[Federal Register Volume 67, Number 56 (Friday, March 22, 2002)]
[Rules and Regulations]
[Pages 13518-13544]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-6947]



[[Page 13517]]

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

Part VII





Securities and Exchange Commission





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



17 CFR Parts 210, 228, et al.



Requirements for Arthur Andersen LLP Auditing Clients; Final Rule

  Federal Register / Vol. 67, No. 56 / Friday, March 22, 2002 / Rules 
and Regulations  

[[Page 13518]]


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

SECURITIES AND EXCHANGE COMMISSION

17 CFR Parts 210, 228, 229, 230, 240, 249 and 260

[Release Nos. 33-8070, 34-45590; 35-27503; 39-2395; IA-2018; IC-25464; 
FR-62; File No. S7-03-02]
RIN 3235-AI46


Requirements for Arthur Andersen LLP Auditing Clients

AGENCY: Securities and Exchange Commission.

ACTION: Temporary final rules and final rules.

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

SUMMARY: The Securities and Exchange Commission (the ``Commission'') is 
adopting rules to assure a continuing and orderly flow of information 
to investors and the U.S. capital markets and to minimize any potential 
disruptions that may occur as a result of the indictment of Arthur 
Andersen LLP. In addition, the Commission is modifying, in a manner 
appropriate for the protection of investors, the requirements for 
including audited financial statements in registration statements under 
the Securities Act of 1933 and filings required by the Trust Indenture 
Act of 1939 by registrants that are unable to or elect not to have 
Andersen issue a manually signed audit report, if the audit report was 
not issued on or before March 14, 2002. The rules the Commission adopts 
today, as well as the interpretations set forth in this release, are 
necessary to effect these modifications. The Commission emphasizes that 
companies should make their own independent decisions regarding 
completion of current audits and that these actions are intended only 
to provide neutral flexibility for companies as they make those 
decisions. In the document, the Commission also publishes companion 
orders relating to, among other matters, the inclusion of financial 
statements in filings under the Securities Exchange Act of 1934, the 
Investment Advisers Act of 1940, the Investment Company Act of 1940 and 
the Public Utility Holding Company Act of 1935 where those filings 
would have included audited or reviewed financial statements for which 
Andersen had been engaged as the independent public accountant. To 
further an understanding of the interactions between the rules we adopt 
today, the interpretations set forth in this document and the 
exemptions provided in the orders, this document includes a description 
of a number of actions taken in those orders.

EFFECTIVE DATE: March 18, 2002, except Temporary Notes 1T, 2T and 3T 
preceding Sec. 210.3-01; Sec. 228.304T; Temporary Notes 1T and 2T in 
Sec. 228.310; Secs. 228.601T, 229.304T, 229.601T, 230.427T; Instruction 
2T following paragraph (b)(2)(iv) in Sec. 230.428; and the amendments 
to Form 20-F will be effective from March 18, 2002 to December 31, 
2002.

FOR FURTHER INFORMATION CONTACT: Investors with questions can call a 
special hotline maintained by the Commission's Office of Investor 
Education and Assistance at 1-800-SEC-0330 or e-mail the office at 
[email protected].
    Issuers with questions regarding Securities Act or Exchange Act 
filings or compliance with the Trust Indenture Act, please call the 
Division of Corporation Finance's hotline at 202-942-2816 or e-mail the 
Division at [email protected].
    Auditors with transition questions may call the Office of the Chief 
Accountant at 202-942-4400 or e-mail the office at [email protected].
    For questions regarding broker-dealers, self-regulatory 
organizations, and transfer agents, please call the Division of Market 
Regulation's hotline at 202-942-0069 or e-mail the Division at 
[email protected].
    For questions regarding investment companies, investment advisers 
or public utility holding companies, please call the Division of 
Investment Management's hotline at 202-942-0590 or e-mail the Division 
at [email protected].

SUPPLEMENTARY INFORMATION: We are adopting temporary amendments to Item 
310 \1\ of Regulation S-B \2\ and Article 3 \3\ of Regulation S-X \4\ 
under the Securities Act of 1933 \5\ (``Securities Act'') and Form 20-F 
\6\ under the Securities Exchange Act of 1934 \7\ (``Exchange Act). We 
are also adopting amendments to Rule 2-02 \8\ of Regulation S-X and 
Rule 428 \9\ under the Securities Act. Additionally, we are adopting 
temporary Items 304T \10\ and 601T \11\ of Regulation S-B, temporary 
Items 304T \12\ and 601T \13\ of Regulation S-K,\14\ temporary Rule 
427T,\15\ Rule 401a \16\ and Rule 437a \17\ under the Securities Act, 
Rule 12b-37 \18\ under the Exchange Act and Rule 19a-1 \19\ under the 
Trust Indenture Act of 1939 \20\ (``Trust Indenture Act''). We are also 
attaching to this release a copy of Release No. 34-45589 (March 18, 
2002) as Appendix A (the ``34 Act Order''), a copy of Release Nos. IA-
2017 and IC-25463 (March 18, 2002) as Appendix B (the ``40 Act Order'') 
and a copy of Release No. 35-27502 (March 18, 2002) as Appendix C (the 
``35 Act Order'').
---------------------------------------------------------------------------

    \1\ 17 CFR 228.310.
    \2\ 17 CFR 228.10 et seq.
    \3\ 17 CFR 210.3-01-3-20.
    \4\ 17 CFR 210.1-01 et seq.
    \5\ 15 U.S.C. Sec. 77a et seq.
    \6\ 17 CFR 249.220f.
    \7\ 15 U.S.C. Sec. 78a et seq.
    \8\ 17 CFR 210.2-02.
    \9\ 17 CFR 230.428.
    \10\ 17 CFR 228.304T.
    \11\ 17 CFR 228.601T.
    \12\ 17 CFR 229.304T.
    \13\ 17 CFR 229.601T.
    \14\ 17 CFR 229.10 et seq.
    \15\ 17 CFR 230.427T.
    \16\ 17 CFR 230.401a.
    \17\ 17 CFR 230.437a.
    \18\ 17 CFR 240.12b-37.
    \19\ 17 CFR 260.19a-1.
    \20\ 15 U.S.C. Sec. 77sss, et seq.
---------------------------------------------------------------------------

I. Introduction

    The Securities and Exchange Commission is taking necessary and 
immediate regulatory actions to assure a continuing and orderly flow of 
information to investors and U.S. capital markets and to minimize any 
potential disruptions that may occur as a result of the indictment of 
Arthur Andersen LLP (``Andersen''). The actions the Commission takes 
today, through this release and by separate Commission orders attached 
as Appendices A, B and C to this release (the ``Orders'') apply, and 
the guidance issued in Staff Accounting Bulletin No. 90, Topic 
I.L.,\21\ does not apply. The Commission has requested and received 
assurances from Andersen that it will continue to audit financial 
statements in accordance with generally accepted auditing standards 
(``GAAS'') and applicable professional and firm auditing standards, 
including quality control standards. Andersen has also told the 
Commission that if it becomes unable to continue to provide those 
assurances, it will advise the Commission immediately.
---------------------------------------------------------------------------

    \21\ Staff Accounting Bulletin No. 90 (Feb. 7, 1991) [56 FR 
4938].
---------------------------------------------------------------------------

    As discussed more fully in this release, companies to whom Andersen 
issues a manually signed audit report after March 14, 2002 must file a 
letter as an exhibit to their filings stating they have received 
certain representations from Andersen concerning audit quality 
controls, including representations regarding the continuity of 
Andersen personnel working on the audit, the availability of national 
office consultation, and the availability of personnel at foreign 
affiliates of Andersen to conduct relevant portions of the audit. So 
long as Andersen continues to be in a position to provide

[[Page 13519]]

those assurances, the Commission will continue to accept financial 
statements audited by Andersen in filings.
    In addition, if companies for which Andersen had been engaged as 
the independent public accountant \22\ are unable to obtain from 
Andersen or elect not to have Andersen issue a manually signed audit 
report, these companies may need additional time to engage new 
independent accountants and complete their filings. Further, as a 
number of requirements throughout the federal securities laws are 
contingent upon the flow of accurate and timely information into the 
market, any potential disruption may, absent the actions the Commission 
takes today, have a significant impact on a company's compliance with a 
number of provisions under the federal securities laws.
---------------------------------------------------------------------------

    \22\ Throughout this release, where we refer to Andersen, we 
also include foreign affiliates of Andersen.
---------------------------------------------------------------------------

    Accordingly, the Commission is taking action for those Andersen 
clients that are unable to obtain from Andersen or elect not to have 
Andersen issue a manually signed audit report. The Commission will 
require adherence to existing filing deadlines, but will accept filings 
that include unaudited financial statements from any such issuer unable 
to provide timely audited financial statements. Issuers electing this 
alternative will generally be required to amend their filings within 60 
days to include audited financial statements. The Commission has taken 
similar actions regarding reviews of interim financial statements.
    The actions the Commission takes today, through this release and by 
the Orders, are meant to provide investors with the timely financial 
information to which they are entitled under the federal securities 
laws, while giving certain Andersen clients time to address any timing 
constraints and temporary disruptions they may face. In addition to 
those actions, in this release we also adopt rules and express 
interpretations concerning the impact of those actions upon other 
requirements of the federal securities laws.\23\ None of the actions 
announced by the Commission today affects the liability standards to 
which an issuer's filing is subject.
---------------------------------------------------------------------------

    \23\ The Commission's actions are procedural in nature and are 
of finite duration. The temporary rules and amendments we are 
adopting today expire on December 31, 2002.
---------------------------------------------------------------------------

    We emphasize that companies should make their own independent 
decisions regarding completion of current audits and that these actions 
are intended only to provide neutral flexibility for companies as they 
make those decisions. Consistent with this approach, our actions do not 
apply to issuers to whom Andersen had issued a signed audit report on 
or before March 14, 2002. We also recognize there are a number of 
situations that will be fact-specific. We strongly encourage companies 
to contact the staff of the Commission listed at the beginning of this 
release and request consideration of specific situations and the 
appropriateness of additional Commission or staff action.

II. Registrants Under the Securities Act of 1933

A. Registrants That Continue To Engage Andersen

    For issuers that make filings that include accountant's reports 
from Andersen issued after March 14, 2002, the Commission has adopted 
Temporary Note 3T to Article 3 of Regulation S-X (and Temporary Note 2T 
to Item 310 of Regulation S-B for small business issuers \24\ and 
General Instruction A-T2 to Form 20-F for foreign private issuers \25\) 
to specify special disclosure requirements for these issuers. While the 
exact nature of each issuer's disclosure may vary depending on the 
facts and circumstances applicable to each of Andersen's public company 
audit clients, these issuers are required to include as an exhibit to 
their filings a letter by the issuer addressed to the Commission that 
states that Andersen has represented to the issuer that the audit was 
subject to Andersen's quality control system for the U.S. accounting 
and auditing practice to provide reasonable assurance that the 
engagement was conducted in compliance with professional standards and 
that there was appropriate continuity of Andersen personnel working on 
audits, availability of national office consultation and availability 
of personnel at foreign affiliates of Andersen to conduct the relevant 
portions of the audit. We expect these assurances will be given in 
connection with the issuance of the audit report. So long as Andersen 
continues to be in a position to provide those assurances, the 
Commission will continue to accept financial statements audited by 
Andersen.
---------------------------------------------------------------------------

    \24\ The term ``small business issuer'' is defined in Item 
10(a)(1) of Regulation S-B.
    \25\ The term ``foreign private issuer'' is defined in 
Securities Act Rule 405 [17 CFR 230.405].
---------------------------------------------------------------------------

B. Registrants That Are Unable To, or Choose Not To, Engage Andersen

    There may be issuers that are Andersen clients or whose filings are 
to include financial statements as to the examination of which Andersen 
had been engaged on or after March 14, 2002 that are unable to obtain 
from Andersen or elect not to have Andersen issue a manually signed 
audit report. The following sections outline specific relief to be 
granted to these issuers. This relief does not apply for financial 
statements where Andersen has already issued a manually signed audit 
report for those financial statements on or before March 14, 2002.
1. Form Eligibility
    Forms S-2,\26\ S-3,\27\ F-2,\28\ F-3 \29\ and S-8 \30\ under the 
Securities Act permit alternative disclosure formats.\31\ Eligibility 
for those forms is dependent upon, among other requirements, whether 
the company filing the registration statement has filed all required 
reports under the Exchange Act for a specified period and whether the 
company has filed those reports in a timely manner for a specified 
period. The 34 Act Order provides alternate procedures for filing 
Exchange Act reports by issuers that are unable to obtain from Andersen 
or elect not to have Andersen issue a manually signed audit report. It 
is the Commission's view that the filing of reports in the manner 
permitted by the 34 Act Order is consistent with the protection of 
investors. Accordingly, it is our further view that compliance with the 
34 Act Order should not negatively impact a company's eligibility to 
use Securities Act registration statement forms. We are adopting Rule 
401a under the Securities Act to make clear that issuers that are 
eligible to rely on the 34 Act Order and that comply with its terms for 
the filing of their Exchange Act reports will be current and timely 
and, therefore, will not have their eligibility for Securities Act 
forms impacted negatively.
---------------------------------------------------------------------------

    \26\ 17 CFR 239.12.
    \27\ 17 CFR 239.13.
    \28\ 17 CFR 239.32.
    \29\ 17 CFR 239.33.
    \30\ 17 CFR 239.16b.
    \31\ Forms S-4 and F-4 [17 CFR 239.25 and 17 CFR 239.34] under 
the Securities Act do not have ``form eligibility'' standards 
relating to the company registering a transaction on that form or 
the other company(ies) involved in the transaction. Rather, Forms S-
4 and F-4 permit specific disclosure formats regarding each of those 
companies based on their eligibility to use Forms S-2 or S-3 and F-2 
or F-3, respectively. As new Securities Act Rule 401a relates to 
eligibility to use Securities Act forms, that rule should be 
considered when completing those sections of Forms S-4 and F-4 that 
rely upon Securities Act form eligibility.
---------------------------------------------------------------------------

2. Financial Statements Required in Registration Statements
    The financial statement requirements for registration statements on 
Forms S-

[[Page 13520]]

1,\32\ S-2, S-3, S-4, S-6,\33\ S-8, S-11,\34\ N-1,\35\ N-1A,\36\ N-
2,\37\ N-3,\38\ N-4,\39\ N-5 \40\ and N-14 \41\ generally are set forth 
in Regulation S-X.\42\ The financial statement requirements for 
registration statements on Form SB-1 \43\ and Form SB-2,\44\ as well as 
for financial statements regarding small business issuers on other 
Securities Act forms, generally are set forth in Item 310 of Regulation 
S-B. The financial statement requirements for registration statements 
on Forms F-1,\45\ F-2, F-3 and F-4 generally are contained in Form 20-F 
under the Exchange Act. We have adopted temporary notes to Article 3 of 
Regulation S-X and Item 310 of Regulation S-B and a temporary 
instruction to Form 20-F for eligible issuers whose registration 
statements contain financial statements of an entity that has a fiscal 
year ending between and including November 30, 2001 \46\ and April 15, 
2002, as to the examination of which Andersen had been engaged as the 
independent public accountant on or after March 14, 2002.\47\ These new 
items generally provide that unaudited information may be included in 
Securities Act registration statements so long as audited financial 
statements are subsequently provided by amendment. These new items may 
not be relied upon by any registrant that is a ``blank check company'' 
as defined in Securities Act Rule 419(a)(2).\48\ These items will have 
the following effect on the inclusion of audited financial statements 
in registration statements under the Securities Act:
---------------------------------------------------------------------------

    \32\ 17 CFR 239.11.
    \33\ 17 CFR 239.16.
    \34\ 17 CFR 239.18.
    \35\ 17 CFR 239.15.
    \36\ 17 CFR 239.15A.
    \37\ 17 CFR 239.14.
    \38\ 17 CFR 239.17a.
    \39\ 17 CFR 239.17b.
    \40\ 17 CFR 239.24.
    \41\ 17 CFR 239.23.
    \42\ These financial statement requirements may be included in 
the form indirectly, as they apply to the company's periodic 
reports, which are incorporated by reference into the registration 
statement. Form S-8 has an additional requirement, as expressed in 
Instruction 2 to Securities Act Rule 428(b) [17 CFR 230.428(b)], 
regarding the delivery of documents during the first 120 days of a 
fiscal year for a domestic company and the first 190 days of a 
fiscal year for a foreign private issuer. Under this instruction, 
the company may deliver a document that does not include audited 
financial information for the most recently completed fiscal year, 
so long as the company provides audited financial information by the 
end of the 120 day or 190 day period, as applicable. Consistent with 
the 34 Act Order, domestic companies may provide a document to plan 
participants within the first 180 days of the fiscal year that do 
not contain audited financial statements. Similarly, foreign private 
issuers may deliver such documents within the first 250 days of the 
fiscal year. The delivery of such documents will be permissible 
conditioned upon the delivery of audited financial statements by the 
end of the 180 day or 250 day period, as applicable.
    \43\ 17 CFR 239.9.
    \44\ 17 CFR 239.10.
    \45\ 17 CFR 239.31.
    \46\ For foreign private issuers, this date is August 31, 2001. 
For registered investment companies, this date is January 1, 2002. 
If the entity does not meet all of the conditions in Rule 3-01(c) of 
Regulation S-X (or Item 310(g) of Regulation S-B if the entity is a 
small business issuer), this date is December 29, 2001.
    \47\ We are using the date of March 14, 2002 to ensure that the 
registrant had engaged Andersen as its auditor for their most recent 
fiscal year end. Other rules and amendments adopted today address 
situations where a registrant is using financial information that 
has previously been audited by Andersen.
    \48\ 17 CFR 230.419(a)(2).
---------------------------------------------------------------------------

     Registration statements filed by companies that, at the 
time of filing the registration statement, are not required to file 
reports under Section 13(a) \49\ or 15(d) \50\ of the Exchange Act, 
must in all circumstances include financial statements that meet the 
timeliness and audit requirements of Commission rules.
---------------------------------------------------------------------------

    \49\ 15 U.S.C. Sec. 78m(a).
    \50\ 15 U.S.C. Sec. 78o(d).
---------------------------------------------------------------------------

     Registration statements (or any pre-effective or post-
effective amendments thereto) filed by companies that, at the time of 
filing the registration statement, are required to file reports under 
Section 13(a) or 15(d) of the Exchange Act,\51\ may include financial 
statements that meet the timeliness requirements of Commission rules 
but that are unaudited if Andersen had been engaged as the independent 
public accountant on or after March 14, 2002 to examine those financial 
statements and the issuer is unable to obtain from Andersen or elects 
not to have Andersen issue a manually signed audit report.\52\ The 
registration statement must also include disclosure reflecting the 
guidance in Temporary Note 2T to Article 3 of Regulation S-X.\53\ These 
companies will then be required to file a pre-effective amendment, 
post-effective amendment or an amendment to a document incorporated by 
reference, as appropriate, containing the audited financial statements 
for the required periods if the registered offering or offerings have 
not been completed. Generally, if the registration statement is not yet 
effective and will become effective on or after the earlier of 60 days 
from the date when use of the financial statements would have been 
required and the date the audited financial statements are filed in the 
annual report of the registrant,\54\ a pre-effective amendment to the 
registration statement or an amendment to a document incorporated by 
reference, as appropriate, containing audited financial statements must 
be filed before effectiveness.\55\ If the registration statement is 
effective, the amendment containing audited financial statements 
generally must be filed by the earlier of 60 days from the date when 
use of the financial statements would have been required and the date 
the audited financial statements are filed in the annual report of the 
registrant,\56\ if the offering or offerings are not complete 
(including any prospectus delivery period required by Section 4(3) of 
the Securities Act \57\ and the rules thereunder) by such date.\58\
---------------------------------------------------------------------------

    \51\ Including registered investment companies that have 
previously filed a registration statement under the Securities Act 
that has been declared effective by the Commission.
    \52\ Unit investment trusts that offer a new series will 
continue to be required to provide audited financial statements for 
the registrant as currently required. The Commission believes that 
obtaining an audit that verifies the securities deposited in a unit 
investment trust is not unduly burdensome.
    \53\ See Section II.B.3 of this release.
    \54\ Annual report to shareholders, in the case of a registered 
investment company.
    \55\ The 60 day period applies to foreign private issuers and 
issuers that meet all of the conditions in Rule 3-01(c) of 
Regulation S-X (or Item 310(g)(2) of Regulation S-B for small 
business issuers). For issuers that do not meet all of the 
conditions in Rule 3-01(c) of Regulation S-X (or Item 310(g)(2) of 
Regulation S-B for small business issuers), the period is 106 days. 
If the issuer is a registered investment company, the applicable 
time period is six months after the close of the fiscal year.
    \56\ Annual report to shareholders, in the case of a registered 
investment company.
    \57\ 15 U.S.C. 77d(3).
    \58\ The period is 106 days for issuers that do not meet all of 
the conditions in Rule 3-01(c) of Regulation S-X (or Item 310(g)(2) 
of Regulation S-B for small business issuers). If the issuer is a 
registered investment company, the applicable time period is six 
months after the close of the fiscal year.
---------------------------------------------------------------------------

     Registration statements for offerings that are registered 
in accordance with Securities Act Rule 415 \59\ and that are updated 
through ``forward incorporation by reference'' of the issuer's Exchange 
Act reports rather than through the filing of post-effective amendments 
will be updated in accordance with the procedures for including the 
audited financial information in the registrant's Exchange Act reports.
---------------------------------------------------------------------------

    \59\ 17 CFR 230.415.
---------------------------------------------------------------------------

    Issuers with effective registration statements for offerings 
registered in accordance with Rule 415 under the Securities Act must 
update the registration statement pursuant to undertakings included in 
those registration statements.\60\ Among the events requiring an 
updating of the registration statement is the occurrence of facts or 
events that, individually or in

[[Page 13521]]

the aggregate, represent a ``fundamental change in the information set 
forth in the registration statement.'' \61\ It is the Commission's view 
that the failure of an eligible issuer to include audited financial 
statements in the registration statement, either through the filing of 
a post-effective amendment or amendments of Exchange Act reports or 
other documents incorporated by reference, in accordance with Temporary 
Note 1T to Article 3 of Regulation S-X (or Temporary Note 1T of Item 
310 of S-B for small business issuers or Temporary Instruction A-T1 to 
Form 20-F for foreign private issuers) represents such a ``fundamental 
change.'' Accordingly, failure to comply with those requirements will 
require the filing of a post-effective amendment to the registration 
statement. Offerings under the registration statement must cease until 
a post-effective amendment that includes all information required by 
those requirements is declared effective.
---------------------------------------------------------------------------

    \60\ Those undertakings, which are set forth in Item 512(a) of 
Regulation S-B or Regulation S-K [17 CFR 228.512 and 17 CFR 
229.512], must be included in registration statements for offerings 
registered in accordance with Rule 415 under the Securities Act.
    \61\ 17 CFR 228.512(a)(1)(ii) and 17 CFR 229.512(a)(1)(ii).
---------------------------------------------------------------------------

