement.
5. A determination by the issuer's or affiliate's board of
directors, as applicable, that the members of the board of directors or
the committee of the board of directors, as applicable, approving an
arrangement in accordance with the provisions of paragraph (f)(12)(ii)
are independent in accordance with the provisions of this instruction to
paragraph (f)(12)(ii) shall satisfy the independence requirements of
paragraph (f)(12)(ii).
Instruction to paragraph (f)(12): The fact that the provisions of
paragraph (f)(12) of this section extend only to employment
compensation, severance and other employee benefit arrangements and not
to other arrangements, such as commercial arrangements, does not raise
any inference that a payment under any such other arrangement
constitutes consideration paid for securities in a tender offer.
(13) Electronic filings. If the issuer or affiliate is an electronic
filer, the minimum offering periods set forth in paragraph (f)(1) of
this section shall be tolled for any period during which it fails to
file in electronic format, absent a hardship exemption (Sec. Sec.
232.201 and 232.202 of this chapter), the Schedule TO (Sec. 240.14d-
100), the tender offer material specified in Item 1016(a)(1) of
Regulation M-A (Sec. 229.1016(a)(1) of this chapter), and any
amendments thereto. If such documents were filed in paper pursuant to a
hardship exemption (see Sec. 232.201 and Sec. 232.202 of this
chapter), the minimum offering periods shall be tolled for any period
during which a required confirming electronic copy of such Schedule and
tender offer material is delinquent.
(g) The requirements of section 13(e) (1) of the Act and Rule 13e-4
and Schedule TO (Sec. 240.14d-100) thereunder shall be deemed satisfied
with respect to any issuer tender offer, including any exchange offer,
where the issuer is incorporated or organized under the laws of Canada
or any Canadian province or territory, is a foreign private issuer, and
is not an investment company registered or required to be registered
under the Investment Company Act of 1940, if less than 40 percent of the
class of securities that is the subject of the tender offer is held by
U. S. holders, and the tender offer is subject to, and the issuer
complies with, the laws, regulations and policies of Canada and/or any
of its provinces or territories governing the conduct of the offer
(unless the issuer has received an exemption(s) from, and the issuer
tender offer does not comply with, requirements that otherwise would be
prescribed by this section), provided that:
(1) Where the consideration for an issuer tender offer subject to
this paragraph consists solely of cash, the entire disclosure document
or documents required to be furnished to holders of the class of
securities to be acquired shall be filed with the Commission on Schedule
13E-4F (Sec. 240.13e-102) and disseminated to shareholders residing in
the United States in accordance with such Canadian laws, regulations and
policies; or
(2) Where the consideration for an issuer tender offer subject to
this paragraph includes securities to be issued pursuant to the offer,
any registration statement and/or prospectus relating
[[Page 211]]
thereto shall be filed with the Commission along with the Schedule 13E-
4F referred to in paragraph (g)(1) of this section, and shall be
disseminated, together with the home jurisdiction document(s)
accompanying such Schedule, to shareholders of the issuer residing in
the United States in accordance with such Canadian laws, regulations and
policies.
Note: Notwithstanding the grant of an exemption from one or more of
the applicable Canadian regulatory provisions imposing requirements that
otherwise would be prescribed by this section, the issuer tender offer
will be eligible to proceed in accordance with the requirements of this
section if the Commission by order determines that the applicable
Canadian regulatory provisions are adequate to protect the interest of
investors.
(h) This section shall not apply to:
(1) Calls or redemptions of any security in accordance with the
terms and conditions of its governing instruments;
(2) Offers to purchase securities evidenced by a scrip certificate,
order form or similar document which represents a fractional interest in
a share of stock or similar security;
(3) Offers to purchase securities pursuant to a statutory procedure
for the purchase of dissenting security holders' securities;
(4) Any tender offer which is subject to section 14(d) of the Act;
(5) Offers to purchase from security holders who own an aggregate of
not more than a specified number of shares that is less than one
hundred: Provided, however, That:
(i) The offer complies with paragraph (f)(8)(i) of this section with
respect to security holders who own a number of shares equal to or less
than the specified number of shares, except that an issuer can elect to
exclude participants in a plan as that term is defined in Sec. 242.100
of this chapter, or to exclude security holders who do not own their
shares as of a specified date determined by the issuer; and
(ii) The offer complies with paragraph (f)(8)(ii) of this section or
the consideration paid pursuant to the offer is determined on the basis
of a uniformly applied formula based on the market price of the subject
security;
(6) An issuer tender offer made solely to effect a rescission offer:
Provided, however, That the offer is registered under the Securities Act
of 1933 (15 U.S.C. 77a et seq.), and the consideration is equal to the
price paid by each security holder, plus legal interest if the issuer
elects to or is required to pay legal interest;
(7) Offers by closed-end management investment companies to
repurchase equity securities pursuant to Sec. 270.23c-3 of this
chapter;
(8) Cross-border tender offers (Tier I). Any issuer tender offer
(including any exchange offer) where the issuer is a foreign private
issuer as defined in Sec. 240.3b-4 if the following conditions are
satisfied.
(i) Except in the case of an issuer tender offer that is commenced
during the pendency of a tender offer made by a third party in reliance
on Sec. 240.14d-1(c), U.S. holders do not hold more than 10 percent of
the subject class sought in the offer (as determined under Instructions
2 or 3 to paragraph (h)(8) and paragraph (i) of this section);
(ii) The issuer or affiliate must permit U.S. holders to participate
in the offer on terms at least as favorable as those offered any other
holder of the same class of securities that is the subject of the offer;
however:
(A) Registered exchange offers. If the issuer or affiliate offers
securities registered under the Securities Act of 1933 (15 U.S.C. 77a et
seq.), the issuer or affiliate need not extend the offer to security
holders in those states or jurisdictions that prohibit the offer or sale
of the securities after the issuer or affiliate has made a good faith
effort to register or qualify the offer and sale of securities in that
state or jurisdiction, except that the issuer or affiliate must offer
the same cash alternative to security holders in any such state or
jurisdiction that it has offered to security holders in any other state
or jurisdiction.
(B) Exempt exchange offers. If the issuer or affiliate offers
securities exempt from registration under Sec. 230.802 of this chapter,
the issuer or affiliate need not extend the offer to security holders in
those states or jurisdictions that require registration or
qualification, except that the issuer or affiliate
[[Page 212]]
must offer the same cash alternative to security holders in any such
state or jurisdiction that it has offered to security holders in any
other state or jurisdiction.
(C) Cash only consideration. The issuer or affiliate may offer U.S.
holders cash only consideration for the tender of the subject
securities, notwithstanding the fact that the issuer or affiliate is
offering security holders outside the United States a consideration that
consists in whole or in part of securities of the issuer or affiliate,
if the issuer or affiliate has a reasonable basis for believing that the
amount of cash is substantially equivalent to the value of the
consideration offered to non-U.S. holders, and either of the following
conditions are satisfied:
(1) The offered security is a ``margin security'' within the meaning
of Regulation T (12 CFR 220.2) and the issuer or affiliate undertakes to
provide, upon the request of any U.S. holder or the Commission staff,
the closing price and daily trading volume of the security on the
principal trading market for the security as of the last trading day of
each of the six months preceding the announcement of the offer and each
of the trading days thereafter; or
(2) If the offered security is not a ``margin security'' within the
meaning of Regulation T (12 CFR 220.2), the issuer or affiliate
undertakes to provide, upon the request of any U.S. holder or the
Commission staff, an opinion of an independent expert stating that the
cash consideration offered to U.S. holders is substantially equivalent
to the value of the consideration offered security holders outside the
United States.
