[Federal Register Volume 74, Number 243 (Monday, December 21, 2009)]
[Rules and Regulations]
[Pages 67812-67815]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-30185]


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SECURITIES AND EXCHANGE COMMISSION

17 CFR Part 232

[Release No. 33-9087; File No. S7-23-09]
RIN 3235-AK44


Extension of Filing Accommodation for Static Pool Information in 
Filings With Respect to Asset-Backed Securities

AGENCY: Securities and Exchange Commission.

ACTION: Final rule.

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SUMMARY: The Commission is adopting an amendment to Rule 312 of 
Regulation S-T to extend its application for one year. Rule 312 
provides a temporary filing accommodation for filings with respect to 
asset-backed securities that allows static pool information required to 
be disclosed in a prospectus to be provided on an Internet Web site 
under certain conditions. Under the rule, such information is deemed to 
be included in the prospectus included in the registration statement 
for the asset-backed securities. As a result of the extension, the rule 
will apply to filings with respect to asset-backed securities filed on 
or before December 31, 2010.

DATES: Effective Date: This amendment is effective December 31, 2009.

FOR FURTHER INFORMATION CONTACT: John Harrington, Attorney-Adviser, 
Division of Corporation Finance, at (202) 551-3430, U.S. Securities and 
Exchange Commission, 100 F Street, NE., Washington, DC 20549-3628.

SUPPLEMENTARY INFORMATION: We are adopting an amendment to Rule 312 \1\ 
of Regulation S-T.\2\
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    \1\ 17 CFR 232.312.
    \2\ 17 CFR 232.10 et seq.
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I. Background and Discussion of the Amendment

    In December, 2004, we adopted new and amended rules and forms to 
address the registration, disclosure and reporting requirements for 
asset-backed securities (``ABS'') under the Securities Act of 1933 \3\ 
(the ``Securities Act'') and the Securities Exchange Act of 1934 \4\ 
(the ``Exchange Act'').\5\ As part of this rulemaking, we adopted 
Regulation AB,\6\ a new principles-based set of disclosure items 
forming the basis for disclosure with respect to ABS in both Securities 
Act registration statements and Exchange Act reports. Compliance with 
the revised rules was phased in; full compliance with the revised rules 
became effective January 1, 2006. One of the significant features of 
Regulation AB is Item 1105, which requires, to the extent material, 
static pool information to be provided in the prospectus included in 
registration statements for ABS offerings.\7\ While the disclosure 
required by Item 1105 depends on factors such as the type of underlying 
asset and materiality, the information required to be disclosed can be 
extensive. For example, a registrant may be required to disclose 
multiple performance metrics in periodic increments for prior 
securitized pools of the sponsor for the same asset type in the last 
five years.\8\
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    \3\ 15 U.S.C. 77a et seq.
    \4\ 15 U.S.C. 78a et seq.
    \5\ See Asset-Backed Securities, Release No. 33-8518 (December 
22, 2004) [70 FR 1506] (adopting release related to Regulation AB 
and other new rules and forms related to asset-backed securities) 
(hereinafter, the ``2004 Adopting Release'').
    \6\ 17 CFR 229.1100 et seq.
    \7\ See Form S-1 and Form S-3 under the Securities Act. Static 
pool information indicates how groups, or static pools, of assets, 
such as those originated at different intervals, are performing over 
time. By presenting comparisons between originations at similar 
points in the assets' lives, the data allows the detection of 
patterns that may not be evident from overall portfolio numbers and 
thus may reveal a more informative picture of material elements of 
portfolio performance and risk.
    \8\ 17 CFR 229.1105.
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    As described in the 2004 Adopting Release, in response to the 
Commission's proposal to require material static pool information in 
prospectuses for ABS offerings, many commenters representing both ABS 
issuers and investors requested flexibility in the presentation of such 
information. In particular, commenters noted that the required static 
pool information could include a significant amount of statistical 
information that would be difficult to file electronically on EDGAR as 
it existed at that time and difficult for investors to use in that 
format. Commenters accordingly requested the flexibility for ABS 
issuers to provide static pool information on an Internet Web site 
rather than as part of an EDGAR filing.\9\ In response to these 
comments, we adopted Rule 312 of Regulation S-T, which permits, but 
does not require, the posting of the static pool information required 
by Item 1105 on an Internet Web site under the

