[Federal Register Volume 60, Number 38 (Monday, February 27, 1995)]
[Proposed Rules]
[Pages 10724-10740]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-4647]




[[Page 10723]]

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Part VI





Securities and Exchange Commission





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17 CFR Part 228, et al.



Prospectus Delivery, Securities Transactions Settlement; Proposed Rule

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

SECURITIES AND EXCHANGE COMMISSION

17 CFR Parts 228, 229, 230, 239, and 240

Release No. 33-7141; 34-35396; IC-20903 File No. S7-7-95
RIN 3235-AG40


Prospectus Delivery; Securities Transactions Settlement

AGENCY: Securities and Exchange Commission.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Commission is proposing revisions to its rules and forms 
and a new rule under the Securities Act of 1933 in order to implement 
two solutions to prospectus delivery issues arising in connection with 
the change to T+3 securities transaction settlement. The proposals are 
based on recommendations submitted by representatives of financial 
intermediaries. In addition, the Commission is proposing to amend an 
exemption from T+3 clearance and settlement for purchases and sales of 
securities pursuant to a firm commitment offering. Such exemption is 
proposed to be limited to offerings of asset-backed securities and 
structured securities and would provide an extended settlement time 
frame to firm commitment offerings under certain conditions.

DATES: Comments should be received on or before March 31, 1995.

ADDRESSES: Comment letters should refer to File Number S7-7-95 and be 
submitted in triplicate to Jonathan G. Katz, Secretary, U.S. Securities 
and Exchange Commission, 450 Fifth Street, N.W., Mail Stop 6-1, 
Washington, D.C. 20549. The Commission will make all comments available 
for public inspection and copying in its Public Reference Room at the 
same address.

FOR FURTHER INFORMATION CONTACT: Anita Klein, Michael Mitchell or 
Joseph Babits, (202) 942-2900, Division of Corporation Finance; and, 
with regard to questions concerning the T+3 settlement proposals, Jerry 
W. Carpenter or Christine Sibille, (202) 942-4187, Division of Market 
Regulation; and, with regard to questions concerning Rule 15c2-8 
proposals, Alexander Dill, (202) 942-4892, Division of Market 
Regulation; and, with regard to questions concerning the application of 
the proposal to investment companies, Kathleen Clarke, (202) 942-0721, 
Division of Investment Management, U.S. Securities and Exchange 
Commission, Washington, D.C. 20549.

SUPPLEMENTARY INFORMATION:

I. Introduction and Background

    Under the Securities Act of 1933 (the ``Securities Act''),1 a 
prospectus used after a registration statement has been filed must meet 
the disclosure requirements of Section 10 of the Securities Act.2 
The term ``prospectus'' is defined broadly to include any written 
communication that ``offers a security for sale or confirms the sale of 
any security.'' 3 Because information generally contained in a 
confirmation typically does not satisfy the disclosure requirements of 
Section 10, a prospectus meeting Section 10(a) requirements must be 
sent or given prior to or at the same time with the confirmation.4 
In addition, the Securities Act prohibits persons from sending 
securities through interstate commerce ``for the purpose of sale or for 
delivery after sale, unless accompanied or preceded by a prospectus 
that meets the requirements'' of Section 10(a).5

    \1\15 U.S.C. 77a et seq.
    \2\15 U.S.C. 77j. See also Section 5(b)(1) of the Securities 
Act, 15 U.S.C. Sec. 77e(b)(1).
    \3\See Section 2(10) of the Securities Act, 15 U.S.C. 77b(10).
    \4\The Securities Act provides that ``a communication provided 
after the effective date of the registration statement * * * shall 
not be deemed a prospectus if it is proved that prior to or at the 
same time with such communication a written prospectus meeting the 
requirements of'' Section 10(a) is provided. See Section 2(10)(a) of 
the Securities Act, 15 U.S.C. 77b(10)(a).
    A written confirmation must be sent to a purchaser prior to 
settlement pursuant to Rule 10b-10 under the Securities Exchange Act 
of 1934, 17 CFR 240.10b-10.
    \5\See Section 5(b)(2) of the Securities Act, 15 U.S.C. 
77e(b)(2).
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    On October 6, 1993, the Commission adopted Rule 15c6-1 under the 
Securities Exchange Act of 1934 (the ``Exchange Act'')6 to 
establish three business days after trade (hereinafter, ``T+3'') as the 
standard settlement time frame for most broker-dealer trades.7 
Rule 15c6-1 covers all securities other than exempted securities, 
government securities, municipal securities,8 commercial paper, 
bankers' acceptances, or commercial bills. That Rule is scheduled to 
become effective on June 7, 1995.9

    \6\15 U.S.C. 78a et seq.
    \7\17 CFR 240.15c6-1. See Exchange Act Release No. 33023 (Oct. 
6, 1993) [58 FR 52891].
    \8\The Commission has published notice of a proposed rule change 
of the Municipal Securities Rulemaking Board that will require 
transactions in municipal securities to settle by T+3. Exchange Act 
Release No. 34541 (Aug. 17, 1994) [59 FR 43603].
    \9\The effective date was changed from June 1, 1995 to June 7, 
1995 in Exchange Act Release No. 34952 (Nov. 9, 1994) [59 FR 59137].
    When Rule 15c6-1 was proposed in February 1993, it provided that 
public offerings of debt and equity securities would have to be settled 
by T+3. Commentators on the proposal raised concerns that new issues of 
securities10 could not be settled by T+3 because the prospectus 
could not be printed prior to the trade date (the date on which the 
securities are priced) and therefore the prospectus printing and 
delivery process could not be completed within a T+3 time frame. To 
address those concerns, Rule 15c6-1 was modified upon adoption to 
provide a limited exemption from T+3 for the sale of securities for 
cash pursuant to firm commitment offerings registered under the 
Securities Act.11 Accordingly, an underwriter can set any 
settlement period for such offerings. Resales of such securities, other 
than the sale to an initial purchaser by a broker-dealer participating 
in such offering, remain subject to the T+3 time frame.

    \10\The term ``new issues'' is used herein to refer to both 
initial public offerings by issuers and offerings of additional 
securities by reporting companies.
    \11\Rule 15c6-1 also contains a specific exemption for sales of 
unlisted limited partnership interests.
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    Since the adoption of Rule 15c6-1, members of the brokerage 
community have suggested that the Commission eliminate this exemption 
from T+3 and ease the problems associated with prospectus delivery 
within T+3 by other means. The primary reasons expressed for requiring 
T+3 settlement of such offerings are: (i) the secondary market for a 
new issue may be subject to greater price fluctuations or instability, 
which in turn may expose underwriters, dealers and investors to 
disproportionate credit and market risk; and (ii) the bifurcated 
settlement cycle created for initial sales and resales of new issues 
would be disruptive to broker-dealer operations and to the clearance 
and settlement system. In particular, it has been noted that if a 
purchaser of a new issue sells on the first or second day after 
pricing, the purchaser's broker will not be able to settle with the 
buyer's broker on a T+3 schedule because the securities will not yet be 
available for settlement purposes. As a result, all such trades by the 
purchasers would ``fail'' and result in expense, inefficiencies and 
greater settlement risk for all participants.12 A bifurcated 
settlement cycle also may require the maintenance of separate computer 
systems and additional internal procedures.

    \12\A system for when-issued trading could be developed to help 
alleviate such failed transactions, but commentators have suggested 
that when-issued trading would not be a solution since, among other 
reasons, many institutional customers are unable to engage in when-
issued trading. See letter from Joseph McLaughlin, infra footnote 
15. [[Page 10725]] 
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    According to the brokerage community, the primary reason that 
settlement within T+3 currently is not feasible for many new issues is 
the amount of time it takes to print and deliver prospectuses. Some of 
these timing difficulties can be expected to be alleviated as markets 
increasingly rely on electronic delivery of materials. In recognition 
of that development, the Commission staff has recently issued an 
interpretive letter to facilitate the use of electronic transmission to 
satisfy prospectus delivery requirements.13 Until the markets 
create systems that make electronic delivery the method of choice, and 
most investors have the means to accept electronic delivery, however, 
the Commission must address delivery of prospectuses in paper 
form.14

    \13\See Brown & Wood (Feb. 17, 1995). An earlier no-action 
letter granted relief in connection with the use of electronic means 
to transmit confirmations. See Thomson Financial Services, Inc. 
(Oct. 8, 1993).
    \14\The Division of Corporation Finance staff, in addition to 
issuing the Brown & Wood letter, is considering generally delivery 
under the Securities Act of prospectuses through other non-paper 
media (e.g., audiotapes, videotapes, facsimile, directed electronic 
mail, and CD ROMs). The staff anticipates submitting to the 
Commission in the near future recommendations intended both to 
facilitate compliance with the Securities Act's prospectus delivery 
requirements and to encourage continued technological developments 
of non-paper delivery media.
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    While multiple recommendations have been made that the Commission 
eliminate the existing T+3 exemption and facilitate the prospectus 
delivery process, members of the brokerage community are not in 
unanimity as to how the prospectus delivery process could best be 
expedited. Two proposals by members of the brokerage community have 
been presented for Commission consideration.15 Those proposals 
recommend markedly different solutions to accomplishing prospectus 
delivery in a T+3 time frame.16

    \15\See letter from Robin Shelby, CS First Boston Corporation; 
Goldman Sachs & Co.; Steven Barkenfield, Lehman Brothers Inc.; and 
John Ander, Morgan Stanley & Co. Inc. to Anita Klein, Securities and 
Exchange Commission, dated Jan. 24, 1995 and letter from Goldman 
Sachs to Anita Klein, Securities and Exchange Commission, dated Feb. 
3, 1995. See also letter from Joseph McLaughlin, Brown & Wood, on 
behalf of the Securities Industry Association, to Anita Klein, 
Securities and Exchange Commission, dated Feb. 1, 1995. Copies of 
these proposals are available for inspection and duplication at the 
Commission's Public Reference Room, 450 Fifth St. NW, Washington, 
D.C. 20549, File Number S7-7-95.
    \16\Today's proposal is not the first time the Commission has 
addressed concerns that the settlement schedule is difficult to meet 
in connection with firm commitment offerings of securities for cash. 
In 1987, the Commission issued a release, in response to industry 
requests, making alternative proposals to expedite the prospectus 
delivery process. See Securities Act Release No. 6727 (July 31, 
1987) [52 FR 29206]. Those proposals engendered opposition from 
commentators and were not adopted by the Commission.
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    The approaches reflected in the two proposals are not mutually 
exclusive methods of expediting prospectus delivery. The Commission 
therefore is proposing amendments to its rules that would accomplish 
both proposals. Comment is sought regarding which alternative should be 
implemented or whether the Commission should implement both proposals 
and thereby allow market participants a choice as to which approach to 
use in any given offering. Alternatively, would some other combination 
of the proposals best expedite prospectus delivery? Comment also is 
solicited with respect to whether there is a need for any Commission 
action with respect to prospectus delivery to accommodate T+3 clearance 
and settlement.

II. The Prospectus Delivery Proposals

 A. The Four Firms Proposal and Related Commission Proposals

    The first proposal to facilitate T+3 settlement was made by a group 
of four firms: CS First Boston Corporation, Goldman, Sachs & Co., 
Lehman Brothers Inc. and Morgan Stanley & Co. Incorporated 
(hereinafter, the ``Four Firms Proposal''). The Four Firms Proposal is 
premised on the view that the process of preparation and delivery of 
prospectuses in new issues can be accelerated sufficiently to comply 
with T+3 if six steps are taken by the Commission. According to the 
proponents, these steps would modify the registration process in ways 
that would facilitate the printing of a significant portion of the 
final prospectus prior to pricing, and therefore accommodate compliance 
with T+3. Certain aspects of the Four Firms Proposal also are proposed 
to apply to offerings of investment company shares. Comment is 
requested on whether some or all of those aspects of the Four Firms 
Proposal should apply to investment companies.
1. Re-ordering of Prospectuses
    The Four Firms Proposal first suggests that the contents of 
prospectuses could be re-ordered so that all portions likely to be 
subject to change at the time of pricing are placed together at the 
front. The Four Firms Proposal indicates that this change would 
expedite printing of the prospectus because the bulk of it is unlikely 
to change as a result of pricing and, therefore, could be printed in 
advance of pricing.
    In practice, prospectus information has been organized roughly in 
the order in which the Commission forms set forth the required items of 
disclosure. While information contained in a prospectus need not follow 
the order of the items in the form,17 some Commission rules 
currently require that certain information is to be included in a 
specified part of the prospectus, or in a specified order.18

    \17\See Rule 421(a) under the Securities Act, 17 CFR 230.421(a). 
Rule 421(a) does require that information in a prospectus be set 
forth in a fashion so as not to obscure any of the required 
information or any information necessary to keep the required 
information from being incomplete or misleading.
    \18\Rules specifying information required on the cover pages of 
the prospectus are: (i) Item 501(c) of Regulation S-K, 17 CFR 
229.501(c) (information that must be contained on the outside front 
cover page of the prospectus); and (ii) Item 502 of Regulation S-K, 
17 CFR 229.502 (information that must be contained on the inside 
front cover page and the outside back cover page). See also Item 501 
and Item 502 of Regulation S-B, 17 CFR 228.501 and 228.502.
    Rules specifying information required in the forepart of the 
prospectus are: (i) Item 503(b) of Regulation S-K, 17 CFR 229.503(b) 
(mailing address and telephone number of the registrant's executive 
offices); and (ii) Item 503(c) of Regulation S-K, 17 CFR 229.503(c) 
(a discussion of the principal risk factors related to the 
offering). See also Item 503(b) and Item 503(c) of Regulation S-B, 
17 CFR 228.503(b) and 228.503(c).
    Other rules, certain Securities Act Industry Guides, and a 
Commission release, which are applicable only to limited categories 
of transactions, specify location or order of prospectus 
information: (i) Items 903(a) and 904(a) of Regulation S-K, 17 CFR 
229.903(a) and 229.904(a) specify, respectively, that a summary of a 
roll-up transaction be included in the forepart of the disclosure 
document and that, immediately following the summary, a reasonably 
detailed description of each material risk and effect of the roll-up 
transaction be included; (ii) Securities Act Industry Guide 4, 17 
CFR 229.801(d), for oil and gas programs, specifies that disclosure 
throughout the prospectus should appear in the sequence indicated; 
(iii) Securities Act Industry Guide 5, 17 CFR 229.801(e), relating 
to interests in real estate limited partnerships, specifies that 
suitability standards, if any, to be utilized by the registrant 
should be described immediately following the cover page; (iv) 
Securities Act Release No. 6900 (June 17, 1991) [56 FR 28979], 
relating to limited partnerships, requires that the forepart of the 
prospectus begin with a cover page, a table of contents, a summary, 
disclosure of risk factors and suitability standards, and requires 
that a glossary be located in the back of the prospectus.
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    Under the proposal, the Commission would not raise objections if a 
prospectus is re-ordered to place the sections likely to change at the 
front in order to expedite the printing process,19 provided that 
the cover pages of the prospectus continue to contain the information 
currently specified by Commission rules.20 In addition, any 
[[Page 10726]] summary section, which logically can appear only near 
the front of the prospectus, and the discussion of risk factors must 
remain in the forepart of the prospectus, although those sections may 
immediately follow a ``pricing information'' section which would 
include disclosure likely to be subject to change at pricing, such as: 
use of proceeds, the plan of distribution and capitalization.21 
Accordingly, certain Commission rules that specify the location of 
other information in the forepart of the prospectus, or in a specified 
order within the prospectus, are proposed to be eliminated.22 No 
revision to the remaining order and location rules, which relate to 
specific and limited classes of transactions, are proposed at this 
time.23 Comment is requested as to whether the Commission should 
require that the summary and risk factors disclosure immediately follow 
the cover page of the prospectus. In addition, should other rules that 
would continue to specify order or location also be revised to 
accommodate expedited printing of prospectuses?