(D) Disparate tax treatment. If the issuer or affiliate offers
``loan notes'' solely to offer sellers tax advantages not available in
the United States and these notes are neither listed on any organized
securities market nor registered under the Securities Act of 1933 (15
U.S.C. 77a et seq.), the loan notes need not be offered to U.S. holders.
(iii) Informational documents. (A) If the issuer or affiliate
publishes or otherwise disseminates an informational document to the
holders of the securities in connection with the issuer tender offer
(including any exchange offer), the issuer or affiliate must furnish
that informational document, including any amendments thereto, in
English, to the Commission on Form CB (Sec. 249.480 of this chapter) by
the first business day after publication or dissemination. If the issuer
or affiliate 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.
(B) The issuer or affiliate 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.
(C) If the issuer or affiliate disseminates by publication in its
home jurisdiction, the issuer or affiliate must publish the information
in the United States in a manner reasonably calculated to inform U.S.
holders of the offer.
(iv) 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, may not use this
paragraph (h)(8); or
(9) Any other transaction or transactions, if the Commission, upon
written request or upon its own motion, exempts such transaction or
transactions, either unconditionally, or on specified terms and
conditions, as not constituting a fraudulent, deceptive or manipulative
act or practice comprehended within the purpose of this section.
(i) Cross-border tender offers (Tier II). Any issuer tender offer
(including any exchange offer) that meets the conditions in paragraph
(i)(1) of this section shall be entitled to the exemptive relief
specified in paragraph (i)(2) of this section, provided that such issuer
tender offer complies with all the requirements of this section other
than those for which an exemption has been specifically provided in
paragraph (i)(2) of this section. In addition, any issuer tender offer
(including any exchange offer) subject only to the requirements of
section 14(e) of the Act and Regulation 14E (Sec. Sec. 240.14e-1
through 240.14e-8)
[[Page 213]]
thereunder that meets the conditions in paragraph (i)(1) of this section
also shall be entitled to the exemptive relief specified in paragraph
(i)(2) of this section, to the extent needed under the requirements of
Regulation 14E, so long as the tender offer complies with all
requirements of Regulation 14E other than those for which an exemption
has been specifically provided in paragraph (i)(2) of this section:
(1) Conditions. (i) The issuer is a foreign private issuer as
defined in Sec. 240.3b-4 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.), other than a registered closed-end investment
company; and
(ii) Except in the case of an issuer tender offer commenced during
the pendency of a tender offer made by a third party in reliance on
Sec. 240.14d-1(d), U.S. holders do not hold more than 40 percent of the
class of securities sought in the offer (as determined in accordance
with Instructions 2 or 3 to paragraphs (h)(8) and (i) of this section).
(2) Exemptions. The issuer tender offer shall comply with all
requirements of this section other than the following:
(i) Equal treatment--loan notes. If the issuer or affiliate offers
loan notes solely to offer sellers tax advantages not available in the
United States and these notes are neither listed on any organized
securities market nor registered under the Securities Act (15 U.S.C. 77a
et seq.), the loan notes need not be offered to U.S. holders,
notwithstanding paragraph (f)(8) and (h)(9) of this section.
(ii) Equal treatment--separate U.S. and foreign offers.
Notwithstanding the provisions of paragraph (f)(8) of this section, an
issuer or affiliate conducting an issuer tender offer meeting the
conditions of paragraph (i)(1) of this section may separate the offer
into multiple offers: one offer made to U.S. holders, which also may
include all holders of American Depositary Shares representing interests
in the subject securities, and one or more offers made to non-U.S.
holders. The U.S. offer must be made on terms at least as favorable as
those offered any other holder of the same class of securities that is
the subject of the tender offers. U.S. holders may be included in the
foreign offer(s) only where the laws of the jurisdiction governing such
foreign offer(s) expressly preclude the exclusion of U.S. holders from
the foreign offer(s) and where the offer materials distributed to U.S.
holders fully and adequately disclose the risks of participating in the
foreign offer(s).
(iii) Notice of extensions. Notice of extensions made in accordance
with the requirements of the home jurisdiction law or practice will
satisfy the requirements of Sec. 240.14e-1(d).
(iv) Prompt payment. Payment made in accordance with the
requirements of the home jurisdiction law or practice will satisfy the
requirements of Sec. 240.14e-1(c).
(v) Suspension of withdrawal rights during counting of tendered
securities. The issuer or affiliate may suspend withdrawal rights
required under paragraph (f)(2) of this section at the end of the offer
and during the period that securities tendered into the offer are being
counted, provided that:
(A) The issuer or affiliate has provided an offer period, including
withdrawal rights, for a period of at least 20 U.S. business days;
(B) At the time withdrawal rights are suspended, all offer
conditions have been satisfied or waived, except to the extent that the
issuer or affiliate is in the process of determining whether a minimum
acceptance condition included in the terms of the offer has been
satisfied by counting tendered securities; and
(C) Withdrawal rights are suspended only during the counting process
and are reinstated immediately thereafter, except to the extent that
they are terminated through the acceptance of tendered securities.
(vi) Early termination of an initial offering period. An issuer or
affiliate conducting an issuer tender offer may terminate an initial
offering period, including a voluntary extension of that period, if at
the time the initial offering period and withdrawal rights terminate,
the following conditions are met:
(A) The initial offering period has been open for at least 20 U.S.
business days;
[[Page 214]]
(B) The issuer or affiliate has adequately discussed the possibility
of and the impact of the early termination in the original offer
materials;
(C) The issuer or affiliate provides a subsequent offering period
after the termination of the initial offering period;
(D) All offer conditions are satisfied as of the time when the
initial offering period ends; and
(E) The issuer or affiliate does not terminate the initial offering
period or any extension of that period during any mandatory extension
required under U.S. tender offer rules.
Instructions to paragraph (h)(8) and (i) of this section: 1. Home
jurisdiction means both the jurisdiction of the issuer's incorporation,
organization or chartering and the principal foreign market where the
issuer's securities are listed or quoted.
2. U.S. holder means any security holder resident in the United
States. To determine the percentage of outstanding securities held by
U.S. holders:
i. Calculate the U.S. ownership as of a date no more than 60 days
before and no more than 30 days after the public announcement of the
tender offer. If you are unable to calculate as of a date within these
time frames, the calculation may be made as of the most recent
practicable date before public announcement, but in no event earlier
than 120 days before announcement;
ii. 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 the subject of the tender
offer, such as warrants, options and convertible securities;
iii. Use the method of calculating record ownership in Sec.
240.12g3-2(a), 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, your jurisdiction of incorporation, and the jurisdiction
that is the primary trading market for the subject securities, if
different than your jurisdiction of incorporation;
iv. 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 definition, that the customers are residents of the jurisdiction in
which the nominee has its principal place of business; and
v. Count securities as 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.