[[Page 67813]]

conditions set forth in the rule.\10\ We recognized at the time that a 
Web-based approach might allow for the provision of the required 
information in a more efficient, dynamic and useful format than was 
currently feasible on the EDGAR system. At the same time, we explained 
that we continued to believe at some point for future transactions the 
information should also be submitted with the Commission in some 
fashion, provided investors continue to receive the information in the 
form they have requested. Accordingly, we adopted Rule 312 as a 
temporary filing accommodation applicable to filings filed on or before 
December 31, 2009.\11\ We explained that we were directing our staff to 
consult with the EDGAR contractor, EDGAR filing agents, issuers, 
investors and other market participants to consider how static pool 
information could be filed with the Commission in a cost-effective 
manner without undue burden or expense that still allows issuers to 
provide the information in a desirable format. We also noted, however, 
that it might be necessary, among other things, to extend the 
accommodation.\12\
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    \9\ See 2004 Adopting Release, Section III.B.4.b.
    \10\ 17 CFR 232.312(a). Instead of relying on Rule 312, an 
issuer can include information required by Item 1105 of Regulation 
AB physically in the prospectus or, if permitted, through 
incorporation by reference from an Exchange Act report.
    \11\ 17 CFR 232.312(a); see also 2004 Adopting Release, Section 
III.B.4.b.
    \12\ 2004 Adopting Release, Section III.B.4.b.
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    In October 2009, we published for public comment \13\ a proposed 
amendment to extend the temporary filing accommodation set forth in 
Rule 312 of Regulation S-T for one year so that it would apply to 
filings with respect to ABS filed on or before December 31, 2010.
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    \13\ Extension of Filing Accommodation for Static Pool 
Information in Filings With Respect to Asset-Backed Securities, 
Release No. 33-9074 (October 19, 2009) [74 FR 54767] (hereinafter, 
the ``Proposing Release'').
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    We received three comment letters that addressed the proposed 
extension.\14\ Two commenters expressed support for the Rule 312 filing 
accommodation and the proposed extension.\15\ The ASF cited the strong 
preference among both its issuer and investor members for Web-based 
presentation of static pool information due to its efficiency, utility 
and effectiveness and the current lack of an adequate filing 
alternative.\16\ The ABA Committees expressed their belief that the 
accommodation has been highly successful and of great value to 
investors.\17\ Neither the ASF nor the ABA Committees was aware of any 
difficulties that investors or other market participants had locating, 
accessing, viewing or analyzing static pool information disclosed on a 
Web site.\18\ For these reasons, among others, both the ASF and the ABA 
Committees requested that the filing accommodation be made permanent 
or, in the alternative, extended for a longer period of time.\19\ One 
commenter, in contrast, did not support the extension and suggested the 
Commission should require structured disclosure using an industry 
standard computer language.\20\
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    \14\ The public comments we received are available online at 
http://www.sec.gov/comments/s7-23-09/s72309.shtml.
    \15\ See letters from the American Securitization Forum (the 
``ASF'') and the Committee on Federal Regulation of Securities and 
the Committee on Securitization and Structured Finance of the 
Section of Business Law of the American Bar Association (the ``ABA 
Committees'').
    \16\ See letter from ASF.
    \17\ See letter from ABA Committees.
    \18\ See letters from ASF and ABA Committees.
    \19\ Id. The ASF requested a five-year extension if the rule 
could not be made permanent and the ABA Committees requested an 18 
to 24 month extension in such a case. Both the ASF and the ABA 
Committees expressed the belief that a permanent or longer extension 
would encourage continued use of the Web-based presentation by 
providing more of an incentive for issuers to make investments in 
developing and innovating Web sites for static pool disclosure. A 
longer extension would also, the ASF noted, give the Commission 
adequate time to consider alternatives.
    \20\ See letter from Paul Wilkinson. If the alternate approach 
supported by Mr. Wilkinson could not be implemented by January 1, 