    Section 10(a)(3) of the Securities Act requires that the 
information in a prospectus that is used more than nine months after 
the effective date of the registration statement of which the 
prospectus is a part ``shall be as of a date not more than sixteen 
months prior to such use so far as such information is known to the 
user of such prospectus or can be furnished without unreasonable effort 
or expense.'' \62\ If the issuer is unable to obtain from Andersen or 
elects not to have Andersen issue a manually signed audit report, this 
presents a situation that we believe would cause compliance with 
Section 10(a)(3) to involve ``unreasonable effort or expense.'' 
Accordingly, we are adopting temporary Rule 427T under the Securities 
Act to extend for eligible issuers the sixteen month requirement in 
Section 10(a)(3) as it relates to audited financial statements. Under 
Rule 427T, the Section 10(a)(3) timeliness requirement for audited 
financial statements will be satisfied by any eligible issuer if two 
conditions are met. First, the prospectus used more than nine months 
after the effective date of the registration statement is updated to 
include unaudited financial information that is as of a date not more 
than sixteen months prior to use; provided that the registrant provides 
in the prospectus disclosure reflecting the guidance in Temporary Note 
2T to Article 3 of Regulation S-X.\63\ Second, the prospectus used more 
than nine months after the effective date of the registration statement 
is updated to include audited financial information that is as of a 
date not more than eighteen months prior to use.\64\ The updated 
prospectus should include a discussion of any material changes from the 
unaudited financial information and updated or revised information in 
any other section of the prospectus or documents incorporated by 
reference that should be updated or revised to reflect the changes in 
the audited financial information. Temporary Rule 427T may not be 
relied upon by any registrant that is a ``blank check company'' as 
defined in Securities Act Rule 419(a)(2).
---------------------------------------------------------------------------

    \62\ Id.
    \63\ For registration statements that are updated through 
``forward incorporation by reference'' of Exchange Act reports, each 
of the required updates may be accomplished in that manner. For 
registration statements that are updated through the filing of post-
effective amendments, each update will require a post-effective 
amendment.
    \64\ Provisions of the 34 Act Order, the 40 Act Order or 
Temporary Note 1T to Article 3 of Regulation S-X may require the 
filing of audited financial statements at an earlier time than Rule 
427T. For example, a registered investment company generally would 
be required to file its annual updating amendment with audited 
financial statements no later than the date it is required to file 
audited financial statements in its annual report to shareholders 
under the 40 Act Order, i.e., typically 120 days after the close of 
its fiscal year.
---------------------------------------------------------------------------

3. Additional Disclosure Required in Filings
    Issuers permitted to provide unaudited financial information in 
reliance on the temporary rules adopted today or in reliance on the 
Orders should consider whether any additional disclosure is necessary 
in those filings. The Commission has adopted Temporary Note 2T to 
Article 3 of Regulation S-X to provide guidance on the additional 
disclosure. The guidance in the note applies to all such issuers, 
including small business issuers and foreign private issuers. The 
temporary note is intended to provide guidance to issuers in meeting 
their disclosure obligations under the federal securities laws. While 
the exact content of each issuer's disclosure may vary depending on the 
facts and circumstances applicable to each of Andersen's former public 
company audit clients, issuers must provide on the cover page of their 
filings a prominent statement that the filing includes unaudited 
financial statements in lieu of the audited financial statements 
because the issuer was unable to obtain from Andersen or elected not to 
have Andersen issue a manually signed audit report. The issuer must 
also place this prominent statement in the filing immediately before 
the financial statements and follow guidance as to providing:
     A statement as to when and how the issuer intends to 
provide the audited financial statements; and
     A statement that no auditor has opined that the unaudited 
financial statements present fairly, in all material respects, the 
financial position, the results of operations, cash flows and the 
changes in shareholders' equity of the company (and, in the case of a 
registered investment company, the financial highlights) for each of 
the periods reported in accordance with generally accepted accounting 
principles.

    Further, any audit report previously issued by Andersen that is 
required to be included in a filing should be included as required.
4. Predecessor Auditor's Reports
    Each issuer filing audited financial statements as to the 
examination of which Andersen had been engaged as the independent 
public accountant is required to file a manually signed accountants' 
report\65\ from Andersen.\66\ Issuers may be unable to obtain an 
accountants' report for the period for which Andersen was engaged. 
Accordingly, the Commission is amending Rule 2-02 of Regulation S-X to 
provide that those issuers that cannot obtain an accountants' report 
from Andersen after reasonable efforts may file a copy of the latest 
signed and dated accountants' report issued by Andersen for such 
period. The issuer must disclose prominently on such copy that the 
report is a copy of a previously issued Andersen report and that the 
report has not been reissued by Andersen. This rule is available only 
to issuers filing documents containing financial statements for a 
period with respect to which Andersen issued an accountants' report.
---------------------------------------------------------------------------

    \65\ See Item 302 of Regulation S-T [17 CFR 232.302] for 
requirements related to signatures in electronic submissions.
    \66\ See Rule 2-02(a) of Regulation S-X [17 CFR 210.2-02(a)] for 
the technical requirements of an accountants' report.
---------------------------------------------------------------------------

5. Written Consents
    Each issuer filing a Securities Act registration statement 
containing financial statements as to the examination of which Andersen 
had been engaged as the independent public accountant is required to 
file a written consent from Andersen. An issuer may be unable to obtain 
these consents. Accordingly, the Commission is adopting Securities Act 
Rule 437a to provide that, notwithstanding any other Commission rule or 
regulation, every registrant eligible to rely on this rule may dispense 
with the requirement for

[[Page 13522]]

the registrant to file the written consent of Andersen as required by 
Section 7 of the Securities Act where:
     The registrant has not already obtained the written 
consent that would be required if not for this temporary rule,
     The registrant is not able to obtain the written consent 
after reasonable efforts, and
     The registrant discloses clearly any limitations on 
recovery by investors posed by the lack of consent.
    This rule is available only to issuers filing registration 
statements containing financial statements audited by Andersen. The 
rule may not be relied upon by any registrant that is a ``blank check 
company'' as defined in Securities Act Rule 419(a)(2).
6. Rule 144
    Rule 144(c)(1) \67\ provides that there shall be adequate, current 
public information available for purposes of Rule 144 if the issuer of 
the securities to be offered has been subject to the reporting 
requirements of Section 13(a) or 15(d) of the Exchange Act for a period 
of at least 90 days preceding the subject sale of securities and has 
filed all required reports for the 12 months preceding that sale. It is 
the view of the Commission that the requirement to have filed all 
required reports for purposes of Rule 144(c)(1) is satisfied for 
issuers eligible to rely on the 34 Act Order if they have filed their 
Exchange Act reports as permitted under the 34 Act Order.\68\
---------------------------------------------------------------------------

    \67\ 17 CFR 230.144(c)(1).
    \68\ This position, as well as the positions expressed with 
regard to Rule 701 [17 CFR 230.701] and Regulation D [17 CFR 
230.501-508], are consistent with Exchange Act Rule 12b-37 which we 
are adopting today to address the satisfaction of an issuer's 
Exchange Act filing requirements.
---------------------------------------------------------------------------

7. Rule 144A
    Rule 144A(d)(4) \69\ addresses the information that an issuer that 
is not a reporting company under the Exchange Act, not a foreign 
government and not a foreign company exempt from registration under 
Section 12 of the Exchange Act \70\ by Exchange Act Rule 12g3-2(b) \71\ 
must agree to provide to investors or prospective investors if Rule 
144A is to be relied upon. Among other requirements, an issuer subject 
to Rule 144A(d)(4) must provide financial information that ``should be 
audited to the extent reasonably available.'' It is the view of the 
Commission that resales under Rule 144A will not be affected by the 
unavailability of audited financial information due to reliance on the 
34 Act Order and temporary rules adopted today.
---------------------------------------------------------------------------

    \69\ 17 CFR 230.144A(d)(4).
    \70\ 15 U.S.C. 77l.
    \71\ 17 CFR 240.12g3-2(b).
---------------------------------------------------------------------------

8. Rule 701
    The conditions for the Rule 701 exemption from Securities Act 
registration for certain offerings of securities include financial 
statement requirements. It is the view of the Commission that, to the 
extent required, where the information referenced in Rule 701(e) is 
prepared in compliance with the 34 Act Order by issuers eligible to 
rely on the 34 Act Order, the information contained in those reports is 
sufficient for purposes of Rule 701.
9. Regulation D
    Rule 502(b)(2)(ii) \72\ sets forth the financial information 
requirements for issuers that are subject to the Exchange Act reporting 
requirements. Subject to various conditions, that rule may require the 
furnishing of annual reports under Exchange Act Rule 14a-3,\73\ reports 
under the Exchange Act or registration statements under the Securities 
Act. It is the view of the Commission that, where the reports and 
registration statements referenced in Rule 502(b)(2)(ii) are prepared 
in compliance with the 34 Act Order by issuers eligible to rely on the 
34 Act Order, the information contained in those reports and 
registration statements is sufficient for purposes of Regulation D.
---------------------------------------------------------------------------

    \72\ 17 CFR 230.502(b)(2)(ii).
    \73\ 17 CFR 240.14a-3.
---------------------------------------------------------------------------

10. Items 304 and 601 of Regulation 
S-K and Regulation S-B
    Item 304 of Regulation S-K \74\ sets forth the disclosure 
requirements for an issuer when its independent public accountant is 
dismissed or resigns. This disclosure would include a discussion of any 
disagreements with the independent accountants regarding accounting and 
financial disclosure. Subject to various conditions, the issuer may be 
required to request that its former independent accountant furnish a 
letter addressed to the Commission stating whether it agrees with the 
statements made by the issuer in response to Item 304(a) and, if not, 
stating the matters on which it does not agree. This letter must be 
filed as an exhibit to certain of the issuer's filings in accordance 
with Item 601(b)(16) of Regulation S-K.\75\
---------------------------------------------------------------------------

    \74\ 17 CFR 229.304. Item 304 of Regulation S-B [17 CFR 228.304] 
sets forth the same requirement for issuers reporting under the 
small business issuer reporting system. The discussion of Item 304T 
in this section refers to new Item 304T of Regulation S-K and 
Regulation S-B.
    \75\ 17 CFR 229.601(b)(16). The discussion of Item 601 of 
Regulation S-K applies equally to Item 601 of Regulation S-B [17 CFR 
228.601].
---------------------------------------------------------------------------

    The resignation or dismissal of the independent accountant triggers 
an issuer's obligation to file a current report on Form 8-K.\76\ That 
Form 8-K must include the information required by Item 304. Further, 
the disclosure and letter required by Item 304 must be included in any 
Exchange Act registration statement or report on Form 10,\77\ 10-
SB,\78\ 10-K,\79\ 10-KSB \80\ or N-SAR \81\ or Securities Act 
registration statement on Form S-1, S-2, S-4 or S-11 that the issuer 
files. We are adopting temporary Items 304T and 601T of Regulation S-K 
and Regulation S-B for use by issuers for which Andersen had been 
engaged as the independent public accountant to examine the issuer's 
financial statements, or for which Andersen had been engaged to examine 
a significant subsidiary's financial statements and on which the 
principal accountant expressed reliance in its report, on or after 
March 14, 2002. Under Item 304T, the filing obligation of these issuers 
will be satisfied if the issuer's filings do not include the letter 
from Andersen if the issuer has not yet obtained it and is not able to 
obtain it after reasonable efforts.
---------------------------------------------------------------------------

    \76\ 17 CFR 249.308.
    \77\ 17 CFR 249.10.
    \78\ Id.
    \79\ 17 CFR 249.310.
    \80\ 17 CFR 249.310b.
    \81\ 17 CFR 249.330. In the case of registered investment 
companies, the disclosure and letter must also be included in the 
annual report to shareholders.
---------------------------------------------------------------------------

III. Trust Indenture Act of 1939

    Section 314(a)(1) of the Trust Indenture Act \82\ requires 
companies that are obligors on securities issued under an indenture 
that is qualified under the Trust Indenture Act to file certain 
information with the indenture trustee. The indenture obligor must 
``file with the indenture trustee all reports required to be filed with 
the Commission pursuant to Section 13 or Section 15(d) of the Exchange 
Act.'' \83\ We have adopted a rule to make clear the application of 
Section 314(a)(1) to indenture obligors that file their Exchange Act 
reports with the

[[Page 13523]]

Commission in compliance with the 34 Act Order.\84\ Trust Indenture Act 
Rule 19a-1 states that the indenture obligor's filing with the 
indenture trustee of those Exchange Act reports filed in accordance 
with the 34 Act Order shall satisfy the indenture obligor's 
responsibility to ``file with the indenture trustee all reports 
required to be filed with the Commission pursuant to Section 13 or 
Section 15(d) of the Exchange Act'' for purposes of Section 314(a)(1).
---------------------------------------------------------------------------

    \82\ 15 U.S.C. 77nnn(a)(1).
    \83\ Id. Section 314(a)(1) also discusses the obligations for 
indenture obligors that are not required to file reports with the 
Commission pursuant to Section 13 or Section 15(d) of the Exchange 
Act. The discussion in this section and new Rule 19a-1 do not apply 
to indenture obligors that are not required to file reports with the 
Commission pursuant to Section 13 or Section 15(d) of the Exchange 
Act.
    \84\ Trust Indenture Act Rule 19a-1 is consistent with Exchange 
Act Rule 12b-37 which we are adopting today regarding satisfaction 
of an issuer's Exchange Act filing requirements. Trust Indenture Act 
Rule 19a-1 uses the term ``eligible indenture obligors.'' The rule 
defines ``eligible indenture obligors'' as those obligors that may 
rely on any of the provisions of the 34 Act Order with regard to the 
filing of reports with the Commission pursuant to Section 13 or 
Section 15(d) of the Exchange Act.
---------------------------------------------------------------------------

IV. Registrants Under the Securities Exchange Act of 1934

A. Registrants That Continue To Engage Andersen

    For issuers that make filings that include accountant's reports 
from Andersen issued after March 14, 2002, the Commission has adopted 
Temporary Note 3T to Article 3 of Regulation S-X (and Temporary Note 2T 
to Item 310 of Regulation S-B for small business issuers and General 
Instruction A-T2 to Form 20-F for foreign private issuers) to specify 
special disclosure requirements for these issuers. While the exact 
nature of each issuer's disclosure may vary depending on the facts and 
circumstances applicable to each of Andersen's public company audit 
clients, these issuers are required to include as an exhibit to their 
filings a letter by the issuer addressed to the Commission that states 
that Andersen has represented to the issuer that the audit was subject 
to Andersen's quality control system for the U.S. accounting and 
auditing practice to provide reasonable assurance that the engagement 
was conducted in compliance with professional standards and that there 
was appropriate continuity of Andersen personnel working on audits, 
availability of national office consultation and availability of 
personnel at foreign affiliates of Andersen to conduct the relevant 
portions of the audit. We expect these assurances will be given in 
connection with the issuance of the audit report. So long as Andersen 
continues to be in a position to provide those assurances, the 
Commission will continue to accept financial statements audited by 
Andersen.

B. Registrants That Are Unable To, or Choose Not To, Engage Andersen

    There may be issuers that are Andersen clients or whose filings are 
to include financial statements as to the examination of which Andersen 
had been engaged on or after March 14, 2002 that are unable to obtain 
from Andersen or elect not to have Andersen issue a manually signed 
audit report. The 34 Act Order issued by the Commission provides 
affected issuers extensions of time to file audited financial 
statements or obtain reviews of financial statements for quarterly 
reports under specified conditions. In most cases, the relief is 
conditioned on timely filing of the financial statements on an 
unaudited basis and requiring an amendment to the filing within 60 days 
after the original due date to provide the audited financial 
statements. The relief does not apply for financial statements where 
Andersen has already issued a manually signed report for those 
financial statements on or before March 14, 2002. In addition, the 
relief does not apply to any filings by a ``blank check company'' as 
defined in Securities Act Rule 419(a)(2). We are adopting Rule 12b-37 
under the Exchange Act to make clear that reports filed in compliance 
with the 34 Act Order and the 40 Act Order will satisfy the issuer's 
Exchange Act filing requirements.
1. Annual Reports on Form 10-K/Form 10-KSB
    For issuers that file annual reports on Form 10-K or Form 10-KSB, 
the relief provided by the 34 Act Order applies to issuers with a 
fiscal year ending between and including November 30, 2001 and April 
15, 2002. The 34 Act Order maintains the existing filing deadlines for 
these reports, but permits eligible issuers to file their annual 
reports with those financial statements on an unaudited basis. The 34 
Act Order's conditions require the issuer to provide disclosure 
reflecting the guidance in Temporary Note 2T to Article 3 of Regulation 
S-X in the report.\85\ Further, within 60 days of the original due date 
for filing, the issuer must file an amendment presenting the financial 
statements audited by an accountant other than Andersen, a discussion 
of any material changes from the unaudited financial statements and any 
other section of the report, including without limitation Management's 
Discussion and Analysis of Financial Condition and Results of 
Operations,\86\ that should be amended to reflect any changes in the 
financial statements.\87\
---------------------------------------------------------------------------

    \85\ See Section II.B.3 of this release.
    \86\ Item 303 of Regulation S-K and Regulation S-B [17 CFR 
229.303 and 17 CFR 228.303].
    \87\ If the original filing was on Form 10-K and Andersen had 
been engaged originally as the independent public accountant to 
examine the issuer's financial statements, selected financial data 
required by Item 6 of Form 10-K based on the audited financial 
statements must also be provided.
---------------------------------------------------------------------------

    For example, the 34 Act Order permits a company with a fiscal year 
that ended on December 31, 2001, for which Andersen had been engaged as 
the independent public accountant to examine the company's financial 
statements on or after March 14, 2002, to file timely its annual report 
responding to all items required in the report by April 1, 2002,\88\ 
but include the financial statements on an unaudited basis.\89\ Under 
the 34 Act Order, the company will then file the audited financial 
statements, any required selected financial data, a discussion of any 
material changes from the unaudited financial statements and any other 
section of the annual report that should be amended to reflect any 
changes in the financial statements as an amendment no later than May 
31, 2002.\90\
---------------------------------------------------------------------------

    \88\ General Instruction A. to Form 10-K and Form 10-KSB set the 
due date for these reports at 90 days after the end of the issuer's 
fiscal year. If that date falls on a Saturday, Sunday or holiday, 
Exchange Act Rule 0-3 [17 CFR 240.0-3] allows such reports to be 
filed on the first business day following. March 31, 2002, which is 
90 days after December 31, 2001, falls on a Sunday, so the report 
will be due by April 1, 2002.
    \89\ One-time extensions of time to file the report are 
available under certain circumstances under Exchange Act Rule 12b-25 
[17 CFR 240.12b-25]. If an issuer complies with that rule, it can 
file its annual report no later than the fifteenth calendar day 
following the prescribed due date for that report, and the report 
will be deemed to be filed on the prescribed due date. If the issuer 
is relying on Exchange Act Rule 12b-25 in connection with a report 
covered by the Orders, the 34 Act Order provides that the issuer 
need not attach as an exhibit to its Form 12b-25 filing a statement 
by Andersen as required by Exchange Act Rule 12b-25(c) if such 
statement cannot be obtained by the issuer after reasonable efforts.
    \90\ Reliance on the 34 Act Order is conditioned upon filing the 
amendment within 60 days after the original due date of the report, 
excluding any additional period issuers had to actually file the 
report under Exchange Act Rule 12b-25. Extensions under Exchange 
Rule 12b-25 are not available for filing the amendment.
---------------------------------------------------------------------------

2. Quarterly Reports on Form 10-Q/Form 10-QSB
    For issuers that file quarterly reports on Form 10-Q \91\ or Form 
10-QSB,\92\ the relief provided by the 34 Act Order applies to issuers 
that have fiscal quarters ending between and including January 26, 2002 
and June 15, 2002. The 34 Act Order maintains the existing

[[Page 13524]]

filing deadlines for these reports,\93\ but permits eligible issuers to 
file their quarterly reports with financial statements that have not 
been reviewed pursuant to Rule 10-01(d) of Regulation S-X (or Item 
310(b) of Regulation S-B for issuers filing on Form 10-QSB). The 34 Act 
Order's conditions require the issuer to provide similar disclosure 
reflecting the guidance in Temporary Note 2T to Article 3 of Regulation 
S-X in the report.
---------------------------------------------------------------------------

    \91\ 17 CFR 249.308.
    \92\ 17 CFR 249.308b.
    \93\ General Instruction A.1. to Form 10-Q and Form 10-QSB set 
the due date for these reports at 45 days after the end of the 
issuer's first three fiscal quarters. As with reports on Form 10-K 
and Form 10-KSB, one-time extensions of time to file the report are 
available under certain circumstances under Exchange Act Rule 12b-
25. If the issuer complies with that rule, it can file its quarterly 
report no later than the fifth calendar day following the prescribed 
due date for that report, and the report will be deemed to be filed 
on the prescribed due date. See supra note 89 for additional relief 
provided by the 34 Act Order regarding Exchange Act Rule 12b-25.
---------------------------------------------------------------------------

    Under the 34 Act Order's conditions, if, upon completion of the 
review, there is a change in those financial statements, the issuer 
must amend its quarterly report to present the reviewed financial 
statements, a discussion of any material changes from the unreviewed 
financial statements and any other section of the quarterly report, 
including without limitation Management's Discussion and Analysis of 
Financial Condition and Results of Operations, that should be amended 
to reflect any changes in the financial statements. Otherwise, the 34 
Act Order's conditions only require the issuer to state in its next 
quarterly report that the financial statements for the previous quarter 
had subsequently been reviewed by an accountant other than Andersen, 
but the issuer is not required to include a copy of the review report. 
If an amendment to the previous quarterly report is not required, we 
encourage issuers to make public that there were no material changes as 
a result of the review prior to the submission of the next required 
periodic report.
3. Annual Reports on Form 20-F
    For foreign private issuers that file annual reports on Form 20-F, 
the 34 Act Order applies to foreign private issuers with fiscal years 
ending between and including August 31, 2001 and April 15, 2002. The 34 
Act Order maintains the existing filing deadline for Form 20-F, but 
permits eligible foreign private issuers to file their annual reports 
on Form 20-F with financial statements on an unaudited basis. The 34 
Act Order's conditions require these financial statements to include an 
unaudited reconciliation to U.S. generally accepted accounting 
principles (GAAP) if the foreign private issuer prepares its financial 
statements in accordance with local GAAP or international accounting 
standards (IAS). The 34 Act Order's conditions also require the foreign 
private issuer to provide disclosure reflecting the guidance in 
Temporary Note 2T to Article 3 of Regulation S-X in the report.
    Within 60 days after the original due date for filing, a foreign 
private issuer relying on the 34 Act Order must file an amendment 
presenting the audited financial statements (including the audited 
reconciliation to U.S. GAAP where the issuer's financial statements are 
prepared in accordance with local GAAP or IAS) audited by an accountant 
other than Andersen, a discussion of any material changes from the 
unaudited financial statements and any other section of the report that 
should be amended to reflect any changes in the financial statements, 
including without limitation the Operating and Financial Review and 
Prospects required by Item 5 of Form 20-F.\94\
---------------------------------------------------------------------------