3. If you are unable to conduct the analysis of U.S. ownership set
forth in Instruction 2 above, U.S. holders will be presumed to hold 10
percent or less of the outstanding subject securities (40 percent for
Tier II) so long as there is a primary trading market outside the United
States, as defined in Sec. 240.12h-6(f)(5) of this chapter, unless:
i. Average daily trading volume of the subject securities in the
United States for a recent twelve-month period ending on a date no more
than 60 days before the public announcement of the tender offer exceeds
10 percent (or 40 percent) of the average daily trading volume of that
class of securities on a worldwide basis for the same period; or
ii. 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 or any jurisdiction in which the
subject securities trade before the public announcement of the offer
indicates that U.S. holders hold more than 10 percent (or 40 percent) of
the outstanding subject class of securities; or
iii. You know or have reason to know, before the public announcement
of the offer, that the level of U.S. ownership of the subject securities
exceeds 10 percent (or 40 percent) of such securities. As an example,
you are deemed to know information about U.S. ownership of the subject
class of securities that is publicly available and that appears in any
filing with the Commission or any regulatory body in the home
jurisdiction and, if different, the non-U.S. jurisdiction in which the
primary trading market for the subject class of securities is located.
You are also deemed to know information obtained or readily available
from any other source that is reasonably reliable, including from
persons you have retained to advise you about the transaction, as well
as from third-party information providers. These examples are not
intended to be exclusive.
4. United States means the United States of America, its territories
and possessions, any State of the United States, and the District of
Columbia.
5. The exemptions provided by paragraphs (h)(8) and (i) of this
section are not available for any securities transaction or series of
transactions that technically complies with paragraph (h)(8) and (i) of
this section but are part of a plan or scheme to evade the provisions of
this section.
(j)(1) It shall be a fraudulent, deceptive or manipulative act or
practice, in connection with an issuer tender offer,
[[Page 215]]
for an issuer or an affiliate of such issuer, in connection with an
issuer tender offer:
(i) To employ any device, scheme or artifice to defraud any person;
(ii) To make any untrue statement of a material fact or to omit to
state a material fact necessary in order to make the statements made, in
the light of the circumstances under which they were made, not
misleading; or
(iii) To engage in any act, practice or course of business which
operates or would operate as a fraud or deceit upon any person.
(2) As a means reasonably designed to prevent fraudulent, deceptive
or manipulative acts or practices in connection with any issuer tender
offer, it shall be unlawful for an issuer or an affiliate of such issuer
to make an issuer tender offer unless:
(i) Such issuer or affiliate complies with the requirements of
paragraphs (b), (c), (d), (e) and (f) of this section; and
(ii) The issuer tender offer is not in violation of paragraph (j)(1)
of this section.
[44 FR 49410, Aug. 22, 1979]
Editorial Note: For Federal Register citations affecting Sec.
240.13e-4, see the List of CFR Sections Affected, which appears in the
Finding Aids section of the printed volume and at www.govinfo.gov.
Sec. 240.13e-100 Schedule 13E-3, Transaction statement under
section 13(e) of the Securities Exchange Act of 1934 and Rule 13e-3
(Sec. 240.13e-3) thereunder.
Securities and Exchange Commission,
Washington, D.C. 20549
Rule 13e-3 Transaction Statement under Section 13(e) of the Securities
Exchange Act of 1934 (Amendment No. __)
________________________________________________________________________
(Name of the Issuer)
________________________________________________________________________
(Names of Persons Filing Statement)
________________________________________________________________________
(Title of Class of Securities)
________________________________________________________________________
(CUSIP Number of Class of Securities)
________________________________________________________________________
(Name, Address, and Telephone Numbers of Person Authorized to Receive
Notices and Communications on Behalf of the Persons Filing Statement)
This statement is filed in connection with (check the appropriate
box):
a. [ ] The filing of solicitation materials or an information
statement subject to Regulation 14A (Sec. Sec. 240.14a-1 through
240.14b-2), Regulation 14C (Sec. Sec. 240.14c-1 through 240.14c-101) or
Rule 13e-3(c) (Sec. 240.13e-3(c)) under the Securities Exchange Act of
1934 (``the Act'').
b. [ ] The filing of a registration statement under the Securities
Act of 1933.
c. [ ] A tender offer.
d. [ ] None of the above.
Check the following box if the soliciting materials or information
statement referred to in checking box (a) are preliminary copies: [ ]
Check the following box if the filing is a final amendment reporting
the results of the transaction [ ]
General Instructions:
A. File eight copies of the statement, including all exhibits, with
the Commission if paper filing is permitted.
B. This filing must be accompanied by a fee payable to the
Commission as required by Sec. 240.0-11(b). The filing fee exhibit
required by Item 16(b) of this schedule must be submitted as required by
Rule 408 of Regulation S-T (Sec. 232.408 of this chapter).
C. If the statement is filed by a general or limited partnership,
syndicate or other group, the information called for by Items 3, 5, 6,
10 and 11 must be given with respect to: (i) Each partner of the general
partnership; (ii) each partner who is, or functions as, a general
partner of the limited partnership; (iii) each member of the syndicate
or group; and (iv) each person controlling the partner or member. If the
statement is filed by a corporation or if a person referred to in (i),
(ii), (iii) or (iv) of this Instruction is a corporation, the
information called for by the items specified above must be given with
respect to: (a) Each executive officer and director of the corporation;
(b) each person controlling the corporation; and (c) each executive
officer and director of any corporation or other person ultimately in
control of the corporation.
D. Depending on the type of Rule 13e-3 transaction (Sec. 240.13e-
3(a)(3)), this statement must be filed with the Commission:
1. At the same time as filing preliminary or definitive soliciting
materials or an information statement under Regulations 14A or 14C of
the Act;
2. At the same time as filing a registration statement under the
Securities Act of 1933;
3. As soon as practicable on the date a tender offer is first
published, sent or given to security holders; or
4. At least 30 days before any purchase of securities of the class
of securities subject to the Rule 13e-3 transaction, if the transaction
does not involve a solicitation, an information statement, the
registration of securities
[[Page 216]]
or a tender offer, as described in paragraphs 1, 2 or 3 of this
Instruction; and
5. If the Rule 13e-3 transaction involves a series of transactions,
the issuer or affiliate must file this statement at the time indicated
in paragraphs 1 through 4 of this Instruction for the first transaction
and must amend the schedule promptly with respect to each subsequent
transaction.
E. If an item is inapplicable or the answer is in the negative, so
state. The statement published, sent or given to security holders may
omit negative and not applicable responses, except that responses to
Items 7, 8 and 9 of this schedule must be provided in full. If the
schedule includes any information that is not published, sent or given
to security holders, provide that information or specifically
incorporate it by reference under the appropriate item number and
heading in the schedule. Do not recite the text of disclosure
requirements in the schedule or any document published, sent or given to
security holders. Indicate clearly the coverage of the requirements
without referring to the text of the items.
F. Information contained in exhibits to the statement may be
incorporated by reference in answer or partial answer to any item unless
it would render the answer misleading, incomplete, unclear or confusing.
A copy of any information that is incorporated by reference or a copy of
the pertinent pages of a document containing the information must be
submitted with this statement as an exhibit, unless it was previously
filed with the Commission electronically on EDGAR. If an exhibit
contains information responding to more than one item in the schedule,
all information in that exhibit may be incorporated by reference once in
response to the several items in the schedule for which it provides an
answer. Information incorporated by reference is deemed filed with the
Commission for all purposes of the Act.