    \19\Of course, the information set forth in the prospectus must 
nevertheless be presented in a clear, concise and understandable 
fashion, as required by Rule 421(b) under the Securities Act, 17 CFR 
230.421(b). See also Rule 421(a), supra footnote 17.
    \20\But see proposed revision to Item 502(f) of Regulation S-K, 
17 CFR 229.502(f).
    \21\See proposed revisions to Item 503(c) of Regulation S-K, 17 
CFR 229.503(c) and Item 503(c) of Regulation S-B, 17 CFR 228.503(c).
    \22\See proposed revisions to Item 503(b) of Regulation S-K, 17 
CFR 229.503(b), Item 503(b) of Regulation S-B, 17 CFR 228.503(b) and 
Securities Act Industry Guide 4, 17 CFR 229.801(d).
    \23\The requirements not proposed to be changed are those set 
forth supra footnote 18 other than the rules set forth supra 
footnotes 21 and 22.
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2. Extension of Pricing Period
    Under Rule 430A under the Securities Act,24 if a prospectus 
supplement containing pricing and other information omitted from a 
registration statement is not filed by the later of five business days 
after the effective date of the registration statement or any post-
effective amendment thereto, the information omitted must be filed in a 
post-effective amendment rather than under Rule 424(b). Unlike a filing 
under Rule 424(b), a post-effective amendment must be declared 
effective prior to any sale of the securities. The second modification 
suggested by the Four Firms Proposal is a revision to Rule 430A to 
extend, from five business days to ten business days, the period during 
which an offering in reliance on that rule may be priced and a 
supplement filed. According to the Four Firms Proposal, issuers delay 
the time at which they seek to have registration statements effective, 
and therefore printing of the prospectus, because they have only five 
days thereafter in which to price and file the required pricing 
supplement. By extending the time in which to file the pricing 
supplement, the Commission would encourage issuers to have their 
filings become effective earlier, and consequently start the printing 
earlier.

    \24\17 CFR 230.430A.
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    The principal purpose of the five business day limitation was to 
ensure that delays in pricing securities under Rule 430A would not 
permit delayed offerings to be made by persons that do not meet the 
criteria for use of shelf registration.25 An extension of the 
five-day period would not appear to defeat the purpose of that 
limitation. The Commission therefore proposes to extend the period 
during which the pricing supplement may be filed from five business 
days to ten business days after the effective date of the registration 
statement. Comment is requested as to whether any problems could arise 
from the extension, and whether such extension would in fact encourage 
earlier printing of all or a portion of the prospectus. Comment also is 
requested as to whether a longer period, such as 15, 25 or 30 business 
days, would provide additional flexibility and further expedite 
prospectus delivery for purposes of complying with T+3.

    \25\See Securities Act Release No. 6714 (May 27, 1987) [52 FR 
21252].
3. Changes in Offering Size and Estimated Price Range
    The Four Firms Proposal also states that delays in printing 
prospectuses in 430A offerings arise because a post-effective amendment 
must be filed if there is a material decrease in the amount of 
securities offered or the pricing of the securities falls outside the 
range estimated in the effective registration statement. Printing and 
sales are delayed until such amendment is declared effective. 
Similarly, where participants decide to increase the size of the 
offering, a new registration statement to register the additional 
securities must be filed and declared effective.26 The Four Firms 
Proposal suggests that no filing with the Commission be required if the 
size of the offering is increased or decreased up to 20% or the price 
deviates from the estimated price range by up to 20%.

    \26\These increases are most common in the context of an initial 
public offering, since the lack of an existing market makes it 
difficult to estimate market demand and the appropriate price for 
such securities.
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    a. Increases in Offering Size. Where a registrant wishes to offer 
and sell more securities than were included in the registration 
statement at the time it became effective, the Securities Act requires 
that it register the additional securities.27 The Commission 
understands that the determination of offering size, particularly in 
certain market climates, can change at the time when prospectus 
printing is imminent. In light of the timing difficulties presented by 
that situation, the Commission is proposing changes to facilitate 
expedited registration in a Rule 430A offering if it is done solely for 
the purpose of increasing an offering size by up to 20%.

    \27\See Section 6 of the Securities Act, 15 U.S.C. 77f, and Rule 
413 under the Securities Act, 17 CFR 230.413.
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    Under the proposal, a short-form version of such a registration 
statement would be accepted.28 Such registration would consist of: 
the facing page, a statement incorporating the contents of the earlier 
registration statement relating to the offering, all required consents 
and opinions, the signature page, and any information required in the 
new registration statement that is not in the earlier registration 
statement.29 To ensure that no delay would result from Commission 
processing, such registration statements would be made effective 
automatically upon filing.30 Such a short-form registration 
statement would be deemed to be a part of the earlier registration 
statement relating to the offering.31

    \28\See proposed revisions to General Instructions of Forms SB-
1, SB-2, S-1, S-2, S-3, S-11, F-1, F-2 and F-3.
    \29\Information regarding the effect of the increase in offering 
size may be required in the new registration statement and would not 
have been contained in the earlier registration statement.
    A similar short-form procedure was adopted by the Commission for 
registration of additional securities for employee benefit plans. 
See General Instruction E to Form S-8.
    \30\See proposed Rule 462(b), 17 CFR 230.462(b). This 
registration statement would be required to be filed within two 
business days of the pricing of the securities registered on the 
earlier registration statement. While indications of interest may 
exceed the amount of securities registered in the earlier 
registration statement, no offers would be permitted prior to the 
filing of the registration statement with respect to the additional 
20% and no sales of the additional 20% would be permitted prior to 
the effectiveness thereof.
    \31\See newly proposed Rule 430A(b), 17 CFR 230.430A(b).
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    To expedite preparation of such registration statements, the 
Commission also would provide that duplicated or facsimile versions of 
manual signatures could be included on the signature page of such 
registration statements, rather than the manual signatures currently 
required.32 In addition, opinions and consents required in such 
registration statements could be incorporated by reference to the 
extent that the opinions [[Page 10727]] and consents contained in the 
earlier effective registration statement were drafted to apply to any 
subsequent registration statement filed solely to increase the offering 
up to the 20% threshold.33 Where consents cannot be incorporated, 
duplicated or facsimile versions of manual signatures would be accepted 
in the new consents required to be filed.34 Comment is requested 
with regard to whether some or all of these changes to facilitate 
expedited registration to increase a Rule 430A offering should be 
extended to all registered offerings.

    \32\See proposed revisions to Rule 402 under the Securities Act, 
17 CFR 230.402. In addition, Items 601(b)(24) of Regulations S-K and 
S-B, 17 CFR 229.601(b)(24) and 17 CFR 228.601(b)(24), are proposed 
to be revised so that a power of attorney included in the earlier 
registration statement relating to the offering may also relate to 
the short-form registration statement filed to register the 
additional securities.
    \33\See Rule 411(c) under the Securities Act, 17 CFR 230.411(c), 
proposed Rule 439(b) under the Securities Act, 17 CFR 230.439(b), 
and proposed changes to General Instructions of Forms SB-1, SB-2, S-
1, S-2, S-3, S-11, F-1, F-2 and F-3.
    \34\See proposed changes to Rules 402 and 439 under the 
Securities Act, 17 CFR 230.402 and 230.439.
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    The Commission also is proposing to increase registrants' 
flexibility with respect to the amount of securities registered in Rule 
430A offerings and thereby minimize the instances in which an increase 
in offering size results in the need to file a new registration 
statement. Such offerings would be permitted to be registered by 
specifying only the title of the class of securities to be registered 
and the proposed maximum aggregate offering price in the ``Calculation 
of Registration Fee'' section.35 The amount of securities to be 
registered and the proposed maximum offering price per unit would no 
longer be required to be set forth.36

    \35\See proposed revisions to Rule 457(o) under the Securities 
Act, 17 CFR 230.457(o). Such flexibility already is provided in 
connection with unallocated shelf registration statements.
    \36\In most non-shelf offerings, such information currently is 
required to be included on the cover page of the registration 
statement. See, e.g., the ``Calculation of Registration Fee'' 
section in Form S-1. The registrant would continue to be required in 
Rule 430A offerings to specify in the prospectus, however, the 
amount of securities offered and, where the registrant is not a 
reporting company, a bona fide estimate of the range of the maximum 
offering price.
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    Under the proposal, an issuer would register a specified dollar 
amount of a class of securities, such as $50 million of common stock, 
and would not be required to register more if the number of shares to 
be offered was increased, unless the aggregate amount of the offering 
would exceed the total dollar amount registered. If registrants 
register a dollar amount greater than what is used for the offering, 
Rule 429 under the Securities Act could be used to save any amount of 
the registration fee paid to the Commission for the remaining dollar 
amount. Under Rule 429, the registrant, in a new registration statement 
filed in the future for another offering of that class of securities, 
could simply indicate that part of the registration fee had been paid 
previously in connection with the earlier registration. Comment is 
requested with regard to whether the flexibility provided by specifying 
the dollar amount of the class of securities registered should be 
extended to all registered offerings.
    b. Changes in Offering Size; Deviation from Price Range. The 
Commission also is proposing to address the concerns raised in the Four 
Firms Proposal with respect to filings resulting from a 20% decrease of 
the offering size or a 20% deviation from the estimated price range. 
Currently, a post-effective amendment is not required to be filed where 
there is a decrease in volume of securities offered or a price chosen 
that is outside the disclosed estimated price range, unless the volume 
decrease or price change would materially change the disclosure 
included in the registration statement at the time of 
effectiveness.37

    \37\See Securities Act Release No. 6964 (Oct. 22, 1992) [57 FR 
48970] for a discussion of the materiality standard as it applies to 
these changes.
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    The proposal would provide that a post-effective amendment need not 
be filed if there is a decrease in the offering size of up to 20% or a 
deviation in price from the estimated price range of up to 20%.38 
In addition, the proposal would provide that, where an increase of up 
to 20% in the offering size would not require additional securities to 
be registered, such an increase also would not result in the need to 
file a post-effective amendment.39 Comment is requested with 
respect to whether lower thresholds, such as 15%, or higher thresholds, 
such as 25%, should be used. Commenters also should consider whether 
this proposal would facilitate non-Rule 430A offerings and should be 
extended to those offerings as well. While the proposal contemplates 
that no post-effective amendment need be filed, issuers would continue 
to be responsible for evaluating the effect of such a volume change or 
price deviation on the accuracy and completeness of disclosure made to 
investors, including disclosure regarding the use of offering proceeds, 
dilution and debt coverage.

    \38\See proposed revision to Instruction to Paragraph (a) of 
Rule 430A, 17 CFR 230.430A. As proposed, a change or deviation 
beyond the 20% threshold would continue to require a post-effective 
amendment only if it materially changes the previous disclosure.
    \39\Id.
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4. Immediate Takedowns from a Shelf Registration
    The Four Firms Proposal also requests that the Commission permit 
immediate takedowns after a shelf registration statement becomes 
effective. Immediate offerings from an effective shelf registration 
statement currently are permitted. At the time of effectiveness, the 
shelf registration statement must accurately reflect all information 
known. If an offering of securities is certain at the time the 
registration statement becomes effective, the relevant information 
(e.g., description of securities, plan of distribution and use of 
proceeds) must be disclosed and the Rule 430A undertakings should be 
included, if the issuer wants Rule 430A pricing flexibility. 
Accordingly, no rule amendments are required to address this request.
5. Acceleration of Effectiveness
    The Four Firms Proposal also recommends that requests to accelerate 
effectiveness of registration statements be accepted by fax 
transmission. Rule revisions are proposed to allow such 
transmissions.40 The Four Firms Proposal also suggests that the 
Commission accept oral acceleration requests. Rule revisions also are 
proposed to permit oral requests for acceleration to be made, provided 
that a version of the registration statement filed with the Commission 
is accompanied by a letter indicating that the registrant and the 
managing underwriter may make oral requests for acceleration and that 
they are aware of their obligations under the Securities Act.41 
Comment is requested regarding whether oral acceleration requests 
present greater risks of being transmitted by persons without the 
authority to do so, or being transmitted without the knowledge of all 
participants in the offering. If so, should written requests continue 
to be required?

    \40\See Securities Act Rule 461(a), 17 CFR 230.461(a). The 
facsimile or duplicate version need not be followed by transmission 
of the manually signed version to the Commission.
    \41\See Securities Act Rule 461(a), 17 CFR 230.461(a). The 
liability of persons who sign the registration statement, the 
underwriters and others under Section 11(a) of the Securities Act, 
15 U.S.C. Sec. 77k(a), is based upon the registration statement at 
the time it becomes effective.
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6. Four-Day Settlement Period
    Finally, the Four Firms Proposal suggests that Rule 15c6-1 be 
amended to provide that, if the offering is priced after the close of 
the market, payment of funds and delivery of securities may occur not 
later than the fourth business day thereafter (``T+4''). When such 
securities are priced late in the day, it is difficult to print the 
final prospectus for delivery by T+3. Further, the majority of 
secondary trading in the securities generally does not begin until 
[[Page 10728]] the opening of the market on the next business day. 
Thus, for these offerings there is less concern about an increase in 
failed transactions from secondary market trading or the need for 
special systems to accommodate two days of when-issued trading in order 
to effect delivery of securities in secondary market trades. The Four 
Firms are of the view that only minor systems modifications would be 
needed to accommodate a T+4 cycle, so the concerns previously expressed 
by the industry about the costs of maintaining systems for T+3 for all 
purposes except firm commitment offerings is reduced substantially.
    The Commission is proposing to revise Rule 15c6-1 to establish T+4 
as the standard settlement cycle for sales in connection with firm 
commitment offerings priced after the market closed and invites comment 
as to whether such a T+4 settlement period is workable. Specifically, 
would this period create confusion in the marketplace?
    Some industry participants may believe that a T+4 requirement for 
firm commitment offerings is not sufficiently flexible. As an 
alternative, the Commission is publishing for comment a provision that 
would permit the settlement cycle for a firm commitment offering to be 
set for any period equal to or less than T+5.42 Rule 15c6-1(a) 
contains an override provision that permits the parties to a contract 
to establish an alternate settlement time frame if expressly agreed to 
at the time of the transaction. In the release adopting the Rule 15c6-
1, the Commission stated that this provision was not intended to permit 
broker-dealers to specify before execution of specific trades that a 
group of trades will settle in a time frame other than T+3.

    \42\See proposed Rule 15c6-1(e), 17 CFR 240.15c6-1(e).
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    If a situation occurs that requires more time for settlement of a 
firm commitment offering, it may be onerous for every broker-dealer in 
the offering to expressly set an alternate time frame for each 
individual trade. The Commission invites comment as to whether it would 
be appropriate to expand the override provision to allow the managing 
underwriter to establish T+3, T+4, or T+5 as the settlement time frame 
for the entire offering.43 The underwriter would be required to 
provide notice of its intent to set an alternate time frame by sending 
written notice to prospective purchasers on or before the date the 
securities are priced and by providing notice of the alternate time 
frame to an exchange where the securities are listed or a registered 
securities association through which quotations are disseminated. 
Additionally, broker-dealers participating in the offering would retain 
their ability to use the specific trade override provision. Commenters 
are requested to provide comments on the benefits and drawbacks to this 
approach, including whether such an amendment would create uncertainty 
in the marketplace.

    \43\This provision will be available for firm commitment 
offerings subject to a T+3 settlement time frame under paragraph (a) 
of Rule 15c6-1, 17 CFR 240.15c6-1(a), and for firm commitment 
offerings subject to a T+4 settlement time frame under paragraph (d) 
of Rule 15c6-1, 17 CFR 240.15c6-1(d).
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    What are the relative benefits and drawbacks of the proposal 
establishing T+4 as the standard settlement cycle for offerings priced 
after the close of the market and the proposal giving underwriters the 
ability to select an alternate trade date? Would adoption of the first 
proposal make it unnecessary to adopt the second proposal? Should T+3 
or T+4 be the standard for offerings that are priced after the close of 
the market?

B. The SIA Proposal and Related Commission Proposals

    In the other proposal received by the Commission, the Securities 
Industry Association has recommended that the Commission adopt a rule 
allowing prospectus information to be delivered without the use of the 
traditional final prospectus (hereinafter, the ``SIA Proposal''). Where 
short-form registration44 is not used, the SIA Proposal would 
provide that all required prospectus information be delivered to 
investors in the preliminary prospectus traditionally disseminated and, 
if necessary, a supplementing memorandum.45 This supplementing 
memorandum would either set forth or summarize: (i) previously 
undisclosed information describing the registered securities (other 
than certain price-related information contained in the 
confirmation);46 and (ii) previously undisclosed actual or 
anticipated changes between the preliminary prospectus circulated to 
investors and the final prospectus filed with the Commission.47

    \44\Short-form registration is used herein to refer to 
registration on Commission Forms S-3 or F-3.
    \45\``Preliminary prospectus'' is used herein to refer to either 
a preliminary prospectus used in reliance on Rule 430, 17 CFR 
230.430, or a prospectus filed in accordance with Rule 430A(a), 17 
CFR 230.430A(a), which omits specified price-related information.
    \46\This price-related information may be omitted from the 
registration statement at the time it is declared effective pursuant 
to Rule 430A under the Securities Act. The description of securities 
would be made in accordance with Item 202 of Regulation S-K, 17 CFR 
229.202, or be a summary of such information.
    \47\The final prospectus filed with the Commission would be the 
prospectus contained in the registration statement at the time it 
becomes effective, as modified subsequently by any prospectus filed 
pursuant to Rule 424(b), 17 CFR 230.424(b).
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    For securities offerings that use short-form registration, the SIA 
Proposal contemplates different methods of delivery depending upon 
whether or not shelf registration is used.48 For shelf offerings, 
the SIA Proposal would require delivery of the base prospectus49 
contained in the registration statement at the time it is declared 
effective and an abbreviated supplementing memorandum.50 The 
abbreviated supplementing memorandum in that case would set forth or 
summarize only a description of the material changes in the 
registrant's affairs pursuant to Item 11 of Form S-3 or Form F-3 
(``Item 11 information'') that have not been disclosed in its Exchange 
Act reports. For non-shelf offerings using short-form registration, the 
SIA Proposal would require delivery of only an abbreviated 
supplementing memorandum describing Item 11 information. A preliminary 
prospectus would be delivered only at the issuer's discretion. 
Supplementing memoranda and abbreviated supplementing memoranda used 
under the SIA Proposal would be required to be filed with the 
Commission within two business days after first being sent to 
investors.

    \48\``Shelf registration'' is used herein to refer to 
registration of a delayed offering pursuant to Rule 415(a)(1)(x) 
under the Securities Act, 17 CFR 230.415(a)(1)(x).
    \49\``Base prospectus'' is used herein to refer to a prospectus 
contained in a registration statement at the time of effectiveness 
that omits information that is not yet known concerning a delayed 
offering pursuant to Rule 415(a)(1)(x), 17 CFR 230.415(a)(1)(x).
    \50\For medium-term note programs, however, any program 
supplement also would be delivered under the SIA proposal.
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    The Commission's proposal varies from the rule proposed by the SIA. 
Like the SIA Proposal, however, proposed Rule 434 under the Securities 
Act51 would permit issuers to convey prospectus information in 
more than one document and allow such documents to be delivered to 
investors at separate intervals and in varying manners.52

    \51\17 CFR 230.434.
    \52\The Commission provided analogous treatment with respect to 
prospectus delivery in connection with employee benefit plans when 
it adopted revisions to Form S-8 in 1990. See Securities Act Release 
No. 6867 (June 13, 1990) [55 FR 23909].
    The rule would provide that, in the aggregate, all required 
information be disclosed to investors on a timely basis 
[[Page 10729]] (i.e., prior to or at the same time as a confirmation is 
sent). Reliance upon this rule would allow participants in a firm 
commitment underwritten offering of securities for cash (hereinafter, 
an ``eligible offering'') to forego last-minute mass printing, shipping 
and mailing of a traditional final prospectus, which is generally 
undertaken only after pricing of the offering. The proposed rule sets 
forth two methods for delivering prospectus information: one that is 
available for eligible offerings not using shelf registration, and one 
that is available for eligible offerings using short-form registration.
1. Prospectus Delivery Method for Offerings Not Made Using Short-Form 
Registration
    In all eligible offerings not made using short-form registration, 
persons could comply with their prospectus delivery obligations by 
delivering a preliminary prospectus, a confirmation and, as needed, a 
supplementing memorandum. A supplementing memorandum would be required 
to be delivered only if information material to investors with respect 
to the offering is not disclosed in the preliminary prospectus or the 
confirmation. This method of delivery differs from traditional 
prospectus delivery primarily in that it is accomplished in more than 
one document. Investors would be delivered information comparable to 
that which is currently required to be delivered.
    a. Rule 430A Offerings. In Rule 430A offerings, a preliminary 
prospectus omitting the price-related information specified in the rule 
would be delivered in addition to a supplementing memorandum that 
contains such price-related information (to the extent not contained in 
the confirmation). The supplementing memorandum also would contain any 
other necessary material disclosure missing from the preliminary 
prospectus. Together, the preliminary prospectus and the supplementing 
memorandum would contain information comparable to the traditional 
final prospectus.53

    \53\The traditional final prospectus currently reflects the 
information set forth in the registration statement at the time of 
effectiveness, any post-effective amendment and the pricing 
supplement. Post-effective amendments, however, are unlikely to be 
filed unless the pricing date exceeds the five business day 
limitation allowing for use of a pricing supplement.
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    b. Offerings Not Made in Reliance on Rule 430A. In offerings not 
proceeding under Rule 430A, a preliminary prospectus containing price-
related information alone could be delivered to investors. Unlike in 
Rule 430A offerings, the price-related information could be included in 
the preliminary prospectus. If such information is included in the 
preliminary prospectus, a supplementing memorandum would not have to be 
delivered unless material changes or material additions to the 
information in the preliminary prospectus must be disclosed. In all 
cases, the preliminary prospectus and any supplementing memorandum, 
together, would contain information comparable to the traditional final 
prospectus, which currently reflects the information set forth in the 
registration statement at the time it goes effective.
    c. Use of Incremental Disclosure. As the SIA Proposal notes, the 
use of a preliminary prospectus and a separate supplementing memorandum 
may not be feasible in all offerings. Whether the latter document, 
which is anticipated to be brief, can convey clearly the missing or 
changed information will depend upon the nature and magnitude of the 
disclosure differences between the preliminary prospectus and the 
prospectus contained in the effective registration statement (as 
modified by post-effective amendments). In some cases, the disclosure 
that would have to be contained in the supplementing memorandum may not 
be able to be described in isolation from other disclosure in the 
preliminary prospectus. Where disclosure in many parts of the 
preliminary prospectus has changed, participants may find the option of 
preparing a supplementing memorandum is not of great benefit.
    Comment is requested as to whether the proposal should be limited 
either with respect to the amount of time that could elapse between 
delivery of the preliminary prospectus and the supplementing 
memorandum, or with respect to the magnitude of changes that a 
supplementing memorandum could contain. If the latter, how would the 
acceptable magnitude be defined?
    d. Filing and Review of Registration Statements. Although the 
method of delivering prospectus information would change under the 
proposed rule, neither the process of filing registration statements 
and amendments thereto, nor the Commission's registration statement 
review process, would be altered.\54\ The proposed rule would require 
that the preliminary prospectus and the supplementing memorandum, taken 
together, not materially differ from the disclosure filed with the 
Commission in connection with the registration statement.\55\ This 
provision would preserve the integrity of the Commission's review 
process and ensure that the delivered prospectus disclosure is 
comparable to that contained in the registration statement.

    \54\Thus, investors that wish to acquire a traditional final 
prospectus would have access to one through the Commission, where 
the issuer would continue to file all required prospectus disclosure 
in the traditional, integrated format. Comment is requested as to 
whether access to a final prospectus in traditional, integrated 
format should be ensured other than through the Commission's 
facilities, such as through the issuer or underwriter(s)' 
facilities. See also proposed Rule 434(c)(4), 17 CFR 230.434(c)(4), 
with regard to short-form registrants.
    \55\The delivered documents could not materially differ from the 
prospectus disclosure in the registration statement at the effective 
date, in any post-effective amendment thereto and in the pricing 
supplement.
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    Under the proposed rule, a supplementing memorandum would be filed 
with the Commission pursuant to Rule 424(b)(1) under the Securities Act 
within two business days after the earlier of pricing and first use. 
Thus, the Commission staff generally would not review supplementing 
memoranda prior to use.\56\ Comment is requested as to whether the 
proposal should require that the supplementing memorandum be filed 
prior to use and, therefore, be subject to staff review.

    \56\As under the current practice, the staff will continue to 
consider whether recirculation of a prospectus is needed when there 
are material changes in disclosure arising after the prospectus 
subject to completion has been given to investors. See Rules 460 and 
461(b) of Regulation S-K, 17 CFR 230.460 and 230.461(b).
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    e. Comparison With SIA Proposal. The proposed method of prospectus 
delivery applicable to non-short form offerings departs from the SIA 
Proposal in one significant respect. While the SIA Proposal 
contemplates that a supplementing memorandum could summarize previously 
undisclosed information, the proposed rule would require full 
disclosure of material changes or material additions. Comment is 
requested regarding whether a summary version of material information 
should be permitted under the proposed rule.
2. Prospectus Delivery Method for Offerings Using Short-Form 
Registration
    As in the case of non-short-form offerings, the proposed delivery 
method for offerings using short-form registration would allow the 
disclosure to be contained in more than one document delivered at 
different times. In addition, delivery would have to occur prior to or 
with a confirmation. Unlike the proposed delivery method for other 
offerings, however, the proposal for offerings using short-form 
registration relies upon delivery of certain prospectus information by 
publication with the Commission.
    Currently, in recognition of the market following that exists for 
issuers [[Page 10730]] using short-form registration, physical delivery 
of most issuer-specific information is not required for offerings by 
such persons.57 Instead, such information is incorporated by 
reference into the prospectus from the issuer's Exchange Act reports. 
Delivery of such information is therefore accomplished by publication 
of such information through filing with the Commission. Thus, the 
traditional final prospectus that is physically delivered by short-form 
issuers contains primarily ``offering-specific'' information as to 
which the efficient market theory generally has not been applied, 
including a description of: the terms of the securities offered, risk 
factors specific to the registered transaction, the intended use of 
offering proceeds, and the plan of distribution for the securities. The 
balance between information physically delivered to investors and 
information published would be altered by the proposed rule.