    \94\ If Andersen or a foreign affiliate of Andersen had been 
engaged originally as the independent public accountant for the 
foreign private issuer's financial statements, selected financial 
data required by Item 3.A. of Form 20-F (and any reconciliation of 
that data to U.S. GAAP and Regulation S-K if required by Instruction 
2 to Item 3.A. of Form 20-F) must also be provided.
---------------------------------------------------------------------------

    For example, the 34 Act Order permits a foreign private issuer with 
a fiscal year that ended on December 31, 2001 for which Andersen had 
been engaged as the independent public accountant to examine the 
financial statements to file timely its annual report on Form 20-F 
responding to all items required in the report by July 1, 2002,\95\ but 
include the financial statements and the reconciliation to U.S. GAAP on 
an unaudited basis.\96\ Under the 34 Act Order, the foreign private 
issuer must then file the audited financial statements and 
reconciliation, any required selected financial data, a discussion of 
any material changes from the unaudited financial statements and any 
other section of the annual report that should be amended to reflect 
any changes in the financial statements as an amendment no later than 
August 30, 2002.\97\
---------------------------------------------------------------------------

    \95\ General Instruction A.(b) of Form 20-F sets the due date 
for these annual reports at six months after the end of the fiscal 
year covered by the report. June 30, 2002 falls on a Sunday, so the 
report will be due by July 1, 2002 for foreign private issuers with 
a December 31 fiscal year end.
    \96\ As with reports on Form 10-K and Form 10-KSB, one-time 
extensions of time to file the report are available under certain 
circumstances under Exchange Act Rule 12b-25. If a foreign private 
issuer complies with that rule, it can file its annual report no 
later than the fifteenth calendar day following the prescribed due 
date for that report, and the report will be deemed to be filed on 
the prescribed due date. See supra note 89 for additional relief 
provided by the 34 Act Order regarding Exchange Act Rule 12b-25.
    \97\ As with reports on Form 10-K and Form 10-KSB, reliance on 
the 34 Act Order is conditioned upon filing of the amendment in 60 
days after the original due date of the report, excluding any 
additional period foreign private issuers had to actually file the 
report under Exchange Act Rule 12b-25. Extensions under Exchange 
Rule 12b-25 are not available for filing the amendment.
---------------------------------------------------------------------------

4. Employee Benefit Plan Annual Reports on Form 11-K
    For non-ERISA \98\ employee stock purchase, savings and similar 
plans subject to Section 15(d) of the Exchange Act, the 34 Act Order 
applies to plans with a fiscal year ending between and including 
November 30, 2001 and April 15, 2002. The 34 Act Order maintains the 
existing filing deadlines for Form 11-K,\99\ but permits non-ERISA 
plans whose annual reports would need to include audited plan financial 
statements for which Andersen had been engaged as the independent 
public accountant on or after March 14, 2002 to file their annual 
reports on Form 11-K with unaudited plan financial statements. The 34 
Act Order's conditions require the plan to provide disclosure 
reflecting the guidance in Temporary Note 2T to Article 3 of Regulation 
S-X in the report. Further, within 60 days of the original due date for 
filing, the plan must file an amendment presenting the financial 
statements audited by an accountant other than Andersen and a 
discussion of any material changes from the unaudited financial 
statements filed originally.
---------------------------------------------------------------------------

    \98\ ERISA stands for the Employee Retirement Income Security 
Act of 1974, as amended [29 U.S.C. Secs. 1001-1461].
    \99\ 17 CFR 249.311.
---------------------------------------------------------------------------

    Exchange Act Rule 15d-21 \100\ provides plans with the alternative 
of including audited financial statements in the annual report of the 
issuer of the stock or other securities offered to employees through 
their participation in the plan. If the plan follows this alternative 
procedure, the 34 Act Order permits unaudited plan financial statements 
(with appropriate disclosures) to be filed in the annual report (or an 
amendment thereto) of the issuer within 120 days after the end of the 
fiscal year of the plan. The 34 Act Order's conditions require audited 
plan financial statements to be filed as an amendment within 180 days 
after the end of the fiscal year of the plan. Plans with fiscal years 
that end within 62 days before the end of the fiscal year of the issuer 
that elect to furnish the

[[Page 13525]]

information as part of the issuer's next annual report, as permitted by 
Exchange Act Rule 15d-21(b), will not be affected.
---------------------------------------------------------------------------

    \100\ 17 CFR 240.15d-21.
---------------------------------------------------------------------------

    For example, the 34 Act Order permits a plan with a fiscal year 
ending December 31, 2001 for which Andersen had been engaged as the 
independent public accountant to examine the plan's financial 
statements on or after March 14, 2002, to file timely its annual report 
on Form 11-K by April 1, 2002,\101\ but include the plan financial 
statements on an unaudited basis.\102\ Under the 34 Act Order, the plan 
will then file its audited plan financial statements, a discussion of 
any material changes from the unaudited plan financial statements and 
any other section of the annual report that should be amended to 
reflect any changes in the financial statements as an amendment by May 
31, 2002.\103\
---------------------------------------------------------------------------

    \101\ General Instruction A. to Form 11-K sets the due date for 
these reports at 90 days after the end of the fiscal year of the 
plan for non-ERISA plans. March 31, 2002 falls on a Sunday, so the 
report will be due by April 1 for plans with a December 31 fiscal 
year end.
    \102\ As with reports on Form 10-K and Form 10-KSB, one-time 
extensions of time to file the report are available under certain 
circumstances under Exchange Act Rule 12b-25. If a plan complies 
with that rule, it can file its annual report no later than the 
fifteenth calendar day following the prescribed due date for that 
report, and the report will be deemed to be filed on the prescribed 
due date. See supra note 89 for additional relief provided by the 34 
Act Order regarding Exchange Act Rule 12b-25.
    \103\ As with reports on Form 10-K and Form 10-KSB, reliance on 
the 34 Act Order is conditioned upon filing of the amendment in 60 
days after the original due date of the report, excluding any 
additional period the plan had to actually file the report under 
Exchange Act Rule 12b-25. Extensions under Exchange Rule 12b-25 are 
not available for filing the amendment.
---------------------------------------------------------------------------

    If the alternative procedure in Exchange Act Rule 15d-21 is 
followed, the 34 Act Order permits unaudited plan financial statements 
to be filed in the annual report of the issuer, or as an amendment to 
that report, by April 30, 2002. Under the 34 Act Order's conditions, 
audited plan financial statements, a discussion of any material changes 
from the unaudited plan financial statements and any other section of 
the annual report related to the plan that should be updated will need 
to be filed as an amendment by July 1, 2002.\104\ If the plan has a 
fiscal year that ends within 62 days before the end of the fiscal year 
of the issuer, it may elect to file the plan financial statements in 
the issuer's next annual report pursuant to Exchange Act Rule 15d-
21(b).
---------------------------------------------------------------------------

    \104\ 180 days after the end of a fiscal year of a plan with a 
December 31 fiscal year is June 29, 2002, which falls on a Saturday. 
Accordingly, the amendment will be due by July 1, 2002.
---------------------------------------------------------------------------

    Plans subject to ERISA will remain subject to the existing 
requirements for filing plan financial statements.
5. Filings on Schedules 14A and 14C
    For issuers that file proxy statements or information statements 
that require audited financial statements pursuant to Item 13 or Item 
14 of Schedule 14A \105\ or Item 1 of Schedule 14C,\106\ the 34 Act 
Order permits the filing of unaudited financial statements of issuers 
and, where applicable, of acquired companies, where the independent 
public accountant of the entity in question had been Andersen on or 
after March 14, 2002.\107\ For issuers that are not registered 
investment companies, the relief provided by the 34 Act Order applies 
to proxy statements or information statements that are sent on or 
before September 13, 2002. For registered investment companies, the 
relief provided by the 34 Act Order applies to proxy statements or 
information statements that are sent on or before August 13, 2002. The 
34 Act Order's conditions require the proxy statement or information 
statement to include disclosure reflecting the guidance in Temporary 
Note 2T to Article 3 of Regulation S-X.
---------------------------------------------------------------------------

    \105\ 17 CFR 240.14a-101.
    \106\ 17 CFR 240.14c-101.
    \107\ Under the 34 Act Order, the entity in question must also 
have a fiscal year ending with a date between and including November 
30, 2001 and April 15, 2002 (for entities that meet the requirements 
of Rule 3-01(c) of Regulation S-X (or Item 310(b) of Regulation S-B 
if the entity is a small business issuer)), a fiscal year ending 
with a date between and including December 29, 2001 and April 15, 
2002 (for entities that do not meet the requirements of Rule 3-01(c) 
of Regulation S-X (or Item 310(b) of Regulation S-B if the entity is 
a small business issuer)) or a fiscal year ending with a date 
between and including January 1, 2002 and April 15, 2002 (if the 
entity is a registered investment company).
---------------------------------------------------------------------------

    Under the 34 Act Order, these issuers must file revised material or 
amend documents incorporated by reference, as appropriate, containing 
financial statements audited by an accountant other than Andersen for 
the required periods by the earlier of 60 days \108\ from the date when 
the financial statements were required to be included in the proxy 
statement or information statement and the date the audited financial 
statements are filed in the annual report of the registrant,\109\ if 
the solicitation for purposes of proxy statements (or corporate action 
for purposes of information statements) has not been completed by such 
date. The revised material or amended documents must present the 
audited financial statements, a discussion of any material changes from 
the unaudited financial statements and any other section of the 
materials that should be updated to reflect the changes in the 
financial statements.\110\
---------------------------------------------------------------------------

    \108\ This period is 106 days for an issuer that does not meet 
all of the conditions in Rule 3-01(c) of Regulation S-X (Item 310(g) 
of Regulation S-B for small business issuers).
    \109\ Or the annual report to shareholders in the case of a 
registered investment company.
    \110\ Unless the company is eligible to rely on Regulation S-B 
for its disclosure requirements, if Andersen had been engaged 
originally as the independent public accountant to examine the 
company's financial statements, selected financial data required by 
Item 301 of Regulation S-K based on the audited financial statements 
are also required to be provided if this information would otherwise 
have been required in the proxy statement or information statement.
---------------------------------------------------------------------------

    Additionally, the Commission recognizes that issuers sending their 
proxy statement or information statement prior to obtaining their audit 
report will be unable to provide disclosure regarding audit committee 
reports pursuant to Item 7(d)(3)(i) of Schedule 14A and audit fees 
pursuant to Item 9(e) of Schedule 14A or Item 1 of Schedule 14C. The 34 
Act Order permits the omission of this information for issuers with a 
fiscal year end between November 30, 2001 and April 15, 2002 from proxy 
statements and information statements in full satisfaction of those 
disclosure requirements if the issuer meets the 34 Act Order's 
conditions.
    The 34 Act Order's conditions require the issuer to send its proxy 
statement or information statement on or before September 13, 
2002.\111\ Further, the issuer must respond to all other applicable 
disclosure requirements in their proxy statement or information 
statement. Under the 34 Act Order, the issuer will then include 
disclosure in response to Items 7(d)(3)(i) and Item 9(e) of Schedule 
14A in their amended Form 10-K or Form 10-KSB, if this information was 
required in the Schedule 14A or Schedule 14C.
---------------------------------------------------------------------------

    \111\ This date is August 13, 2002 in the case of an issuer that 
is a registered investment company.
---------------------------------------------------------------------------

6. Annual Reports to Shareholders in Connection With Annual Meeting 
Proxy Solicitations
    Issuers furnishing proxy statements or information statements in 
connection with their annual meeting of security holders, or written 
consents in lieu of annual meetings, at which directors are to be 
elected, must accompany or precede that proxy statement with an annual 
report to shareholders. That annual report to shareholders must satisfy 
the requirements of Exchange Act Rule 14a-3(b) \112\ for proxy 
statements and Exchange Act Rule 14c-3 \113\ for information 
statements. The 34 Act Order applies to issuers with a fiscal year 
ending between and including

[[Page 13526]]

November 30, 2001 and April 15, 2002 for proxy statements or 
information statements sent on or before September 13, 2002.
---------------------------------------------------------------------------

    \112\ 17 CFR 240.14a-3(b).
    \113\ 17 CFR 240.14c-3.
---------------------------------------------------------------------------

    Where their annual reports will include financial statements as to 
the examination of which Andersen had been engaged as the independent 
public accountant on or after March 14, 2002, the 34 Act Order permits 
issuers to provide those financial statements on an unaudited basis, if 
the document containing the unaudited financial statements includes 
disclosure reflecting the guidance in Temporary Note 2T to Article 3 of 
Regulation S-X. The 34 Act Order's conditions require any issuer that 
does not include audited financial statements to inform its 
shareholders (i.e., through a press release \114\ and posting the 
audited financial statements on the issuer's website, if it has one) 
when it files or amends its Form 10-K or Form 10-KSB to include the 
financial statements audited by an accountant other than Andersen, if 
the issuer's solicitation or corporate action has not been completed 
before the time the audited financial statements are filed.
---------------------------------------------------------------------------

    \114\ The press release is to announce that the audited 
financial statements are available and may be found in the issuer's 
filing on the Commission's website at www.sec.gov and on the 
issuer's website, citing the address, if the issuer has a website.
---------------------------------------------------------------------------

7. Tender Offer Filings on Schedules TO
    For offerors that commence tender offers that require financial 
statements pursuant to Item 10 of Schedule TO,\115\ the 34 Act Order 
permits the filing of unaudited financial statements where the 
independent public accountant of the entity in question had been 
Andersen on or after March 14, 2002. The relief provided by the 34 Act 
Order applies to a Schedule TO filed on or before September 13, 2002 
that would need to contain audited financial statements of an entity 
that has a fiscal year ending between and including November 30, 2001 
and April 15, 2002 and where Andersen had been engaged as the 
independent public accountant on or after March 14, 2002 to examine 
those financial statements. The 34 Act Order's conditions require the 
Schedule TO to include disclosure reflecting the guidance in Temporary 
Note 2T to Article 3 of Regulation S-X.
---------------------------------------------------------------------------

    \115\ 17 CFR 240.14d-100.
---------------------------------------------------------------------------

    Under the 34 Act Order, the offeror must file revised material or 
amend documents incorporated by reference, as appropriate, to provide 
the financial statements audited by an accountant other than Andersen 
no later than the earlier of 60 days from the date the audited 
financial statements were required to be included in the Schedule TO 
and the date the audited financial statements are filed in the annual 
report of the registrant,\116\ if the tender offer has not been 
completed by that date. The 34 Act Order's conditions require the 
revised material or amended documents to present the audited financial 
statements, a discussion of any material changes from the unaudited 
financial statements and any other section of the materials that should 
be updated to reflect the changes in the financial statements.\117\
---------------------------------------------------------------------------

    \116\ Or annual report to shareholders in the case of a 
registered investment company.
    \117\ Unless the offeror is eligible to rely on Regulation S-B 
for its disclosure requirements, if Andersen had been engaged 
originally as the independent public accountant to examine the 
offeror's financial statements, selected financial data required by 
Item 301 of Regulation S-K based on the audited financial statements 
must also be provided.
---------------------------------------------------------------------------

V. Special Case-by-Case Matters

A. Item 7 of Form 8-K--Financial Statements in Business Combination 
Transactions

    Item 7 of Form 8-K requires the filing by an acquiring company of 
financial statements of a target company and pro forma financial 
statements within 75 days of the consummation for certain business 
combination transactions. The Commission invites acquiring companies to 
seek accommodation, such as extensions of time to file, or other 
relief, such as permitting use of unaudited financial statements if the 
acquiring or target company had Andersen as its independent accountant 
and audited financial statements are not available and cannot be 
obtained without unreasonable effort and expense, in writing under Rule 
3-13 of Regulation S-X. Letters should name all parties involved and 
state the relief or accommodation sought, the reason(s) the relief or 
accommodation is being sought and any other relevant information. 
Letters should be addressed to the Commission at 450 Fifth Street, NW, 
Washington, DC 20549-0410 (Facsimile: 202-942-9582). For purposes of 
the significance tests of Regulation S-X used to determine whether 
financial statements of a target company and pro forma financial 
statements are required, if Andersen was the independent accountant of 
the issuer, the issuer should use the most recent annual consolidated 
financial statements filed at, or prior to, the date of acquisition, 
even though the most recent filing may include unaudited financial 
statements.

B. Other Matters

    We encourage issuers to contact the staff of the Commission and 
request consideration of the appropriateness of Commission or staff 
action in connection with their specific factual situation. Some of the 
areas where these types of requests may be appropriate include: 
companies with uncommon fiscal year ends, change in fiscal year end and 
the resultant need to file transition reports pursuant to either 
Exchange Act Rule 13a-10 \118\ or Exchange Act Rule 15d-10, \119\ 
special financial reports required by Exchange Act Rule 15d-2, \120\ 
filings by Canadian issuers under the Multi-Jurisdictional Disclosure 
System \121\ and issues concerning the need to recirculate a 
prospectus, resolicit a proxy statement or extend an offering.
---------------------------------------------------------------------------

    \118\ 17 CFR 240.13a-10.
    \119\ 17 CFR 240.15d-13.
    \120\ 17 CFR 240.15d-2.
    \121\ As a general matter, it is the view of the Commission that 
MJDS filers on Forms F-7, F-8, F-9, F-10 or F-80 [17 CFR 239.37, 
239.38, 239.39, 239.40 or 239.41] under the Securities Act will be 
in compliance with the requirements of the form relating to consents 
of Andersen if the issuer meets the eligibility requirements and 
conditions of new Securities Act Rule 437a.
---------------------------------------------------------------------------

VI. Broker-Dealers and Transfer Agents Registered Under the 
Exchange Act; Other Market Regulation Guidance

    The 34 Act Order provides affected registered broker-dealers and 
transfer agents extensions of time to file audited financial statements 
and audited internal controls reports, respectively, under specified 
conditions. The 34 Act Order also permits affected registered broker-
dealers to furnish unaudited annual financial statements to customers 
and certain other persons under specified conditions. The relief 
provided by the 34 Act Order is available with respect to registered 
broker-dealers and transfer agents that are unable or elect not to 
obtain from Andersen a manually signed audit report for those financial 
statements, or a manually signed internal controls report, so long as 
such manually-signed reports were not received on or before March 14, 
2002.

A. Broker-Dealer Financial Statements

    The relief provided by the 34 Act Order applies to broker-dealers 
with a fiscal year ending between and including January 14, 2002 and 
April 15, 2002. Paragraph (d) of Exchange Act Rule 17a-5 \122\ 
generally requires a registered broker-dealer to file with the 
Commission annually, on a calendar or fiscal year basis, specified 
audited

[[Page 13527]]

financial statements no later than 60 days after the date of the 
financial statements. The 34 Act Order permits eligible broker-dealers 
to file their audited financial statements within 60 days after the 
date the statements otherwise would have been required to have been 
filed under paragraph (d)(5) of Rule 17a-5. For example, the 34 Act 
Order permits a broker-dealer with a fiscal year that ended on January 
31, 2002, for which Andersen had been engaged as the independent public 
accountant to examine the broker-dealer's financial statements, and for 
which the manually-signed audit report has not been received on or 
before March 14, 2002, to file its audited financial statements no 
later than May 31, 2002.
---------------------------------------------------------------------------

    \122\ 17 CFR 240.17a-5.
---------------------------------------------------------------------------

    In addition, paragraph (c) of Exchange Act Rule 17a-5 generally 
requires a registered broker-dealer to send to its customers and 
certain other persons \123\ certain audited financial statements within 
105 days after the date of the end of the calendar or fiscal year.\124\ 
The 34 Act Order maintains the existing deadline under Rule 17a-5(c), 
but permits eligible broker-dealers to furnish financial statements on 
an unaudited basis. For example, the 34 Act Order permits a broker-
dealer with a fiscal year that ended on January 31, 2002, for which 
Andersen had been engaged as the independent public accountant to 
examine the broker-dealer's financial statements, and for which the 
manually-signed audit report has not been received on or before March 
14, 2002, to furnish unaudited annual financial statements to customers 
and such other persons no later than May 16, 2002.
---------------------------------------------------------------------------

    \123\ Subparagraph (c)(1) of Rule 17a-5 requires registered 
broker-dealers to file specified customer statements with the 
Commission, at its principal office in Washington, D.C., with the 
regional office of the Commission for the region in which the 
broker-dealer has its principal place of business, and with each 
national securities exchange and national securities association of 
which it is a member.
    \124\ Specifically, the audited financial statements must be 
sent to customers no later than 105 days after the date of the 
audited report required by paragraph (d) of Rule 17a-5.
---------------------------------------------------------------------------

B. Transfer Agent Internal Control Reports

    Paragraph (a) of Exchange Act Rule 17Ad-13 \125\ generally requires 
a registered transfer agent to file annually with the Commission and 
the transfer agent's appropriate regulatory agency a report prepared by 
an independent accountant concerning the transfer agent's system of 
internal accounting control and related procedures for the transfer of 
record ownership and the safeguarding of related securities and funds. 
That internal controls report must be filed within 90 calendar days of 
the date of the accountant's study and evaluation. The 34 Act Order 
permits eligible transfer agents to file their internal controls 
reports within 60 days after the date the reports otherwise would have 
been required to have been filed under paragraph (a) of Rule 17Ad-13. 
For example, the 34 Act Order permits a transfer agent, for which 
Andersen had been engaged to prepare its annual internal controls 
report and had conducted its study and evaluation as of January 31, 
2002, and for which a manually-signed report has not been received on 
or before March 14, 2002, to file such report no later than June 30, 
2002.
---------------------------------------------------------------------------

    \125\ 17 CFR 240.17Ad-13.
---------------------------------------------------------------------------

C. Other Market Regulation Guidance

1. Listing Requirements of Self-Regulatory Organizations
    Self-regulatory organization (``SRO'') listing standards typically 
require issuers to distribute to shareholders an annual report 
containing audited financial statements within a prescribed period 
after the end of the issuer's fiscal year and no later than a 
prescribed number of days before the issuer's annual meeting.\126\ The 
Commission will work with applicable SROs to encourage them to grant 
relief to listed companies that are audit clients of Andersen that is 
consistent with the relief being issued by the Commission today.
---------------------------------------------------------------------------

    \126\ E.g., NYSE Listed Company Manual Para. 203.01; NASD Rule 
4350(b); Amex Listing Standards, Policies and Requirements Sections 
610-611.
---------------------------------------------------------------------------

2. SRO Member Firm Audit Requirements
    To the extent that SRO rules require broker-dealer member firms to 
file annual audited financial statements,\127\ the Commission will work 
with such SROs to encourage them to grant relief to member firms that 
are audit clients of Andersen that is consistent with the relief being 
issued by the Commission today. In addition, the Commission urges 
broker-dealer audit clients of Andersen with fiscal years ending before 
January 14, 2002 that have encountered delays in completing their 
audited financial statements to contact their designated examining 
authority for an appropriate extension of time to file under Exchange 
Act Rule 17a-5.\128\
---------------------------------------------------------------------------

    \127\ E.g., NYSE Rule 418; CBOE Rule 15.6.
    \128\ Subparagraph (l)(1) of Exchange Act Rule 17a-5 permits a 
broker-dealer's designated examining authority to extend the period 
for filing annual audit reports under paragraph (d) of Exchange Act 
Rule 17a-5.
---------------------------------------------------------------------------