G. If the Rule 13e-3 transaction also involves a transaction subject
to Regulation 14A (Sec. Sec. 240.14a-1 through 240.14b-2) or 14C
(Sec. Sec. 240.14c-1 through 240.14c-101) of the Act, the registration
of securities under the Securities Act of 1933 and the General Rules and
Regulations of that Act, or a tender offer subject to Regulation 14D
(Sec. Sec. 240.14d-1 through 240.14d-101) or Sec. 240.13e-4, this
statement must incorporate by reference the information contained in the
proxy, information, registration or tender offer statement in answer to
the items of this statement.
H. The information required by the items of this statement is
intended to be in addition to any disclosure requirements of any other
form or schedule that may be filed with the Commission in connection
with the Rule 13e-3 transaction. If those forms or schedules require
less information on any topic than this statement, the requirements of
this statement control.
I. If the Rule 13e-3 transaction involves a tender offer, then a
combined statement on Schedules 13E-3 and TO may be filed with the
Commission under cover of Schedule TO (Sec. 240.14d-100). See
Instruction J of Schedule TO (Sec. 240.14d-100).
J. Amendments disclosing a material change in the information set
forth in this statement may omit any information previously disclosed in
this statement.
Item 1. Summary Term Sheet
Furnish the information required by Item 1001 of Regulation M-A
(Sec. 229.1001 of this chapter) unless information is disclosed to
security holders in a prospectus that meets the requirements of Sec.
230.421(d) of this chapter.
Item 2. Subject Company Information
Furnish the information required by Item 1002 of Regulation M-A
(Sec. 229.1002 of this chapter).
Item 3. Identity and Background of Filing Person
Furnish the information required by Item 1003(a) through (c) of
Regulation M-A (Sec. 229.1003 of this chapter).
Item 4. Terms of the Transaction
Furnish the information required by Item 1004(a) and (c) through (f)
of Regulation M-A (Sec. 229.1004 of this chapter).
Item 5. Past Contacts, Transactions, Negotiations and Agreements
Furnish the information required by Item 1005(a) through (c) and (e)
of Regulation M-A (Sec. 229.1005 of this chapter).
Item 6. Purposes of the Transaction and Plans or Proposals
Furnish the information required by Item 1006(b) and (c)(1) through
(8) of Regulation M-A (Sec. 229.1006 of this chapter).
Instruction to Item 6: In providing the information specified in
Item 1006(c) for this item, discuss any activities or transactions that
would occur after the Rule 13e-3 transaction.
Item 7. Purposes, Alternatives, Reasons and Effects
Furnish the information required by Item 1013 of Regulation M-A
(Sec. 229.1013 of this chapter).
Item 8. Fairness of the Transaction
Furnish the information required by Item 1014 of Regulation M-A
(Sec. 229.1014 of this chapter).
[[Page 217]]
Item 9. Reports, Opinions, Appraisals and Negotiations
Furnish the information required by Item 1015 of Regulation M-A
(Sec. 229.1015 of this chapter).
Item 10. Source and Amounts of Funds or Other Consideration
Furnish the information required by Item 1007 of Regulation M-A
(Sec. 229.1007 of this chapter).
Item 11. Interest in Securities of the Subject Company
Furnish the information required by Item 1008 of Regulation M-A
(Sec. 229.1008 of this chapter).
Item 12. The Solicitation or Recommendation
Furnish the information required by Item 1012(d) and (e) of
Regulation M-A (Sec. 229.1012 of this chapter).
Item 13. Financial Statements
Furnish the information required by Item 1010(a) through (b) of
Regulation M-A (Sec. 229.1010 of this chapter) for the issuer of the
subject class of securities.
Instructions to Item 13: 1. The disclosure materials disseminated to
security holders may contain the summarized financial information
required by Item 1010(c) of Regulation M-A (Sec. 229.1010 of this
chapter) instead of the financial information required by Item 1010(a)
and (b). In that case, the financial information required by Item
1010(a) and (b) of Regulation M-A must be disclosed directly or
incorporated by reference in the statement. If summarized financial
information is disseminated to security holders, include appropriate
instructions on how more complete financial information can be obtained.
If the summarized financial information is prepared on the basis of a
comprehensive body of accounting principles other than U.S. GAAP, the
summarized financial information must be accompanied by a reconciliation
as described in Instruction 2.
2. If the financial statements required by this Item are prepared on
the basis of a comprehensive body of accounting principles other than
U.S. GAAP, provide a reconciliation to U.S. GAAP in accordance with Item
17 of Form 20-F (Sec. 249.220f of this chapter).
3. The filing person may incorporate by reference financial
statements contained in any document filed with the Commission, solely
for the purposes of this schedule, if: (a) The financial statements
substantially meet the requirements of this Item; (b) an express
statement is made that the financial statements are incorporated by
reference; (c) the matter incorporated by reference is clearly
identified by page, paragraph, caption or otherwise; and (d) if the
matter incorporated by reference is not filed with this Schedule, an
indication is made where the information may be inspected and copies
obtained. Financial statements that are required to be presented in
comparative form for two or more fiscal years or periods may not be
incorporated by reference unless the material incorporated by reference
includes the entire period for which the comparative data is required to
be given. See General Instruction F to this Schedule.
Item 14. Persons/Assets, Retained, Employed, Compensated or Used
Furnish the information required by Item 1009 of Regulation M-A
(Sec. 229.1009 of this chapter).
Item 15. Additional Information
Furnish the information required by Item 1011(b) and (c) of
Regulation M-A (Sec. 229.1011(b) and (c) of this chapter).
Item 16. Exhibits
File each of the following as an exhibit to the Schedule:
(a) All documents specified in Item 1016(a) through (d), (f) and (g)
of Regulation M-A (Sec. 229.1016 of this chapter); and
(b) The transaction valuation, fee rate, amount of filing fee and,
as applicable, information relating to reliance on Sec. 240.0-11(a)(2)
in the tabular form indicated.
Calculation of Filing Fee Tables
Table 1--Transaction Valuation
----------------------------------------------------------------------------------------------------------------
Transaction Amount of
valuation Fee rate filing fee
----------------------------------------------------------------------------------------------------------------
Fees to Be Paid.............................................. X X X
----------------------------------------------------------------------------------------------------------------
Fees Previously Paid......................................... X X
----------------------------------------------------------------------------------------------------------------
Total Transaction Valuation.............................. X
----------------------------------------------------------------------------------------------------------------
Total Fees Due for Filing................................ X
----------------------------------------------------------------------------------------------------------------
Total Fees Previously Paid............................... X
----------------------------------------------------------------------------------------------------------------
[[Page 218]]
Total Fee Offsets........................................ X
----------------------------------------------------------------------------------------------------------------
Net Fee Due.............................................. X
----------------------------------------------------------------------------------------------------------------
Table 2--Fee Offset Claims and Sources
----------------------------------------------------------------------------------------------------------------
Fee paid
Registrant Form or File Initial Filing Fee offset with fee
or filer filing number filing date claimed offset
name type date source
----------------------------------------------------------------------------------------------------------------
Fee Offset Claims........... X X X X
----------------------------------------------------------------------------------------------------------------
Fee Offset Sources.......... X X X X X
----------------------------------------------------------------------------------------------------------------
Instructions to the Calculation of Filing Fee Tables and Related
Disclosure (``Instructions''):
1. General Requirements.
A. Applicable Table Requirements.
The ``X'' designation indicates the information required to be
disclosed, as applicable, in tabular format. Add as many rows of each
table as necessary.
