[Federal Register Volume 71, Number 29 (Monday, February 13, 2006)]
[Rules and Regulations]
[Pages 7411-7413]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 06-1286]


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SECURITIES AND EXCHANGE COMMISSION

17 CFR Parts 229 and 230

[Release Nos. 33-8591A; 34-52056A; IC-26993A; FR-75A; International 
Series Release No. 1294A; File No. S7-38-04]
RIN 3235-AI11


Securities Offering Reform; Correction

AGENCY: Securities and Exchange Commission.

ACTION: Final rule; technical amendments.

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SUMMARY: We are making technical corrections to rules adopted in 
Release No. 33-8591 (July 19, 2005), which were published in the 
Federal Register on August 3, 2005 (70 FR 44722). The adopted rules 
modify and advance significantly the registration, communications, and 
offering processes under the Securities Act of 1933. This document 
corrects certain errors in the regulatory text of the adopting release 
and otherwise clarifies certain of the rules.

DATES: Effective February 13, 2006.

FOR FURTHER INFORMATION CONTACT: Amy M. Starr at (202) 551-3200, in the 
Division of Corporation Finance, U.S. Securities and Exchange 
Commission, 100 F Street, NE., Washington DC 20549.

SUPPLEMENTARY INFORMATION: We are amending Item 512 \1\ of Regulation 
S-K,\2\ and Rules 139,\3\ 405,\4\ and 433 \5\ under the Securities 
Act.\6\
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    \1\ 17 CFR 229.512.
    \2\ 17 CFR 229.10 et seq.
    \3\ 17 CFR 230.139.
    \4\ 17 CFR 230.405.
    \5\ 17 CFR 230.433.
    \6\ 15 U.S.C. 77a et seq.
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I. Discussion of Corrections

A. Rule 139(a)(1)(i)--Issuer-specific research reports

    The amendments to Rule 139 provided that the eligibility 
determination for purposes of a broker's or dealer's reliance on the 
safe harbor for issuer-specific research reports could be determined at 
the time an issuer filed its Form S-3 or Form F-3 and the time of each 
annual Securities Act Section 10(a)(3) update to such a registration 
statement. The amendment was intended to provide an approximately-
annual evaluation of an issuer's status for purposes of Rule 139 that 
would provide greater certainty to brokers and dealers relying on the 
safe harbor for issuer specific research reports. Because it was our 
intent that the safe harbor continue to be available where an issuer 
proposes to file a registration statement, it was inconsistent for the 
amendment to condition the safe harbor eligibility determination on a 
Form S-3 or Form F-3 actually being on file. Indeed, the availability 
of the safe harbor even if an issuer has not yet filed its Form S-3 or 
Form F-3 is clear from the rule text comprising the preamble to Rule 
139(a), which states:
    Under the conditions of paragraph (a)(1) or (a)(2) of this section, 
a broker's or dealer's publication or distribution of a research report 
about an issuer or any of its securities shall be deemed for purposes 
of sections 2(a)(10) and 5(c) of the Act not to constitute an offer to 
sell a security that is the subject of an offering pursuant to a 
registration statement that the issuer proposes to file, or has filed, 
or that is effective, even if the broker dealer is participating or 
will participate in the registered offering of the issuer's 
securities.* * * (emphasis added)
    Further, a filed registration statement on Form S-3 or Form F-3 was 
not required under the pre-amendment provisions of Rule 139. 
Accordingly, we are amending Rule 139(a)(1)(i)(A)(1) to state 
explicitly that if a Form S-3 or Form F-3 is not on file, the broker or 
dealer could rely on the safe harbor if, at the time of reliance on the 
rule, the issuer meets the registrant requirements of Form S-3 or Form 
F-3 and either:
     The issuer is eligible to register a primary offering of 
securities on Form S-3 or Form F-3 based on the $75 million minimum 
public float eligibility provision of those forms; or
     The issuer proposes to register an offering of the 
issuer's securities in reliance on General Instruction I.B.2 of Form S-
3 or Form F-3.
    In addition, the safe harbor for issuer-specific reports in Rule 
139 also was meant to cover all equity and debt securities of well-
known seasoned issuers, whether or not investment grade, that may be 
registered on an

[[Page 7412]]

automatic shelf registration statement, consistent with our belief that 
well-known seasoned issuers are the most widely followed in the 
marketplace. However, the reference in the rule to only primary 
offerings meeting the transactional requirements of General Instruction 
I.B.1 or I.B.2 of Form S-3 or Form F-3 mistakenly excluded certain 
securities that may be registered by well-known seasoned issuers on 
Form S-3 or Form F-3 under automatic shelf registration statements 
pursuant to General Instruction I.D, such as non-investment grade 
securities. We are, therefore, amending Rule 139(a)(1) to provide that 
a broker or dealer can rely on the safe harbor if the issuer is a well-
known seasoned issuer. The only exception to this provision is for a 
majority-owned subsidiary that is not eligible on its own as a well-
known seasoned issuer and registers its securities on its parent well-
known seasoned issuer's registration statement.