3. Municipal Securities Issuers: Contractual Requirements to Provide 
Audited Financial Statements
    Exchange Act Rule 15c2-12 \129\ generally requires underwriters 
participating in municipal securities offerings to reasonably determine 
that issuers and certain other ``obligated persons'' have contracted to 
provide annual financial statements to certain information 
repositories,\130\ and to disclose in material event notices \131\ and 
future official statements \132\ failures to do so by the contractual 
deadline. The Commission urges municipal securities market participants 
to interpret the filing of annual audited financial statements within 
60 days of the contractual deadline, by municipal securities issuers 
and obligated persons with a fiscal year ending between and including 
September 15, 2001 and April 15, 2002 that are audited by Andersen, as 
not creating a material breach of their contractual undertaking. This 
interpretation would be appropriate, however, only if the issuer or 
obligated person files unaudited financial statements with the 
appropriate repositories by the contractual deadline.
---------------------------------------------------------------------------

    \129\ 17 CFR 240.15c2-12.
    \130\ Annual financial information is to be furnished to each 
nationally recognized municipal securities information repository 
and to the appropriate state information depository, if any. (Rule 
15c2-12(b)(5)(i)(A)-(B)).
    \131\ Rule 15c2-12(b)(5)(i)(D).
    \132\ As defined in Rule 15c2-12(f)(3), the required ``final 
official statement'' must include a description of any instances in 
the previous five years in which the issuer or obligated person 
failed to comply, in all material respects, with any previous 
undertakings in a written contract or agreement specified by Rule 
15c2-12(b)(5)(i).
---------------------------------------------------------------------------

VII. Registrants Under the Investment Company Act of 1940 and the 
Investment Advisers Act of 1940

    The Commission is also issuing an order under the Investment 
Company Act \133\ and Investment Adviser Act \134\ that address issues 
investment companies and investment advisers may face that are unable 
to obtain the services of Andersen or that choose not to continue to 
engage Andersen as their independent public accountant.
---------------------------------------------------------------------------

    \133\ 15 U.S.C. 80a-1 et seq.
    \134\ 15 U.S.C. 80b-1 et seq.
---------------------------------------------------------------------------

A. Registration Statements and Reports Under the Investment Company Act

1. Eligibility
    The 40 Act Order provides relief for investment companies with 
obligations to file amendments to registration statements under the 
1940 Act, annual reports to shareholders, and annual

[[Page 13528]]

reports on Form N-SAR.\135\ An investment company is eligible for the 
relief (an ``Eligible Fund'') if--
---------------------------------------------------------------------------

    \135\ 17 CFR 274.101.
---------------------------------------------------------------------------

     Andersen had been engaged on or after March 14, 2002 as 
the fund's independent public accountant;
     The Eligible Fund, on or before March 14, 2002, had not 
obtained a manually signed audit report from Andersen in respect to 
those financial statements; and
     The Eligible Fund is unable to obtain from Andersen or 
elects not to have Andersen issue a manually signed audit report with 
respect to its financial statements.
2. Registration Statement Under the Investment Company Act
    For Eligible Funds with a fiscal year ending between January 1, 
2002 and April 15, 2002, the 40 Act Order permits them to file a post-
effective amendment to their 1940 Act registration statements within 
six months after their fiscal year end (rather than 120 days) if the 
fund has timely filed its Form N-SAR as provided in the order. The 40 
Act Order thus conforms the 1940 Act registration statement updating 
requirements to those we are today adopting in 1933 Act Rule 427T.
3. Annual Reports to Shareholders
    For Eligible Funds transmitting annual reports to shareholders and 
that have fiscal years ended between January 1, 2002 and April 15, 
2002, the 40 Act Order permits them to mail their annual reports to 
shareholders with unaudited financial statements that also contain the 
disclosure reflecting the guidance included in Temporary Note 2T to 
Article 3 of Regulation S-X. The Eligible Fund must file an amended 
annual report within 60 days of the original due date containing 
financial statements audited by another independent public accountant 
and a discussion of any material changes from the unaudited financial 
statements filed originally.\136\
---------------------------------------------------------------------------

    \136\ An investment company that continues to engage Andersen 
must make the disclosures specified in Temporary Note 3T to Article 
3 of Regulation S-X in its annual report to shareholders, although 
the exact nature of each company's disclosure may vary depending 
upon the facts and circumstances of each company. See discussion in 
Section II.A. of this release.
---------------------------------------------------------------------------

    Most closed-end funds annually furnish shareholders a proxy 
statement (or information statement) that must be accompanied or 
preceded by an annual report. The 40 Act Order's conditions require a 
closed-end fund, when it amends its annual report to include the 
audited financial statements, to inform its shareholders through a 
press release and by posting the audited financial statements on the 
company's web site (if it has one) if the company's solicitation or 
corporate action has not been completed before the time the audited 
financial statements are filed.
4. Form N-SAR
    For Eligible Funds filing annual reports on Form N-SAR with fiscal 
years ending between December 15, 2001 and April 15, 2002, the 40 Act 
Order permits them to file their Form N-SAR with unaudited financial 
information and without the report of independent accountants on 
internal controls so long as the Eligible Fund files an amendment 
providing audited financial information and the report of the 
independent accountants on internal controls within 60 days of the 
original due date for the filing.
    Investment companies for which Andersen has been acting as 
independent accountant may report a change in accountant under item 77K 
of Form N-SAR consistent with our statement on change in accountants as 
described above in Section II.B.10. of this release.

B. Selection of Independent Public Accountant

    Section 32(a)(1) and Rule 32a-3 under the Investment Company Act 
set forth certain periods at the beginning of each fiscal year during 
which registered management investment companies (mutual funds, closed-
end funds and business development companies) must select an 
independent public accountant.\137\ Some investment companies for which 
Andersen serves as independent public accountant may need additional 
time as a result of recent events. The 40 Act Order provides an 
additional sixty days for an investment company to select an 
independent public accountant whose financial statements for its last 
fiscal years was audited by Andersen and whose fiscal year ended on or 
before April 15, 2002.
---------------------------------------------------------------------------

    \137\ 15 U.S.C 80a-31 and 17 CFR 270.32a-3. Section 32(a)(1) 
also applies to face amount certificate companies.
---------------------------------------------------------------------------

    Section 32(a) provides that a new accountant may be selected due to 
the death or resignation of the accountant by a vote of a majority of 
members of the investment company's board of directors (i.e., without 
shareholder ratification), but does not address how a fund whose board 
of directors has terminated the appointment of the accountant may 
select a new one. The 40 Act Order permits a fund that had selected 
Andersen as its independent public accountant on or before March 14, 
2002, and thereafter terminated the appointment, to select a new 
independent public accountant by a majority vote of the independent 
directors of the fund.
    Section 32 requires the directors to select the investment 
company's independent public accountant at a meeting at which their 
votes would be cast ``in person.'' In light of the events surrounding 
Andersen, the 40 Act Order permits companies making selections pursuant 
to the provisions of the 40 Act Order to cast their votes in a meeting 
in which directors may participate by any means of communicating that 
allows all directors participating to communicate with each other 
simultaneously during the meeting.

C. Verification of Assets in Custody

    Various Investment Company Act rules (Rules 17f-1, 17f-2, 6e-2 and 
6e-3(T)) regarding custody of securities or similar investments of a 
management investment company or insurance company separate account 
require that the securities and other investments be verified by actual 
examination periodically by an independent public accountant.\138\ 
Because clients of Andersen may decide to retain a new independent 
public accountant and may need additional time to complete their 
verifications, the 40 Act Order allows an additional 60 days to 
complete these verifications for investment companies with a fiscal 
year ending between January 1 and April 15, 2002.
---------------------------------------------------------------------------

    \138\ 17 CFR 270. 17f-1, 17f-2, 6e-2, and 6e-3(T).
---------------------------------------------------------------------------

D. Balance Sheets of Investment Advisers

    Investment Adviser Act Form ADV requires an investment adviser to 
include on Schedule G of the Form a balance sheet for its most recent 
fiscal year, audited by an independent accountant, if the adviser has 
custody of client funds or securities or if the adviser requires 
prepayment of more than $500 in fees per client and six or more months 
in advance.\139\ The 40 Act Order permits an adviser that had engaged 
Andersen (or a foreign affiliate of Andersen) to examine the balance 
sheet to be included in Schedule G to use an unaudited balance sheet to 
satisfy the requirements of Schedule G for 60 days if the adviser--
---------------------------------------------------------------------------

    \139\ 17 CFR 279.1.
---------------------------------------------------------------------------

     Had not, on or before April 14, 2002, obtained a manually 
signed unaudited report from Andersen (or a foreign affiliate of 
Andersen);
     Is unable or elects not to have Andersen issue a manually 
signed audit

[[Page 13529]]

report from Andersen in respect to that balance sheet; and
     Has a fiscal year ending between December 1, 2001 and 
April 15, 2002.
    At the end of the 60-day period the adviser must resume furnishing 
or offering to furnish a disclosure statement containing an audited 
balance sheet. The 40 Act Order imposes no additional filing 
requirements.

E. Exemptive Orders

    In the past, the Commission has issued a number of orders under the 
Investment Company Act and the Investment Advisers Act and the rules 
thereunder exempting investment companies, investment advisers and 
others from provisions of these statutes and rules. Some of these 
orders are conditioned upon the involvement of an independent 
accountant preparing a report, conducting an audit, reviewing various 
systems or procedures, monitoring ongoing transactions or providing 
other services. Persons relying on these orders that have retained the 
services of Andersen will not be in violation of the applicable 
provisions of law or rule because of an inability to comply with the 
conditions or representations as a result of their inability to obtain 
the services of or elects not to continue to engage Andersen. We have 
provided persons relying on these orders an additional 60 days to 
comply with the requirements of their orders.

VIII. Registrants Under the Public Utility Holding Company Act of 
1935

    The Commission is issuing another order under the Public Utility 
Holding Company Act of 1935 \140\ that addresses issues that registered 
public utility holding companies may face as a result of the 
circumstances surrounding Andersen.
---------------------------------------------------------------------------

    \140\ 15 U.S.C. 79a et seq.
---------------------------------------------------------------------------

A. Annual Reports on Form U5S

    Public utility holding companies registered under the Public 
Utility Holding Company Act of 1935 are required to file with the 
Commission annual reports on Form U5S.\141\ Form U5S includes 
requirements that a registered holding company incorporate by reference 
annual reports filed by any of its system companies under the Exchange 
Act (``1934 Act Reports'') as well as the opinion of its independent 
accountant with respect to the holding company's consolidated financial 
statements.
---------------------------------------------------------------------------

    \141\ 17 CFR 259.5s.
---------------------------------------------------------------------------

    The 35 Act Order permits registered public utility holding 
companies with a fiscal year ending between November 30, 2001 and April 
15, 2002 that have retained Andersen as their independent accountant to 
file their annual report on Form U5S with unaudited financial 
statements. Specifically, the 35 Act Order permits registered public 
utility holding companies to incorporate by reference 1934 Act Reports 
that meet the requirements of the 34 Act Order provided they amend 
their filing to include any amended report filed in accordance with the 
34 Act Order as well as the opinion of their independent accountants 
within 60 days.

B. Computations Required by Certain Rules and Orders

    Rules 53 and 58 under the Public Utility Holding Company Act of 
1935 establish safe harbors that permit registered public utility 
holding companies to invest up to a specified amount in various types 
of non-utility activities without seeking prior Commission 
approval.\142\ In computing the permitted level of investment, 
registered public utility holding companies relying on the rules are 
required to use financial information included in their filings on Form 
10-Q and Form 10-K. Other registered utility holding companies with 
orders under Sections 53, 54 \143\ and 58 of the Public Utility Holding 
Company Act of 1935 permitting them to exceed these safe harbors are 
required to make analogous computations pursuant to the terms of their 
orders. The 35 Act Order makes clear that with respect to any 
computation required by Rule 53(a)(1) or Rule 58(a)(1) or any similar 
computation required by these rules or orders, a registered public 
utility holding company that is filing annual reports of Form 10-K or 
quarterly reports on Form 10-Q in reliance on the 34 Act Order may rely 
on the financial statements included in those filings in performing the 
required calculations.
---------------------------------------------------------------------------

    \142\ 17 CFR 250.53 and 58.
    \143\ 17 CFR 250.54.
---------------------------------------------------------------------------

IX. Consideration of Comments

    We are publishing final rules and temporary final rules, rather 
than a notice of proposed rulemaking, for reasons stated in the section 
entitled ``Procedural Matters.'' We will, however, consider any 
comments concerning whether other temporary or permanent rule changes 
are needed.

X. Procedural Matters

    The Administrative Procedure Act generally requires an agency to 
publish notice of a proposed rulemaking in the Federal Register.\144\ 
This requirement does not apply, however, if the agency ``for good 
cause finds * * * that notice and public procedure are impracticable, 
unnecessary, or contrary to the public interest.'' \145\ The Commission 
believes that it is appropriate to adopt the rules immediately for two 
reasons. First, some Andersen clients that end their audit relationship 
with Andersen may be in the middle of, or about to begin, raising 
capital publicly but will not have the required audited financial 
statements available when they are needed. The rules are needed 
immediately to remove regulatory impediments to their capital-raising 
plans with minimal market disruption. Second, information needs to be 
available to the investing public, beginning immediately, about the 
assurances issuers to whom Andersen issues reports after March 14, 2002 
have received from Andersen concerning Andersen's quality control 
procedures in place during the audit. Accordingly, the Commission for 
good cause finds that delaying adoption of these rules until after a 
notice and comment period would be impractical and contrary to the 
public interest.
---------------------------------------------------------------------------

    \144\ See 5 U.S.C. 553(b).
    \145\ Id.
---------------------------------------------------------------------------

    The Administrative Procedure Act also generally requires that an 
agency publish an adopted rule in the Federal Register 30 days before 
it becomes effective.\146\ This requirement, however, does not apply if 
the agency finds good cause for making the rule effective sooner.\147\ 
For the same reasons as it is waiving notice and comment, the 
Commission finds good cause to make the rules effective 
immediately.\148\
---------------------------------------------------------------------------

    \146\ See 5 U.S.C. 553(d).
    \147\ Id.
    \148\ This finding also satisfies the requirements of 5 U.S.C. 
808(2), allowing the rules to become immediately effective 
notwithstanding the requirements of 5 U.S.C. 801 (if agency finds 
that notice and public procedure are ``impractical, unnecessary, or 
contrary to the public interest,'' rule ``shall take effect at such 
time as the Federal agency promulgating the rule determines'').
---------------------------------------------------------------------------

XI. Paperwork Reduction Act

    This Paperwork Reduction Act (``PRA'') information pertains to both 
the rules adopted today and the accompanying orders attached to this 
release as Appendices A-C. Certain provisions of the rules and 
accompanying orders contain a ``collection of information'' requirement 
within the meaning of the Paperwork Reduction Act of 1995.\149\ We 
submitted this requirement to the Office of Management and Budget 
(``OMB'') for review in accordance with 44 U.S.C. 3507(j) and 5 CFR 
1320.13. The title for

[[Page 13530]]

the collection is Temporary Relief for Certain Entities Audited by 
Arthur Andersen LLP.
---------------------------------------------------------------------------

    \149\ 44 U.S.C. 3501 et seq.
---------------------------------------------------------------------------

    As discussed above, the Commission is adopting rules and issuing 
orders to mitigate the potential consequences to the markets as a 
result of Andersen's indictment. In order to minimize any market 
disruption, the Commission is providing relief with respect to certain 
filing and other requirements for certain clients of Andersen. The 
collection of information adopted today is necessary to ensure that the 
market receives disclosure from clients of Andersen that are taking 
advantage of this relief. The collection of information will supply 
investors with information they may not otherwise have and will help 
prevent confusion.
    Temporary Relief for Certain Entities Audited by Arthur Andersen 
LLP. This collection of information encompasses certain new disclosures 
required by certain clients of Andersen. In general, public companies 
for whom Andersen does not complete audits or reviews will be allowed 
to file unaudited financial statements, rather than audited ones, in 
order to meet existing periodic reporting, proxy statement, tender 
offer, and registration requirements, as long as they disclose that the 
financial statements are unaudited (or not reviewed), provide audited 
(or reviewed) financial statements at a later date, and explain any 
material differences between the unaudited and audited financial 
statements. In some cases, issuers must alert the public through a 
press release that the audited financial statements are available and 
post the audited financial statements on their websites (if they have 
websites). Certain investment advisers may provide clients and 
prospective clients with unaudited balance sheets, with appropriate 
disclosure, and provide audited balance sheets at a later date. Clients 
that wish to file financial statements audited by Andersen must file a 
letter with affected filings concerning representations received from 
Andersen regarding Andersen's audit quality controls. In certain cases 
where Andersen clients were required to submit a consent or a reissued 
accountants' report from their auditor, but cannot obtain the consent 
or the reissued accountants' report, those requirements have been 
waived provided the filing includes appropriate disclosure. Because the 
rules regarding waiver of consents and reissued accountants' reports 
are permanent, these aspects of the collection of information also have 
been submitted to OMB for regular review as a stand-alone collection of 
information.
    This collection of information imposes a minimal and temporary 
burden on some Andersen clients. It is difficult to estimate with 
precision the burden imposed by this collection of information 
requirement. We estimate that there are approximately 2,400 clients of 
Andersen potentially affected by this collection of information. 
However, some clients may not be subject to the collection of 
information because these clients may already have filed financial 
statements audited by Andersen.
    We estimate for purposes of the PRA that approximately 1,979 
Andersen clients will make new disclosures associated with one periodic 
report (two burden hours per filing) and approximately 325 will make 
new disclosures associated with two such reports; approximately 130 
Andersen clients will make new disclosures associated with one 
registration statement each (three burden hours per filing); 
approximately 2,304 Andersen clients will make new disclosures 
associated with one proxy-related filing each (two burden hours per 
filing); approximately 22 Andersen clients will make new disclosures 
associated with one tender offer-related filing (two burden hours per 
filing); approximately 83 Andersen clients will make disclosures 
associated with investment adviser balance sheet requirements (one hour 
per disclosure); and approximately 2,400 Andersen clients will make one 
disclosure relating to Andersen's audit quality controls (one burden 
hour per filing). We recognize that the assumptions necessarily 
overcount the potential burden, as they assume all clients will both 
continue to be audited by Andersen and decide not to have Andersen 
complete the audit. We make these assumptions because the overall 
burden estimate is minimal and because we cannot estimate which option 
Andersen clients will choose. Thus, for PRA purposes, we have estimated 
that the total number of burden hours associated with this collection 
of information is 12,783.
    Waiver of Auditor Consent and Reissued Accountants' Report. The 
Commission has also submitted, for regular review pursuant to 44 U.S.C. 
3507(d) and 5 CFR 1320.11, as a separate collection of information that 
will not be temporary, two aspects of the above-described collection of 
information. First, companies currently need to include in their 
registration statements the consent of auditors for use of their 
reports related to the three previous years' audits. For Andersen 
clients unable to obtain these consents, the rule amendments waive the 
obligation to obtain an auditor's consent for years before 2001, 
provided that the company discloses any limitations on remedies 
resulting from the lack of consents. Second, certain issuers that 
change auditors need to obtain from their predecessor auditor a 
reissued accountants' report for previously audited financial 
statements. Under the new rules, if the issuer is unable to obtain the 
accountants' report after reasonable efforts, the issuer may provide a 
copy of the latest previously issued accountants' report, as long as it 
discloses that the report is a copy of a report previously issued and 
that the report has not been reissued by Andersen. This collection of 
information is necessary to advise potential purchasers of securities 
and investors of certain information that they would not receive 
otherwise.
    For the purposes of the collection of information entitled 
``Temporary Relief for Certain Entities Audited by Arthur Andersen 
LLP,'' we estimated that the disclosures associated with registration 
statements would take three hours and that disclosures associated with 
periodic reports, proxy statements and tender offers would take two 
hours. One half hour of these estimates is the estimated time required 
to make disclosures associated with the waiver of consents and one half 
hour of these estimates is the estimated time required to make 
disclosures associated with the waiver of the predecessor auditor's 
reissued report.
    We estimate that last year there were approximately 650 
registration statements filed by clients of Andersen. For purposes of 
the PRA, we assume that 650 Andersen clients will file one registration 
statement annually requiring waivers of the consent and the reissued 
predecessor auditor's report. Additionally, we estimate that of 
Andersen's approximately 2,400 clients, approximately 2,304 are public 
companies that file annual reports, proxy materials and tender offer 
filings. We estimate that these clients will file 2,629 annual reports 
(certain issuers with non-ERISA retirement benefit plans may file 
additional annual reports for those plans), 2,304 proxy-related 
filings, and 132 tender offer filings. Because we estimate that each 
disclosure will require one half hour, we estimate that the total 
number of burden hours associated with this collection of information 
is 3,182.5.
    The Commission has adopted, and OMB has approved, the collection of 
information entitled ``Temporary Relief for Certain Entities Audited by 
Arthur Andersen LLP'' on an emergency basis. The control number for 
this collection

[[Page 13531]]

of information is OMB Control No. 3235-0557. This collection of 
information will expire on September 30, 2002. As noted above, the 
Commission has also submitted for regular review pursuant to 44 U.S.C. 
3507(d) and 5 CFR 1320.11 the collection of information entitled 
``Waiver of Auditor Consent and Reissued Accountants' Report.''
    Pursuant to 44 U.S.C. 3506(c)(2)(B), the Commission solicits 
comments to: (i) Evaluate whether the proposed collection of 
information entitled ``Waiver of Auditor Consent and Reissued 
Accountants' Report'' is necessary for the proper performance of the 
functions of the agency, including whether the information will have 
practical utility; (ii) evaluate the accuracy of the Commission's 
estimate of the burden of the proposed collection of information; (iii) 
determine whether there are ways to enhance the quality, utility, and 
clarity of the information to be collected; and (iv) evaluate whether 
there are ways to minimize the burden of the collection of information 
on those who are to respond, including through the use of automated 
collection techniques or other forms of information technology.
    Persons submitting comments on the collection of information 
requirement should direct the comments to the Office of Management and 
Budget, Attention: Desk Officer for the Securities and Exchange 
Commission, Office of Information and Regulatory Affairs, Washington, 
DC 20503, and should send a copy to Jonathan G. Katz, Secretary, 
Securities and Exchange Commission, 450 Fifth Street, NW, Washington, 
DC 20549-0609, with reference to File No. S7-03-02. Requests for 
materials submitted to OMB by the Commission with regard to this 
collection of information should be in writing, refer to File No. S7-
03-02, and be submitted to the Securities and Exchange Commission, 
Records Management, Office of Filings and Information Services. OMB is 
required to make a decision concerning its regular review of the 
collection of information between 30 and 60 days after publication of 
this release. Consequently, a comment to OMB is assured of having its 
full effect if OMB receives it within 30 days of publication.
    An agency may not conduct or sponsor, and a person is not required 
to respond to, a collection of information unless it displays a 
currently valid OMB control number. Compliance with the disclosure 
requirements is mandatory for those taking advantage of the rules and 
orders. There is no mandatory retention period for the information 
disclosed, and responses to the disclosure requirements will not be 
kept confidential.