B. Fee Rate.
For the current fee rate, see https://www.sec.gov/ofm/Article/
feeamt.html.
C. Explanations.
If not otherwise explained in response to these instructions,
disclose specific details relating to the fee calculation as necessary
to clarify the information presented in each table, including references
to the applicable provisions of Rule 0-11 (Sec. 240.0-11 of this
chapter). All disclosure these Instructions require that is not
specifically required to be presented in tabular format must appear in
narrative format immediately after the table(s) to which it corresponds.
2. Table 1: Transaction Valuation Table and Related Disclosure.
A. Fees to Be Paid and Fees Previously Paid.
i. Fees to Be Paid.
Provide the information Table 1 requires for the line item ``Fees to
Be Paid'' as follows:
a. Initial Filings.
For an initial filing on this schedule, provide the required
information for the total transaction valuation.
b. Amendments with Then-Current Total Transaction Valuation Higher
than Highest Total Transaction Valuation Previously Reported.
For amendments to this schedule that reflect a then-current total
transaction valuation higher than the highest total transaction
valuation previously reported, provide the required information for the
incremental increase.
ii. Fees Previously Paid.
Provide the information Table 1 requires for the line item ``Fees
Previously Paid'' for the prior initial filing or amendment to this
transaction statement that reflected a then-current total transaction
valuation that was the highest total transaction valuation previously
reported.
B. Other Tabular Information.
Provide the following information in the table for the line items
``Fees to be Paid'' and ``Fees Previously Paid'', as applicable:
i. The transaction valuation computed pursuant to Exchange Act Rule
0-11;
ii. The fee rate; and
iii. The filing fee due, without regard to any previous payments or
offsets.
C. Totals.
i. Total Transaction Valuation.
Provide the sum of the transaction valuations for the line items
``Fees to be Paid'' and ``Fees Previously Paid.''
ii. Total Fees Due for Filing.
Provide the sum of the fees due without regard to any previous
payments or offsets for the line items ``Fees to be Paid'' and ``Fees
Previously Paid.''
iii. Total Fees Previously Paid.
Provide the aggregate of filing fees previously paid with this
filing.
iv. Total Fee Offsets.
Provide the aggregate of the fee offsets that are claimed in Table 2
pursuant to Instruction 3.
v. Net Fee Due.
Provide the difference between (a) the total fees due for this
transaction statement from the Total Fees Due for Filing row; and (b)
the sum of (i) the aggregate of filing fees previously paid from the
Total Fees Previously Paid row; and (ii) the aggregate fee offsets
claimed from the Total Fee Offsets row.
D. Narrative Disclosure
[[Page 219]]
Explain how the transaction valuation was determined.
3. Table 2: Fee Offset Claims and Sources.
A. Terminology.
For purposes of this Instruction 3 and Table 2, the term
``submission'' means any (i) initial filing of, or amendment (pre-
effective or post-effective), to a fee-bearing document; or (ii) fee-
bearing form of prospectus filed under Rule 424 under the Securities Act
(Sec. 230.424 of this chapter), in all cases that was accompanied by a
contemporaneous fee payment. For purposes of these instructions to Table
2, a contemporaneous fee payment is the payment of a required fee that
is satisfied through the actual transfer of funds, and does not include
any amount of a required fee satisfied through a claimed fee offset.
Instruction 3.B.ii requires a filer that claims a fee offset under Rule
0-11(a)(2) to identify previous submissions with contemporaneous fee
payments that are the original source to which the fee offsets claimed
on this filing can be traced. See Instruction 3.C for an example.
B. Rule 0-11(a)(2).
If relying on Rule 0-11(a)(2) to offset some or all of the filing
fee due on this transaction statement by amounts paid in connection with
earlier filings (other than this Schedule 13E-3) relating to the same
transaction, provide the following information:
i. Fee Offset Claims.
For each earlier filed Securities Act registration statement or
Exchange Act document relating to the same transaction from which a fee
offset is being claimed, provide the information that Table 2 requires
for the line item ``Fee Offset Claims''. The ``Fee Offset Claimed''
column requires the dollar amount of the previously paid filing fee to
be offset against the currently due fee.
Note to Instruction 3.B.i.
If claiming an offset from a Securities Act registration statement,
provide a detailed explanation of the basis for the claimed offset.
ii. Fee Offset Sources.
With respect to amounts claimed as an offset under Rule 0-11(a)(2),
identify those submissions with contemporaneous fee payments that are
the original source to which those amounts can be traced. For each
submission identified, provide the information that Table 2 requires for
the line item ``Fee Offset Sources''. The ``Fee Paid with Fee Offset
Source'' column requires the dollar amount of the contemporaneous fee
payment made with respect to each identified submission that is the
source of the fee offset claimed pursuant to Rule 0-11(a)(2).
C. Fee Offset Source Submission Identification Example.
A filer:
Initially files a registration statement on Form
S-1 on 1/15/20X1 (assigned file number 333-123456) with a fee payment of
$10,000;
Files pre-effective amendment number 1 to the
Form S-1 (333-123456) on 2/15/20X1 with a fee payment of $15,000 and the
registration statement goes effective on 2/20/20X1;
Initially files a registration statement on Form
S-1 on 1/15/20X4 (assigned file number 333-123467) with a fee payment of
$25,000 and relies on Rule 457(p) to claim an offset of $10,000 related
to the unsold securities registered on the previously filed Form S-1
(333-123456) and apply it to the $35,000 filing fee due and the
registration statement goes effective on 2/15/20X4.
Initially files a registration statement related
to a tender offer on Form S-4 (assigned file number 333-123478) on 1/15/
20X7 with a fee payment of $15,000 and relies on Rule 457(p) to claim an
offset of $30,000 related to the unsold securities registered on the
most recently effective Form S-1 (333-123467) filed on 1/15/20X4 and
apply it to the $45,000 filing fee due.
Initially files a Schedule TO related to the same
tender offer on 1/22/20X7 and relies on Rule 0-11(a)(2) to claim an
offset of $45,000 from the fee paid directly and by offset claimed on
the Form S-4 (333-123478) filed 1/15/20X7 and apply it to the $45,000
filing fee due.
For the Schedule TO filed on 1/22/20X7, the filer can satisfy the
submission identification requirement when it claims the $45,000 fee
offset from the Form S-4 (333-123478) filed on 1/15/20X7 by referencing
any combination of the Form S-4 (333-123478) filed on 1/15/20X7, the
Form S-1 (333-123467) filed on 1/15/20X4, the pre-effective amendment to
the Form S-1 (333-123456) filed on 2/15/20X1 or the initial filing of
the Form S-1 (333-123456) on 1/15/20X1 in relation to which
contemporaneous fee payments were made equal to $45,000.
One example could be:
The Form S-4 (333-123478) filed on 1/15/20X7 in
relation to the payment of $15,000 made with that submission;
the Form S-1 (333-123467) filed on 1/15/20X4 in
relation to the payment of $25,000 made with that submission; and
the pre-effective amendment to the Form S-1 (333-
123456) filed on 2/15/20X1 in relation to the payment of $5,000 out of
the payment of $15,000 made with that submission (it would not matter if
the filer cited to this pre-effective amendment and/or the initial
submission of this Form S-1 (333-123456) on 1/15/20X1 as long as singly
or together they were cited as relating to a total of $5,000 in this
example).