2010, he recommended that any extension only last until the 
alternate approach could be implemented. As discussed more fully 
below, the staff of the Division of Corporation Finance is in the 
process of exploring the feasibility of a filing mechanism for 
static pool information that would allow the information to be filed 
with the Commission in an efficient and useful manner.
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    We are adopting as proposed a one-year extension to the temporary 
filing accommodation provided by Rule 312. Based on the staff's 
experience since Rule 312 became effective in 2006, the vast majority 
of residential mortgage-backed security issuers and a significant 
portion of ABS issuers in other asset classes have relied on the 
accommodation provided by the rule to disclose static pool information 
on an Internet Web site. Furthermore, we believe that it remains the 
case that it could be difficult to file the information electronically 
on EDGAR as it exists today and difficult for investors to use in that 
format.
    During the extension, the existing requirements of Rule 312 will 
continue to apply. Pursuant to these requirements, the registrant must 
disclose its intention to provide static pool information through a Web 
site in the prospectus included in the registration statement at the 
time of effectiveness and provide the specific Internet address where 
the static pool information is posted in the prospectus filed pursuant 
to Rule 424.\21\ The registrant must maintain such information on the 
Web site unrestricted and free of charge for a period of not less than 
five years, indicate the date of any updates or changes to the 
information, undertake to provide any person without charge, upon 
request, a copy of the information as of the date of the prospectus if 
a subsequent update or change is made to the information and retain all 
versions of the information provided on the Web site for a period of 
not less than five years in a form that permits delivery to an investor 
or the Commission. In addition, the registration statement for the ABS 
must contain an undertaking pursuant to Item 512(l) of Regulation S-K 
\22\ that the information provided on the Web site pursuant to Rule 312 
is deemed to be part of the prospectus included in the registration 
statement.\23\
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    \21\ 17 CFR 230.424.
    \22\ 17 CFR 229.512(l).
    \23\ 17 CFR 232.312. As we indicated in the 2004 Adopting 
Release, if the conditions of Rule 312 are satisfied, then the 
information will be deemed to be part of the prospectus included in 
the registration statement and thus subject to all liability 
provisions applicable to prospectuses and registration statements, 
including Section 11 of the Securities Act [15 U.S.C. 77k]. 2004 
Adopting Release, Section III.B.4.b.
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    As we noted in the Proposing Release, since the adoption of Rule 
312 in December, 2004, technological advances and expanded use of the 
Internet have enabled the Commission to adopt additional rules 
incorporating electronic communications. The Commission continues to 
recognize that, in certain circumstances and under certain conditions, 
the Internet can present a reliable and cost-effective alternative or 
supplement to traditional disclosure methods.\24\ On the other hand, we 
are mindful of the benefit of having information filed on the EDGAR 
system.
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    \24\ See, e.g., Internet Availability of Proxy Materials, 
Release No. 34-55146 (Jan. 22, 2007) [72 FR 4148] (adopting release 
for voluntary E-Proxy rules) and Internet Availability of Proxy 
Materials, Release No. 34-52926 (December 8, 2005) [70 FR 74598] 
(proposing release for voluntary E-Proxy rules). See also Enhanced 
Disclosure and New Prospectus Delivery Option for Registered Open-
End Management Investment Companies, Release No. 33-8998, Section 
III.A.4.c (Jan. 13, 2009) [74 FR 4546] (adopting Item 11(g)(2) of 
Form N-1A under the Investment Company Act of 1940 [15 U.S.C. 80a-1 
et seq.] which allows exchange-traded funds to provide premium/
discount information on a Web site rather than in a prospectus or 
annual report) and Securities Offering Reform, Release No. 33-8591, 
Section VI.B.1 (July 19, 2005) [70 FR 44722] (adopting ``access 
equals delivery'' model for final prospectus delivery).
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    As we noted in the Proposing Release, the staff of the Division of 
Corporation Finance is currently engaged in a broad