XII. Analysis of Costs and Benefits

    The Commission is sensitive to the costs and benefits imposed by 
its rules.\150\ The rules we are adopting include a requirement that 
Andersen clients that continue their audit relationship with Andersen 
make publicly available certain assurances they receive from Andersen 
concerning Andersen's quality control procedures in place during the 
audit (the ``assurance letter requirement''). The rules also provide 
alternative regulatory requirements that will give Andersen clients 
certain options regarding compliance with the federal securities laws 
(the ``temporary rules'').
---------------------------------------------------------------------------

    \150\ In companion Orders issued today, we are providing relief 
under the Securities Exchange Act of 1934, the Investment Company 
Act of 1940, the Investment Advisers Act of 1940, and the Public 
Utility Holding Company Act. This cost-benefit analysis addresses 
only the relief provided by these rule amendments.
---------------------------------------------------------------------------

A. The Assurance Letter Requirement

    The assurance letter requirement benefits investors by providing 
that basic information about Andersen's continued adherence to quality 
control standards be made publicly available with respect to each 
Andersen audit during this period of uncertainty and potentially rapid 
change. The costs of the assurance letter requirement are limited to 
the minimal costs involved for Andersen to transmit representations to 
its audit clients and the minimal costs involved for each Andersen 
audit client to include representations in a letter with certain 
filings.

B. The Temporary Rules

    Before its indictment, Andersen may not have completed its audit or 
issued audit opinions with respect to many of its clients in 
registration or about to register securities. Andersen clients that are 
in that position, but that choose to end their audit relationship with 
Andersen or are unable to obtain audit services from Andersen to 
complete their audits (hereafter, the ``terminated clients''), will 
need to engage new independent public accountants. We recognize that 
many terminated clients may be unable to engage a new auditor that can, 
in a timely fashion, complete an audit and sign an audit opinion that 
normally must be included with a registration statement. The purpose of 
the temporary rules is to minimize disruption to the capital markets 
and to the terminated clients while those clients complete certain 
pending or imminent offerings.
    The temporary rules have four primary components:
     The Commission is permitting the terminated clients filing 
registration statements (other than companies registering initial 
public offerings) to include unaudited financial statements. Those 
terminated clients must amend their registration statements to include 
audited financial statements within 60 days after the date on which the 
audited financial statements would otherwise be required.
     The Commission is extending from 16 to 18 months the age 
of audited financial information that a terminated client can include 
in a prospectus used nine months after the effectiveness of an 
underlying registration statement.
     The Commission is waiving the requirement for Andersen 
clients to include in a registration statement the consent of Andersen 
to use audit reports for prior years for which a consent cannot be 
obtained; the issuer must include a copy of the latest signed and dated 
accountants' report issued by Andersen and include certain related 
disclosure if a reissued accountants' report cannot be obtained.
     Our current rules require issuers that expect to report a 
loss for the most recent fiscal year, or that had a loss for the last 
two fiscal years, to file audited financial statements within 45 days 
of the end of their fiscal year. The Commission is providing relief 
allowing the affected terminated clients to continue to use their 
unaudited financial statements for registration statements or any other 
purpose provided they obtain audited financial statements within 60 
days of the original due date.
1. Benefits
    The benefit of the temporary rules, like the Orders issued today, 
is the mitigation of disruption, uncertainty, lost opportunity, and 
other costs that, however unlikely, might be visited upon the market 
and the terminated clients. The temporary rules provide the market and 
the terminated clients with regulatory clarity to help address the 
disruption in an orderly fashion, and without expending more resources, 
or forsaking more opportunity, than is necessary.
    First, by virtue of addressing and resolving certain questions, the 
temporary rules mitigate the costs to terminated clients from having to 
formulate capital-raising plans in an uncertain regulatory environment. 
It is unavoidable that the terminated clients will need to devote 
resources to

[[Page 13532]]

assessment and planning, but a principal benefit of the temporary rules 
is to facilitate that assessment and planning process by preemptively 
addressing questions that would arise concerning regulatory compliance.
    Second, the temporary rules will help mitigate any possible 
disruptions to the capital-raising process. The terminated clients 
currently in registration, or planning to register securities in the 
very near term, may be unable to obtain audited financial statements in 
time to support registration statements. They may also face hardship in 
obtaining necessary consents from Andersen to include accountants' 
reports related to financial statements Andersen audited in prior years 
and obtaining a reissued accountants' report for use in future filings. 
Capital raising frequently is time-sensitive. By preserving for the 
terminated clients the option of going forward with their capital-
raising plans, albeit subject to whatever market risk accompanies going 
forward with unaudited financial statements, the temporary rules afford 
issuers and investors a capital-raising and investment option that 
would otherwise be postponed and possibly lost altogether.
    Third, the temporary rules will benefit certain terminated clients 
by extending a regulatory deadline that would be difficult, and perhaps 
impossible, to meet because of the transition to a new auditor. Our 
current rules require issuers that expect to report a loss for the most 
recent fiscal year, or that had a loss for the last two fiscal years, 
to file audited financial statements within 45 days of the end of their 
fiscal year. The temporary rules provide a reasonable regulatory 
accommodation for the terminated clients in that position.
2. Costs
    As described above, the principal purpose of the temporary rules is 
to mitigate costs and uncertainties. Because the temporary rules, like 
the Orders issued today, provide optional compliance alternatives, any 
costs that they impose will be imposed only on those parties that 
choose to proceed pursuant to them. The terminated clients that opt to 
proceed pursuant to the temporary rules may incur costs associated with 
explaining the effect of filing unaudited financial statements, 
retransmitting financial statements, and obtaining new signatures for 
the second filing, with attendant liability.
    The temporary rules may also impose certain other types of costs. 
One cost that may result from the rules is the unquantifiable cost of 
allowing the terminated clients to offer securities for a temporary 
period with unaudited, rather than audited, financial statements. That 
cost is borne both by investors, who may bear more risk than usual in 
purchasing the securities, and by the terminated clients, since that 
increased investor risk may create a less receptive market and a 
correspondingly higher cost of capital for those issuers.
    The temporary rules limit the time during which potential investors 
in the securities will need to make investment decisions without the 
benefit of audited financial statements. The temporary rules do not 
mitigate the risk to those investors who do in fact purchase the 
securities in the period before the audited financial statements are 
filed, nor do they mitigate the risk to issuers that investors may be 
less receptive to their securities during that period.
    Some costs may be associated with allowing a withdrawing client to 
use audited financial information that is up to 18 months old, rather 
than 16 months old, in a prospectus used nine months after the 
effectiveness of the underlying registration statement. The increased 
age of the information may mean that it is perceived by investors to be 
less reliable.
    Costs may also accompany the waiver, for current and former 
Andersen clients, of the requirement that a registration statement 
include the consent of Andersen to use Andersen audit opinions for 
prior years. Because the registration statements will be supported by 
prior years' audit opinions that are not backed by the auditor's 
current consent, the temporary rules may generate a cost in that 
investors may have less confidence in the issuer's reported financial 
condition for those earlier years. Similar costs may be associated with 
the inability of issuers to obtain a reissued accountants' report.
    The inability of Andersen clients to obtain Andersen's consent is a 
consequence of Andersen's status and not a consequence of the temporary 
rules. That inability alone, however, does not make it impossible for 
Andersen clients to comply with the consent requirement, since they 
could decide to retain a different auditor to re-audit prior years. 
Thus, while it is Andersen's status, and not the temporary rules, that 
may make it impossible to obtain the relevant consents from Andersen, 
the temporary rules create the possibility that the affected 
registration statements will be effective without those issuers 
otherwise complying with the consent requirement. Issuers may select 
the approach which they perceive to be most cost-effective.
    Finally, there are costs associated with extending the deadline for 
filing audited financial statements by those terminated clients that 
expect to report a loss for a recently completed fiscal year or have 
reported losses for the past two fiscal years. As discussed above, the 
use of unaudited financial statements can result in unquantifiable 
costs to investors and issuers. The filing deadline serves a regulatory 
purpose that will be impeded temporarily because of the delay.

XIII. Regulatory Flexibility Act

    The Regulatory Flexibility Act\151\ does not apply to the rules we 
are adopting today. The Regulatory Flexibility Act only requires 
agencies to prepare analyses for rulemaking when the Administrative 
Procedure Act requires general notice of proposed rulemaking.\152\ As 
noted above, the Commission is not required to solicit public comment 
because the Commission is using the expedited rulemaking procedures 
under section 553(b) of the Administrative Procedure Act.
---------------------------------------------------------------------------

    \151\ 5 U.S.C. 601-612.
    \152\ 5 U.S.C. 603(a).
---------------------------------------------------------------------------

XIV. Effects on Competition, Efficiency and Capital Formation

    Section 2(b) of the Securities Act and Section 3(f) of the Exchange 
Act require the Commission, when engaging in rulemaking that requires 
it to consider or determine whether an action is necessary or 
appropriate in the public interest, to consider whether the action will 
promote efficiency, competition, and capital formation. Section 
23(a)(2) of the Exchange Act requires the Commission, in adopting rules 
under the Exchange Act, to consider the anticompetitive effects of any 
rules it adopts.

A. The Assurance Letter Requirement

    We have considered what impact the assurance letter requirement 
will have on efficiency, competition, and capital formation. The 
requirement may promote efficiency to some degree by making available 
to markets information that it would not otherwise be available, at a 
de minimis cost to those that must supply the information. The 
assurance letter requirement will neither promote nor impede capital 
formation or competition, but will only help ensure the availability of 
relevant information to markets and investors.

B. The Temporary Rules

    The temporary rules neither promote nor impede competition. The 
temporary

[[Page 13533]]

rules give the terminated clients the option of proceeding with capital 
formation as intended before the announcement of Andersen's indictment. 
Absent the relief we are providing today, some terminated clients might 
be forced to postpone public offerings of securities until they engage 
a new auditor and obtain audited financial statements. By affording 
those terminated clients the option of proceeding, temporarily, with 
unaudited financial statements, the temporary rules reduce that 
obstacle to capital formation.
    Some terminated clients have made, or will make, financial and 
economic decisions to raise capital based on their individual needs and 
will pursue plans toward that end. Absent the relief we are providing 
today, the temporary adjustments that the terminated clients would need 
to make to financial and other operations due to the postponement of 
those plans would likely entail overall inefficiencies in their 
capital-raising efforts. By giving those terminated clients the option 
to proceed, the temporary rules provide them with an alternative that 
would reduce or eliminate those inefficiencies.
    We have considered whether the temporary rules promote competition. 
The temporary rules will neither promote nor impede competition. The 
terminated clients may have made plans for, and based expectations on, 
raising capital within a certain time frame. Absent the relief we are 
providing today, capital raising could be delayed. From this 
perspective, the temporary rules may well mitigate that possible 
effect.
    We have also considered whether the temporary rules would impede 
competition by giving terminated clients a competitive advantage 
relative to other issuers. It might be suggested that other issuers 
would like to have the option of filing a registration statement with 
unaudited financial statements and only supplying audited financial 
statements sixty days later. We cannot conclude that the temporary 
rules create a competitive advantage for the terminated clients or 
otherwise impede competition. The terminated clients will be seeking 
capital without supplying investors with audited financial statements, 
while competing issuers seeking capital in the same markets will supply 
audited financial statements. This does not constitute a competitive 
advantage for the terminated clients. The temporary rules do not pose 
an impediment to competition or materially impede the competitive 
position of any issuer.

XV. Statutory Bases

    The amendments contained in this release are being adopted under 
the authority set forth in Sections 2, 4, 6, 7, 8, 10, 19 and 28 of the 
Securities Act, as amended, Sections 3, 4, 10, 12, 13, 14, 15, 23 and 
36 of the Exchange Act, as amended, and Sections 304, 305, 307, 308, 
310, 314 and 319 of the Trust Indenture Act of 1939, as amended.

List of Subjects

17 CFR Part 210

    Accountants, Accounting.

17 CFR Part 228

    Reporting and recordkeeping requirements, Securities, Small 
business.

17 CFR Parts 229 and 249

    Reporting and recordkeeping requirements, Securities.

17 CFR Part 230

    Investment companies, Reporting and recordkeeping requirements, 
Securities.

17 CFR Part 240

    Reporting and recordkeeping requirements, Securities.

17 CFR Part 260

    Reporting and recordkeeping requirements, Securities, Trusts and 
trustees.

Text of the Amendments

    For the reasons set out in the preamble, Title 17, Chapter II of 
the Code of Federal Regulations is amended as follows:

PART 210--FORM AND CONTENT OF AND REQUIREMENTS FOR FINANCIAL 
STATEMENTS, SECURITIES ACT OF 1933, SECURITIES EXCHANGE ACT OF 
1934, PUBLIC UTILITY HOLDING COMPANY ACT OF 1935, INVESTMENT 
COMPANY ACT OF 1940, INVESTMENT ADVISERS ACT OF 1940, AND ENERGY 
POLICY AND CONSERVATION ACT OF 1975

    1. The authority citation for part 210 continues to read as 
follows:

    Authority: 15 U.S.C. 77f, 77g, 77h, 77j, 77s, 77z-2, 77z-3, 
77aa(25), 77aa(26), 78c, 78j-1, 78l, 78m, 78n, 78o(d), 78q, 78u-5, 
78w(a), 78ll, 78mm, 79e(b), 79j(a), 79n, 79t(a), 80a-8, 80a-20, 80a-
29, 80a-30, 80a-37(a), 80b-3, 80b-11 unless otherwise noted.

    2. By amending Sec. 210.2-02 by adding paragraph (e) to read as 
follows:


Sec. 210.2-02  Accountants' reports.

* * * * *
    (e) Paragraph (e) of this section applies only to registrants that 
are providing financial statements in a filing for a period with 
respect to which Arthur Andersen LLP or a foreign affiliate of Arthur 
Andersen LLP (``Andersen'') issued an accountants' report. 
Notwithstanding any other Commission rule or regulation, a registrant 
that cannot obtain an accountants' report that meets the technical 
requirements of paragraph (a) of this section after reasonable efforts 
may include in the document a copy of the latest signed and dated 
accountants' report issued by Andersen for such period in satisfaction 
of that requirement, if prominent disclosure that the report is a copy 
of the previously issued Andersen accountants' report and that the 
report has not been reissued by Andersen is set forth on such copy.

    3. By adding Temporary Note 1T, Temporary Note 2T and Temporary 
Note 3T after the introductory note under the undesignated heading 
``General Instructions as to Financial Statements'' preceding 
Sec. 210.3-01 to read as follows:

GENERAL INSTRUCTIONS AS TO FINANCIAL STATEMENTS

* * * * *
    Temporary Note 1T: Notwithstanding any other Commission rule or 
regulation, every registrant meeting the eligibility requirements in 
paragraph (a) of this note that files a registration statement on 
Forms S-1, S-2, S-3, S-4, S-6, S-8, S-11, N-1, N-1A, N-2, N-3, N-4, 
N-5 or N-14 (Secs. 239.11, 239.12, 239.13, 239.25, 239.16, 239.16b, 
239.18, 239.15, 239.15A, 239.14, 239.17a, 239.17b, 239.24 or 239.23 
of this chapter), or an amendment thereto, that requires audited 
financial statements for the most recent fiscal year end may file 
unaudited financial statements in satisfaction of that requirement 
under the conditions listed in paragraph (b) of this note. In the 
case of a registered investment company that files a new 
registration statement on Form S-6 other than an insurance company 
separate account, however, the relief provided by this note shall 
not extend to financial statements of the registered investment 
company itself.
    (a) Eligibility requirements. An issuer:
    (1) That at the time of filing a registration statement is 
subject to the periodic reporting requirements of Section 13(a) or 
15(d) of the Securities Exchange Act of 1934 (15 U.S.C. Secs. 78m(a) 
or 78o(d)) or, in the case of a registered investment company, has 
previously filed a registration statement under the Securities Act 
of 1933 (15 U.S.C. Sec. 77a et seq.) that has been declared 
effective by the Commission;
    (2) Whose registration statement will include financial 
statements:
    (i) Of an entity that has a fiscal year ending between and 
including:
    (A) November 30, 2001 and April 15, 2002, if the entity meets 
all of the conditions in Rule 3-01(c) of Regulation S-X (Sec. 210.3-
01(c)) (or Item 310(g) of Regulation S-B

[[Page 13534]]

(Sec. 228.310(g) of this chapter) if the entity is a small business 
issuer) (or if the entity is a depositor for a registered unit 
investment trust and the entity is not subject to the periodic 
reporting requirements of Section 13(a) or 15(d) of the Securities 
Exchange Act of 1934 (15 U.S.C. Secs. 78m(a) or 78o(d))) and is not 
a registered investment company;
    (B) December 29, 2001 and April 15, 2002, if the entity does not 
meet all of the conditions in Rule 3-01(c) of Regulation S-X 
(Sec. 210.3-01(c)) (or Item 310(g) of Regulation S-B 
(Sec. 228.310(g) of this chapter) if the entity is a small business 
issuer) and is not a registered investment company; or
    (C) January 1, 2002 and April 15, 2002 in the case of a 
registered investment company;
    (ii) As to the examination of which Arthur Andersen LLP (or a 
foreign affiliate of Arthur Andersen LLP) had been engaged as the 
independent public accountant on or after March 14, 2002;
    (3) That, on or before March 14, 2002, had not obtained a 
manually signed audit report from Arthur Andersen LLP (or a foreign 
affiliate of Arthur Andersen LLP) in respect of those financial 
statements;
    (4) That is unable to obtain from Arthur Andersen LLP (or a 
foreign affiliate of Arthur Andersen LLP) or elects not to have 
Arthur Andersen LLP (or a foreign affiliate of Arthur Andersen LLP) 
issue a manually signed audit report in respect of those financial 
statements; and
    (5) That is not a ``blank check company'' as defined in 
Sec. 230.419(a)(2) of this chapter.
    (b) Conditions.
    (1) The issuer's registration statement responds to all items 
required by the applicable registration form, but with unaudited 
financial statements that meet the timeliness requirements of Rule 
3-01 of Regulation S-X (Sec. 210.3-01) or, for a registered 
investment company, Rules 3-12 and 3-18 of Regulation S-X 
(Secs. 210.3-12 and 210.3-18) for those financial statements as to 
the examination of which Arthur Andersen LLP (or a foreign affiliate 
of Arthur Andersen LLP) had been engaged as the independent public 
accountant.
    (2) The issuer provides in the registration statement disclosure 
reflecting the guidance in Temporary Note 2T to Article 3 of 
Regulation S-X (Secs. 210.3-01--3-20).
    (3) If the registration statement is not yet effective and it 
will become effective on or after the date specified in paragraph 
(b)(4) of this section, the issuer must file a pre-effective 
amendment or an amendment to a document incorporated by reference, 
as appropriate, before effectiveness. If the registration statement 
is effective, the issuer must file either a post-effective amendment 
or an amendment to a document incorporated by reference, as 
appropriate, not later than the date specified in paragraph (b)(4) 
of this note; provided that this filing or amendment need not be 
made if the offering or offerings have been completed (and any 
prospectus delivery period under Section 4(3) of the Securities Act 
of 1933 (15 U.S.C. Sec. 77d(3)) and the rules thereunder has 
expired) prior to the date specified in paragraph (b)(4) of this 
note. The filing or amendment shall present:
    (i) The financial statements audited by an independent public 
accountant other than Arthur Andersen LLP (or a foreign affiliate of 
Arthur Andersen LLP);
    (ii) If Arthur Andersen LLP (or a foreign affiliate of Arthur 
Andersen LLP) had been engaged as the independent public accountant 
to examine the issuer's financial statements, selected financial 
data required by Item 301 of Regulation S-K (Sec. 229.301 of this 
chapter) based on the audited financial statements; (iii)A 
discussion of any material changes from the unaudited financial 
statements filed originally; and
    (iv) Any other section of the registration statement or 
documents incorporated by reference that should be updated or 
revised to reflect the changes in the financial statements so filed 
by amendment.
    (4) For purposes of paragraph (b)(3) of this note:
    (i) If the issuer (other than a registered investment company) 
meets all of the conditions in Rule 3-01(c) of Regulation S-X 
(Sec. 210.3-01(c)), the date shall be the earlier of:
    (A) 60 days from the date the audited financial statements were 
required to be included in the registration statement; and
    (B) The date on which an amended Form 10-K or 10-KSB 
(Sec. 249.310 or 249.310b of this chapter) containing audited 
financial statements is filed in accordance with Release No. 34-
45589 (March 18, 2002) (which may be viewed on the Commission's 
website at www.sec.gov);
    (ii) If the issuer (other than a registered investment company) 
does not meet all of the conditions in Rule 3-01(c) of Regulation S-
X (Sec. 210.3-01(c)), the date shall be the earlier of:
    (A) 106 days from the date the audited financial statements were 
required to be included in the registration statement; and
    (B) The date on which an amended Form 10-K or 10-KSB containing 
audited financial statements is filed in accordance with Release No. 
34-45589 (March 18, 2002) (which may be viewed on the Commission's 
website at www.sec.gov); and
    (iii) If the issuer is a registered investment company, the date 
shall be the earlier of:
    (A) 6 months after the close of the fiscal year of the issuer; 
and
    (B) The date on which an amended annual report to shareholders 
containing audited financial statements is filed in accordance with 
Release No. IC-25463 (March 18, 2002) (which may be viewed on the 
Commission's website at www.sec.gov).
    (c) This temporary note will expire on December 31, 2002.
    Temporary Note 2T: (a) This temporary note applies to any issuer 
that provides unaudited financial statements in a filing in reliance 
on Release No. 34-45589 (March 18, 2002) or Release Nos. IA-2017 and 
IC-25463 (March 18, 2002) (each of which may be viewed on the 
Commission's website at www.sec.gov) or a temporary rule adopted in 
Release 33-8070 (March 18, 2002) published on March 22, 2002, in the 
Federal Register. The guidance provided by this note is intended to 
assist issuers in meeting their disclosure obligations under the 
federal securities laws. The exact content of each issuer's 
disclosure may vary depending on the facts and circumstances 
applicable to each of Arthur Andersen LLP's (or a foreign affiliate 
of Arthur Andersen LLP's) former public company audit clients. To 
the extent this note requires disclosure on the cover page of a 
filing, if the subject filing does not have a cover page, present 
this information as a preface to the disclosure presented in 
response to the form.
    (b) The issuers for which this temporary note applies must 
provide on the cover page of their filings a prominent statement 
that the filing includes unaudited financial statements in lieu of 
audited financial statements because the issuer was unable to obtain 
from Arthur Andersen LLP (or a foreign affiliate of Arthur Andersen 
LLP) or elected not to have Arthur Andersen LLP (or a foreign 
affiliate of Arthur Andersen LLP) issue a manually signed audit 
report in respect of those financial statements and a cross-
reference to additional information contained in the filing.
    (c) The issuer for which this temporary note applies also shall 
provide the prominent statement referred to in paragraph (b) of this 
note in the filing immediately before the financial statements and 
shall also disclose:
    (1) A statement as to when and how the issuer intends to provide 
the audited financial statements; and
    (2) A statement that no auditor has opined that the unaudited 
financial statements present fairly, in all material respects, the 
financial position, the results of operations, cash flows and the 
changes in shareholders' equity of the company (and, in the case of 
a registered investment company, the financial highlights) for each 
of the periods reported in accordance with generally accepted 
accounting principles.
    (d) Further, any audit report previously issued by Arthur 
Andersen LLP (or a foreign affiliate of Arthur Andersen LLP) that is 
required to be included in a filing should be included as required.
    (e) This temporary note will expire on December 31, 2002.
    Temporary Note 3T: (a) This temporary note applies to any issuer 
that provides audited financial statements with an accountant's 
report issued by Arthur Andersen LLP or a foreign affiliate of 
Arthur Andersen LLP (``Andersen'') after March 14, 2002 in a filing. 
The exact content of each issuer's disclosure may vary depending on 
the facts and circumstances applicable to each of Andersen's public 
company audit clients.
    (b) The issuers for which this temporary note applies must 
include as an exhibit (under Exhibit 99) to their filing a letter by 
the issuer addressed to the Commission that states that Andersen has 
represented to the issuer that the audit was subject to Andersen's 
quality control system for the U.S. accounting and auditing practice 
to provide reasonable assurance that the engagement was conducted in 
compliance with professional standards and that there was 
appropriate continuity of Andersen personnel working on audits, 
availability of national office consultation and availability of 
personnel at foreign affiliates of Andersen to conduct the relevant 
portions of the audit.
    (c) This temporary note will expire on December 31, 2002.