In this example, the filer could not satisfy the submission
identification requirement solely by citing to the Form S-4 (333-123478)
filed on 1/15/20X7 because even though the offset claimed and available
from that filing was $45,000, the contemporaneous fee payment made with
that filing ($15,000) was less than the offset being claimed. As a
result,
[[Page 220]]
the filer must also identify a prior submission or submissions with an
aggregate of contemporaneous fee payment(s) of $30,000 as the original
source(s) to which the rest of the claimed offset can be traced.
Signature. After due inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this statement is
true, complete and correct.
________________________________________________________________________
(Signature)
________________________________________________________________________
(Name and title)
________________________________________________________________________
(Date)
Instruction to Signature: The statement must be signed by the filing
person or that person's authorized representative. If the statement is
signed on behalf of a person by an authorized representative (other than
an executive officer of a corporation or general partner of a
partnership), evidence of the representative's authority to sign on
behalf of the person must be filed with the statement. The name and any
title of each person who signs the statement must be typed or printed
beneath the signature. See Sec. 240.12b-11 with respect to signature
requirements.
[64 FR 61454, Nov. 10, 1999, as amended at 76 FR 6045, Feb. 2, 2011; 86
FR 70253, Dec. 9, 2021]
Sec. 240.13e-101 [Reserved]
Sec. 240.13e-102 Schedule 13E-4F. Tender offer statement pursuant to
section 13(e) (1) of the Securities Exchange Act of 1934 and Sec. 240.13e-4
thereunder.
Securities and Exchange Commission
Washington, DC 20549
Schedule 13E-4F
Issuer Tender Offer Statement Pursuant to Section 13(e)(1) of the
Securities Exchange Act of 1934
[Amendment No. ____]
________________________________________________________________________
(Exact name of Issuer as specified in its charter)
________________________________________________________________________
(Translation of Issuer's Name into English (if applicable))
________________________________________________________________________
(Jurisdiction of Issuer's Incorporation or Organization)
________________________________________________________________________
(Name(s) of Person(s) Filing Statement)
________________________________________________________________________
(Title of Class of Securities)
________________________________________________________________________
(CUSIP Number of Class of Securities) (if applicable)
________________________________________________________________________
(Name, address (including zip code) and telephone number (including
area code) of person authorized to receive notices and communications on
behalf of the person(s) filing statement)
________________________________________________________________________
(Date tender offer first published, sent or given to
securityholders)
General Instructions
I. Eligibility Requirements for Use of Schedule 13E-4F
A. Schedule 13E-4F may be used by any foreign private issuer if: (1)
The issuer is incorporated or organized under the laws of Canada or any
Canadian province or territory; (2) the issuer is making a cash tender
or exchange offer for the issuer's own securities; and (3) less than 40
percent of the class of such issuer's securities outstanding that is the
subject of the tender offer is held by U.S. holders. The calculation of
securities held by U.S. holders shall be made as of the end of the
issuer's last quarter or, if such quarter terminated within 60 days of
the filing date, as of the end of the issuer's preceding quarter.
Instructions
1. For purposes of this Schedule, ``foreign private issuer'' shall
be construed in accordance with Rule 405 under the Securities Act.
2. For purposes of this Schedule, the term ``U.S. holder'' shall
mean any person whose address appears on the records of the issuer, any
voting trustee, any depositary, any share transfer agent or any person
acting in a similar capacity on behalf of the issuer as being located in
the United States.
3. If this Schedule is filed during the pendency of one or more
ongoing cash tender or exchange offers for securities of the class
subject to this offer that was commenced or was eligible to be commenced
on Schedule 14D-1F and/or Form F-8 or Form F-80, the date for
calculation of U.S. ownership for purposes of this Schedule shall be the
same as that date used by the initial bidder or issuer.
4. For purposes of this Schedule, the class of subject securities
shall not include any securities that may be converted into or are
exchangeable for the subject securities.
B. Any issuer using this Schedule must extend the cash tender or
exchange offer to U.S. holders of the class of securities subject to the
offer upon terms and conditions not less favorable than those extended
to any other holder of the same class of such securities, and must
comply with the requirements of any Canadian federal, provincial and/or
territorial law, regulation or policy relating to the terms and
conditions of the offer.
[[Page 221]]
C. This Schedule shall not be used if the issuer is an investment
company registered or required to be registered under the Investment
Company Act of 1940.
II. Filing Instructions and Fees
A.(1) The issuer must file this Schedule and any amendment to the
Schedule (see Part I, Item 1.(b)), including all exhibits and other
documents filed as part of the Schedule or amendment, in electronic
format via the Commission's Electronic Data Gathering, Analysis, and
Retrieval (EDGAR) system in accordance with the EDGAR rules set forth in
Regulation S-T (17 CFR part 232). The filing fee exhibit required by
paragraph (4) under ``Part II--Information Not Required To Be Sent to
Shareholders'' must be submitted as required by Rule 408 of Regulation
S-T (Sec. 232.408 of this chapter). For assistance with technical
questions about EDGAR or to request an access code, call the EDGAR Filer
Support Office at (202) 551-8900. For assistance with the EDGAR rules,
call EDGAR filer support at (202) 551-8900.
(2) If filing the Schedule in paper under a hardship exemption in 17
CFR 232.201 or 232.202 of Regulation S-T, or as otherwise permitted, the
issuer must file with the Commission at its principal office five copies
of the complete Schedule and any amendment, including exhibits and all
other documents filed as a part of the Schedule or amendment. The issuer
must bind, staple or otherwise compile each copy in one or more parts
without stiff covers. The issuer must further bind the Schedule or
amendment on the side or stitching margin in a manner that leaves the
reading matter legible. The issuer must provide three additional copies
of the Schedule or amendment without exhibits to the Commission.
B. An electronic filer must provide the signatures required for the
Schedule or amendment in accordance with 17 CFR 232.302 of Regulation S-
T. An issuer filing in paper must have the original and at least one
copy of the Schedule and any amendment signed in accordance with
Exchange Act Rule 12b-11(d) (17 CFR 12b-11(d)) by the persons whose
signatures are required for this Schedule or amendment. The issuer must
also conform the unsigned copies.
C. At the time of filing this Schedule with the Commission, the
issuer shall pay to the Commission in accordance with Rule 0-11 of the
Exchange Act, a fee in U.S. dollars in the amount prescribed by section
13(e)(3) of the Exchange Act. See also Rule 0-9 of the Exchange Act.
(1) The value of the securities to be acquired solely for cash shall
be the amount of cash to be paid for them, calculated into U.S. dollars.
(2) The value of the securities to be acquired with securities or
other non-cash consideration, whether or not in combination with a cash
payment for the same securities, shall be based on the market value of
the securities to be acquired by the issuer as established in accordance
with paragraph (3) of this section.
(3) When the fee is based upon the market value of the securities,
such market value shall be established by either the average of the high
and low prices reported on the consolidated reporting system (for
exchange-traded securities and last sale reported for over-the-counter
securities) or the average of the bid and asked price (for other over-
the-counter securities) as of a specified date within 5 business days
prior to the date of filing the Schedule. If there is no market for the
securities to be acquired by the issuer, the value shall be based upon
the book value of such securities computed as of the latest practicable
date prior to the date of filing of the Schedule, unless the issuer of
the securities is in bankruptcy or receivership or has an accumulated
capital deficit, in which case one-third of the principal amount, par
value or stated value of such securities shall be used.