[[Page 67814]]

review of the Commission's regulation of ABS including disclosure, 
offering process, and reporting of ABS issuers. Along with this review, 
the staff of the Division of Corporation Finance is continuing to 
explore whether a filing mechanism for static pool information that 
fulfills the objectives identified above is feasible. Although we note 
the two commenters' requests that we make the filing accommodation 
permanent or extend it for a longer period of time as well as the other 
commenter's request that we immediately move to provide for structured 
disclosure using an industry standard computer language, we continue to 
believe a proposal for a longer-term solution for providing static pool 
disclosure would be better considered together with other possible 
proposals to revise the regulations governing the offer and sale of 
ABS. The one-year extension of Rule 312 that we are adopting today is 
intended to provide time to enable us to proceed in this manner.
    The Administrative Procedure Act generally requires that an agency 
publish an adopted rule in the Federal Register 30 days before it 
becomes effective. This requirement, however, does not apply if the 
agency finds good cause for making the rule effective sooner.\25\ 
Because the temporary filing accommodation expires on December 31, 
2009, we believe it is necessary to make the amendment effective 
December 31st so that there is no gap between which an issuer would be 
required to convert its static pool data into an EDGAR filing. In 
addition, this extension creates no new requirements but maintains a 
voluntary accommodation that relieves a registrant from the obligation 
to file static pool data on EDGAR, provided it makes the information 
available on a Web site. The Commission therefore believes the 
extension grants or recognizes an exemption or relieves a restriction. 
On the basis of the foregoing, the Commission finds good cause to make 
the amendment effective December 31, 2009.
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    \25\ See 5 U.S.C. 553(d).
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II. Paperwork Reduction Act

    Rule 312 of Regulation S-T was adopted in 2004 along with other new 
and amended rules and forms to address the registration, disclosure and 
reporting requirements for ABS under the Securities Act and the 
Exchange Act. In connection with this prior rulemaking, we submitted a 
request for approval of the ``collection of information'' requirements 
contained in the amendments and rules to the Office of Management and 
Budget (``OMB'') in accordance with the Paperwork Reduction Act of 1995 
(``PRA'').\26\ OMB approved these requirements.\27\
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    \26\ 44 U.S.C. 3501 et seq.
    \27\ The collections of information to which Rule 312 of 
Regulation S-T relates are ``Form S-1'' (OMB Control No. 3235-0065) 
and ``Form S-3'' (OMB Control No. 3235-0073).
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    Item 1105 of Regulation AB \28\ requires certain static pool 
information, to the extent material, to be provided in prospectuses 
included in registration statements for ABS offerings.\29\ Rule 312 is 
a temporary filing accommodation that permits the posting of the static 
pool information required by Item 1105 on an Internet Web site under 
the conditions set forth in the rule.\30\ The amendment to Rule 312 
extends the existing temporary filing accommodation provided by the 
rule for one additional year. As is the case today, issuers may choose 
whether or not to take advantage of the accommodation during the 
extension. The conditions of Rule 312 remain otherwise unchanged. The 
disclosure requirements themselves, which are contained in Forms S-1 
and S-3 under the Securities Act and require the provision of the 
information set forth in Item 1105 of Regulation AB, also remain 
unchanged. Therefore, the amendment will not result in an increase or 
decrease in the costs and burdens imposed by the ``collection of 
information'' requirements previously approved by the OMB. No commenter 
suggested the extension would impose any new paperwork burden.
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    \28\ 17 CFR 229.1105.
    \29\ See Form S-1 and Form S-3 under the Securities Act.
    \30\ 17 CFR 232.312(a).
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III. Cost-Benefit Analysis

    In this section, we examine the benefits and costs of the 
amendment. In the Proposing Release, we requested that commenters 
provide views, supporting information and estimates on the benefits and 
costs that may result from the adoption of the proposed amendment. No 
commenter addressed the cost-benefit analysis of the Proposing Release.

A. Benefits

    We initially adopted the filing accommodation provided by Rule 312 
of Regulation S-T because commenters requested flexibility in the 
presentation of required static pool information.\31\ Given the large 
amount of statistical information involved, those commenters argued for 
a Web-based approach that would allow issuers to present the 
information in an efficient manner and with greater functionality and 
utility than might be available if an EDGAR filing was required.\32\ We 
believe this greater functionality and utility has enhanced an 
investor's ability to access and analyze the static pool information 
and also removed the burden on issuers of duplicating the information 
in each prospectus as well as easing the burdens of updating such 
information.\33\ As we discussed in the 2004 Adopting Release, since 
the information is deemed to be part of the prospectus included in the 
registration statement, the rule is designed to give investors access 
to accurate and reliable information.\34\
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    \31\ See 2004 Adopting Release, Section III.B.4.b.
    \32\ Id.
    \33\ See Section I above and 2004 Adopting Release, Section V.D.
    \34\ See 2004 Adopting Release, Section III.B.4.b.
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    By extending the accommodation provided by Rule 312, these benefits 
to both issuers and investors will continue to apply. As discussed 
above, many ABS issuers rely on Rule 312 to provide static pool 
information on an Internet Web site rather than in an EDGAR filing.\35\ 
We proposed the one-year extension of Rule 312 because we do not 
believe we can implement an alternative filing mechanism by the end of 
2009 that would meet the objectives of both issuers and investors to 
present static pool information in an efficient, cost-effective form 
that would provide investors utility and functionality in terms of 
accessing and analyzing that information. Therefore, if we did not 
amend Rule 312 to extend its application as we are doing today, static 
pool information would have been required in EDGAR filings beginning on 
January 1, 2010. We believe this would have resulted in costs for 
issuers as they attempt to adjust their procedures in a short period of 
time in order to present the information in a format acceptable to the 
EDGAR system and could have resulted in costs to investors if the 
information filed on EDGAR was presented in a less useful format.
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    \35\ See Section I above.
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    By extending Rule 312, we seek to avoid these potentially negative 
effects for issuers and investors as we continue to explore the best 
format in which to require the filing of static pool information. As 
indicated above, the staff of the Division of Corporation Finance is 
considering this issue along with other proposals addressing the 
disclosure, offering process and reporting of ABS issuers.

B. Costs

    We do not believe the one-year extension of the Rule 312

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accommodation will impose any new or increased costs on issuers. In the 
Cost-Benefit Analysis section of the 2004 Adopting Release, we noted 
that ABS issuers electing the Web-based accommodation provided by Rule 
312 would incur costs related to the maintenance and retention of 
static pool information posted on a Web site and might also incur 
start-up costs.\36\ While it is likely that certain of those costs will 
continue to impact ABS issuers that elect the Web-based approach during 
the extension period, we do not believe the amendment will impose any 
new or increased costs for ABS issuers because it does not change any 
other conditions to the accommodation or the underlying filing and 
disclosure obligations. As a result of the extension of the 
accommodation, ABS issuers will be able to continue their current 
practices for an additional year.
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    \36\ See 2004 Adopting Release, Section V.D.
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    For investors, there may be costs associated with the static pool 
information not being electronically filed with the Commission. For 
example, when information is electronically filed with the Commission, 
investors and staff can access the information from a single, 
centralized location, the EDGAR Web site. We think these costs are 
mitigated by the fact that ABS issuers relying on the Rule 312 
accommodation must ensure that the prospectus for the offering contains 
the Internet Web site address where the static pool information is 
posted, the Web site must be unrestricted and free of charge, such 
information must remain on the Internet Web site for five years with 
any changes clearly indicated and the issuer must undertake to provide 
the information to any person free of charge, upon request, if a 
subsequent update or change is made. Furthermore, because the 
information is deemed included in the prospectus under Rule 312, it is 
subject to all liability provisions applicable to prospectuses and 
registration statements.
    Investors and issuers may have incurred costs to adjust their 
processes in anticipation of the lapse of the Rule 312 accommodation 
and potential reversion to a requirement to file static pool 
information on EDGAR. In this case, benefits to investors or issuers of 
not having to change their procedures regarding static pool reporting 
in a short time frame would be diminished by any costs already incurred 
in anticipation of the change. We believe such anticipatory action and 
any associated costs are minimal.

IV. Consideration of Impact on the Economy, Burden on Competition, and 
Promotion of Efficiency, Competition, and Capital Formation

    Section 2(b) of the Securities Act requires us, when engaging in 
rulemaking where we are required to consider or determine whether an 
action is necessary or appropriate in the public interest, to also 
consider whether the action will promote efficiency, competition, and 
capital formation.
    As discussed in greater detail above, Rule 312 of Regulation S-T 
was adopted as a temporary filing accommodation so that issuers of ABS 
could present static pool information on an Internet Web site. The 
amendment to Rule 312 of Regulation S-T that we are adopting today 
extends its application for one year. We are not changing the 
conditions of Rule 312 or the disclosure obligations to which it 
applies. We do not believe that the one-year extension will impose a 
burden on competition. We also believe the extension of the filing 
accommodation will continue to promote efficiency and capital formation 
by permitting ABS issuers to disclose static pool information in a 
format that is more useful to investors and cost-effective and not 
unduly burdensome for ABS issuers.
    We requested comment on whether the proposed amendment, if adopted, 
would promote efficiency, competition, and capital formation. We did 
not receive any comments directly responding to this request.

V. Regulatory Flexibility Analysis Certification

    In Part VI of the Proposing Release, the Commission certified 
pursuant to Section 605(b) of the Regulatory Flexibility Act \37\ that 
the proposed amendment to Rule 312 of Regulation S-T would not have a 
significant economic impact on a substantial number of small entities. 
While the Commission encouraged written comments regarding this 
certification, no commenters responded to this request or indicated 
that the amendment as adopted would have a significant economic impact 
on a substantial number of small entities.
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    \37\ 5 U.S.C. 605(b).
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VI. Statutory Authority and Text of the Final Amendment

    The amendment described is being adopted under the authority set 
forth in Sections 6, 7, 10, 19 and 28 of the Securities Act of 1933 (15 
U.S.C. 77f, 77g, 77j, 77s, and 77z-3).

List of Subjects

17 CFR Part 232

    Reporting and recordkeeping requirements, Securities.

Text of the Amendment

0
For the reasons set out in the preamble, the Commission hereby amends 
title 17, chapter II, of the Code of Federal Regulations as follows:

PART 232--REGULATION S-T--GENERAL RULES AND REGULATIONS FOR 
ELECTRONIC FILINGS

0
1. The authority citation for part 232 continues to read, in part, as 
follows:

    Authority: 15 U.S.C. 77f, 77g, 77h, 77j, 77s(a), 77z-3, 
77sss(a), 78c(b), 78l, 78m, 78n, 78o(d), 78w(a), 78ll, 80a-6(c), 
80a-8, 80a-29, 80a-30, 80a-37, and 7201 et seq.; and 18 U.S.C. 1350.
* * * * *


Sec.  232.312  [Amended]

0
2. Amend Sec.  232.312 by removing ``December 31, 2009'' and in its 
place adding ``December 31, 2010'' in the first sentence of paragraph 
(a).

    By the Commission.

    Dated: December 15, 2009.
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-30185 Filed 12-18-09; 8:45 am]
BILLING CODE 8011-01-P