[[Page 13535]]

PART 228--INTEGRATED DISCLOSURE SYSTEM FOR SMALL BUSINESS ISSUERS

    4. The authority citation for Part 228 is revised to read as 
follows:

    Authority: 15 U.S.C. 77e, 77f, 77g, 77h, 77j, 77k, 77s, 77z-2, 
77z-3, 77aa(25), 77aa(26), 77ddd, 77eee, 77ggg, 77hhh, 77jjj, 77nnn, 
77sss, 78l, 78m, 78n, 78o, 78u-5, 78w, 78ll, 78mm, 80a-8, 80a-29, 
80a-30, 80a-37 and 80b-11.


    5. By adding Sec. 228.304T to read as follows:


Sec. 228.304T  (Item 304T) Item 304T of Regulation S-B.

    Note: This is a special temporary section that applies to 
issuers for which Arthur Andersen LLP (or a foreign affiliate of 
Arthur Andersen LLP) had been engaged as the independent public 
accountant to examine the issuer's financial statements, or for 
which Arthur Andersen LLP (or a foreign affiliate of Arthur Andersen 
LLP) had been engaged to examine a significant subsidiary's 
financial statements and on which the principal public accountant 
expressed reliance in its report, on or after March 14, 2002.

    (a) General rule. Those issuers for which this Item 304T applies 
must comply with the requirements of Sec. 228.304, except as indicated 
in paragraph (b) of this Item 304T.
    (b) Special disclosure standards for issuers to whom this Item 304T 
applies. An issuer for which this Item 304T applies may comply with 
Sec. 228.304(a)(3) in the following manner:
    (1) If Arthur Andersen LLP (or the foreign affiliate of Arthur 
Andersen LLP, if applicable) has already provided the issuer with a 
letter addressed to the Commission stating whether it agrees with the 
statements made by the issuer in response to Sec. 228.304, and, if that 
letter indicates that it does not agree, stating the respects in which 
it does not agree, the issuer shall file that letter as an exhibit to 
the report or registration statement containing this disclosure; or
    (2) If the issuer has not yet received that letter and cannot 
obtain it after reasonable efforts, compliance with Sec. 228.304(a)(3) 
is not required.
    (c) This temporary section will expire on December 31, 2002.

    6. By amending Sec. 228.310 by adding Temporary Note 1T and 
Temporary Note 2T after the introductory notes to read as follows:


Sec. 228.310  (Item 310) Financial Statements.

    Notes * * *
    Temporary Note 1T: Notwithstanding any other Commission rule or 
regulation, every registrant meeting the eligibility requirements in 
paragraph (a) of this note that files a registration statement on 
Forms SB-1, SB-2, S-3, S-4 or S-8 (Secs. 239.9, 239.10, 239.13, 
239.25 or 239.16b), or an amendment thereto, that requires audited 
financial statements for the most recent fiscal year end may file 
unaudited financial statements in satisfaction of that requirement 
under the conditions listed in paragraph (b) of this note.
    (a) Eligibility requirements. An issuer:
    (1) That at the time of filing a registration statement is 
subject to the periodic reporting requirements of Section 13(a) or 
15(d) of the Exchange Act (15 U.S.C. Secs. 78m(a) or 78o(d));
    (2) Whose registration statement will include financial 
statements:
    (i) Of an entity that has a fiscal year ending between and 
including:
    (A) November 30, 2001 and April 15, 2002, if the entity meets 
all of the conditions in Item 310(g) of Regulation S-B 
(Sec. 228.310(g)); or
    (B) December 29, 2001 and April 15, 2002, if the entity does not 
meet all of the conditions in Item 310(g) of Regulation S-B 
(Sec. 228.310(g));
    (ii) As to the examination of which Arthur Andersen LLP (or a 
foreign affiliate of Arthur Andersen LLP) had been engaged as the 
independent public accountant on or after March 14, 2002;
    (3) That, on or before March 14, 2002, had not obtained a 
manually signed audit report from Arthur Andersen LLP (or a foreign 
affiliate of Arthur Andersen LLP) in respect of those financial 
statements;
    (4) That is unable to obtain from Arthur Andersen LLP (or a 
foreign affiliate of Arthur Andersen LLP) or elects not to have 
Arthur Andersen LLP (or a foreign affiliate of Arthur Andersen LLP) 
issue a manually signed audit report in respect of those financial 
statements; and
    (5) That is not a ``blank check company'' as defined in 
Sec. 230.419(a)(2) of this chapter.
    (b) Conditions.
    (1) The issuer's registration statement responds to all items 
required by the appropriate registration form, but with unaudited 
financial statements that meet the timeliness requirements of Item 
310(g) of Regulation S-B (Sec. 228.310(g)) for those financial 
statements as to the examination of which Arthur Andersen LLP (or a 
foreign affiliate of Arthur Andersen LLP) had been engaged as the 
independent public accountant.
    (2) The issuer provides in the registration statement disclosure 
reflecting the guidance in Temporary Note 2T to Article 3 of 
Regulation S-X (Secs. 210.3-01--3-20 of this chapter).
    (3) If the registration statement is not yet effective and it 
will become effective on or after the date specified in paragraph 
(b)(4) of this section, the issuer must file a pre-effective 
amendment or an amendment to a document incorporated by reference, 
as appropriate, before effectiveness. If the registration statement 
is effective, the issuer must file either a post-effective amendment 
or an amendment to a document incorporated by reference, as 
appropriate, not later than the date specified in paragraph (b)(4) 
of this note; provided that this filing or amendment need not be 
made if the offering or offerings have been completed (and any 
prospectus delivery period under Section 4(3) of the Securities Act 
of 1933 (15 U.S.C. Sec. 77d(3)) and the rules thereunder has 
expired) prior to the date specified in paragraph (b)(4) of this 
note. The filing or amendment shall present:
    (i) The financial statements audited by an independent public 
accountant other than Arthur Andersen LLP (or a foreign affiliate of 
Arthur Andersen LLP);
    (ii) A discussion of any material changes from the unaudited 
financial statements filed originally; and
    (iii) Any other section of the registration statement or 
documents incorporated by reference that should be updated or 
revised to reflect the changes in the financial statements so filed 
by amendment.
    (4) For purposes of paragraph (b)(3) of this note:
    (i) If the issuer meets all of the conditions of Item 310(g)(2) 
of Regulation S-B (Sec. 228.310(g)(2)), the date shall be the 
earlier of:
    (A) 60 days from the date the audited financial statements were 
required to be included in the registration statement; and
    (B) The date on which an amended Form 10-K or 10-KSB containing 
audited financial statements is filed in accordance with Release No. 
34-45589 (March 18, 2002) (which may be viewed on the Commission's 
website at www.sec.gov); and
    (ii) If the issuer does not meet all of the conditions of Item 
310(g)(2) of Regulation S-B (Sec. 228.310(g)(2)), the date shall be 
the earlier of:
    (A) 106 days from the date the audited financial statements were 
required to be included in the registration statement; and
    (B) The date on which an amended Form 10-K or 10-KSB 
(Sec. 249.310 or 249.310b of this chapter) containing audited 
financial statements is filed in accordance with Release No. 34-
45589 (March 18, 2002) (which may be viewed on the Commission's 
website at www.sec.gov).
    (c) This temporary note will expire on December 31, 2002.
    Temporary Note 2T: (a) This temporary note applies to any issuer 
that provides audited financial statements with an accountant's 
report issued by Arthur Andersen LLP or a foreign affiliate of 
Arthur Andersen LLP (``Andersen'') after March 14, 2002 in a filing. 
The exact content of each issuer's disclosure may vary depending on 
the facts and circumstances applicable to each of Andersen's public 
company audit clients.
    (b) The issuers for which this temporary note applies must 
include as an exhibit (under Exhibit 99) to their filing a letter by 
the issuer addressed to the Commission that states that Andersen has 
represented to the issuer that the audit was subject to Andersen's 
quality control system for the U.S. accounting and auditing practice 
to provide reasonable assurance that the engagement was conducted in 
compliance with professional standards and that there was 
appropriate continuity of Andersen personnel working on audits, 
availability of national office consultation and availability of 
personnel at foreign affiliates of Andersen to conduct the relevant 
portions of the audit.

[[Page 13536]]

    (c) This temporary note will expire on December 31, 2002.
* * * * *


    7. By adding Sec. 228.601T to read as follows:


Sec. 228.601T  (Item 601T) Item 601T of Regulation S-B.

    Any issuer that may rely upon the alternative disclosure 
requirement of Sec. 228.304T shall comply with Sec. 228.601(b)(16) in 
the following manner:
    (a) If Arthur Andersen LLP (or a foreign affiliate of Arthur 
Andersen LLP) has already provided the issuer with a letter addressed 
to the Commission stating whether it agrees or disagrees with the 
statements made by the registrant in response to Sec. 228.304(c), the 
issuer must comply with Sec. 228.601(b)(16).
    (b) If Arthur Andersen LLP (or a foreign affiliate of Arthur 
Andersen LLP) has not provided the issuer with this letter and the 
issuer cannot obtain it after reasonable efforts, the issuer need not 
comply with Sec. 228.601(b)(16).
    (c) This temporary section will expire on December 31, 2002.

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

    8. The authority citation for Part 229 is revised to read as 
follows:

    Authority: 15 U.S.C. 77e, 77f, 77g, 77h, 77j, 77k, 77s, 77z-2, 
77z-3, 77aa(25), 77aa(26), 77ddd, 77eee, 77ggg, 77hhh, 77iii, 77jjj, 
77nnn, 77sss, 78c, 78i, 78j, 78l, 78m, 78n, 78o, 78u-5, 78w, 
78ll(d), 78mm, 79e, 79n, 79t, 80a-8, 80a-29, 80a-30, 80a-31(c), 
80a-37, 80a-38(a) and 80b-11, unless otherwise noted.

    9. By adding Sec. 229.304T to read as follows:


Sec. 229.304T  (Item 304T) Item 304T of Regulation S-K.

    Note: This is a special temporary section that applies to 
issuers for which Arthur Andersen LLP (or a foreign affiliate of 
Arthur Andersen LLP) had been engaged as the independent public 
accountant to examine the issuer's financial statements, or for 
which Arthur Andersen LLP (or a foreign affiliate of Arthur Andersen 
LLP) had been engaged to examine a significant subsidiary's 
financial statements and on which the principal public accountant 
expressed reliance in its report, on or after March 14, 2002.

    (a) General rule. Those issuers for which this Item 304T applies 
must comply with the requirements of Sec. 229.304, except as indicated 
in paragraph (b) of this Item 304T.
    (b) Special disclosure standards for issuers to whom this Item 304T 
applies. An issuer for which this Item 304T applies may comply with 
Sec. 229.304(a)(3) in the following manner:
    (1) If Arthur Andersen LLP (or the foreign affiliate of Arthur 
Andersen LLP, if applicable) has already provided the issuer with a 
letter addressed to the Commission stating whether it agrees with the 
statements made by the issuer in response to Sec. 229.304, and, if that 
letter indicates that it does not agree, stating the respects in which 
it does not agree, the issuer shall file that letter as an exhibit to 
the report or registration statement containing this disclosure; or
    (2) If the issuer has not yet received that letter and cannot 
obtain it after reasonable efforts, compliance with Sec. 229.304(a)(3) 
is not required.
    (c) This temporary section will expire on December 31, 2002.

    10. By adding Sec. 229.601T to read as follows:


Sec. 229.601T  (Item 601T) Item 601T of Regulation S-K.

    Any issuer that may rely upon the alternative disclosure 
requirement of Sec. 229.304T shall comply with Sec. 229.601(b)(16) in 
the following manner:
    (a) If Arthur Andersen LLP (or a foreign affiliate of Arthur 
Andersen LLP) has already provided the issuer with a letter addressed 
to the Commission stating whether it agrees or disagrees with the 
statements made by the issuer in response to Sec. 229.304(c), the 
issuer must comply with Sec. 229.601(b)(16).
    (b) If Arthur Andersen LLP (or a foreign affiliate of Arthur 
Andersen LLP) has not provided the issuer with this letter and the 
issuer cannot obtain it after reasonable efforts, the issuer need not 
comply with Sec. 229.601(b)(16).
    (c) This temporary section will expire on December 31, 2002.

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

    11. The general authority citation for Part 230 is revised to read 
as follows:

    Authority: 15 U.S.C. 77b, 77c, 77d, 77f, 77g, 77h, 77j, 77r, 
77s, 77sss, 77z-3, 78c, 78d, 78l, 78m, 78n, 78o, 78t, 78w, 77ll(d), 
78mm, 79t, 80a-8, 80a-24, 80a-28, 80a-29, 80a-30 and 80a-37, unless 
otherwise noted.
* * * * *

    12. By adding Sec. 230.401a to read as follows:


Sec. 230.401a  Requirements as to proper form.

    With regard to issuers eligible to rely on Release No. 34-45589 
(March 18, 2002) (which may be viewed on the Commission's website at 
www.sec.gov), the filing of reports in accordance with the provisions 
of that Release shall result in those reports being ``timely filed'' 
for purposes of all form eligibility standards in registration 
statement forms under the Securities Act of 1933 (15 U.S.C. 77a et 
seq.).

    13. By adding Sec. 230.427T to read as follows:


Sec. 230.427T  Information in prospectuses more than nine months after 
the effective date of the related registration statement.

    (a) Notwithstanding the language in Section 10(a)(3) of the Act (15 
U.S.C. Sec. 77j(a)(3)), until December 16, 2002, for a registrant that 
meets the eligibility requirements in paragraph (a)(1) of this section, 
the audited financial information in a prospectus used more than nine 
months after the effective date of the registration statement of which 
that prospectus is a part must be as of a date not more than eighteen 
months prior to such use; provided that the conditions specified in 
paragraph (a)(2) of this section are satisfied.
    (1) Eligibility requirements. A registrant meets the eligibility 
requirements of this paragraph (a) of this section if:
    (i) The registrant has an effective registration statement under 
the Act that is required to include financial statements for any entity 
that has a fiscal year ending between and including November 30, 2001 
(or, in the case of a registered investment company, January 1, 2002) 
and April 15, 2002;
    (ii) Arthur Andersen LLP (or a foreign affiliate of Arthur Andersen 
LLP) had been engaged, on or after March 14, 2002, as the independent 
public accountant to examine those financial statements for that fiscal 
year;
    (iii) On or before March 14, 2002, the registrant had not obtained 
a manually signed audit report from Arthur Andersen LLP (or a foreign 
affiliate of Arthur Andersen LLP) in respect of those financial 
statements for that fiscal year;
    (iv) The registrant is unable to obtain from Arthur Andersen LLP 
(or a foreign affiliate of Arthur Andersen LLP) or elects not to have 
Arthur Andersen LLP (or a foreign affiliate of Arthur Andersen LLP) 
issue a manually signed audit report in respect of those financial 
statements; and

[[Page 13537]]

    (v) The registrant is not a ``blank check company'' as defined in 
Sec. 230.419(a)(2) of this chapter.
    (2) Conditions.
    (i) A prospectus that is used more than nine months after the 
effective date of the registration statement of which that prospectus 
is a part includes unaudited financial information that is as of a date 
not more than sixteen months prior to such use; provided that the 
registrant provides in the prospectus disclosure reflecting the 
guidance in Temporary Note 2T to Article 3 of Regulation S-X 
(Secs. 210.3-01--3-20 of this chapter).
    (ii) The audited financial information referred to in paragraph 
(a)(1)(i) of this section in a prospectus used more than nine months 
after the effective date of the registration statement of which that 
prospectus is a part must be audited by an independent public 
accountant other than Arthur Andersen LLP (or a foreign affiliate of 
Arthur Andersen LLP) and the prospectus must include:
    (A) A discussion of any material changes from the unaudited 
financial information; and
    (B) Updated or revised information in any other section of the 
prospectus or documents incorporated by reference that should be 
updated or revised to reflect the changes in the audited financial 
information.
    (b) This temporary section will expire on December 31, 2002.

    14. By amending Sec. 230.428 by adding Instruction 2T to the 
Instructions following paragraph (b)(2)(iv) to read as follows:


Sec. 230.428  Documents constituting a section 10(a) prospectus for 
Form S-8 registration statement; requirements relating to offerings of 
securities registered on Form S-8.

* * * * *
    (b) * * *
    (2) * * *
    (iv) * * *
    Instructions.
* * * * *
    2T. With regard to issuers that are eligible to rely on and are 
electing to comply with Release No. 34-45589 (March 18, 2002) (which 
may be viewed on the Commission's website at www.sec.gov) or a 
temporary rule adopted in Release 33-8070 (March 18, 2002) published 
on March 22, 2002, in the Federal Register, until September 13, 2002 
(or December 16, 2002 with respect to foreign private issuers), if 
the latest fiscal year has ended within 180 days (or 250 days with 
respect to foreign private issuers) prior to the delivery of 
documents containing the information specified by Part I of Form S-8 
(Sec. 239.16b of this chapter), the issuer may deliver a document 
containing financial statements for the fiscal year preceding the 
latest fiscal year, provided that within the 180 or 250 day period a 
document containing financial statements for the latest fiscal year 
is furnished to each employee. This temporary instruction will 
expire on December 31, 2002.
* * * * *

    15. By adding Sec. 230.437a to read as follows:


Sec. 230.437a  Written consents.

    (a) This section applies only to registrants that:
    (1) Are not a ``blank check company'' as defined in 
Sec. 230.419(a)(2); and
    (2) Are filing a registration statement containing financial 
statements in which Arthur Andersen LLP (or a foreign affiliate of 
Arthur Andersen LLP) had been acting as the independent public 
accountant.
    (b) Notwithstanding any other Commission rule or regulation, every 
registrant eligible to rely on this section may dispense with the 
requirement for the registrant to file the written consent of Arthur 
Andersen LLP (or a foreign affiliate of Arthur Andersen LLP) as 
required by Section 7 of the Act (15 U.S.C. 77g) where:
    (1) The registrant has not already obtained the written consent 
that would be required if not for this section;
    (2) The registrant is not able to obtain the written consent after 
reasonable efforts; and
    (3) The registrant discloses clearly any limitations on recovery by 
investors posed by the lack of consent.

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

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

    Authority: 15 U.S.C. 77c, 77d, 77g, 77j, 77s, 77z-2, 77z-3, 
77eee, 77ggg, 77nnn, 77sss, 77ttt, 78c, 78d, 78e, 78f, 78g, 78i, 
78j, 78j-1, 78k, 78k-1, 78l, 78m, 78n, 78o, 78p, 78q, 78s, 78u-5, 
78w, 78x, 78ll, 78mm, 79q, 79t, 80a-20, 80a-23, 80a-29, 80a-37, 80b-
3, 80b-4 and 80b-11, unless otherwise noted.
* * * * *

    17. By adding Sec. 240.12b-37 to read as follows:


Sec. 240.12b-37  Satisfaction of filing requirements.

    With regard to issuers eligible to rely on Release No. 34-45589 
(March 18, 2002) or Release No. IC-25463 (March 18, 2002) (each of 
which may be viewed on the Commission's website at www.sec.gov), 
filings made in accordance with the provisions of those Releases shall 
satisfy the issuer's requirement to make such a filing under Section 
13(a), 14 or 15(d) of the Act (15 U.S.C. 77m(a), 78n or 78o(d)), as 
applicable, and the Commission's rules and regulations thereunder.

PART 249--FORMS, SECURITIES EXCHANGE ACT OF 1934

    18. The authority citation for Part 249 continues to read in part 
as follows:

    Authority: 15 U.S.C. 78a et seq., unless otherwise noted.
* * * * *

    19. By amending Form 20-F (referenced in Sec. 249.220f) by adding 
General Instruction A-T1. and General Instruction A-T2. after General 
Instruction A. to read as follows:

    Note: Form 20-F does not, and this amendment will not, appear in 
the Code of Federal Regulations.

United States

Securities and Exchange Commission

Washington, D.C. 20549

Form 20-F

* * * * *

General Instructions

    A. * * *
* * * * *

A-T1. Temporary Instructions Relating to Certain Financial 
Statements.