D. If at any time after the initial payment of the fee the aggregate
consideration offered is increased, an additional filing fee based upon
such increase shall be paid with the required amended filing.
E. The issuer must file the Schedule or amendment in electronic
format in the English language in accordance with 17 CFR 232.306 of
Regulation S-T. The issuer may file part of the Schedule or amendment,
or exhibit or other attachment to the Schedule or amendment, 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 17 CFR 232.11 of Regulation S-T. For both
an electronic filing and a paper filing, the issuer may provide an
English translation or English summary of a foreign language document as
an exhibit or other attachment to the Schedule or amendment as permitted
by the rules of the applicable Canadian securities administrator.
F. A paper filer must number sequentially the signed original of the
Schedule or amendment (in addition to any internal numbering that
otherwise may be present) by handwritten, typed, printed or other
legible form of notation from the first page through the last page of
the Schedule or amendment, including any exhibits or attachments. A
paper filer must disclose the total number of pages on the first page of
the sequentially numbered Schedule or amendment.
III. Compliance with the Exchange Act
A. Pursuant to Rule 13e-4(g) under the Exchange Act, the issuer
shall be deemed to
[[Page 222]]
comply with the requirements of section 13(e)(1) of the Exchange Act and
Rule 13e-4 and Schedule TO thereunder in connection with a cash tender
or exchange offer for securities that may be made pursuant to this
Schedule, provided that, if an exemption has been granted from the
requirements of Canadian federal, provincial and/or territorial laws,
regulations or policies, and the tender offer does not comply with
requirements that otherwise would be prescribed by Rule 13e-4, the
issuer (absent an order from the Commission) shall comply with the
provisions of section 13(e)(1) of the Exchange Act and Rule 13e-4 and
Schedule TO thereunder.
B. Any cash tender or exchange offer made pursuant to this Schedule
is not exempt from the antifraud provisions of section 10(b) of the
Exchange Act and Rule 10b-5 thereunder, section 13(e)(1) of the Exchange
Act and Rule 13e-4(b)(1) thereunder, and section 14(e) of the Exchange
Act and Rule 14e-3 thereunder, and this Schedule shall be deemed
``filed'' for purposes of section 18 of the Exchange Act.
C. The issuer's attention is directed to Regulation M (Sec. Sec.
242.100 through 242.105 of this chapter), in the case of an issuer
exchange offer, and to Rule 14e-5 under the Exchange Act (Sec. 240.14e-
5), in the case of an issuer cash tender offer or issuer exchange offer.
[See Exchange Act Release No. 29355 (June 21, 1991) containing an
exemption from Rule 10b-13, the predecessor to Rule 14e-5.]
Part I--Information Required To Be Sent to Shareholders
Item 1. Home Jurisdiction Documents
(a) This Schedule shall be accompanied by the entire disclosure
document or documents required to be delivered to holders of securities
to be acquired by the issuer in the proposed transaction pursuant to the
laws, regulations or policies of the Canadian jurisdiction in which the
issuer is incorporated or organized, and any other Canadian federal,
provincial and/or territorial law, regulation or policy relating to the
terms and conditions of the offer. The Schedule need not include any
documents incorporated by reference into such disclosure document(s) and
not distributed to offerees pursuant to any such law, regulation or
policy.
(b) Any amendment made by the issuer to a home jurisdiction document
or documents shall be filed with the Commission under cover of this
Schedule, which must indicate on the cover page the number of the
amendment.
(c) In an exchange offer where securities of the issuer have been or
are to be offered or cancelled in the transaction, such securities shall
be registered on forms promulgated by the Commission under the
Securities Act of 1933 including, where available, the Commission's Form
F-8 or F-80 providing for inclusion in that registration statement of
the home jurisdiction prospectus.
Item 2. Informational Legends
The following legends, to the extent applicable, shall appear on the
outside front cover page of the home jurisdiction document(s) in bold-
face roman type at least as high as ten-point modern type and at least
two-points leaded:
``This tender offer is made by a foreign issuer for its own
securities, and while the offer is subject to disclosure requirements of
the country in which the issuer is incorporated or organized, investors
should be aware that these requirements are different from those of the
United States. Financial statements included herein, if any, have been
prepared in accordance with foreign generally accepted accounting
principles and thus may not be comparable to financial statements of
United States companies.
``The enforcement by investors of civil liabilities under the
federal securities laws may be affected adversely by the fact that the
issuer is located in a foreign country, and that some or all of its
officers and directors are residents of a foreign country.
``Investors should be aware that the issuer or its affiliates,
directly or indirectly, may bid for or make purchases of the securities
of the issuer subject to the offer, or of its related securities, during
the period of the issuer tender offer, as permitted by applicable
Canadian laws or provincial laws or regulations.''
Note to Item 2. If the home jurisdiction document(s) are delivered
through an electronic medium, the issuer may satisfy the legibility
requirements for the required legends relating to type size and fonts by
presenting the legend in any manner reasonably calculated to draw
security holder attention to it.
Part II--Information Not Required To Be Sent to Shareholders
The exhibits specified below shall be filed as part of the Schedule,
but are not required to be sent to shareholders unless so required
pursuant to the laws, regulations or policies of Canada and/or any of
its provinces or territories. Exhibits shall be lettered or numbered
appropriately for convenient reference.
(1) File any reports or information that, in accordance with the
requirements of the home jurisdiction(s), must be made publicly
available by the issuer in connection with the transaction, but need not
be disseminated to shareholders.
(2) File copies of any documents incorporated by reference into the
home jurisdiction document(s) .
(3) If any name is signed to the Schedule pursuant to power of
attorney, manually signed copies of any such power of attorney
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shall be filed. If the name of any officer signing on behalf of the
issuer is signed pursuant to a power of attorney, certified copies of a
resolution of the issuer's board of directors authorizing such signature
also shall be filed.
(4) File the following information: The transaction valuation, fee
rate, amount of filing fee and, as applicable, information relating to
reliance on Sec. 240.0-11(a)(2) in the tabular form indicated.
Calculation of Filing Fee Tables
Table 1--Transaction Valuation
----------------------------------------------------------------------------------------------------------------
Transaction Amount of
valuation Fee rate filing fee
----------------------------------------------------------------------------------------------------------------
Fees to Be Paid.............................................. X X X
----------------------------------------------------------------------------------------------------------------
Fees Previously Paid......................................... X X
----------------------------------------------------------------------------------------------------------------
Total Transaction Valuation.............................. X
----------------------------------------------------------------------------------------------------------------
Total Fees Due for Filing................................ X
----------------------------------------------------------------------------------------------------------------
Total Fees Previously Paid............................... X
----------------------------------------------------------------------------------------------------------------
Total Fee Offsets........................................ X
----------------------------------------------------------------------------------------------------------------
Net Fee Due.............................................. X
----------------------------------------------------------------------------------------------------------------
Table 2--Fee Offset Claims and Sources
----------------------------------------------------------------------------------------------------------------
Fee paid
Registrant Form or File Initial Filing Fee offset with fee
or filer filing number filing date claimed offset
name type date source
----------------------------------------------------------------------------------------------------------------
Fee Offset Claims........... X X X X
----------------------------------------------------------------------------------------------------------------
Fee Offset Sources.......... X X X X X
----------------------------------------------------------------------------------------------------------------
Instructions to the Calculation of Filing Fee Tables and Related
Disclosure (``Instructions''):
1. General Requirements.
A. Applicable Table Requirements.
The ``X'' designation indicates the information required to be
disclosed, as applicable, in tabular format. Add as many rows of each
table as necessary.
