[Federal Register Volume 66, Number 194 (Friday, October 5, 2001)]
[Notices]
[Pages 51076-51077]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-24994]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 44874/September 28, 2001]


Securities Exchange Act of 1934; Exemptive Order Pursuant to 
Section 36(a)(1) of the Securities Exchange Act of 1934 Issuing 
Exemptive Relief To Respond to Market Developments

    Section 36 of the Securities Exchange Act of 1934 (Exchange Act) 
authorizes the Commission, by rule, regulation, or order, to exempt, 
either conditionally or unconditionally, any person, security, or 
transaction, or any class or classes of persons, securities, or 
transactions, from any provisions or provisions of the Exchange Act or 
any rule or regulation thereunder, to the extent that such exemption is 
necessary or appropriate in the public interest, and is consistent with 
the protection of investors.
    Following the events of September 11, 2001, trading in the equity 
and options markets halted for four days. To facilitate the reopening 
of trading, the Commission, recognizing that purchases by registrants 
of their own securities can represent an important source of liquidity 
to maintain fair and orderly markets, used its authority under section 
12(k)(2) of the Exchange Act to relax certain regulatory provisions to 
permit additional flexibility in making such purchases.\1\ While there 
is no longer an emergency and the markets are functioning well, 
nonetheless, under the current highly unusual circumstances, it 
continues to be useful to facilitate issuers repurchases to enhance 
orderly markets. We believe that this exemption providing similar 
relief is appropriate in the public interest. This exemption, 
particularly in light of the other provisions of Rule 10b-18 that 
remain applicable and its limited duration, is consistent with the 
protection of investors.
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    \1\ Securities Exchange Act Release No. 44791 (September 14, 
2001). Securities Exchange Act Release No. 44827 (September 21, 
2001).
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    Accordingly,
    It is Ordered, pursuant to section 36 of the Exchange Act, that,
    In connection with a Rule 10b-18 purchase \2\ or with a Rule 10b-18 
bid that is made during the period covered by this Order by the use of 
any means or instrumentality of interstate commerce or of the mails, or 
of any facility of any national securities exchange, an issuer, or an 
affiliated purchaser of the issuer, shall not be deemed to have 
violated section 9(a)(2) of the Exchange Act or Rule 10b-5 under the 
Exchange Act, solely by reason of the time or price at which its Rule 
10b-18 bids or Rule 10b-18 purchases are made or the amount of such 
bids or purchases or the number of brokers or dealers used in 
connection with such bids or purchases if the issuer or affiliated 
purchaser of the issuer meets all of the conditions in Rule 10b-18 \3\ 
with the exception that:
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    \2\ Terms used in this order have the same meaning as those 
terms used in Exchange Act Rule 10b-18 unless stated otherwise.
    \3\ All other conditions of Rule 10b-18 remain in effect, 
including the timing condition with respect to issuers whose 
securities do not meet the $1,000,000 average daily trading volume 
(ADTV) value and $150 million public float test stated in paragraph 
1 above. ADTV and public float shall be determined in a manner 
consistent with 17 CFR 242.100. This Order is separate from the 
Emergency Order issued on September 14, 2001 and extended on 
September 21, 2001. Securities Exchange Act Release No. 44791 
(September 14, 2001); Securities Exchange Act Release No. 44827 
(September 21, 2001).
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    1. The timing condition in paragraph (b)(2) may be satisfied by an 
issuer whose security has an average daily trading volume (ADTV) value 
of $1,000,000 or more and a public float value of $150 million or more 
if that issuer effects purchases that (a) do not constitute the opening 
transaction in the security, and (b) occur up to the ten minutes before 
the scheduled close of trading on the primary market for such security; 
and
    2. The volume condition of paragraph (b)(4) may be satisfied if the 
issuer makes all Rule 10b-18 purchases other than block purchases of a 
reported or exchange traded security in an amount that, when added to 
the amount of all other Rule 10b-18 purchases, other than block 
purchases, from or through a broker or dealer effected by or for the 
issuer or an affiliated purchaser of the issuer on that day, does not 
exceed 100 percent of the trading volume (excluding the week of 
September 10, 2001 from the four week calculation) for that security; 
\4\ and
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    \4\ The four-week trading volume calculation excludes the week 
of September 10, 2001. For example, if an issuer's Rule 10b-18 
purchases occur on October 2, 2001, the four calendar week trading 
volume calculation should be determined using the calendar weeks 
beginning on August 27th, September 3rd, September 17th, and 
September 24th.
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    It is Further Ordered that,
    Notwithstanding the pooling-of-interest provisions in the 
Accounting Principles Board Opinion No. 16, Business Combinations, and 
the related interpretations of the American Institute of Certified 
Public Accountants,

[[Page 51077]]

consensuses of the Financial Accounting Standards Board's Emerging 
Issues Task Force, rules and regulations of the Commission and 
Interpretations by its staff, and other authoritative accounting 
guidance, acquisitions by registrants of their own equity securities 
during the period covered by this Order will not affect the 
availability of pooling-of-interests accounting and, accordingly, a 
registrant's financial statements will not be misleading or inaccurate 
solely because the registrant has engaged in such purchases and has 
accounted for its business combination transactions as a pooling of 
interests.\5\
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    \5\ Our authority under Section 36 extends to any provision of 
the Exchange Act or any rule or regulation thereunder. Regulation S-
X was promulgated, in part, under the authority of the Exchange Act. 
We acknowledge that our action, by necessity, also will affect 
filings under the other provisions of the securities laws that 
require filings to be in compliance with Regulation S-X.
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    This Order shall be effective beginning on October 1, 2001 through 
October 12, 2001.

    By the Commission.

Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 01-24994 Filed 10-4-01; 8:45 am]
BILLING CODE 8010-01-M