    Notwithstanding any other Commission rule or regulation, every 
foreign private issuer meeting the eligibility requirements in 
paragraph (a) of this instruction that files a registration 
statement on Forms F-1, F-2, F-3, F-4 or S-8, or an amendment 
thereto, that requires audited financial statements for the most 
recent fiscal year end may file unaudited financial statements in 
satisfaction of that requirement under the conditions listed in 
paragraph (b) of this instruction.
    (a) Eligibility Requirements. A foreign private issuer:
    (1) That at the time of filing a registration statement is 
subject to the periodic reporting requirements of Section 13(a) or 
15(d) of the Exchange Act;
    (2) Whose registration statement will include audited financial 
statements of an entity that has a fiscal year ending between and 
including November 30, 2001 and April 15, 2002 as to the examination 
of which Arthur Andersen LLP or a foreign affiliate of Arthur 
Andersen LLP had been engaged as the independent public accountant 
on or after March 14, 2002, unless the foreign private issuer fits 
within Instruction 2 to Item 8 of Form 20-F, in which case the 
fiscal year can be between August 31, 2001 and April 15, 2002;
    (3) That, on or before March 14, 2002, had not obtained a 
manually signed audit report from Arthur Andersen LLP (or a foreign 
affiliate of Arthur Andersen LLP) in respect of those financial 
statements;
    (4) That is unable to obtain from Arthur Andersen LLP (or a 
foreign affiliate of Arthur Andersen LLP) or elects not to have 
Arthur Andersen LLP (or a foreign affiliate of Arthur Andersen LLP) 
issue a manually signed audit

[[Page 13538]]

report in respect of those financial statements; and
    (5) That is not a ``blank check company'' as defined in 
Securities Act Rule 419(a)(2) (Sec. 230.419(a)(2) of this chapter).
    (b) Conditions.
    (1) The foreign private issuer's registration statement responds 
to all items required by the appropriate registration form, but with 
unaudited financial statements that meet the required timeliness 
requirements for those financial statements as to the examination of 
which Arthur Andersen LLP or a foreign affiliate of Arthur Andersen 
LLP had been engaged as the independent public accountant (including 
an unaudited reconciliation to U.S. generally accepted accounting 
principles (GAAP) pursuant to Item 17(c) of Form 20-F if the foreign 
private issuer prepares its financial statements on a basis of 
accounting other than U.S. GAAP).
    (2) The foreign private issuer provides in the registration 
statement disclosure reflecting the guidance in Temporary Note 2T of 
Article 3 of Regulation S-X (17 CFR 210.3-01 `` 3-20).
    (3) If the registration statement is not yet effective and it 
will become effective on or after the date specified in paragraph 
(b)(4) of this instruction, the foreign private issuer must file a 
pre-effective amendment or an amendment to a document incorporated 
by reference, as appropriate, before effectiveness. If the 
registration statement is effective, the foreign private issuer must 
file either a post-effective amendment to the registration statement 
or an amendment to a document incorporated by reference, as 
appropriate, not later than the date specified in paragraph (b)(4) 
of this instruction; provided that this filing or amendment need not 
be made if the offering or offerings have been completed (and any 
prospectus delivery period under Section 4(3) of the Securities Act 
of 1933 (15 U.S.C. 77d(3)) and the rules thereunder has expired) 
prior to the date specified in paragraph (b)(4) of this instruction. 
The filing or amendment shall present:
    (i) The financial statements audited by an independent public 
accountant other than Arthur Andersen LLP (or a foreign affiliate of 
Arthur Andersen LLP);
    (ii) If Arthur Andersen LLP (or a foreign affiliate of Arthur 
Andersen LLP) had been engaged as the independent public accountant 
to examine the registrant's financial statements, selected financial 
data required by Item 3(a) of Form 20-F based on the audited 
financial statements;
    (iii) A discussion of any material changes from the unaudited 
financial statements filed originally; and
    (iv) Any other section of the registration statement or Form 20-
F that should be updated or revised to reflect the changes in the 
financial statements so filed by amendment.
    (4) For purposes of paragraph (b)(3) of this instruction, the 
date shall be the earlier of:
    (i) 60 days from the date the audited financial statements were 
required to be included in the registration statement; and
    (ii) The date on which an amended Form 20-F containing audited 
financial statements is filed in accordance with Release No. 34-
45589 (March 18, 2002) (which may be viewed on the Commission's 
website at www.sec.gov).
    (c) This temporary instruction will expire on December 31, 2002.

A-T2.Temporary Instructions Relating to Certain Financial 
Statements

    (a) This temporary note applies to any foreign private issuer 
that provides audited financial statements with an accountant's 
report issued by Arthur Andersen LLP or a foreign affiliate of 
Arthur Andersen LLP (``Andersen'') after March 14, 2002 in a filing. 
The exact content of each foreign private issuer's disclosure may 
vary depending on the facts and circumstances applicable to each of 
Andersen's public company audit clients.
    (b) The foreign private issuers for which this temporary note 
applies must include as an exhibit (under Exhibit 99) to their 
filing a letter by the foreign private issuer addressed to the 
Commission that states that Andersen has represented to the foreign 
private issuer that the audit was subject to Andersen's quality 
control system for the U.S. accounting and auditing practice to 
provide reasonable assurance that the engagement was conducted in 
compliance with professional standards and that there was 
appropriate continuity of Andersen personnel working on audits, 
availability of national office consultation and availability of 
personnel at foreign affiliates of Andersen to conduct the relevant 
portions of the audit.
    (c) This temporary note will expire on December 31, 2002.
* * * * *

PART 260--GENERAL RULES AND REGULATIONS, TRUST INDENTURE ACT OF 
1939

    20. The authority citation for Part 260 continues to read as 
follows:

    Authority: 15 U.S.C. 77eee, 77ggg, 77nnn, 77sss, 78ll(d), 80b-3, 
80b-4, and 80b-11.

    21. By adding Sec. 260.19a-1 to read as follows:


Sec. 260.19a-1  Compliance with Section 314(a)(1) of the Trust 
Indenture Act for certain eligible indenture obligors.

    (a) This section is applicable only to an ``eligible indenture 
obligor'' as defined in paragraph (b) of this section.
    (b) For purposes of paragraph (c) of this section, an ``eligible 
indenture obligor'' is any obligor that:
    (1) Is required to file reports with the Commission pursuant to 
Section 13 or Section 15(d) of the Securities Exchange of 1934 (15 
U.S.C. Secs. 78m or 78o(d)) (the ``Exchange Act''); and
    (2) May rely on any of the provisions of Release No. 34-45589 
(March 18, 2002) (which may be viewed on the Commission's website at 
www.sec.gov) with regard to the filing of reports with the Commission 
pursuant to Section 13 or Section 15(d) of the Exchange Act (14 U.S.C. 
78m or 78o(d)).
    (c) An ``eligible indenture obligor'' that files with the indenture 
trustee those Exchange Act reports filed with the Commission in 
accordance with the Release referred to in paragraph (b)(2) of this 
section has met its duty under Section 314(a)(1) of the Act (15 U.S.C. 
77nn(a)(1)) to ``file with the indenture trustee all reports required 
to be filed with the Commission pursuant to Section 13 or Section 15(d) 
of the Securities Exchange Act of 1934.''

    By the Commission.

    Dated: March 18, 2002.
Margaret H. McFarland,
Deputy Secretary.

    Note:
    Appendices A, B and C to the preamble will not appear in the 
Code of Federal Regulations.

Appendix A

United States of America Before the Securities and Exchange Commission

Securities Exchange Act of 1934

Release No. 34-45589/March 18, 2002

Order Under Section 36 of the Securities Exchange Act of 1934 Granting 
Exemptions From Certain Provisions of the Act and Rules Thereunder

    To assure a continuing and orderly flow of information to 
investors and the U.S. capital markets and to minimize any potential 
disruptions that may occur in light of the circumstances surrounding 
Arthur Andersen LLP (``Andersen''), the Commission finds that the 
exemptions set forth below are necessary and appropriate in the 
public interest and consistent with the protection of investors.\1\
---------------------------------------------------------------------------

    \1\ The Commission is also publishing today a separate release 
modifying, in a manner appropriate for the protection of investors, 
the requirements for including audited financial statements in 
registration statements under the Securities Act of 1933 and filings 
required by the Trust Indenture Act of 1939. See Release No. 33-8070 
(March 18, 2002).
---------------------------------------------------------------------------

    I. Accordingly, it is ordered, pursuant to Section 36 of the 
Securities Exchange Act of 1934 (the ``Exchange Act''), that any one 
or more of theprovisions of Section I. of this order shall apply to 
any issuer:
     Whose report, registration statement, amendment or 
other documents referenced in this order will include financial 
statements the examination or review of which Andersen (or a foreign 
affiliate of Andersen) had been engaged, on or after March 14, 2002, 
as the independent public accountant;
     That, on or before March 14, 2002, had not obtained a 
manually signed audit report from Andersen (or a foreign affiliate 
of Andersen) in respect of those financial statements (or a review 
report in the case of interim financial statements);
     That is unable to obtain from Andersen (or a foreign 
affiliate of Andersen) or elects not to have Andersen (or a foreign 
affiliate of Andersen) issue a manually signed audit report in 
respect of those financial statements (or a review in the case of 
interim financial statements); and

[[Page 13539]]

     That is not a ``blank check company'' as defined in 
Rule 419(a)(2) under the Securities Act of 1933.
    The review referenced above is a review in accordance with Rule 
10-01(d) of Regulation S-X (or Item 310(b) of Regulation S-B for 
small business issuers, as defined in Item 10(a)(1) of Regulation S-
B).
    1. Annual Reports on Form 10-K/Form 10-KSB. Notwithstanding any 
other Commission rule or regulation, an issuer that has a fiscal 
year ending between and including November 30, 2001 and April 15, 
2002 that is required to file an annual report on Form 10-K or Form 
10-KSB may file its annual report for that fiscal year under the 
conditions below.
    Conditions.
    (a) The issuer timely files its annual report on Form 10-K or 
Form 10-KSB within the period specified in the appropriate form 
(including any additional period for filing the report if the issuer 
relies on Exchange Act Rule 12b-25) responding to all items required 
by the appropriate form, but with unaudited financial statements for 
those financial statements as to the examination of which Andersen 
(or a foreign affiliate of Andersen) had been engaged as the 
independent public accountant;
    (b) The issuer provides the disclosure reflecting the guidance 
included in Temporary Note 2T to Article 3 of Regulation S-X in the 
report; and
    (c) The issuer files an amendment to the report within 60 days 
of the original due date of the report (excluding any additional 
period for filing the original report if the issuer relied on 
Exchange Act Rule 12b-25 for the filing of that report), that 
presents:
    (1) The financial statements audited by an independent public 
accountant other than Andersen (or a foreign affiliate of Andersen);
    (2) If the original filing was on Form 10-K and Andersen (or a 
foreign affiliate of Andersen) had been engaged as the independent 
public accountant to examine the issuer's financial statements, 
selected financial data required by Item 6 of Form 10-K based on the 
audited financial statements;
    (3) A discussion of any material changes from the unaudited 
financial statements filed originally; and
    (4) Any other section of the annual report that should be 
amended, including without limitation, Management's Discussion and 
Analysis of Financial Condition and Results of Operations, to 
reflect any changes in the financial statements so filed by 
amendment.
    2. Quarterly Reports on Form 10-Q/Form 10-QSB. Notwithstanding 
any other Commission rule or regulation, an issuer that has a fiscal 
quarter ending between and including January 26, 2002 and June 15, 
2002 that is required to file quarterly reports on Form 10-Q or Form 
10-QSB may file its quarterly report for those fiscal quarters under 
the conditions listed below.
    Conditions.
    (a) The issuer timely files its quarterly report on Form 10-Q or 
Form 10-QSB within the period specified in the appropriate form 
(including any additional period for filing the report if the issuer 
relies on Exchange Act Rule 12b-25) responding to all items required 
by the appropriate form, but with interim financial statements that 
have not been reviewed by an independent public accountant in 
accordance with Rule 10-01(d) of Regulation S-X (or Item 310(b) of 
Regulation S-B for issuers filing on Form 10-QSB);
    (b) The issuer provides disclosure in the report similar to that 
reflected in the guidance included in Temporary Note 2T to Article 3 
of Regulation S-X, as applicable;
    (c) If upon completion of the review by an independent public 
accountant in accordance with Rule 10-01(d) of Regulation S-X (or 
Item 310(b) of Regulation S-B for issuers filing on Form 10-QSB) 
there is a change to the interim financial statements, the issuer 
must file an amendment to the report upon completion of the review 
presenting:
    (1) The interim financial statements reviewed by an independent 
public accountant other than Andersen (or a foreign affiliate of 
Andersen);
    (2) A discussion of any material changes from the unreviewed 
financial statements filed originally; and
    (3) Any other section of the quarterly report that should be 
amended, including without limitation, Management's Discussion and 
Analysis of Financial Condition and Results of Operations, to 
reflect any changes in the financial statements so filed by 
amendment; and
    (d) If upon completion of the review there is not a change to 
the interim financial statements, the issuer must state in its 
quarterly report for the immediately succeeding fiscal quarter that 
the interim financial statements for the previous quarter had 
subsequently been reviewed by an independent public accountant other 
than Andersen (or a foreign affiliate of Andersen), but no report of 
that independent public accountant need be presented.
    3. Annual Reports on Form 20-F. Notwithstanding any other 
Commission rule or regulation, a foreign private issuer that has a 
fiscal year ending between and including August 31, 2001 and April 
15, 2002 that is required to file an annual report on Form 20-F may 
file its annual report on Form 20-F for that fiscal year under the 
conditions listed below.
    Conditions.
    (a) The foreign private issuer timely files its annual report on 
Form 20-F within the period specified in Form 20-F (including any 
additional period for filing the report if the foreign private 
issuer relies on Exchange Act Rule 12b-25) responding to all items 
required by Form 20-F, but with unaudited financial statements for 
those financial statements as to the examination of which either 
Andersen (or a foreign affiliate of Andersen) had been engaged as 
the independent public accountant (including an unaudited 
reconciliation to U.S. generally accepted accounting principles 
(GAAP) pursuant to Item 17(c) of Form 20-F if the foreign private 
issuer prepares its financial statements on a basis of accounting 
other than U.S. GAAP);
    (b) The foreign private issuer provides disclosure reflecting 
the guidance included in Temporary Note 2T to Article 3 of 
Regulation S-X in the report; and
    (c) The foreign private issuer files an amendment to the report 
within 60 days of the original due date of the report (excluding any 
additional period for filing the original report if the issuer 
relied on Exchange Act Rule 12b-25 for the filing of that report), 
that presents:
    (1) The financial statements audited by an independent public 
accountant other than Andersen (or a foreign affiliate of Andersen);
    (2) If Andersen (or a foreign affiliate of Andersen) had been 
engaged as the independent public accountant to examine the foreign 
private issuer's financial statements, selected financial data 
required by Item 3.A. of Form 20-F (including any reconciliation of 
that data to U.S. GAAP and Regulation S-K if required by Instruction 
2 to Item 3.A. of Form 20-F) based on the audited financial 
statements;
    (3) A discussion of any material changes from the unaudited 
financial statements or unaudited reconciliation filed originally; 
and
    (4) Any other section of the annual report that should be 
amended, including without limitation, the Operating and Financial 
Review and Prospects required by Item 5 of Form 20-F, to reflect any 
changes in the financial statements so filed by amendment.
    4. Rule 12b-25. Notwithstanding any other Commission rule or 
regulation, an issuer that files a Notification of Late Filing on 
Form 12b-25 for its annual report on Form 10-K or Form 10-KSB for 
its fiscal year ending between and including November 30, 2001 and 
April 15, 2002, its annual report on Form 20-F for its fiscal year 
ending between and including August 31, 2001 and April 15, 2002, its 
annual report on Form N-SAR for its fiscal year ending between and 
including December 15, 2001 and April 15, 2002 or its quarterly 
report on Form 10-Q or Form 10-QSB for its fiscal quarter ending 
between and including January 26, 2002 and June 15, 2002 need not 
attach as an exhibit a statement by Andersen (or a foreign affiliate 
of Andersen) as required by Exchange Act Rule 12b-25(c) if such 
statement cannot be obtained by the issuer after reasonable efforts.
    5. Schedules 14A and 14C. Notwithstanding any other Commission 
rule or regulation, every issuer that files either a Schedule 14A or 
Schedule 14C that requires audited financial statements of an entity 
with a fiscal year ending between and including:
    (i) November 30, 2001 and April 15, 2002, if the entity meets 
all of the conditions in Rule 3-01(c) of Regulation S-X (or Item 
310(g) of Regulation S-B if the entity is a small business issuer), 
(ii) December 29, 2001 and April 15, 2002, if the entity does not 
meet all of the conditions in Rule 3-01(c) of Regulation S-X (or 
Item 310(g) of Regulation S-B if the entity is a small business 
issuer), or (iii)January 1, 2002 and April 15, 2002, if the entity 
is a registered investment company, may file unaudited financial 
statements in satisfaction of that requirement under the conditions 
listed below.
    Conditions.
    (a) The issuer sends its proxy statement or information 
statement on or before September 13, 2002 (or, in the case of an 
issuer that is a registered investment company, on or before August 
13, 2002);
    (b) The issuer's proxy statement or information statement 
responds to all items

[[Page 13540]]

required by Schedule 14A or Schedule 14C (taking into account 
paragraph I.6. below), but with unaudited financial statements for 
those financial statements as to the examination of which Andersen 
(or a foreign affiliate of Andersen) had been engaged as the 
independent public accountant;
    (c) The issuer provides in the proxy statement or information 
statement disclosure reflecting the guidance included in Temporary 
Note 2T to Article 3 of Regulation S-X;
    (d) The issuer must file either revised materials or amended 
documents incorporated by reference, as appropriate, not later than 
the date specified in paragraph I.5.(e) below, provided that this 
filing or amendment need not be made if the solicitation or 
corporate action has been completed by that date. Such filing or 
amended document shall present:
    (1) The financial statements audited by an independent public 
accountant other than Andersen (or a foreign affiliate of Andersen);
    (2) If Andersen (or a foreign affiliate of Andersen) had been 
engaged as the independent public accountant for the issuer's 
financial statements, selected financial data required by Item 301 
of Regulation S-K based on the audited financial statements if this 
information would otherwise have been required in the proxy 
statement or information statement;
    (3) A discussion of any material changes from the unaudited 
financial statements filed originally; and
    (4) Any other section of the revised materials or filings 
incorporated by reference that should be updated or revised to 
reflect any changes in the financial statements contained in the 
revised materials or amended documents; and
    (e) For purposes of paragraph I.5.(d) above:
    (1) If the issuer meets all of the conditions in Rule 3-01(c) of 
Regulation S-X (or Item 310(g)(2) of Regulation S-B for small 
business issuers, as defined in Item 10(a)(1) of Regulation S-B), 
the date shall be the earlier of (i) 60 days from the date the 
audited financial statements were required to be included in the 
proxy statement or information statement and (ii) the date on which 
an amended Form 10-K or 10-KSB containing audited financial 
statements is filed in accordance with this Order;
    (2) If the issuer does not meet all of the conditions in Rule 3-
01(c) of Regulation S-X (or Item 310(g)(2) of Regulation S-B for 
small business issuers, as defined in Item 10(a)(1) of Regulation S-
B), the date shall be the earlier of (i) 106 days from the date the 
audited financial statements were required to be included in the 
proxy statement or information statement and (ii) the date on which 
an amended Form 10-K or 10-KSB containing audited financial 
statements is filed in accordance with this Order; and
    (3) If the issuer is a registered investment company, the date 
shall be the earlier of (i) 60 days from the date the audited 
financial statements were required to be in the proxy statement or 
information statement and (ii) the date on which an amended annual 
report to shareholders containing audited financial information is 
filed in accordance with Release No. IC-25463 (March 18, 2002).
    6. Audit Committee Disclosures in Certain Schedules 14A and 14C. 
Notwithstanding any other Commission rule or regulation, every 
issuer that has a fiscal year ending between and including November 
30, 2001 and April 15, 2002 that files either a Schedule 14A or 
Schedule 14C may omit any disclosure required by Item 7(d)(3)(i) and 
Item 9(e) of Schedule 14A or Item 7(d)(3)(i) and Item 9(e) of 
Schedule 14A pursuant to Item 1 of Schedule 14C under the conditions 
listed below.
    (a) The issuer sends its proxy statement or information 
statement on or before September 13, 2002 (or, in the case of an 
issuer that is a registered investment company, on or before August 
13, 2002).
    (b) The issuer's proxy statement or information statement 
responds to all items required by Schedule 14A or Schedule 14C 
(taking into account paragraph I.5. above, if applicable) other than 
Items 7(d)(3)(i) and Item 9(e) for Schedule 14A or Item 7(d)(3)(i) 
and Item 9(e) of Schedule 14A pursuant to Item 1 of Schedule 14C for 
Schedule 14C.
    (c) The issuer has not filed audited financial statements nor 
amended its Form 10-K or Form 10-KSB pursuant to paragraph I.1. 
above prior to sending its proxy statement or information statement 
to shareholders.
    (d) The issuer includes information in its amended Form 10-K or 
Form 10-KSB (or, in the case of a registered investment company, in 
its amended annual report to shareholders) that responds to Items 
7(d)(3)(i) and Item 9(e) of Schedule 14A, if this information would 
otherwise have been required in the Schedule 14A or Schedule 14C.
    7. Rule 14a-3. Notwithstanding any other Commission rule or 
regulation, every issuer that has a fiscal year ending between and 
including November 30, 2001 and April 15, 2002 that files either a 
Schedule 14A that relates to an annual meeting of security holders 
(or a special meeting in lieu of an annual meeting of security 
holders), or written consent in lieu of such meeting, at which 
directors are to be elected shall satisfy the requirements in Rule 
14a-3 for audited financial statements in the annual report to 
security holders for that fiscal year under the conditions listed 
below.
    Conditions.
    (a) The proxy statement or information statement is sent on or 
before September 13, 2002;
    (b) The issuer's proxy statement responds to all items required 
by Schedule 14A (taking into account paragraphs I.5. and I.6. above, 
if applicable);
    (c) The issuer's annual report to security holders responds to 
all items required in the report, but with unaudited financial 
statements for those financial statements as to the examination of 
which Andersen (or a foreign affiliate of Andersen) had been engaged 
as the independent public accountant;
    (d) The issuer provides in the annual report to security holders 
disclosure reflecting the guidance included in Temporary Note 2T to 
Article 3 of Regulation S-X; and
    (e) The issuer announces in a press release, at the time it 
files its Form 10-K or Form 10-KSB (or an amendment thereto) that 
includes the financial statements audited by an independent public 
accountant other than Andersen (or a foreign affiliate of Andersen), 
that these financial statements are available and may be found in 
that filing on the Commission's website at www.sec.gov and on the 
issuer's website, citing the address, if the issuer has a website; 
provided that this announcement need not be made if the issuer's 
solicitation or corporate action has been completed prior to the 
time these audited financial statements are filed.
    8. Rule 14c-3. Notwithstanding any other Commission rule or 
regulation, every issuer that has a fiscal year ending between and 
including November 30, 2001 and April 15, 2002 that files a Schedule 
14C that relates to an annual meeting of security holders (or a 
special meeting in lieu of an annual meeting of security holders), 
or written consent in lieu of such meeting, at which directors are 
to be elected shall satisfy the requirements in Rule 14c-3 for 
audited financial statements in the annual report to security 
holders for that fiscal year under the conditions listed below.
    Conditions.
    (a) The proxy statement or information statement is sent on or 
before September 13, 2002;
    (b) The issuer's information statement responds to all items 
required by Schedule 14C (taking into account paragraphs I.5. and 
I.6. above, if applicable);
    (c) The issuer's annual report to security holders responds to 
all items required in the report, but with unaudited financial 
statements for those financial statements as to the examination of 
which Andersen (or a foreign affiliate of Andersen) had been engaged 
as the independent public accountant;
    (d) The issuer provides in the annual report to security holders 
disclosure reflecting the guidance included in Temporary Note 2T to 
Article 3 of Regulation S-X; and
    (e) The issuer announces in a press release, at the time it 
files its Form 10-K or Form 10-KSB (or an amendment thereto) that 
includes the financial statements audited by an independent public 
accountant other than Andersen (or a foreign affiliate of Andersen), 
that these financial statements are available and may be found in 
that filing on the Commission's website at www.sec.gov and on the 
issuer's website, citing the address, if the issuer has a website; 
provided that this announcement need not be made if the issuer's 
solicitation or corporate action has been completed prior to the 
time these audited financial statements are filed.
    9. Schedules TO. Notwithstanding any other Commission rule or 
regulation, every issuer whose Schedule TO requires audited 
financial statements of an entity with a fiscal year ending between 
and including November 30, 2001 and April 15, 2002 may file the 
Schedule TO with unaudited financial statements in satisfaction of 
that requirement under the conditions listed below.
    Conditions.
    (a) The issuer files its Schedule TO on or before September 13, 
2002;