    \57\To be eligible to use short-form registration for a primary 
offering, an issuer must have a public float of $75 million and must 
have been reporting with the Commission for one year. See General 
Instructions I.A.3. and I.B.1. to Form S-3 and General Instructions 
I.A.1. and I.B.1. to Form F-3.
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    a. Short-Form, Non-Shelf Registration. The proposed rule would 
permit participants in non-shelf offerings using short-form 
registration to comply with their delivery obligations by distributing 
a preliminary prospectus and an abbreviated supplementing memorandum. 
The abbreviated supplementing memorandum would be required to contain: 
(i) a fair and accurate summary of the description of 
securities;58 and (ii) Item 11 information, to the extent not 
disclosed in the preliminary prospectus or the registrant's Exchange 
Act reports.59

    \58\This disclosure would be a fair and accurate summary of that 
which is required under Item 202 of Regulation S-K, 17 CFR 229.202.
    \59\The abbreviated supplementing memorandum would be required 
to be filed with the Commission pursuant to Rule 424(b)(1) under the 
Securities Act, 17 CFR 230.424(b)(1) (or, if the disclosure 
represents a fundamental change in the information contained in the 
registration statement, in a post-effective amendment declared 
effective prior to the time a confirmation is sent or given). 
Pursuant to Rule 430A, the abbreviated supplementing memorandum 
would be deemed to be a part of the registration statement at the 
time it became effective.
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    Under the proposed rule, it is likely that the preliminary 
prospectus would contain the bulk of offering-specific disclosure that 
would have been physically delivered in a traditional final 
prospectus.60 Thus, offering-specific information physically 
delivered would continue to surpass offering-specific information 
published in those offerings. Where Rule 430A is relied upon, certain 
price-related information that may be excluded at effectiveness also 
would not be in the preliminary prospectus. Such information generally 
would not be included in the abbreviated supplementing memorandum, but 
it would be on file with the Commission prior to the time confirmations 
are sent. The price itself will be set forth in the confirmation.

    \60\The information currently required to be physically 
delivered in a short-form final prospectus would consist of 
disclosure required by Items 501-510 and 202 of Regulation S-K, 17 
CFR 229.502-229.510 and 229.202, as well as Item 11 information.
    Section 5(b)(1) of the Securities Act, 15 U.S.C. Sec. 77e(b)(1), 
prohibits transmission of any prospectus relating to any security 
with respect to which a registration statement has been filed unless 
the prospectus meets the requirements of Section 10 of the 
Securities Act, 15 U.S.C. 77j.
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    b. Short-Form Delayed Shelf Registration. The proposed rule would 
permit participants in delayed shelf offerings using short-form 
registration to comply with their delivery obligations by distributing 
a base prospectus and an abbreviated supplementing memorandum. As in 
the case of non-shelf offerings, the abbreviated supplementing 
memorandum would be required to contain: (i) a fair and accurate 
summary of the description of securities; and (ii) Item 11 information, 
to the extent not disclosed in the base prospectus or the registrant's 
Exchange Act reports.61

    \61\As proposed, an abbreviated supplementing memorandum would 
be filed with the Commission in accordance with Rule 424(b)(1), 17 
CFR 230.424(b)(1), and would be deemed a part of the registration 
statement pursuant to Rule 430A. If the disclosure represents a 
fundamental change in the information contained in the registration 
statement, however, a post-effective amendment rather than a filing 
pursuant to Rule 424(b)(1) would be required. See proposed Rule 
434(c)(3), 17 CFR 230.434(c)(3).
    Traditionally, the final prospectus delivered to investors in 
delayed shelf offerings would include information set forth in both the 
base prospectus and a prospectus supplement.62 Information in the 
prospectus supplement would no longer be delivered physically to 
investors, except to the extent it is disclosed pursuant to the 
abbreviated supplementing memorandum. For example, use of proceeds, 
syndicate and plan of distribution information and a full description 
of securities need not be included in the abbreviated supplementing 
memorandum. The proposal would require, however, that the prospectus 
supplement in such offerings be filed with the Commission by the time 
any confirmation is sent or given to investors.63 In addition, 
such prospectus supplement would be deemed a part of the registration 
statement upon filing with the Commission.

    \62\The base prospectus omits information that is not yet known 
with respect to the terms of a specific securities offering. The 
omitted information is included in the prospectus supplement filed 
after the effective date of the registration statement. The base 
prospectus and prospectus supplement, which are physically delivered 
together, comprise the final prospectus.
    \63\See proposed Rule 424(e), 17 CFR 230.424(e). Prospectus 
supplements for shelf offerings generally are required to be filed 
with the Commission two or more business days after the earlier of 
pricing or first use. See Rule 424(b)(2), 17 CFR 230.424(b)(2).
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    As proposed, Rule 434 would not apply to offerings pursuant to the 
Commission's shelf registration rules other than delayed shelf 
offerings made by persons using short-form registration.64 It 
appears that other types of shelf offerings would not be contemplated 
within the parameters of firm commitment underwritten offerings for 
cash. Comment is requested, however, with respect to whether any other 
type of shelf offerings, including secondary offerings,65 could 
take place in connection with a firm commitment underwritten offering 
for cash. If so, should the proposed rule be extended to such 
offerings?

    \64\See proposed Rule 434(b) and (c), 17 CFR 230.434(b) and (c).
    \65\These offerings are described in Rule 415(a)(1)(i) under the 
Securities Act, 17 CFR 230.415(a)(1)(i).
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    c. Variations from the SIA Proposal. Under the SIA Proposal, in the 
case of short-form delayed shelf offerings, publication of prospectus 
information would only occur after the time confirmations had been 
sent, since the prospectus supplement would not be required to be filed 
with the Commission until two business days after the earlier of 
pricing or first use. The proposed rule does not incorporate this 
aspect of the SIA Proposal because delaying the availability of 
disclosure to a time after delivery of the confirmation appears 
inconsistent with Sections 5(b) and 2(10)(a) of the Securities Act and 
may not be particularly useful to investors.
    For non-shelf offerings using short-form registration, the proposed 
rule also diverges from the SIA Proposal in that it would require 
delivery of a preliminary prospectus, rather than just an abbreviated 
supplementing memorandum. Under the SIA Proposal, the abbreviated 
supplementing memorandum would include only a summary of Item 11 
information. Thus, the SIA Proposal essentially would not require 
physical delivery of offering-specific information. The proposed rule 
would require physical delivery of certain offering-specific 
disclosure.
    Comment is requested with respect to whether the proposed rule 
strikes the [[Page 10731]] appropriate balance between physical 
delivery of prospectus information and publication by filing. Should 
the full description of securities required by Item 202 of Regulation 
S-K be required to be physically delivered? If so, would such 
description cause the abbreviated supplementing memorandum to become so 
lengthy that the timing difficulties associated with prospectus 
delivery would not be surmounted? Should the proposed rule require 
physical delivery of other offering-specific information, such as 
disclosure of risk factors?
    Offerings registered through short-form registration currently 
proceed frequently with delivery of only a final prospectus, although a 
preliminary or base prospectus is prepared for filing with the 
Commission.66 Those offerings could proceed under the proposed 
rule only if a preliminary or base prospectus is delivered. Although 
base prospectuses are commonly prepared well in advance of a takedown 
from the delayed shelf, comment is requested with respect to whether a 
preliminary prospectus could be prepared and delivered sufficiently in 
advance of pricing in such offerings to warrant adoption of the 
proposed rule as it relates to non-shelf offerings made in short-form 
registration. If not, what alternative document should be allowed to be 
used to convey the required information? On the other hand, commenters 
should address whether physical delivery of all offering-specific 
information should be required for offerings using short-form 
registration.

    \66\Offerings of novel or complex securities, even when done 
through short-form registration, are sometimes sold through use of a 
preliminary prospectus.
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3. Conforming Changes to Rule 15c2-8
    Although the delivery of a prospectus to investors in advance of 
the final prospectus is not required by the Securities Act, paragraph 
(b) of Rule 15c2-8 under the Exchange Act67 requires broker-
dealers, in the case of certain initial public offerings, to deliver a 
copy of the preliminary prospectus at least 48 hours prior to the 
mailing of the confirmation.68 Other provisions of Rule 15c2-8 
govern the furnishing of the prospectus to broker-dealers participating 
in the offering to ensure that they have the latest available 
information when they solicit investors.

    \67\17 CFR 240.15c2-8(b).
    \68\Any person who is expected to receive a confirmation must 
have been sent a preliminary prospectus at least 48 hours prior to 
the sending of the confirmation. This requirement is satisfied by 
delivering a preliminary prospectus that is current at the time of 
its delivery.
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    The Commission is proposing amendments to Rule 15c2-8 to reflect 
the provisions of proposed Rule 434 and new means of disseminating 
confirmations and prospectuses. The proposed revisions would add new 
paragraph (j) that states that, for purposes of Rule 15c2-8, the terms 
``preliminary prospectus'' and ``final prospectus'' include the terms 
``prospectus subject to completion'' and ``Section 10(a) prospectus,'' 
respectively, as such terms are used in proposed Rule 434. Also, the 
proposals substitute the term ``sending'' for the term ``mailing.'' 
These proposed revisions are not intended to make substantive changes 
to Rule 15c2-8. Commenters are requested to provide their views on 
whether these proposals are appropriate in light of proposed Rule 434, 
and whether any other changes to Rule 15c2-8 are necessary in light of 
Securities Act rule revisions proposed herein.
4. Scope of the Proposed Rule
    a. Exchange Offers and Business Combinations; Best Efforts 
Offerings. Proposed Rule 434 extends only to offerings where the sole 
consideration given in exchange for securities is cash. Offerings such 
as exchange offers and business combinations would not be included. In 
those offerings, the final prospectus is traditionally used to begin 
the process of soliciting votes or consents to a transaction. Thus, the 
logistical difficulties of prospectus delivery intended to be minimized 
by the proposal should not be associated with those offerings.
    The proposed rule also does not extend to offerings that are made 
other than on a firm commitment basis with underwriters. The SIA 
Proposal would cover agency transactions in securities registered on a 
delayed shelf registration statement. In a firm commitment 
underwriting, the underwriter(s) agree to purchase the securities from 
the issuer for a fixed price and then resells the securities to the 
public, thereby assuming the risk of market fluctuations in the price 
of securities. According to the SIA Proposal, the prospectus delivery 
pressures appear to be greatest in such firm commitment offerings where 
the underwriter must make payment of its own funds to the issuer on a 
specified date, whether or not its customers have paid for the 
securities. In contrast, in a best efforts offering,69 the broker-
dealer is required to pay customers' funds promptly to the issuer (or 
to a separate bank or escrow account in the case of a contingency) upon 
receipt. In that case, a broker-dealer would not pay out funds that it 
has not received, or use its own funds to pay for securities that have 
not been sold.

    \69\In a best efforts offering, the underwriter acts as an agent 
for the issuer and agrees to use its best efforts to sell the 
securities on behalf of the issuer.
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    Comment is requested as to whether there are other types of 
offerings with comparable timing pressures to which the proposed rule 
ought to be expanded. Should the proposal be extended to some or all 
agency transactions in delayed-shelf-registered securities? Are such 
transactions subject to particular timing pressures in connection with 
settlement that are absent in best efforts offerings? Are such 
transactions sold to such a large number of investors that mass 
printing and delivery is required?
    b. Offerings of Asset-backed Securities. The SIA Proposal 
recommends including firm commitment underwritten offerings of asset-
backed securities (``ABS'') within the scope of the proposed rule. The 
Commission, however, has determined to exclude ABS offerings from 
proposed Rule 434 for several reasons.70 First, it appears that 
settlement in connection with ABS offerings currently takes place 
outside of the T+3 time frame, on approximately a T+10 cycle, and is 
likely to continue to do so. The existing settlement schedule is the 
result primarily of factors unique to these offerings, which include: 
(i) the distinctive structuring process for most ABS offerings; (ii) 
the time needed for identification of the specific pool of collateral 
which will support the ABS; and (iii) the necessity of assembling the 
prospectus (or prospectus supplement), which describes all material 
features of the collateral and the transaction's structure, shortly 
before sale of the ABS. Furthermore, concerns relating to a bifurcated 
settlement cycle do not appear to be a pressing problem in the ABS 
market.

    \70\``Asset-backed security'' is defined for purposes of this 
release the same way it is defined in General Instruction I.B.5. of 
Form S-3: a security that is primarily serviced by the cashflows of 
a discrete pool of receivables or other financial assets, either 
fixed or revolving, that by their terms convert into cash within a 
finite time period plus any rights or other assets designed to 
assure the servicing or timely distribution of proceeds to the 
securityholders.
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    The SIA Proposal treats ABS offerings the same as other offerings 
using short-form registration. Unlike other issuers using short-form 
registration, however, the special purpose ABS issuer is not required 
to have a history of filing Exchange Act reports to use such forms. In 
fact, these special purpose issuers typically are newly created with 
each securities offering. Investors in ABS offerings have recourse only 
to the special purpose issuer's assets as the [[Page 10732]] source of 
payment on their ABS.71 The Commission's treatment of short-form 
issuers under proposed Rule 434 is predicated, in part, on the fact 
that significant issuer-specific information is available through 
Exchange Act reports. There is no equivalent source of information 
about the special-purpose issuer in ABS offerings.

    \71\While the sponsor/depositor associated with the offering may 
be a seasoned, reporting company, the reporting history of the 
sponsor/depositor usually is not relevant because there is no 
recourse to the sponsor/depositor.
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    In addition, most ABS offerings are registered as delayed offerings 
under the Commission's shelf registration rule. While the base 
prospectus includes a general description of the securities that may be 
offered from time to time, the terms of a specific ABS offering are 
included in the prospectus supplement. Such supplement details the 
characteristics of specific pool assets and the structure of the 
transaction, and is of significant length and complexity. The 
Commission's proposed rule would provide that only a summary of such 
information be physically delivered in short-form delayed shelf 
offerings. In the case of ABS offerings, a summary of such terms would 
not serve as an adequate substitute for the complete description in the 
prospectus supplement.
    Treating ABS offerings the same as non-short-form offerings under 
the proposed rule, and thereby requiring use of a preliminary 
prospectus, also would not be appropriate. Offerings of ABS differ 
significantly from conventional offerings of corporate securities. The 
principal focus in ABS offerings is on the structure of the transaction 
and the nature of the collateral generating the payment streams 
supporting the ABS. As a particular offering evolves, a variety of 
structures may be considered as the sponsor attempts to meet investors' 
needs by adjusting the impact of, e.g., prepayment rate and cash flow 
variables on particular classes within the structure. The process of 
developing a satisfactory structure typically extends almost to the 
time when the security is priced. Consequently, a preliminary 
prospectus (or, in the case of a delayed shelf offering, a preliminary 
prospectus supplement) is virtually never utilized.
    Finally, even in the rare instance when an ABS offering may employ 
a preliminary prospectus, the complexity of the disclosure and the 
structural modifications occurring during the course of the offering do 
not lend themselves to incremental delivery of prospectus information. 
Nevertheless, comment is requested regarding whether any ABS offerings 
could be accomplished within the strictures of the proposed rule while 
maintaining the present quality of prospectus disclosure.
    c. Offerings of Structured Securities. As in the case of asset-
backed securities, the SIA Proposal would extend relief to structured 
securities. The Commission's proposed Rule 434, however, would exclude 
offerings of such securities. These securities usually have terms that 
are highly complex, with many employing one or more indices as a basis 
for determining the issuer's payment obligations (e.g., coupon, 
principal, redemption payments). Structured securities often are 
designed with specific market risks in mind, as well as risks relating 
to the issuer. Consequently, a structured security's value is derived 
not only from the creditworthiness of its issuer, but also from any 
underlying assets, indices, interest rates or cash flow upon which the 
security is predicated.
    The incremental distribution of information proposed under the 
rule, when combined with the complex nature of these securities, may 
result in material disclosure not being readily accessible to 
investors. Additionally, issuers of securities with complex terms or 
formulas for the calculation of payment obligations may not be able to 
develop a summary description (as contemplated by the rule for short-
form offerings) that is an adequate substitute for the complete 
description presently delivered to investors. A complete description of 
offering-specific information is of particular importance to investors 
in making an investment decision, given the market risks resulting from 
the structure of these securities.
    Comment is solicited regarding the exclusion or inclusion of these 
securities with respect to the proposed rule. Comment is requested as 
to whether the proposed incremental delivery procedure would impede an 
investor's ability to consider and evaluate material information about 
structured securities. Can structured securities be adequately 
summarized? Also, are there additional concerns that further warrant 
the exclusion of structured securities? Comment also is solicited 
regarding whether ``structured securities'' as used in proposed Rule 
434 should be defined. If so, how should such securities be defined? 
For example, should such definition conform to the proposed definition 
in Rule 15c6-1(c)(2) discussed below?
    d. Investment Companies. The proposed rule provides that it does 
not apply to the offering of any security of any company registered or 
required to be registered under the Investment Company Act of 
194072 or any company that is treated as a business development 
company under that Act.

    \72\15 U.S.C. Sec. 80a-1 et seq.
---------------------------------------------------------------------------

    In making its proposal, the SIA did not specifically address the 
applicability to registered investment companies. The Commission 
understands that open-end investment company (mutual fund) initial 
offerings typically do not raise the prospectus delivery logistical 
concerns that have led to these proposals. Mutual fund shares are 
normally offered on a continuous basis, and a preliminary prospectus is 
not generally printed. Moreover, the Commission has concerns that 
separate delivery of a document that supplements and modifies a 
prospectus may be inconsistent with efforts to simplify investment 
company prospectuses.
    Comment is requested on whether adoption of a T+3 settlement period 
will raise prospectus delivery concerns with respect to initial 
offerings of closed-end funds and unit investment trusts. Commenters 
favoring the application of proposed Rule 434 to investment companies 
should address the effects of the proposal on retail investors' ability 
to understand their investment in these types of companies, as well as 
the specific investment company-related rules that would require 
modification.
5. Feasibility of the Proposal
    A number of concerns have been raised about the feasibility of the 
SIA Proposal for issuers and underwriters and the utility of the 
disclosure to investors.73 Comment is requested with respect to 
each of the issues raised under the following captions.

    \73\See the Four Firms letter, supra note 15.
---------------------------------------------------------------------------

    a. Investor Confusion and Resistance. Investors may be obliged to 
read multiple documents to ascertain the required information about the 
transaction and securities. While prospectuses included in short-form 
registrations currently are not self-contained, given the incorporation 
by reference of issuer-specific information, would investors expect and 
require an integrated disclosure document for other offerings, e.g., 
initial public offerings?
    Because a supplementing memorandum could reflect additions to, or 
changes from, the disclosure contained in a preliminary prospectus, 
thereby modifying or superseding such information, would investors be 
confused and frustrated in attempting to determine the important and 
relevant information? Is this process further 
[[Page 10733]] exacerbated when a preliminary prospectus is distributed 
before staff comments on the document are resolved and multiple changes 
to the document are reflected in the supplementing memorandum? Are 
concerns that investors might not be shown all changes made in response 
to staff comments appropriate? Is the purported function of the 
supplementing memorandum inconsistent with its anticipated brevity?
    Investors also may be required to examine multiple documents in 
order to obtain price-related information. Purchasers in secondary 
trades may receive prospectus information that does not disclose 
pricing information included only in the confirmations in connection 
with the primary offering. Would such delivery be adequate with respect 
to secondary market trading transactions effected during the prospectus 
delivery period specified in Securities Act Section 4(3) and Rule 174 
thereunder?74

    \74\15 U.S.C. Sec. 77d(3); 17 CFR 230.174.
---------------------------------------------------------------------------

    Investors who receive a supplementing memorandum may not have 
retained, or may have difficulty locating, a copy of the preliminary 
prospectus previously sent. Does this possibility compromise the 
utility of this proposed method for prospectus delivery?
    Is there a risk that investors who receive more than one 
preliminary prospectus will be unwilling to be responsible for matching 
related supplementing memoranda to such preliminary prospectuses? How 
significant are concerns relating to investor confusion from mismatches 
or the inability to match related documents?
    Will investors require the delivery of a traditional final 
prospectus (even if delivered after the confirmation) for convenience 
of reference or for other reasons?
    b. Monitoring Delivery. Because prospectus information would be 
delivered incrementally, would participants in the offering require re-
delivery of the preliminary prospectus at the time any supplementing 
memorandum is delivered? If so, to what extent would this negate the 
intended benefits of the modified delivery method? Would new 
recordkeeping burdens be incurred in connection with recording the 
delivery of the prospectus where delivery is effected incrementally? 
Would other variables exist under this delivery scheme that would 
impose substantial additional monitoring and recordkeeping burdens on 
underwriters? In the event an issuer delivers more than one version of 
the preliminary prospectus, would recordkeeping regarding which 
investors received which versions be burdensome? Commenters also should 
consider whether broker-dealers will be able to comply with Rule 15c2-8 
and, if not, specifically discuss why compliance would not be feasible.
    c. Third Parties' Opinions. Would issuers' and underwriters' 
counsel have difficulty giving opinions as to the adequacy of 
disclosure in the supplementing memorandum and preliminary prospectus, 
particularly if the supplementing memorandum only summarizes certain 
changes fully set forth in the filing declared effective? Auditors also 
may be expected to perform additional work. The additional work 
required by third parties may result in higher legal and accounting 
costs to issuers. How likely is it that disagreements, or the time 
required to reach agreement, among the parties about the content of a 
supplementing memorandum will negate the purported benefits of the 
proposal?

III. Revision of the Rule 15C6-1 Exemption

    Because the difficulties associated with prospectus delivery within 
a T+3 time frame were the principal reason for the current exemption 
for firm commitment offerings in Rule 15c6-1, the Commission believes 
that the necessity for such exemption should be reconsidered in light 
of the proposals to alleviate those timing difficulties. It is 
consistent with the purposes of Rule 15c6-1 to establish T+3 as the 
standard settlement cycle for firm commitment offerings. It has been 
estimated that approximately $20 billion in new issues may be subject 
to settlement risk in any given day.\75\ Rule 15c6-1 was intended to 
reduce the credit and market risk inherent in the settlement of 
securities transactions. Thus, by including these trades within a T+3 
settlement time frame, the goal of risk reduction will be greatly 
enhanced. Moreover, by revising the exemption, the Commission believes 
that it will provide certainty to the industry in the form of a written 
standard.

    \75\See letter from Joseph McLaughlin, supra footnote 15, page 
4.
---------------------------------------------------------------------------

    As discussed above in connection with the SIA Proposal, offerings 
of asset-backed securities raise concerns different from other 
offerings, and it does not appear that settlement of such offerings 
typically will occur within a T+3 time frame. The Commission therefore 
preliminarily believes that it would be appropriate to continue to 
exempt from T+3 settlement sales of asset-backed securities sold 
pursuant to a firm commitment offering.
    The release adopting Rule 15c6-1 includes an interpretation with 
respect to the treatment of a type of asset-backed security, mortgage 
pass-throughs in the to-be-announced market. With respect to the 
purchase or sale of such securities, the Commission interprets Rule 
15c6-1 to permit settlement to occur within three days after the date a 
specific pool of mortgages is identified as collateral for the 
securities for purposes of the sales agreement with the customer. The 
Commission invites comment as to whether a similar interpretation 
should be applied to all asset-backed securities. If such an 
interpretation is provided, is an express exemption still needed for 
offerings of asset-backed securities?
    While it appears that offerings of structured securities\76\ 
currently settle within a T+5 settlement cycle, it may be difficult to 
settle offerings of structured securities by T+3 because of the time 
difficulties associated with prospectus delivery. As proposed, Rule 434 
would not apply to such securities. The revisions contemplated in 
connection with the Four Firms Proposal, however, would provide the 
same benefits with respect to prospectus delivery in offerings of 
structured securities as to other offerings. Although an exemption for 
offerings of structured securities may create problems in secondary 
market trading as described above, the Commission currently believes 
that it is preferable that the exemption for firm commitment offerings 
be continued for offerings of structured securities because of the 
possible difficulties of settling such instruments within a T+3 time 
frame. The Commission invites comment as to the feasibility of this 
approach. In addition, the Commission invites comment as to the 
proposed Rule 15c6-1 definition of structured securities. Does the 
definition provide sufficient guidance as to the class of securities 
included?

    \76\For purposes of Rule 15c6-1, a structured security is 
proposed to be defined as a security whose cash flow characteristics 
depend upon one or more indices or that have imbedded forwards or 
options or a security where an investor's investment return and the 
issuer's payment obligations are contingent on, or highly sensitive 
to, changes in the value of underlying assets, indices, interest 
rates or cash flows. See proposed Rule 15c6-1(c)(2), 17 CFR 
240.15c6-1(c)(2).
---------------------------------------------------------------------------

    The Commission invites commenters to address the merits of the 
proposed Rule 15c6-1 amendments. Assuming the adoption of the proposals 
relating to prospectus delivery, should the exemption for firm 
commitment [[Page 10734]] offerings be modified? Comment is 
specifically requested on the treatment of asset-backed securities and 
structured securities and particularly whether any exemption from the 
requirements of Rule 15c6-1 is needed for offerings of such securities. 
Would any exemption be needed if managing underwriters are given the 
ability to set alternate settlement time frames as previously 
discussed? Further, the Commission also invites comment on whether 
offerings of any other classes of securities pursuant to a firm 
commitment underwriting may need to be exempted from the scope of Rule 
15c6-1.

IV. Cost-Benefit Analysis

    To evaluate fully the costs and benefits associated with the 
proposals, the Commission requests commenters to provide views and 
empirical data as to the costs and benefits associated with such 
proposals. The proposals are expected to benefit issuers and other 
participants in certain offerings by lowering the transaction costs 
associated with the printing and delivery of prospectuses, and by 
providing them additional flexibility in reacting to changes in market 
conditions and in clearance and settlement of trades. For example, mass 
printing and delivery of a supplementing memorandum or abbreviated 
supplementing memorandum, due to its expected brevity, would be 
expected to consume far less time and be less expensive for issuers to 
undertake than would production of a traditional final prospectus. 
Furthermore, the proposals are not expected to diminish investor 
protection; rather, investors would be expected to benefit from the 
proposals since offering participants would be required to settle 
certain underwritten offerings in T+3 as opposed to T+5.

V. Summary of Initial Regulatory Flexibility Analysis

    The Commission has prepared an Initial Regulatory Flexibility 
Analysis (``IRFA''), pursuant to the requirements of the Regulatory 
Flexibility Act,\77\ regarding the proposed rule and amendments to 
existing regulations. The IRFA notes that the proposed rule and 
amendments are intended to provide entities with, and reflect the 
availability of, greater flexibility and efficiency with respect to the 
timing of printing and delivery of prospectus information, thereby 
facilitating compliance with Rule 15c6-1 under the Exchange Act and 
access to the public securities markets. As discussed more fully in the 
analysis, the proposed rule and amendments to Securities Act 
regulations are anticipated to decrease costs associated with 
fulfilling entities' prospectus delivery obligations under the 
Securities Act. The proposed amendments to Exchange Act regulations are 
not anticipated to have any significant economic impact on entities. 
The proposed rule could impose minimal additional reporting, 
recordkeeping or compliance requirements, while the proposed amendments 
would not impose any new reporting, recordkeeping or compliance 
requirements on any entities. No alternatives to the proposed rule and 
amendments consistent with their objectives and the Commission's 
statutory mandate were found.

    \77\5 U.S.C. 603 (1988).
    It is expected that the overall effect of the proposed rule and 
amendments will provide entities increased efficiency in raising 
capital from the public securities markets. The proposal to provide for 
the incremental delivery of prospectus information, if adopted, would 
apply to any entity engaged in a public distribution with respect to an 
eligible offering. The proposed amendments to Securities Act 
regulations are intended to streamline the registration process and 
thereby facilitate compliance with prospectus delivery within T+3 and 
would apply to any entity engaged in a public offering of securities. 
The proposed amendments to Exchange Act regulations are intended to 
reflect the availability of expedited delivery of prospectus 
information provided by the proposed new rule and amendments to the 
Securities Act regulations.
    Commenters are encouraged to comment on any aspect of the analysis. 
Such comments will be considered in the preparation of the Final 
Regulatory Flexibility Analysis if the proposed rule and amendments are 
adopted. A copy of the IRFA may be obtained from Michael Mitchell, 
Division of Corporation Finance, Securities and Exchange Commission, 
450 Fifth Street, NW., Mail Stop 3-3, Washington, DC 20549, (202) 942-
2900.

VI. General Request for Comments

    Any interested person wishing to submit written comments on any 
aspect of the proposed rule and amendments to the rules and forms, as 
well as on other matters that might have an impact on the proposals 
contained herein, is requested to do so. In addition, the Commission 
requests comment on whether any further changes to the rules and forms 
are necessary or appropriate to facilitate T+3 at this time. Comment is 
requested specifically from investors, broker-dealers, underwriters, 
issuers, analysts and other persons that rely on the information 
provided in the prospectus supplement. Comments should be submitted in 
triplicate to Jonathan G. Katz, Secretary, U.S. Securities and Exchange 
Commission, 450 Fifth Street, NW., Washington, DC 20549 and should 
refer to file number S7-7-95.

VII. Statutory Bases

    The proposed rule and the amendments to the Commission's rules and 
forms under the Securities Act are being proposed pursuant to sections 
6, 7, 8, 10 and 19(a) of the Securities Act of 1933, as amended. The 
proposed revisions to the Commission's rules under the Exchange Act are 
being proposed pursuant to sections 3, 10, 12, 15 and 23 of the 
Securities Exchange Act of 1934, as amended.

List of Subjects in 17 CFR Parts 228, 229, 230, 239, and 240

    Brokers, Investment companies, Reporting and recordkeeping 
requirements, Securities, Small businesses.

Text of Proposed Amendments

    In accordance with the foregoing, Title 17, chapter II of the Code 
of Federal Regulations is proposed to be amended as follows:

PART 228--INTEGRATED DISCLOSURE SYSTEM FOR SMALL BUSINESS ISSUERS

    1. The authority citation for part 228 continues to read as 
follows:

    Authority: 15 U.S.C. 77e, 77f, 77g, 77h, 77j, 77k, 77s, 
77aa(25), 77aa(26), 77ddd, 77eee, 77ggg, 77hhh, 77jjj, 77nnn, 77sss, 
78l, 78m, 78n, 78o, 78w, 78ll, 80a-8, 80a-29, 80a-30, 80a-37, 80b-
11, unless otherwise noted.

    2. By revising paragraph (b) and paragraph (c) of Sec. 228.503 to 
read as follows:


Sec. 228.503 (Item 503)  Summary Information and Risk Factors.

* * * * *
    (b) Address and telephone number. Include in the prospectus the 
complete mailing address and telephone number of the small business 
issuer's principal executive offices.
    (c) Risk factors. Small business issuers discuss, on the page 
immediately following the cover page of the prospectus (or following 
the summary, if included), or on the page immediately following a 
section containing pricing information where such section immediately 
follows the cover page (or following the summary, if included), any 
factors that make the offering speculative or risky. These 
[[Page 10735]] factors may include no operating history, no recent 
profit from operations, poor financial position, the kind of business 
in which the small business issuer is engaged or proposes to engage, or 
no market for the small business issuer's securities.

    Instruction to Item 503(c). ``Pricing information'' as used in 
paragraph (c) includes disclosure required by Items 504 and 508 of 
Regulation S-B (Sec. 228.504 and Sec. 228.508) and information 
regarding the small business issuer's capitalization.

    3. By amending Sec. 228.601 to revise the third sentence of 
paragraph (b)(24) to read as follows:


Sec. 228.601 (Item 601)  Exhibits.

* * * * *
    (b) * * *
    (24) Power of attorney. * * * A power of attorney that is filed 
with the Commission shall relate to a specific filing, an amendment 
thereto, or a related registration statement that is to be effective 
upon filing pursuant to Rule 462(b) under the Securities Act 
(Sec. 230.462(b) of this chapter). * * *
* * * * *

PART 229--STANDARD INSTRUCTIONS FOR FILING FORMS UNDER SECURITIES 
ACT OF 1933, SECURITIES EXCHANGE ACT OF 1934 AND ENERGY POLICY AND 
CONSERVATION ACT OF 1975--REGULATION S-K

    4. The authority citation for part 229 continues to read in part as 
follows:

    Authority: 15 U.S.C. 77e, 77f, 77g, 77h, 77j, 77k, 77s, 
77aa(25), 77aa(26), 77ddd, 77eee, 77ggg, 77hhh, 77iii, 77jjj, 77nnn, 
77sss, 78c, 78i, 78j, 78l, 78m, 78n, 78o, 78w, 78ll(d), 79e, 79n, 
79t, 80a-8, 80a-29, 80a-30, 80a-37, 80b-11, unless otherwise noted.
* * * * *
    5. By revising the last sentence of the introductory text of 
paragraph (f) of Sec. 229.502 to read as follows:


Sec. 229.502 (Item 502)  Inside front and outside back cover pages of 
prospectus.

* * * * *
    (f) * * * Such disclosure need not be included on the inside front 
cover page of the prospectus, if it is included, under appropriate 
caption, elsewhere in the prospectus.
* * * * *
    6. By revising paragraph (b) and paragraph (c) of Sec. 229.503 to 
read as follows:
Sec. 229.503  (Item 503)  Summary information, risk factors and ratio 
of earnings to fixed charges.

* * * * *
    (b) Address and telephone number. Registrants shall include in the 
prospectus the complete mailing address, including zip code, and the 
telephone number, including area code, of their principal executive 
offices.
    (c) Risk factors. Registrants, where appropriate, shall set forth, 
on the page immediately following the cover page of the prospectus (or 
following the summary, if included), or on the page immediately 
following a section containing pricing information where such section 
immediately follows the cover page (or following the summary, if 
included), under an appropriate caption, a discussion of the principal 
factors that make the offering speculative or one of high risk; these 
factors may be due, among other things, to such matters as an absence 
of an operating history of the registrant, an absence of profitable 
operations in recent periods, the financial position of the registrant, 
the nature of the business in which the registrant is engaged or 
proposes to engage, or, if common equity or securities convertible into 
or exercisable for common equity are being offered, the absence of a 
previous market for the registrant's common equity.

    Instruction to Item 503(c). ``Pricing information'' as used in 
paragraph (c) includes disclosure required by Items 504 and 508 of 
Regulation S-K (Sec. 229.504 and Sec. 229.508) and information 
regarding the registrant's capitalization.
* * * * *
    7. By amending Sec. 229.601 to revise the fourth sentence of 
paragraph (b)(24) to read as follows:


Sec. 229.601  (Item 601) Exhibits.

* * * * *
    (b) * * *
    (24) Power of attorney. * * * A power of attorney that is filed 
with the Commission shall relate to a specific filing, an amendment 
thereto, or a related registration statement that is to be effective 
upon filing pursuant to Rule 462(b) under the Securities Act 
(Sec. 230.462(b) of this chapter). * * *
* * * * *
    8. Guide 4 (referenced in Sec. 229.801(d)) is amended by removing 
the first sentence of the Guide.

    Note: The text of Guide 4 does not and the amendments will not 
appear in the Code of Federal Regulations.

PART 230--GENERAL RULES AND REGULATIONS, SECURITIES ACT OF 1933

    9. The authority citation for part 230 continues to read in part as 
follows:

    Authority: 15 U.S.C. 77b, 77f, 77g, 77h, 77j, 77s, 77sss, 78c, 
78l, 78m, 78n, 78o, 78w, 78ll(d), 79t, 80a-8, 80a-29, 80a-30, and 
80a-37, unless otherwise noted.
* * * * *
    10. By amending Sec. 230.402(a) to add a sentence between the 
fourth and fifth sentences to read as follows:


Sec. 230.402  Number of copies; binding; signatures.

    (a) * * * Registration statements filed pursuant to Rule 462(b) 
under the Act (Sec. 230.462(b)), however, may include duplicated or 
facsimile versions of manual signatures of persons required to sign, 
and such signatures shall be considered manual signatures for purposes 
of the Act and rules and regulations thereunder. * * *
* * * * *
    11. By amending Sec. 230.424 by redesignating paragraphs (e) and 
(f), respectively, as paragraphs (f) and (g) and by adding paragraph 
(e) to read as follows:


Sec. 230.424  Filing of prospectuses; number of copies.

* * * * *
    (e) Ten copies of each form of prospectus which, but for the 
application of Rule 434 under the Act (Sec. 230.434) would be filed 
pursuant to paragraphs (b)(2) or (b)(5) of this section, shall be filed 
pursuant to this paragraph with the Commission on or prior to the date 
on which a confirmation is sent or given.
* * * * *
    12. By amending Sec. 230.430A by removing the word ``five'' and 
adding, in each place it appears, the word ``ten'' in paragraph (a)(3); 
by adding a sentence at the end of Instruction to paragraph (a); by 
redesignating paragraphs (c), (d), and (e) as paragraphs (d), (e), and 
(f) and by adding paragraph (c) to read as follows:


Sec. 230.430A  Prospectus in a registration statement at the time of 
effectiveness.

* * * * *
    Instruction to paragraph (a): * * * Notwithstanding the 
foregoing, any increase or decrease in volume up to 20% or deviation 
in the price range of up to 20% may be reflected in the form of 
prospectus filed with the Commission pursuant to Rule 424(b)(1) 
(Sec. 230.424(b)(1)) or Rule 497(h) (Sec. 230.497(h)), provided that 
in the case of a volume increase no form of prospectus filed 
pursuant to Rule 424(b)(1) (Sec. 230.424(b)(1)) may be used if the 
total dollar value of securities offered exceeds that which was 
registered.
* * * * *
    (c) Where a registration statement is filed to increase the amount 
of securities in a Rule 430A (Sec. 230.430A) offering and it is to be 
effective upon filing pursuant to Rule 462(b) (Sec. 230.462(b)), 
[[Page 10736]] such registration statement upon its effectiveness shall 
be deemed part of the earlier filed registration statement with respect 
to such offering.
* * * * *
    13. By adding Sec. 230.434 to read as follows:


Sec. 230.434  Prospectus delivery requirements in firm commitment 
underwritten offerings of securities for cash.

    (a) Where securities, other than asset-backed securities and 
structured securities, are offered for cash in a firm commitment 
underwritten offering and the conditions described in paragraph (b) or 
paragraph (c) of this section are satisfied:
    (1) The prospectus subject to completion and the supplementing 
memorandum described in paragraphs (b)(1) and (b)(2) of this section, 
taken together, and the prospectus subject to completion and the 
supplementing memorandum described in paragraphs (c)(1) and (c)(2) of 
this section, taken together, shall constitute prospectuses that meet 
the requirements of Section 10(a) of the Act (15 U.S.C. 77j(a)) for 
purposes of Section 5(b)(2) and Section 2(10)(a) of the Act (15 U.S.C. 
77e(b)(2) and 77b(10)(a)); and
    (2) Such Section 10(a) prospectuses shall have:
    (i) Been sent or given prior to or at the same time that a 
confirmation is sent or given for purposes of Section 2(10)(a) of the 
Act; and
    (ii) Accompanied or preceded the transmission of the securities for 
purposes of sale or for delivery after sale for purposes of Section 
5(b)(2) of the Act.
    (b) With respect to offerings of securities (other than offerings 
pursuant to Rule 415 under the Act (Sec. 230.415)) that are registered 
on any form other than Form S-3 or Form F-3 (Secs. 239.13 and 239.33 of 
this chapter) under the Act the following conditions are satisfied:
    (1) A prospectus subject to completion and any supplementing 
memorandum described in paragraph (b)(3) of this section are sent or 
given prior to or at the same time with the confirmation;
    (2) Except for information omitted from the prospectus in a 
registration statement at the time of effectiveness in accordance with 
Rule 430A (Sec. 230.430A), such prospectus subject to completion and 
supplementing memorandum, together, are not materially different from 
the prospectus in the registration statement at the time of its 
effectiveness or post-effective amendment thereto at the time of its 
effectiveness; and
    (3) A supplementing memorandum setting forth all information 
material to investors with respect to the offering that is not 
disclosed in the prospectus subject to completion or the confirmation 
is filed with the Commission pursuant to Rule 424(b)(1) under the Act 
(Sec. 230.424(b)(1)).
    (c) With respect to offerings of securities (other than offerings 
pursuant to Rule 415(a)(1)(i)-(ix) and (xi) (Sec. 230.415(a)(1)(i)-(ix) 
and (xi)) that are registered on Form S-3 or Form F-3 (Secs. 239.13 and 
239.33 of this chapter) the following conditions are satisfied:
    (1) A prospectus subject to completion and the abbreviated 
supplementing memorandum described in paragraph (c)(2) of this section 
are sent or given prior to or at the same time with the confirmation;
    (2) The abbreviated supplementing memorandum delivered to investors 
sets forth:
    (i) If not disclosed in the prospectus subject to completion, a 
description of securities required to be disclosed pursuant to Item 202 
of Regulation S-K (17 CFR 229.202 of this chapter), or a fair and 
accurate summary thereof; and
    (ii) If not disclosed in the registrant's Exchange Act reports or 
the prospectus subject to completion, all material changes in the 
registrant's affairs required to be disclosed pursuant to Item 11 of 
Form S-3 or Form F-3 (Secs. 239.13 and 239.33 of this chapter), as 
applicable;
    (3) The abbreviated supplementing memorandum described in paragraph 
(c)(2) of this section is filed with the Commission pursuant to Rule 
424(b)(1) under the Act (Sec. 230.424(b)(1)) or, if the disclosure 
represents a fundamental change in the information set forth in the 
prospectus filed as part of the registration statement declared 
effective or any post-effective amendment thereto, is filed in a post-
effective amendment to the registration statement that is declared 
effective prior to the time any confirmation is sent or given;
    (4) In an offering made pursuant to Rule 415(a)(1)(x) under the Act 
(Sec. 230.415(a)(1)(x)), a form of prospectus is filed pursuant to Rule 
424(e) under the Act (Sec. 230.424(e)), and in an offering not made 
pursuant to Rule 415(a)(1)(x) under the Act (Sec. 230.415(a)(1)(x)), a 
prospectus meeting the requirements of Section 10(a) of the Act other 
than by virtue of paragraph (a)(1) of this section is filed with the 
Commission prior to the effective date of the registration statement; 
and
    (d) The information contained in any form of prospectus filed with 
the Commission pursuant to Rule 424(e) under the Act (Sec. 230.424(e)) 
shall be deemed to be a part of the registration statement as of the 
time such information is filed with the Commission.
    (e) For purposes of this section, asset-backed securities shall 
mean asset-backed securities as defined in General Instruction I.B.5 of 
Form S-3 (Sec. 239.13 of this chapter).
    (f) For purposes of this section, prospectus subject to completion 
shall mean any prospectus that is either a preliminary prospectus used 
in reliance on Rule 430 (Sec. 230.430), a prospectus filed in 
accordance with Rule 430A(a) (Sec. 230.430A(a)), or a prospectus 
omitting information that is not yet known concerning a delayed 
offering pursuant to Rule 415(a)(i)(x) under the Act 
(Sec. 230.415(a)(1)(x)) that is contained in a registration statement 
at the time of effectiveness.
    (g) Notwithstanding paragraphs (a) through (f) of this section, 
this section shall not apply to the offering of any security of any 
company registered or required to be registered under the Investment 
Company Act of 1940 (15 U.S.C. 80a-1 et seq., as amended) or any 
company that is exempt from the requirement to register under that Act 
through filing either a notification of election or a notice of intent 
to file a notification of election to be treated as a business 
development company under that Act.
    14. By designating the existing text as paragraph (a) and adding 
paragraph (b) to Sec. 230.439 to read as follows:


Sec. 230.439  Consent to use of material incorporated by reference.

    (a) * * *
    (b) In a registration statement filed pursuant to Rule 462(b) under 
the Act (Sec. 230.462(b)), any required consent may be incorporated by 
reference into the registration statement from a previously filed 
registration statement relating to the offering, provided that the 
consent contained in the previously filed registration statement 
expressly provides for such incorporation. Any consent filed in a Rule 
462(b) (Sec. 230.462(b)) registration statement may contain duplicated 
or facsimile versions of required signatures, and such signatures shall 
be considered manually signed for purposes of the Act and the rules 
thereunder.
    15. By amending Sec. 230.457 to revise paragraph (o) to read as 
follows:


Sec. 230.457  Computation of fee.

* * * * * [[Page 10737]] 
    (o) Where an issuer is offering securities pursuant to Rule 430A 
under the Act (Sec. 230.430A) or where an issuer eligible to use Form 
S-3 (Sec. 239.13 of this chapter) is registering securities pursuant to 
General Instruction I.B.1 or I.B.2 to Form S-3 to be offered on a 
delayed or continuous basis pursuant to Rule 415(a)(1)(x) under the Act 
(Sec. 230.415(a)(1)(x)), or pursuant to General Instruction H. to Form 
S-4 (Sec. 239.25 of this chapter) in connection with a business 
combination transaction pursuant to Rule 415(a)(1)(viii) under the Act 
(Sec. 230.415(a)(1)(viii)), the registration fee may be calculated on 
the basis of the maximum offering price of all the securities listed in 
the ``Calculation of Registration Fee'' table.
    16. By revising the first sentence of paragraph (a) and adding two 
new sentences immediately after the first sentence of paragraph (a) to 
Sec. 230.461 to read as follows:


Sec. 230.461  Acceleration of effective date.

    (a) Requests for acceleration of the effective date of a 
registration statement shall be made by the registrant and the managing 
underwriters of the proposed issue, or, if there are no managing 
underwriters, by the principal underwriters of the proposed issue, and 
shall state the date upon which it is desired that the registration 
statement shall become effective. Such requests may be made in writing 
or orally, provided that, if oral requests are to be made, a letter 
indicating that fact and stating that the registrant and the managing 
or principal underwriters are aware of their obligations under the Act 
must accompany the filing of the registration statement with the 
Commission. Written requests may be sent to the Commission by facsimile 
transmission. * * *
* * * * *
    17. By revising the section heading, designating the existing text 
as paragraph (a), and adding paragraph (b) to Sec. 230.462 to read as 
follows:


Sec. 230.462  Effective date of certain registration statements.

    (a) * * *
    (b) A registration statement and any post-effective amendment 
thereto shall become effective upon filing with the Commission if:
    (1) The registration statement is for the sole purpose of 
registering additional securities of the same class(es) as were 
included in an earlier registration statement for the same offering 
filed pursuant to Rule 430A under the Act (Sec. 230.430A) and declared 
effective by the Commission;
    (2) The new registration statement is filed within two business 
days of the pricing of the earlier registration statement; and
    (3) The new registration statement registers no more than 20% of 
the amount of such class(es) of securities that were registered in the 
earlier registration statement.

PART 239--FORMS PRESCRIBED UNDER THE SECURITIES ACT OF 1933

    18. The authority citation for part 239 continues to read in part 
as follows:

    Authority: 15 U.S.C. 77f, 77g, 77h, 77j, 77s, 77sss, 78c, 78l, 
78m, 78n, 78o(d), 78w(a), 78ll(d), 79e, 79f, 79g, 79j, 79l, 79m, 
79n, 79q, 79t, 80a-8, 80a-29, 80a-30 and 80a-37, unless otherwise 
noted.
* * * * *
    19. By amending Form SB-1 (referenced in Sec. 239.9) by adding one 
check box to the cover page immediately before ``Calculation of 
Registration Fee,'' by adding a Note to appear immediately after the 
Calculation of Registration Fee table, and by adding paragraph H to 
General Instructions to read as follows:

    Note: The text of Form SB-1 does not and the amendments will not 
appear in the Code of Federal Regulations.

Form SB-1

Registration Statement Under the Securities Act of 1933

* * * * *
    If this Form is registering additional securities pursuant to 
Rule 462(b) under the Securities Act, please check the following box 
and list the Securities Act registration statement number of the 
earlier effective registration statement for the same offering. [ ] 
33-____________
* * * * *

Calculation of Registration Fee

* * * * *
    Note: For offerings made pursuant to Rule 430A under the 
Securities Act, only the title of the class of securities to be 
registered, the proposed maximum aggregate offering price for that 
class of securities and the amount of registration fee need to 
appear in the Calculation of Registration Fee table. Any difference 
between the dollar amount of securities registered for such 
offerings and the dollar amount of securities sold may be carried 
forward on a future registration statement pursuant to Rule 429 
under the Securities Act.
* * * * *

General Instructions

* * * * *

H. Registration of Additional Securities

    With respect to offerings registered pursuant to Rule 462(b) 
under the Securities Act, the registrant may file a registration 
statement consisting only of the following: the facing page; a 
statement that the contents of the earlier registration statement, 
identified by file number, are incorporated by reference; required 
opinions and consents; the signature page; and any information 
required in the new registration statement that is not in the 
earlier registration statement. Any opinion or consent required in 
such a registration statement may be incorporated by reference from 
the earlier registration statement with respect to the offering, if: 
(i) Such opinion or consent expressly provides for such 
incorporation; and (ii) such opinion relates to the securities 
registered pursuant to Rule 462(b). See Rule 411(c) and Rule 439(b) 
under the Securities Act.
* * * * *
    20. By amending Form SB-2 (referenced in Sec. 239.10) by adding one 
check box to the cover page immediately before ``Calculation of 
Registration Fee,'' by adding two sentences to the end of the Note 
following the Calculation of Registration Fee table, and by adding 
paragraph C to General Instructions to read as follows:

    Note: The text of Form SB-2 does not and the amendments will not 
appear in the Code of Federal Regulations.

Form SB-2

Registration Statement Under the Securities Act of 1933

* * * * *
    If this Form is registering additional securities pursuant to 
Rule 462(b) under the Securities Act, please check the following box 
and list the Securities Act registration statement number of the 
earlier effective registration statement for the same offering. [ ] 
33-____________
* * * * *
    Note: * * * For offerings made pursuant to Rule 430A under the 
Securities Act, only the title of the class of securities to be 
registered, the proposed maximum aggregate offering price for that 
class of securities and the amount of registration fee need to 
appear in the Calculation of Registration Fee table. Any difference 
between the dollar amount of securities registered for such 
offerings and the dollar amount of securities sold may be carried 
forward on a future registration statement pursuant to Rule 429 
under the Securities Act.
* * * * *

General Instructions

* * * * *

C. Registration of Additional Securities

    With respect to offerings registered pursuant to Rule 462(b) 
under the Securities Act, the registrant may file a registration 
statement consisting only of the following: the facing page; a 
statement that the contents of the earlier registration statement, 
identified by file number, are incorporated by reference; required 
opinions and consents; the signature page; and any information 
required in the new registration statement that is not in the 
earlier registration statement. Any opinion or consent required 
[[Page 10738]] in such a registration statement may be incorporated 
by reference from the earlier registration statement with respect to 
the offering, if: (i) Such opinion or consent expressly provides for 
such incorporation; and (ii) such opinion relates to the securities 
registered pursuant to Rule 462(b). See Rule 411(c) and Rule 439(b) 
under the Securities Act.
* * * * *
    21. By amending Form S-1 (referenced in Sec. 239.11) by adding one 
check box to the cover page immediately before ``Calculation of 
Registration Fee,'' and by adding two sentences to the end of the Note 
following the Calculation of Registration Fee table, and by adding 
paragraph V to General Instructions to read as follows:

    Note: The text of Form S-1 does not and the amendments will not 
appear in the Code of Federal Regulations.

Form S-1

Registration Statement Under the Securities Act of 1933

* * * * *
    If this Form is registering additional securities pursuant to 
Rule 462(b) under the Securities Act, please check the following box 
and list the Securities Act registration statement number of the 
earlier effective registration statement for the same offering. [ ] 
33-____________
* * * * *
    Note: * * * For offerings made pursuant to Rule 430A under the 
Securities Act, only the title of the class of securities to be 
registered, the proposed maximum aggregate offering price for that 
class of securities and the amount of registration fee need to 
appear in the Calculation of Registration Fee table. Any difference 
between the dollar amount of securities registered for such 
offerings and the dollar amount of securities sold may be carried 
forward on a future registration statement pursuant to Rule 429 
under the Securities Act.

General Instructions

* * * * *

V. Registration of Additional Securities

    With respect to offerings registered pursuant to Rule 462(b) 
under the Securities Act, the registrant may file a registration 
statement consisting only of the following: the facing page; a 
statement that the contents of the earlier registration statement, 
identified by file number, are incorporated by reference; required 
opinions and consents; the signature page; and any information 
required in the new registration statement that is not in the 
earlier registration statement. Any opinion or consent required in 
such a registration statement may be incorporated by reference from 
the earlier registration statement with respect to the offering, if: 
(i) Such opinion or consent expressly provides for such 
incorporation; and (ii) such opinion relates to the securities 
registered pursuant to Rule 462(b). See Rule 411(c) and Rule 439(b) 
under the Securities Act.
* * * * *
    22. By amending Form S-2 (referenced in Sec. 239.12) by adding one 
check box to the cover page immediately before ``Calculation of 
Registration Fee,'' by adding two sentences to the end of the Note 
following the Calculation of Registration Fee table, and by adding 
paragraph III to General Instructions to read as follows:

    Note: The text of Form S-2 does not and the amendments will not 
appear in the Code of Federal Regulations.

Form S-2

Registration Statement Under the Securities Act of 1933

* * * * *
    If this Form is registering additional securities pursuant to 
Rule 462(b) under the Securities Act, please check the following box 
and list the Securities Act registration statement number of the 
earlier effective registration statement for the same offering. [ ] 
33-____________
* * * * *
    Note: * * * For offerings made pursuant to Rule 430A under the 
Securities Act, only the title of the class of securities to be 
registered, the proposed maximum aggregate offering price for that 
class of securities and the amount of registration fee need to 
appear in the Calculation of Registration Fee table. Any difference 
between the dollar amount of securities registered for such offering 
and the dollar amount of securities sold may be carried forward on a 
future registration statement pursuant to Rule 429 under the 
Securities Act.

General Instructions

* * * * *

III. Registration of Additional Securities

    With respect to offerings registered pursuant to Rule 462(b) 
under the Securities Act, the registrant may file a registration 
statement consisting only of the following: the facing page; a 
statement that the contents of the earlier registration statement, 
identified by file number, are incorporated by reference; required 
opinions and consents; the signature page; and any information 
required in the new registration statement that is not in the 
earlier registration statement. Any opinion or consent required in 
such a registration statement may be incorporated by reference from 
the earlier registration statement with respect to the offering, if: 
(i) such opinion or consent expressly provides for such 
incorporation; and (ii) such opinion relates to the securities 
registered pursuant to Rule 462(b). See Rule 411(c) and Rule 439(b) 
under the Securities Act.
* * * * *
    23. By amending Form S-3 (referenced in Sec. 239.13) by adding one 
check box to the cover page immediately before ``Calculation of 
Registration Fee,'' by adding two sentences to the end of the Note 
following the Calculation of Registration Fee table, and by adding 
paragraph IV to General Instructions to read as follows:

    Note: The text of Form S-3 does not and the amendments will not 
appear in the Code of Federal Regulations.

Form S-3

Registration Statement Under the Securities Act of 1933

* * * * *
    If this Form is registering additional securities pursuant to 
Rule 462(b) under the Securities Act, please check the following box 
and list the Securities Act registration statement number of the 
earlier effective registration statement for the same offering. [ ] 
33-____________
* * * * *
    Note: * * * For offerings made pursuant to Rule 430A under the 
Securities Act, only the title of the class of securities to be 
registered, the proposed maximum aggregate offering price for that 
class of securities and the amount of registration fee need to 
appear in the Calculation of Registration Fee table. Any difference 
between the dollar amount of securities registered for such 
offerings and the dollar amount of securities sold may be carried 
forward on a future registration statement pursuant to Rule 429 
under the Securities Act.

General Instructions

* * * * *

IV. Registration of Additional Securities

    With respect to offerings registered pursuant to Rule 462(b) 
under the Securities Act, the registrant may file a registration 
statement consisting only of the following: the facing page; a 
statement that the contents of the earlier registration statement, 
identified by file number, are incorporated by reference; required 
opinions and consents; the signature page; and any information 
required in the new registration statement that is not in the 
earlier registration statement. Any opinion or consent required in 
such a registration statement may be incorporated by reference from 
the earlier registration statement with respect to the offering, if: 
(i) such opinion or consent expressly provides for such 
incorporation; and (ii) such opinion relates to the securities 
registered pursuant to Rule 462(b). See Rule 411(c) and Rule 439(b) 
under the Securities Act.
* * * * *
    24. By amending Form S-11 (referenced in Sec. 239.18) by adding 
paragraph G to General Instructions, by adding one check box to the 
cover page immediately before ``Calculation of Registration Fee'' and 
by adding two sentences to the end of the Note following the 
Calculation of Registration Fee table to read as follows:

    Note: The text of Form S-11 does not and the amendments will not 
appear in the Code of Federal Regulations. [[Page 10739]] 

Form S-11

For Registration Under the Securities Act of 1933 of Securities of 
Certain Real Estate Companies

General Instructions

* * * * *

G. Registration of Additional Securities

    With respect to offerings registered pursuant to Rule 462(b) 
under the Securities Act, the registrant may file a registration 
statement consisting only of the following: the facing page; a 
statement that the contents of the earlier registration statement, 
identified by file number, are incorporated by reference; required 
opinions and consents; the signature page; and any information 
required in the new registration statement that is not in the 
earlier registration statement. Any opinion or consent required in 
such a registration statement may be incorporated by reference from 
the earlier registration statement with respect to the offering, if: 
(i) such opinion or consent expressly provides for such 
incorporation; and (ii) such opinion relates to the securities 
registered pursuant to Rule 462(b). See Rule 411(c) and Rule 439(b) 
under the Securities Act.
* * * * *

Form S-11

Registration Statement Under the Securities Act of 1933

* * * * *
    If this Form is registering additional securities pursuant to 
Rule 462(b) under the Securities Act, please check the following box 
and list the Securities Act registration statement number of the 
earlier effective registration statement for the same offering. [ ] 
33-____________
* * * * *
    Note: * * * For offerings made pursuant to Rule 430A under the 
Securities Act, only the title of the class of securities to be 
registered, the proposed maximum aggregate offering price for that 
class of securities and the amount of registration fee need to 
appear in the Calculation of Registration Fee table. Any difference 
between the dollar amount of securities registered for such 
offerings and the dollar amount of securities sold may be carried 
forward on a future registration statement pursuant to Rule 429 
under the Securities Act.
* * * * *
    25. By amending Form F-1 (referenced in Sec. 239.31) by adding one 
check box to the cover page immediately before ``Calculation of 
Registration Fee,'' by adding two sentences to the end of the Note 
following the Calculation of Registration Fee table, and by adding 
paragraph V to General Instructions to read as follows:

    Note: The text of Form F-1 does not and the amendments will not 
appear in the Code of Federal Regulations.

Form F-1

Registration Statement Under the Securities Act of 1933

* * * * *
    If this Form is registering additional securities pursuant to 
Rule 462(b) under the Securities Act, please check the following box 
and list the Securities Act registration statement number of the 
earlier effective registration statement for the same offering. [ ] 
33-____________
* * * * *
    Note: * * * For offerings made pursuant to Rule 430A under the 
Securities Act, only the title of the class of securities to be 
registered, the proposed maximum aggregate offering price for that 
class of securities and the amount of registration fee need to 
appear in the Calculation of Registration Fee table. Any difference 
between the dollar amount of securities registered for such 
offerings and the dollar amount of securities sold may be carried 
forward on a future registration statement pursuant to Rule 429 
under the Securities Act.

General Instructions

* * * * *

V. Registration of Additional Securities

    With respect to offerings registered pursuant to Rule 462(b) 
under the Securities Act, the registrant may file a registration 
statement consisting only of the following: the facing page; a 
statement that the contents of the earlier registration statement, 
identified by file number, are incorporated by reference; required 
opinions and consents; the signature page; and any information 
required in the new registration statement that is not in the 
earlier registration statement. Any opinion or consent required in 
such a registration statement may be incorporated by reference from 
the earlier registration statement with respect to the offering, if: 
(i) such opinion or consent expressly provides for such 
incorporation; and (ii) such opinion relates to the securities 
registered pursuant to Rule 462(b). See Rule 411(c) and Rule 439(b) 
under the Securities Act.
* * * * *
    26. By amending Form F-2 (referenced in Sec. 239.32) by adding one 
check box to the cover page immediately before ``Calculation of 
Registration Fee,'' by adding two sentences to the end of the Note 
following the Calculation of Registration Fee table, and by adding 
paragraph IV to General Instructions to read as follows:

    Note: The text of Form F-2 does not and the amendments will not 
appear in the Code of Federal Regulations.

Form F-2

Registration Statement Under the Securities Act of 1933

* * * * *
    If this Form is registering additional securities pursuant to 
Rule 462(b) under the Securities Act, please check the following box 
and list the Securities Act registration statement number of the 
earlier effective registration statement for the same offering. [ ] 
33-____________
* * * * *
    Note: * * * For offerings made pursuant to Rule 430A under the 
Securities Act, only the title of the class of securities to be 
registered, the proposed maximum aggregate offering price for that 
class of securities and the amount of registration fee need to 
appear in the Calculation of Registration Fee table. Any difference 
between the dollar amount of securities registered for such 
offerings and the dollar amount of securities sold may be carried 
forward on a future registration statement pursuant to Rule 429 
under the Securities Act.

General Instructions

* * * * *

IV. Registration of Additional Securities

    With respect to offerings registered pursuant to Rule 462(b) 
under the Securities Act, the registrant may file a registration 
statement consisting only of the following: the facing page; a 
statement that the contents of the earlier registration statement, 
identified by file number, are incorporated by reference; required 
opinions and consents; the signature page; and any information 
required in the new registration statement that is not in the 
earlier registration statement. Any opinion or consent required in 
such a registration statement may be incorporated by reference from 
the earlier registration statement with respect to the offering, if: 
(i) such opinion or consent expressly provides for such 
incorporation; and (ii) such opinion relates to the securities 
registered pursuant to Rule 462(b). See Rule 411(c) and Rule 439(b) 
under the Securities Act.
* * * * *
    27. By amending Form F-3 (referenced in Sec. 239.33) by adding one 
check box to the cover page immediately before ``Calculation of 
Registration Fee,'' by adding two sentences to the end of the Note 
following the Calculation of Registration Fee table, and by adding 
paragraph IV to General Instructions to read as follows:

    Note: The text of Form F-3 does not and the amendments will not 
appear in the Code of Federal Regulations.

Form F-3

Registration Statement Under the Securities Act of 1933

* * * * *
    If this Form is registering additional securities pursuant to 
Rule 462(b) under the Securities Act, please check the following box 
and list the Securities Act registration statement number of the 
earlier effective registration statement for the same offering. [ ] 
33-____________
* * * * *
    Note: * * * For offerings made pursuant to Rule 430A under the 
Securities Act, only the title of the class of securities to be 
registered, [[Page 10740]] the proposed maximum aggregate offering 
price for that class of securities and the amount of registration 
fee need to appear in the Calculation of Registration Fee table. Any 
difference between the dollar amount of securities registered for 
such offerings and the dollar amount of securities sold may be 
carried forward on a future registration statement pursuant to Rule 
429 under the Securities Act.

General Instructions

* * * * *
IV. Registration of Additional Securities

    With respect to offerings registered pursuant to Rule 462(b) 
under the Securities Act, the registrant may file a registration 
statement consisting only of the following: the facing page; a 
statement that the contents of the earlier registration statement, 
identified by file number, are incorporated by reference; required 
opinions and consents; the signature page; and any information 
required in the new registration statement that is not in the 
earlier registration statement. Any opinion or consent required in 
such a registration statement may be incorporated by reference from 
the earlier registration statement with respect to the offering, if: 
(i) such opinion or consent expressly provides for such 
incorporation; and (ii) such opinion relates to the securities 
registered pursuant to Rule 462(b). See Rule 411(c) and Rule 439(b) 
under the Securities Act.
* * * * *

PART 240--GENERAL RULES AND REGULATIONS, SECURITIES EXCHANGE ACT OF 
1934

    28. The authority citation for part 240 continues to read in part 
as follows:

    Authority: 15 U.S.C. 77c, 77d, 77g, 77j, 77s, 77eee, 77ggg, 
77nnn, 77sss, 77ttt, 78c, 78d, 78i, 78j, 78l, 78m, 78n, 78o, 78p, 
78q, 78s, 78w, 78x, 78ll(d), 79q, 79t, 80a-20, 80a-23, 80a-29, 80a-
37, 80b-3, 80b-4 and 80b-11, unless otherwise noted.
* * * * *
    29. Section 240.15c2-8(b) is amended by revising the phrase 
``mailing'' to read ``sending''.
    30. Section 240.15c2-8(c) is amended by revising the phrase 
``mail'' to read ``send''.
    31. Section 240.15c2-8(d) is amended by revising the phrase 
``mail'' to read ``send''.
    32. Section 240.15c2-8 is amended by adding paragraph (j) to read 
as follows:


Sec. 240.15c2-8  Delivery of prospectus.

* * * * *
    (j) For purposes of this section, the term preliminary prospectus 
shall include the term prospectus subject to completion as used in 17 
CFR 230.434(f), and the term final prospectus shall include the term 
Section 10(a) prospectus as used in 17 CFR 230.434(f).
    33. Amend Sec. 240.15c6-1 by revising the phrase ``paragraph (b)'' 
contained in paragraph (a) to read ``paragraphs (b), (d), and (e)''; by 
revising the phrase ``Paragraph (a)'' contained in the introductory 
text of paragraph (b) to read ``Paragraphs (a) and (d)''; by revising 
the phrase ``the sale for cash of securities'' contained in paragraph 
(b)(2) to read ``the sale for cash of asset-backed securities or 
structured securities''; and by adding paragraphs (c), (d), and (e) to 
read as follows:


Sec. 240.15c6-1  Settlement cycle.

* * * * *
    (c) For purposes of this section:
    (1) Asset-backed security means an asset-backed security as defined 
in General Instruction I.B.5 of Form S-3 (Sec. 239.13 of this chapter); 
and
    (2) Structured security means a security whose cash flow 
characteristics depend upon one or more indices or that have imbedded 
forwards or options or a security where an investor's investment return 
and the issuer's payment obligations are contingent on, or highly 
sensitive to, changes in the value of underlying assets, indices, 
interest rates or cash flows.
    (d) Paragraph (a) of this section shall not apply to securities 
that are sold pursuant to a firm commitment underwritten offering 
registered under the Securities Act of 1933 and that are priced after 
4:30 p.m. Eastern time on the date such securities are priced, provided 
that a broker or dealer shall not effect or enter into a contract for 
the purchase or sale of such securities that provides for payment of 
funds and delivery of securities later than the fourth business day 
after the date of the contract unless otherwise expressly agreed to by 
the parties at the time of the transaction.
    (e) For purposes of paragraphs (a) and (d) of this section, the 
parties to a contract shall be deemed to have expressly agreed to an 
alternate date for payment of funds and delivery of securities at the 
time of the transaction for a contract for the sale for cash of 
securities pursuant to a firm commitment offering registered under the 
Securities Act of 1933 if:
    (1) The alternate date is no later than the fifth business day 
after the date of the contract;
    (2) The managing underwriter has selected such date for all 
securities sold pursuant to such offering;
    (3) Information disclosing the alternate date is contained in a 
written notice sent or given to all prospective purchasers on or before 
the date the securities which are sold pursuant to such offering are 
priced;
    (4) The managing underwriter provides written notification to all 
exchanges on which the securities are listed and all registered 
securities associations through which quotations for such securities 
are disseminated prior to the date the securities which are sold 
pursuant to such offering are priced; and
    (5) The parties to the contract have not expressly agreed to 
another date for payment of funds and delivery of securities at the 
time of the transaction.

    Dated: February 21, 1995.

    By the Commission.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 95-4647 Filed 2-24-95; 8:45 am]
BILLING CODE 8010-01-P