B. Fee Rate.
For the current fee rate, see https://www.sec.gov/ofm/Article/
feeamt.html.
C. Additional Filing Fee Provisions.
See General Instructions II.C and D of this Schedule for additional
provisions regarding filing fees.
D. Explanations.
If not otherwise explained in response to these instructions,
disclose specific details relating to the fee calculation as necessary
to clarify the information presented in each table, including references
to the applicable provisions of Rule 0-11 (Sec. 240.0-11 of this
chapter). All disclosure these Instructions require that is not
specifically required to be presented in tabular format must appear in
narrative format immediately after the table(s) to which it corresponds.
2. Table 1: Transaction Valuation Table and Related Disclosure.
A. Fees to Be Paid and Fees Previously Paid.
i. Fees to Be Paid.
Provide the information Table 1 requires for the line item ``Fees to
Be Paid'' as follows:
a. Initial Filings.
For an initial filing on this schedule, provide the required
information for the total transaction valuation.
b. Amendments with Then-Current Total Transaction Valuation Higher
than Highest Total Transaction Valuation Previously Reported.
For amendments to this schedule that reflect a then-current total
transaction valuation higher than the highest total transaction
valuation previously reported, provide the required information for the
incremental increase.
ii. Fees Previously Paid.
Provide the information Table 1 requires for the line item ``Fees
Previously Paid'' for the prior initial filing or amendment to this
schedule that reflected a then-current total
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transaction valuation that was the highest total transaction valuation
previously reported.
B. Other Tabular Information.
Provide the following information in the table for the line items
``Fees to be Paid'' and ``Fees Previously Paid'', as applicable:
i. The transaction valuation computed pursuant to Exchange Act Rule
0-11;
ii. The fee rate; and
iii. The filing fee due without regard to any previous payments or
offsets.
C. Totals.
i. Total Transaction Valuation.
Provide the sum of the transaction valuations for the line items
``Fees to be Paid'' and ``Fees Previously Paid''.
ii. Total Fees Due for Filing.
Provide the sum of the fees due without regard to any previous
payments or offsets for the line items ``Fees to be Paid'' and ``Fees
Previously Paid.''
iii. Total Fees Previously Paid.
Provide the aggregate of filing fees previously paid with this
filing.
iv. Total Fee Offsets.
Provide the aggregate of the fee offsets that are claimed in Table 2
pursuant to Instruction 3.
v. Net Fee Due.
Provide the difference between (a) the total fees due for this
tender offer statement from the Total Fees Due for Filing row; and (b)
the sum of (i) the aggregate of filing fees previously paid from the
Total Fees Previously Paid row; and (ii) the aggregate fee offsets
claimed from the Total Fee Offsets row.
D. Narrative Disclosure
Explain how the transaction valuation was determined.
3. Table 2: Fee Offset Claims and Sources.
A. Terminology.
For purposes of this Instruction 3 and Table 2, the term
``submission'' means any (i) initial filing of, or amendment (pre-
effective or post-effective), to a fee-bearing document; or (ii) fee-
bearing form of prospectus filed under Rule 424 under the Securities Act
(Sec. 230.424 of this chapter), in all cases that was accompanied by a
contemporaneous fee payment. For purposes of these instructions to Table
2, a contemporaneous fee payment is the payment of a required fee that
is satisfied through the actual transfer of funds, and does not include
any amount of a required fee satisfied through a claimed fee offset.
Instruction 3.B.ii requires a filer that claims a fee offset under Rule
0-11(a)(2) to identify previous submissions with contemporaneous fee
payments that are the original source to which the fee offsets claimed
on this filing can be traced. See Instruction 3.C for an example.
B. Rule 0-11(a)(2).
If relying on Rule 0-11(a)(2) to offset some or all of the filing
fee due on this tender offer statement by amounts paid in connection
with earlier filings (other than this Schedule 13E-4F) relating to the
same transaction, provide the following information:
i. Fee Offset Claims.
For each earlier filed Securities Act registration statement or
Exchange Act document relating to the same transaction from which a fee
offset is being claimed, provide the information that Table 2 requires
for the line item ``Fee Offset Claims''. The ``Fee Offset Claimed''
column requires the dollar amount of the previously paid filing fee to
be offset against the currently due fee.
Note to Instruction 3.B.i.
If claiming an offset from a Securities Act registration statement,
provide a detailed explanation of the basis for the claimed offset.
ii. Fee Offset Sources.
With respect to amounts claimed as an offset under Rule 0-11(a)(2),
identify those submissions with contemporaneous fee payments that are
the original source to which those amounts can be traced. For each
submission identified, provide the information that Table 2 requires for
the line item ``Fee Offset Sources''. The ``Fee Paid with Fee Offset
Source'' column requires the dollar amount of the contemporaneous fee
payment made with respect to each identified submission that is the
source of the fee offset claimed pursuant to Rule 0-11(a)(2).
C. Fee Offset Source Submission Identification Example.
A filer:
Initially files a registration statement on Form
S-1 on 1/15/20X1 (assigned file number 333-123456) with a fee payment of
$10,000;
Files pre-effective amendment number 1 to the
Form S-1 (333-123456) on 2/15/20X1 with a fee payment of $15,000 and the
registration statement goes effective on 2/20/20X1;
Initially files a registration statement on Form
S-1 on 1/15/20X4 (assigned file number 333-123467) with a fee payment of
$25,000 and relies on Rule 457(p) to claim an offset of $10,000 related
to the unsold securities registered on the previously filed Form S-1
(333-123456) and apply it to the $35,000 filing fee due and the
registration statement goes effective on 2/15/20X4.
Initially files a registration statement related
to a tender offer on Form S-4 (assigned file number 333-123478) on 1/15/
20X7 with a fee payment of $15,000 and relies on Rule 457(p) to claim an
offset of $30,000 related to the unsold securities registered on the
most recently effective Form S-1 (333-123467) filed on 1/15/20X4 and
apply it to the $45,000 filing fee due.
Initially files a Schedule TO related to the same
tender offer on 1/22/20X7 and relies on Rule 0-11(a)(2) to claim an
offset of $45,000 from the fee paid directly and by offset claimed on
the Form S-4 (333-123478) filed 1/
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15/20X7 and apply it to the $45,000 filing fee due.
For the Schedule TO filed on 1/22/20X7, the filer can satisfy the
submission identification requirement when it claims the $45,000 fee
offset from the Form S-4 (333-123478) filed on 1/15/20X7 by referencing
any combination of the Form S-4 (333-123478) filed on 1/15/20X7, the
Form S-1 (333-123467) filed on 1/15/20X4, the pre-effective amendment to
the Form S-1 (333-123456) filed on 2/15/20X1 or the initial filing of
the Form S-1 (333-123456) on 1/15/20X1 in relation to which
contemporaneous fee payments were made equal to $45,000. One example
could be: