[Federal Register Volume 60, Number 24 (Monday, February 6, 1995)]
[Rules and Regulations]
[Pages 6965-6966]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-2892]
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SECURITIES AND EXCHANGE COMMISSION
17 CFR Part 230
[Release No. 33-7132; International Series Release No. 780; File No.
S7-36-94]
RIN 3235-AG26
Adoption of Amendments To Clarify Safe Harbors for Broker-Dealer
Research Reports
AGENCY: Securities and Exchange Commission.
ACTION: Final rules.
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SUMMARY: The Commission is announcing the adoption of amendments
relating to the safe harbor provisions of Rules 138 and 139 under the
Securities Act of 1933. The amendments clarify the availability of the
safe harbor provisions of Rule 138 relating to broker-dealer research
reports on individual domestic and foreign companies and the
availability of the safe harbor provisions of Rule 139 for broker-
dealer industry research reports which include sizable, first-time
foreign registrants.
EFFECTIVE DATE: February 6, 1995.
FOR FURTHER INFORMATION CONTACT: Annemarie Tierney, (202) 942-2990,
Office of International Corporate Finance, Division of Corporation
Finance, U.S. Securities and Exchange Commission, 450 Fifth Street NW.,
Washington, D.C. 20549.
SUPPLEMENTARY INFORMATION: As described in detail below, the Commission
is adopting amendments to Rule 1381 and Rule 1392 under the
Securities Act of 1933 (the ``Securities Act'')3. The amendments
adopted today were proposed by the Commission on December 13,
1994.4
\1\17 CFR 230.138.
\2\17 CFR 230.139.
\3\15 U.S.C. 77a et seq.
\4\See Release No. 33-7120 (Dec. 13, 1994), 59 FR 31038. One
comment letter, which expressed support for the proposal, was
received. That letter is available for public inspection and copying
in File Number S7-36-94 at the Commission's Public Reference Room in
Washington, D.C.
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I. Availability of Research Report Safe Harbors
Rule 138 under the Securities Act permits publication of
information, opinions and recommendations concerning qualifying issuers
by broker-dealers that are participants in a distribution, so long as
the reports contain information, opinions or recommendations regarding
a specified class of the issuer's securities which is not the subject
of the offering in which the broker-dealer is a participant. The
amendments adopted today clarify that Rule 138 is available for
offerings registered on Form S-3. The amendments also clarify that Form
F-3 eligible issuers qualify for the rule, as do sizable first-time
foreign issuers that meet the alternative offshore trading history test
adopted for Rule 139.
In addition, in light of the fact that shelf registration
statements often register both debt and equity securities (on an either
allocated or unallocated basis), the Commission is amending Rule 138 to
add an instruction codifying the staff interpretation that the rule
should be applied on an offering-by-offering basis for issuers which
are eligible to use Forms S-3 or F-3 and are using the Commission's
shelf registration procedures. Thus, the filing of a shelf registration
statement covering different classes of securities does not impede the
availability of the rule.
Rule 139 under the Securities Act provides safe harbor protection
from the registration requirements of that Act for the distribution by
broker-dealers of information, opinions or recommendations concerning
issuers in the process of registering securities under the Securities
Act. The amendments adopted today make clear that the expanded
eligibility requirements adopted last year5 for sizable foreign
issuers that satisfy the alternative offshore trading history test in
Rule 139 are also available for those issuers' initial public offerings
in the United States.
\5\Release No. 33-7053 (Apr. 19, 1994), 59 FR 21644.
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II. Cost-Benefit Analysis
No information was provided in response to the Commission's request
regarding the costs and benefits of the amendments being adopted today.
The Commission believes that the adoption of these amendments will
benefit both issuers and broker-dealers without imposing any additional
costs.
III. Statutory Bases
The Commission's rules are being amended pursuant to sections 6, 7,
8, 10 and 19(a) of the Securities Act of 1933, as amended.
IV. Effective Date
The final amendments to the Commission's rules shall be effective
immediately upon publication in the Federal Register, in accordance
with the Administrative Procedure Act, which allows effectiveness in
less than 30 days after publication for, inter alia, ``a substantive
rule which grants or recognizes an exemption or relieves a
restriction.'' 5 U.S.C. Sec. 553(d)(1).
List of Subjects in 17 CFR Part 230
Reporting and recordkeeping requirements, Securities.
Text of Proposed Amendments
In accordance with the foregoing, Title 17, chapter II of the Code
of Federal Regulations is amended as follows:
PART 230--GENERAL RULES AND REGULATIONS, SECURITIES ACT OF 1933
1. The general authority citation for Part 230 continues to read in
part as follows:
Authority: 15 U.S.C. 77b, 77f, 77g, 77h, 77j, 77s, 77sss, 78c,
78l, 78m, 78n, 78o, 78w, 78ll(d), 79t, 80a-8, 80a-29, 80a-30, and
80a-37, unless otherwise noted.