B. Rule 405--Definition of Well-Known Seasoned Issuer

    In the definition of well-known seasoned issuer, paragraph 
(1)(i)(B)(3) contains a typographical error--the paragraph contains a 
cross reference to paragraph (1)(i)(B)(2) that should be a cross 
reference to paragraph (1)(i)(B)(1). We are correcting that 
typographical error in this release.

C. Rule 433(f)--Free Writing Prospectuses Published or Distributed By 
Media

    New Rule 433(f) includes certain accommodations where a free 
writing prospectus is prepared and published or broadcast by persons in 
the media business that are unaffiliated with the issuer and any other 
offering participant, and the preparation, publication, or broadcast is 
not paid for by the issuer or other offering participant. Where the 
conditions of Rule 433(f) are met, an issuer or offering participant is 
not required to have a statutory prospectus precede or accompany the 
media communication. However, a filed registration statement including 
a statutory prospectus is necessary.
    In adopting Rule 433, we stated that the purpose of the media free 
writing prospectus provision in paragraph (f) is to permit 
unaffiliated, uncompensated media publications to be published or 
distributed while an issuer is in registration, without requiring that 
the statutory prospectus precede or accompany the media publication, so 
long as the statutory prospectus is on file. Under Rule 433(f), it was 
our intent that the media publication accommodations be available 
without regard to whether the statutory prospectus in an initial public 
offering includes a bona fide price range.\7\
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    \7\ Indeed, in the adopting release (Securities Offering Reform, 
Release No. 33-8591 [70 FR 44722] (Aug. 3, 2005)), we provided an 
example of a chief executive officer of a non-reporting issuer 
giving an interview to a financial news magazine without payment. We 
included this example to make clear that the accommodation for 
unaffiliated, uncompensated media publications was available to 
issuers in initial public offerings. Providing that the 
unaffiliated, uncompensated media accommodation for issuer and 
underwriter free writing prospectuses is available in an initial 
public offering only after the prospectus includes a bona fide price 
range would, we believe, significantly and unintentionally limit the 
availability of the media accommodation in initial public offerings 
to a potentially brief time period between the inclusion of a bona 
fide price range in the prospectus and the effective date of the 
registration statement.
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    However, Rule 433 inadvertently can be read elsewhere to narrow the 
availability of the media exclusion for initial public offerings, as 
Rule 433(b)(2)(ii) requires that a statutory prospectus be on file, 
which in the context of an initial public offering requires a price 
range. To address this situation, we are amending paragraph (b)(2)(ii) 
of Rule 433 to provide that the media accommodations in Rule 433(f) do 
not require that the filed prospectus, in the context of an initial 
public offering, include a price range. This change will clarify that 
the media accommodations included in paragraph (f) of Rule 433 are not 
limited for initial public offerings.

D. Item 512(h) of Regulation S-K--Inclusion of Statement of 
Commission's Position on Indemnification for Liabilities in Automatic 
Shelf Registration Statements

    Item 512(h) of Regulation S-K requires an issuer to include a 
statement regarding the Commission's position on indemnification for 
liabilities under the Securities Act in registration statements in 
which acceleration is requested or in registration statements filed on 
Form S-8. We did not intend to alter the application of Item 512(h) of 
Regulation S-K; however, we did not amend Item 512(h) of Regulation S-K 
to include a reference to immediately effective automatic shelf 
registration statements under amended Rule 462. Absent the corrections 
we are making today, the amendments to Rule 462 providing that 
automatic shelf registration statements go effective immediately would 
inadvertently allow a well-known seasoned issuer to file an automatic 
shelf registration statement without including a statement of the 
Commission's position on indemnification in its undertakings. The 
omission of such language was an oversight, as it would otherwise be 
inconsistent with our long-standing rules to include such statements.
    Accordingly, we are correcting this omission under Item 512(h) of 
Regulation S-K with regard to automatic shelf registration statements 
and post-effective amendments to automatic shelf registration 
statements that go effective immediately pursuant to Rule 462(e) and 
(f). The amendments we are adopting provide for the inclusion of new 
language in Item 512(h) of Regulation S-K stating that the Item will 
apply to registration statements that go effective immediately pursuant 
to Rule 462(e) and (f).

II. Certain Findings

    Under the Administrative Procedure Act, a notice of proposed 
rulemaking is not required when an agency, for good cause, finds ``that 
notice and public procedure thereon are impracticable, unnecessary, or 
contrary to the public interest.'' \8\ The correcting amendments to 
Item 512 of Regulation S-K, and Rules 139, 405, and 433 under the 
Securities Act are technical changes that conform the text to the 
intent of the Commission and correct a cross-reference. For these 
reasons, the Commission finds that there is no need to publish notice 
of these amendments.\9\
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    \8\ 5 U.S.C. 553(b)(3)(B).
    \9\ For similar reasons, the amendments do not require an 
analysis under the Regulatory Flexibility Act or analysis of major 
status under the Small Business Regulatory Enforcement Fairness Act. 
See 5 U.S.C. 601(2) (for purposes of Regulatory Flexibility Act 
analyses, the term ``rule'' means any rule for which the agency 
publishes a general notice of proposed rulemaking) and 5 U.S.C. 
804(3)(C) (for purposes of congressional review of agency 
rulemaking, the term ``rule'' does not include any rule of agency 
organization, procedure, or practice that does not substantially 
affect the rights or obligations of non-agency parties).
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    The Administrative Procedures Act also requires publication of a 
rule at least 30 days before its effective date unless the agency finds 
otherwise for good cause.\10\ For the same reasons described with 
respect to opportunity for notice and comment, the Commission finds 
there is good cause for the amendments to take effect on February 13, 
2006.
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    \10\ See 5 U.S.C. 553(d)(3).
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III. Text of Amendments

List of Subjects in 17 CFR Parts 229 and 230

    Reporting and recordkeeping requirements, Securities.


0
Accordingly, 17 CFR parts 229 and 230 are corrected by making the 
following amendments:

[[Page 7413]]

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

0
1. The authority citation for part 229 continues to read in part as 
follows:

    Authority: 15 U.S.C. 77e, 77f, 77g, 77h, 77j, 77k, 77s, 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, 
78mm, 79e, 79j, 79n, 79t, 80a-8, 80a-9, 80a-20, 80a-29, 80a-30, 80a-
31(c), 80a-37, 80a-38(a), 80a-39, 80b-11, and 7201 et seq.; and 18 
U.S.C. 1350, unless otherwise noted.
* * * * *

0
2. Amend Sec.  229.512 to revise the introductory text of paragraph (h) 
to read as follows:


Sec.  229.512 (Item 512)  Undertakings.

* * * * *
    (h) Request for acceleration of effective date or filing of 
registration statement becoming effective upon filing. Include the 
following if acceleration is requested of the effective date of the 
registration statement pursuant to Rule 461 under the Securities Act 
(Sec.  230.461 of this chapter), if a Form S-3 or Form F-3 will become 
effective upon filing with the Commission pursuant to Rule 462 (e) or 
(f) under the Securities Act (Sec.  230.462 (e) or (f) of this 
chapter), or if the registration statement is filed on Form S-8, and:
* * * * *

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

0
3. The authority citation for part 230 continues to read in part as 
follows:

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

0
4. Amend Sec.  230.139 to revise paragraph (a)(1)(i)(A)(1) to read as 
follows:


Sec.  230.139  Publications or distributions of research reports by 
brokers or dealers distributing securities.

    (a) * * *
    (1) * * *
    (i) * * *
    (A)(1) At the later of the time of filing its most recent Form S-3 
(Sec.  239.13 of this chapter) or Form F-3 (Sec.  239.33 of this 
chapter) or the time of its most recent amendment to such registration 
statement for purposes of complying with section 10(a)(3) of the Act 
or, if no Form S-3 or Form F-3 has been filed, at the date of reliance 
on this section, meets the registrant requirements of such Form S-3 or 
Form F-3 and:
    (i) At such date, meets the minimum float provisions of General 
Instruction I.B.1 of such Forms; or
    (ii) At the date of reliance on this section, is, or if a 
registration statement has not been filed, will be, offering securities 
meeting the requirements for the offering of investment grade 
securities pursuant to General Instruction I.B.2 of Form S-3 or Form F-
3; or
    (iii) At the date of reliance on this section is a well-known 
seasoned issuer as defined in Rule 405 (Sec.  230.405), other than a 
majority-owned subsidiary that is a well-known seasoned issuer by 
virtue of paragraph (1)(ii) of the definition of well-known seasoned 
issuer in Rule 405; and
* * * * *


Sec.  230.405  [Amended]

0
5. Amend Sec.  230.405, definition of ``Well-known seasoned issuer'', 
paragraph (1)(i)(B)(3) to revise the cite ``paragraph (1)(i)(B)(2)'' to 
read ``paragraph (1)(i)(B)(1)'.

0
6. Amend Sec.  230.433 by adding a sentence to the end of paragraph 
(b)(2)(ii) to read as follows:


Sec.  230.433  Conditions to permissible post-filing free writing 
prospectuses.

* * * * *
    (b) * * *
    (2) * * *
    (ii) * * * For purposes of paragraph (f) of this section, the 
prospectus included in the registration statement relating to the 
offering that has been filed does not have to include a price range 
otherwise required by rule.
* * * * *

    Dated: February 6, 2006.

    By the Commission.
Jill M. Peterson,
Assistant Secretary.
[FR Doc. 06-1286 Filed 2-10-06; 8:45 am]
BILLING CODE 8010-01-P