[[Page 13541]]

    (b) The offering materials respond to all items required by 
Schedule TO, but with unaudited financial statements for those 
financial statements as to the examination of which Andersen (or a 
foreign affiliate of Andersen) had been engaged as the independent 
public accountant;
    (c) The issuer provides in the offering materials disclosure 
reflecting the guidance included in Temporary Note 2T to Article 3 
of Regulation S-X; and
    (d) The issuer must either file revised materials or amend 
documents incorporated by reference to provide the financial 
statements audited by an independent public accountant other than 
Andersen (or a foreign affiliate of Andersen) not later than the 
earlier of (i) 60 days from the date the audited financial 
statements were required to be included in the Schedule TO and (ii) 
the date on which an amended Form 10-K or 10-KSB (or, in the case of 
a registered investment company, annual report to shareholders) 
containing audited financial statements is filed in accordance with 
this Order; provided that such filing or amendment shall not be 
required if the tender offer has been completed by such date. The 
revised materials or the periodic report which satisfies this 
requirement through incorporation by reference, must present:
    (1) Those audited financial statements;
    (2) If Andersen (or a foreign affiliate of Andersen) had been 
engaged originally as the independent public accountant for the 
issuer's financial statements, selected financial data required by 
Item 301 of Regulation S-K based on the audited financial 
statements;
    (3) A discussion of any material changes from the unaudited 
financial statements filed originally; and
    (4) Any other section of the revised materials or filings 
incorporated by reference that should be updated or revised to 
reflect any changes in the financial statements contained in the 
revised materials or amended documents.
    II. It is further ordered, pursuant to Section 36 of the 
Exchange Act, that:
    1. Employee Benefit Plan Annual Reports on Form 11-K. 
Notwithstanding any other Commission rule or regulation, employee 
stock purchase, savings and similar plans meeting the requirements 
in paragraph II.1.(a) below that are required to file annual reports 
on Form 11-K may file their annual report on Form 11-K for their 
fiscal year ending between and including November 30, 2001 and April 
15, 2002 under the conditions listed in paragraph II.1.(b) below.
    (a) Eligibility Requirements. This paragraph II.1. applies to an 
employee stock purchase, savings or similar plan:
    (1) That is subject to Section 15(d) of the Exchange Act;
    (2) That is not subject to the Employee Retirement Income 
Security Act of 1974;
    (3) That has a fiscal year ending between and including November 
30, 2001 and April 15, 2002;
    (4) Whose report for such period will include financial 
statements as to the examination of which Andersen (or a foreign 
affiliate of Andersen) had been engaged as the independent public 
accountant on or after March 14, 2002;
    (5) That, on or before March 14, 2002, had not obtained a 
manually signed audit report from Andersen (or a foreign affiliate 
of Andersen) in respect of those financial statements;
    (6) That is unable to obtain from Andersen (or a foreign 
affiliate of Andersen) or elects not to have Andersen (or a foreign 
affiliate of Andersen) issue a manually signed audit report in 
respect of those financial statements; and
    (7) Where the issuer of the stock or other securities offered to 
employees through their participation in the plan is not a ``blank 
check company'' as defined in Rule 419(a)(2) under the Securities 
Act of 1933.
    (b) Conditions.
    (1) The plan timely files its annual report on Form 11-K within 
the period specified in Form 11-K (including any additional period 
for filing the report if the plan relies on Exchange Act Rule 12b-
25) responding to all items required by Form 11-K, but with 
unaudited plan financial statements for those financial statements 
as to the examination of which Andersen (or a foreign affiliate of 
Andersen) had been engaged as the independent public accountant;
    (2) The plan provides the disclosure reflecting the guidance 
included in Temporary Note 2T to Article 3 of Regulation S-X in the 
report;
    (3) The plan files an amendment to the report within 60 days of 
the original due date for filing (excluding any additional period 
for filing the original report if the issuer relied on Exchange Act 
Rule 12b-25 for the filing of that report), that presents:
    (i) The financial statements audited by an independent public 
accountant other than Andersen (or a foreign affiliate of Andersen);
    (ii) A discussion of any material changes from the unaudited 
financial statements filed originally; and
    (iii) Any other section of the annual report that should be 
amended to reflect any changes in the financial statements so filed 
by amendment.
    (4) Notwithstanding paragraphs II.1.(b)(1)-(3) above, if the 
plan elects to use the alternative filing procedure in Exchange Act 
Rule 15d-21:
    (i) Unaudited plan financial statements as to the examination of 
which Andersen (or a foreign affiliate of Andersen) had been engaged 
as the independent public accountant must be filed in the annual 
report on Form 10-K, Form 10-KSB or U5S of the issuer, or an 
amendment thereto, within 120 days after the end of the fiscal year 
of the plan;
    (ii) The issuer provides the disclosure reflecting the guidance 
included in Temporary Note 2T to Article 3 of Regulation S-X in the 
report with respect to the plan;
    (iii) An amendment must be filed to such report within 180 days 
after the end of the fiscal year of the plan, presenting:
    (A) The audited financial statements that would have been 
required for the plan where Andersen (or a foreign affiliate of 
Andersen) had been engaged as the independent public accountant;
    (B) A discussion of any material changes from the unaudited 
financial statements filed originally; and
    (C) Any other section of the annual report related to the plan 
that should be amended including without limitation Management's 
Discussion and Analysis of Financial Condition and Results of 
Operations, to reflect any changes in the financial statements so 
filed by amendment; and
    (iv) Notwithstanding paragraphs II.1.(b)(4)(i)-(iii) above, a 
plan whose fiscal year ends within 62 days prior to the end of the 
fiscal year of the issuer may elect to file the audited plan 
financial statements as a part of the issuer's next annual report 
pursuant to Exchange Act Rule 15d-21(b).
    2. Rule 12b-25. Notwithstanding any other Commission rule or 
regulation, every plan meeting the eligibility requirements in 
paragraph II.1.(a) above that files a Notification of Late Filing on 
Form 12b-25 for its annual report on Form 11-K for its fiscal year 
ending between and including November 30, 2001 and April 15, 2002 
need not attach as an exhibit a statement by Andersen (or a foreign 
affiliate of Andersen) as required by Exchange Act Rule 12b-25(c) if 
such statement cannot be obtained by the issuer after reasonable 
efforts.
    III. It is further ordered, pursuant to Section 36 of the 
Exchange Act, that:
    1. Rule 17a-5. A registered broker-dealer with a contractual 
commitment from Andersen (or a foreign affiliate of Andersen) to 
conduct the broker-dealer's annual audit pursuant to Exchange Act 
Rule 17a-5(d) as of a date between and including January 14, 2002 
and April 15, 2002, and for which the manually signed audit report 
has not been received on or before March 14, 2002, may (i) file its 
audited financial statements within 60 days after the date the 
statements would otherwise have been required to have been filed 
under Exchange Act Rule 17a-5(d)(5); and (ii) comply with the 
requirements of Exchange Act Rule 17a-5(c)(2) by furnishing 
unaudited statements to customers and other persons set forth in 
Exchange Act Rule 17a-5(c)(1) within 105 days after the date as of 
which audited statements were to have been prepared. The unaudited 
statements shall contain the information specified in Exchange Act 
Rule 17a-5(c)(2)(i) and (c)(2)(ii).
    2. Rule 17Ad-13. A registered transfer agent with a contractual 
commitment from Andersen (or a foreign affiliate of Andersen) to 
prepare a report concerning the transfer agent's system of internal 
accounting control and related procedures for the transfer of record 
ownership and the safeguarding of related securities and funds 
pursuant to Exchange Act Rule 17Ad-13(a), and for which the manually 
signed report has not been received on or before March 14, 2002, may 
file the report pursuant to such paragraph within 60 days after the 
date the report otherwise would have been required to have been 
filed.

    By the Commission.

Jonathan G. Katz,
Secretary.

[[Page 13542]]

Appendix B

United States of America Before the Securities and Exchange Commission

Investment Company Act of 1940

Release No. IC-25463/March 18, 2002

Investment Advisers Act of 1940

Release No. IA-2017/March 18, 2002

Order Under Sections 6(b), 6(c), and 38(a) of the Investment Company 
Act of 1940 and Sections 206A and 211(a) of the Investment Advisers Act 
of 1940 Granting Exemptions From Certain Provisions of the Acts and 
Rules Thereunder

    To assure a continuing and orderly flow of information to 
investors and the U.S. capital markets and to minimize any potential 
disruptions that may occur in light of the circumstances surrounding 
Arthur Andersen LLP (``Andersen''), the Commission finds that the 
exemptions set forth below:
     Are necessary and appropriate to the exercise of the 
powers conferred on it by the Investment Company Act of 1940 
(Company Act) and Investment Advisers Act of 1940 (Advisers Act); 
and
     Are necessary and appropriate in the public interest 
and consistent with the protection of investors and the purposes 
fairly intended by the policies and provisions of the Company Act 
and Advisers Act.\1\
---------------------------------------------------------------------------

    \1\ The Commission is also publishing today a separate release 
modifying, in a manner appropriate for the protection of investors, 
the requirements for including audited financial statements in 
registration statements under the Securities Act of 1933 and filings 
required by the Trust Indenture Act of 1939. See Investment Company 
Act Release No. 25464 (March 18, 2002).
---------------------------------------------------------------------------

    The necessity for immediate action of the Commission does not 
permit prior notice of the Commission's action.
    Accordingly, IT IS ORDERED, pursuant to Sections 6(b), 6(c), and 
38(a) of the Company Act and Sections 206A and 211(a) of the 
Advisers Act:

I. Selection of Auditors by Investment Companies

    1.(a) A registered management investment company, registered 
face amount certificate company or a business development company:
    (i) Whose financial statements for its last fiscal year were 
audited by Andersen, had not selected its independent public 
accountant on or before March 14, 2002, and whose fiscal year ends 
on or before April 15, 2002, is exempt from the requirement of 
Section 32(a) of the Company Act and Rule 32a-3 thereunder that such 
company select its independent public accountant within the time 
periods specified by Section 32(a) or rule 32a-3, provided that it 
selects its independent public accountant other than Andersen no 
later than 60 days after it otherwise would have been required to 
select the independent public accountant; or
    (ii) That had selected Andersen as its independent accountant on 
or before March 14, 2002, and terminates the appointment may, 
notwithstanding any provision of Section 32(a), select another 
independent public accountant by vote of a majority of those members 
of the board of directors who are not interested persons of the 
registered investment company.
    (b) A registered management investment company, registered face 
amount certificate company or a business development company that 
selects an independent public accountant pursuant to paragraph 
I.1.(a) of this Order is exempt from the provisions of Section 32(a) 
that require that the selection be made by a vote of a majority of 
those members of the board of directors who are not interested 
persons, cast in person at a meeting called for that purpose, 
provided that such votes are instead cast at a meeting in which 
directors may participate by any means of communicating that allows 
all directors participating to communicate with each other 
simultaneously during the meeting.

II. Custody of Investment Company Assets

    1. Self-Custody. A registered management investment company or 
business development company having a fiscal year ending between and 
including January 1, 2002 and April 15, 2002, and which has engaged 
Andersen for the purpose of verifying assets pursuant to Rule 17f-2, 

6e-2 or 6e-3(T) under the Company Act and elects to terminate such 
engagement is exempt from the requirement of those rules that an 
independent public accountant conduct an actual examination of such 
assets at least three times during the company's fiscal year, 
provided the examinations required by the rules are conducted by an 
independent public accountant other than Andersen no later than 60 
days from the date they were required to be conducted.
    2. Custody with a Member of a National Securities Exchange. A 
registered management investment company or business development 
company having a fiscal year ending between and including January 1, 
2002 and April 15, 2002 that has engaged Andersen for the purpose of 
verifying assets held with a member of a national securities 
exchange pursuant to Rule 17f-1 under the Company Act and elects to 
terminate such engagement is exempt from the requirement that an 
independent public accountant conduct an examination of such assets 
at the end of the annual fiscal period, semiannual fiscal period and 
at a time chosen by the accountant, provided that:
    (a) The actual examinations are conducted by an independent 
public accountant other than Andersen no later than 60 days after 
the date they were required to be conducted; and
    (b) In the case of a semiannual or annual verification, the 
assets are verified as of the end of the annual or semiannual fiscal 
period.

III. Reports and Registration Statements by Investment Companies

    1. The relief provided in Section III of this order shall apply 
to a registered investment company:
    (a) Whose report, registration statement, or amendments 
referenced in this order will include financial statements or are 
based on financial statements the examination of which Andersen had 
been engaged, on or after March 14, 2002, as the independent public 
accountant;
    (b) That, on or before March 14, 2002, had not obtained a 
manually signed audit report from Andersen in respect of those 
financial statements; and
    (c) That is unable to obtain from Andersen or elects not to have 
Andersen issue a manually signed audit report in respect of those 
financial statements.
    2. Annual Reports on Form N-SAR. A registered management 
investment company or a unit investment trust having a fiscal year 
ending between and including December 15, 2001 and April 15, 2002 is 
exempt from the requirement of Rule 30a-1 under the Company Act to 
file an annual report to the Commission on Form N-SAR containing 
financial information based upon audited financial information and 
without a report of independent accountants on internal controls, 
provided that such company or trust:
    (a) Files Form N-SAR within 60 days of the end of its fiscal 
year (or 75 days in the case of a company or trust relying on Rule 
12b-25 under the Securities Exchange Act of 1934 (``Exchange Act'')) 
responding to all items required by the form, but with financial 
information based upon unaudited financial statements, and includes 
disclosure in an exhibit to the form explaining that financial 
information in the report is based upon unaudited financial 
statements because the company or trust was unable to receive 
services from Andersen or chose not to have Andersen complete those 
audits; and
    (b) Files an amendment to its Form N-SAR no later than 60 days 
from the date it was required to file Form N-SAR (excluding any 
additional time period for filing the additional report if the 
company or trust relied upon Rule 12b-25 under the Exchange Act for 
the filing of that report) that contains (i) financial information 
based upon financial statements audited by an independent public 
accountant other than Andersen, (ii) a report of independent 
accountants on internal controls issued by an independent public 
accountant other than Andersen, and (iii) an exhibit that provides a 
discussion of any material changes from the financial information 
based upon the unaudited financial statements filed originally and 
identifies the items of the company's or trust's Form N-SAR that 
were revised as a result of the amendment.
    3. Annual Reports to Shareholders. A registered management 
investment company or a unit investment trust having a fiscal year 
ending between and including January 1, 2002 and April 15, 2002, is 
exempt from the requirement of Rule 30e-1 under the Company Act (and 
registration forms to which the Rule refers) to transmit to each 
shareholder of record an annual report containing audited financial 
statements, provided that the company or trust:
    (a) Transmits to its shareholders within 60 days after the close 
of its fiscal year (and files with the Commission no later than 10 
days thereafter) an annual report responding to all items required 
by the appropriate form, but with (i) unaudited financial 
statements, and (ii) disclosure reflecting the guidance included in 
Temporary Note 2T to Article 3 of Regulation S-X;

[[Page 13543]]

    (b) Files with the Commission no later than 60 days from the 
date it was required to file the annual shareholder report an 
amendment to its shareholder report containing (i) the financial 
statements audited by an independent public accountant other than 
Andersen, (ii) a discussion of any material changes from the 
unaudited financial statements filed originally, and (iii) changes 
to any other section to reflect any changes in the financial 
statements filed by amendment; and
    (c) In the case of a closed-end management company, announces, 
at the time it files its amendment that includes financial 
statements audited by an independent public accountant other than 
Andersen, that these financial statements are available and may be 
found in that filing on the Commission's website at www.sec.gov and 
on the company's website, citing the address, if the company has a 
website; provided that this announcement need not be made if the 
company's solicitation or corporate action has been completed prior 
to the time that these audited financial statements are filed.
    4. Amendments to Investment Company Act Registration Statements. 
A registered management investment company that has (i) a fiscal 
year ending between and including January 1, 2002 and April 15, 
2002, and (ii) timely filed a report on Form N-SAR as provided in 
paragraph III.2. of this order, is exempt from the requirement of 
Rule 8b-16 under the Company Act to amend its registration statement 
within 120 days of the end of its fiscal year, provided that the 
company files the amendment not later than six months after the end 
of the fiscal year.

IV. Balance Sheet Requirement for Certain Investment Advisers

    A registered investment adviser that (i) is required by Item 14 
of Part II of Form ADV under the Advisers Act to furnish a balance 
sheet audited by an independent public accountant, (ii) had engaged 
Andersen (or a foreign affiliate of Andersen) as an independent 
public accountant to examine the balance sheet to be included in 
Form ADV; (iii) had not, on or before March 14, 2002, obtained a 
manually signed audit report from Andersen (or a foreign affiliate 
of Andersen); (iv) is unable to or elects not to have Andersen issue 
a manually signed audit report from Andersen in respect of that 
balance sheet; and (v) has a fiscal year ending between and 
including December 1, 2001 and April 15, 2002, is exempt from the 
requirement of Rule 204-3 of the Advisers Act to furnish (in the 
case of a prospective client) or offer (in the case of a client) 
Part II of Form ADV (or a written disclosure statement) that 
contains an audited balance sheet, provided that:
    1. The adviser furnishes or offers to furnish to prospective 
clients and clients on a timely basis Part II of Form ADV (or a 
written disclosure statement containing at least the information 
required by Part II) responding to all items required by Form ADV, 
but with an unaudited balance sheet, and discloses prominently on 
Schedule G (or the written disclosure statement) that an audited 
balance sheet is unavailable because the adviser was unable to 
receive services from Andersen or chose not to have Andersen 
complete those audits; and
    2. The adviser amends its Part II (or written disclosure 
statement) to include a balance sheet examined by an independent 
public accountant other than Andersen no later than 60 days from the 
date it was required to update its Part II (which amendment is not 
required to be submitted to the Commission).

V. Exemptive Orders

    An investment company, investment adviser, employees' securities 
company or other person relying on a Commission exemptive order 
issued under the Company Act or the Advisers Act that requires 
(either as a result of a representation made by the applicant or 
condition of the order) the involvement of an independent public 
accountant or independent representative (who may be an independent 
public accountant), that, on or after March 14, 2002, had engaged 
but is no longer able to obtain such services from Andersen or 
elects not to continue to engage Andersen shall not be deemed to 
have violated the terms or conditions of the order provided:
    1. In the case of a report that must be furnished periodically 
or an audit that must be conducted annually, the report is furnished 
or audit is conducted by an independent public accountant other than 
Andersen no later than 60 days after the report was otherwise 
required to be furnished or the audit was otherwise required to be 
conducted; and
    2. In the case of ongoing transactions that must be reviewed by 
the independent public accountant (or independent representative), 
the transactions are effected without the review, provided that the 
company or adviser engages an independent public accountant (or 
independent representative) other than Andersen no later than May 
15, 2002, and that new engagement requires the independent public 
accountant (or independent representative) to review the 
transactions effected during the interim period.

    By the Commission.

Jonathan G. Katz,
Secretary.

Appendix C

United States of America Before the Securities and Exchange Commission

Public Utility Holding Company Act of 1935

Release No. 35-27502/March 18, 2002

Order Under Sections 20(a) and 20(d) of the Public Utility Holding 
Company Act of 1935 Granting Exemptions From Certain Provisions of the 
Act and Rules Thereunder

    To assure a continuing and orderly flow of information to 
investors and the U.S. capital markets and to minimize any potential 
disruptions that may occur in light of the circumstances surrounding 
Arthur Andersen LLP (``Andersen''), the Commission finds that the 
exemptions set forth below are necessary and appropriate to the 
exercise of the powers conferred on it by the Public Utility Holding 
Company of 1935.\1\
---------------------------------------------------------------------------

    \1\ The Commission is also publishing today a separate release 
modifying, in a manner appropriate for the protection of investors, 
the requirements for including audited financial statements in 
registration statements under the Securities Act of 1933 and filings 
required by the Trust Indenture Act of 1939. See Release No. 33-8070 
(March 18, 2002).
---------------------------------------------------------------------------

    The necessity for immediate action of the Commission does not 
permit prior notice of the Commission's action.
    Accordingly, it is ordered, pursuant to sections 20(a) and 20(d) 
of the Public Utility Holding Company Act of 1935:

I. Annual Reports on Form U5S

    (1) Notwithstanding any other Commission rule or regulation, 
every registered public utility holding company that is required to 
file an annual report on Form U5S and

    (a) That has a fiscal year ending from November 30, 2001 to 
April 15, 2002, and
    (b) That meets the requirements of Section I of Securities 
Exchange Act of 1934 Release No. 45589 (March 18, 2002) (``1934 Act 
Order'')

may file its annual report on Form U5S for its fiscal year ending 
from November 30, 2001 to April 15, 2002 under the conditions listed 
in paragraph (2) below. Reports filed pursuant to this order shall 
be deemed to have satisfied the registered public utility holding 
company's requirement to file an annual report for such period under 
section 14 of the Public Utility Holding Company Act and the 
Commission's rules and regulations thereunder.
    (2) Conditions:
    (a) The registered public utility holding company files its 
annual report on Form U5S within the required period, responding to 
all items required by the form except for any item requiring that 
(i) the registered public utility holding company provide material 
including audited financial statements as to the examination of 
which Andersen had been engaged as the independent public accountant 
or (ii) the registered public utility holding company provide an 
opinion of an independent public accountant that would have been 
provided by Andersen;
    (b) With respect to any annual report required to be 
incorporated by reference in Exhibit A to Form U5S, the registered 
public utility holding company incorporates by reference an annual 
report that complies with paragraphs I.1.(a) and I.1.(b) of the 1934 
Act Order;
    (c) With respect to any amendment to an annual report required 
by paragraph I.1.(c) of the 1934 Act Order, the registered public 
utility holding company files the amendment as an amendment to its 
Form U5S filing on the same day and amends any other section of its 
Form U5S filing that should be updated as a result; and
    (d) With respect to ``the opinion of the independent 
accountants'' required by Exhibit F to Form U5S, the registered 
public utility holding company files as an amendment to its Form U5S 
filing the opinion within 60 days of the original due date of the 
Form.

II. Computations Required by Certain Rules and Orders

    With respect to any computation required by rule 53(a)(1) or 
rule 58(a)(1) or any similar

[[Page 13544]]

computation required by a Commission order issued under sections 53, 
54 or 58 of the Public Utility Holding Company Act of 1935, a 
registered public utility holding company which is filing annual 
reports on Form 10-K or quarterly reports on Form 10-Q in reliance 
on the exemptions provided in the 1934 Act Order may rely on the 
financial statements included in those filings in performing the 
required computations.

    By the Commission.
Jonathan G. Katz,
Secretary.


[FR Doc. 02-6947 Filed 3-19-02; 4:54 pm]
BILLING CODE 8010-01-P