* * * * *
2. By revising Sec. 230.138 to read as follows:
Sec. 230.138 Definition of ``offer for sale'' and ``offer to sell'' in
sections 2(10) and 5(c) in relation to certain publications.
(a) Where a registrant which meets the requirements of paragraph
(c)(1), (c)(2) or (c)(3) of this section proposes to file, has filed or
has an effective registration statement under the Act relating solely
to a nonconvertible debt security or to a nonconvertible,
nonparticipating preferred stock, publication or distribution in the
regular course of its [[Page 6966]] business by a broker or dealer of
information, opinions or recommendations relating solely to common
stock or to debt or preferred stock convertible into common stock of
such registrant shall not be deemed to constitute an offer for sale or
offer to sell the security to which such registration statement relates
for purposes of sections 2(10) and 5(c) of the Act (15 U.S.C. 77a et
seq.) even though such broker or dealer is or will be a participant in
the distribution of the security to which such registration statement
relates.
(b) Where a registrant which meets the requirements of paragraph
(c)(1), (c)(2) or (c)(3) of this section proposes to file, has filed or
has an effective registration statement under the Act relating solely
to common stock or to debt or preferred stock convertible into common
stock, the publication or distribution in the regular course of its
business by a broker or dealer of information, opinions or
recommendations relating solely to a nonconvertible debt security, or
to a nonconvertible nonparticipating preferred stock shall not be
deemed to constitute an offer for sale or offer to sell the security to
which such registration statement relates for purposes of sections
2(10) and 5(c) of the Act (15 U.S.C. 77a et seq.), even though such
broker or dealer is or will be a participant in the distribution of the
security to which such registration statement relates.
(c)(1) The registrant meets all of the conditions for the use of
Form S-2 [Sec. 239.12 of this chapter] or Form F-2 [Sec. 239.32 of this
chapter];
(2) The registrant meets the registrant requirements of Form S-3
[Sec. 239.13 of this chapter] or Form F-3 [Sec. 239.33 of this
chapter]; or
(3) The registrant is a foreign private issuer which meets all the
registrant requirements of Form F-3 [Sec. 239.33 of this chapter],
other than the reporting history provisions of paragraph A.1. and
A.2.(a) of General Instruction I of such form, and meets the minimum
float or investment grade securities provisions of either paragraph
B.1. or B.2. of General Instruction I. of such form and the
registrant's securities have been traded for a period of at least 12
months on a designated offshore securities market, as defined in
Sec. 230.902(a).
Instruction to Rule 138
When a registration statement relates to securities which are
being registered for an offering to be made on a continuous or
delayed basis pursuant to Rule 415(a)(1)(x) under the Act
(Sec. 230.415(a)(1)(x)) and the securities which are being
registered include classes of securities which are specified in both
paragraphs (a) and (b) of this section on either an allocated or
unallocated basis, a broker or dealer may nonetheless rely on:
1. Paragraph (a) of this section when the offering in which such
broker or dealer is or will be a participant relates solely to
classes of securities specified in paragraph (a) of this section,
and
2. Paragraph (b) of this section when the offering in which such
broker or dealer is or will be a participant relates solely to
classes of securities specified in paragraph (b) of this section.
3. By revising the introductory text to Sec. 230.139 and
paragraph (a)(2) to read as follows:
Sec. 230.139 Definition of ``offer for sale'' and ``offer to sell'' in
sections 2(10) and 5(c) in relation to certain publications.
Where a registrant which is required to file reports pursuant to
section 13 or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C.
78a et seq.) or which is a foreign private issuer meeting the
conditions of paragraph (a)(2) of this section proposes to file, has
filed or has an effective registration statement under the Securities
Act of 1933 (15 U.S.C. 77a et seq.) relating to its securities, the
publication or distribution by a broker or dealer of information, an
opinion or a recommendation with respect to the registrant or any class
of its securities shall not be deemed to constitute an offer for sale
or offer to sell the securities registered or proposed to be registered
for purposes of sections 2(10) and 5(c) of the Act (15 U.S.C. 77a et
seq.), even though such broker or dealer is or will be a participant in
the distribution of such securities, if the conditions of paragraph (a)
or (b) of this section have been met:
(a) * * *
(2) The registrant is a foreign private issuer that meets all the
registrant requirements of Form F-3 (Sec. 239.33 of this chapter),
other than the reporting history provisions of paragraphs A.1. and
A.2.(a) of General Instruction I of such form, and meets the minimum
float or investment grade securities provisions of either paragraph
B.1. or B.2. of General Instruction I of such form, and the
registrant's securities have been traded for a period of at least 12
months on a designated offshore securities market, as defined in
Sec. 230.902(a), and such information, opinion or recommendation is
contained in a publication which is distributed with reasonable
regularity in the normal course of business.
* * * * *
By the Commission.
Dated: February 1, 1995.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 95-2892 Filed 2-2-95; 8:45 am]
BILLING CODE 8010-01-P