Prospectus Delivery; Securities Transactions Settlement

SUMMARY: The Commission is proposing revisions to its rules and forms

and a new rule under the Securities Act of 1933 in order to implement

two solutions to prospectus delivery issues arising in connection with

the change to T+3 securities transaction settlement. The proposals are

based on recommendations submitted by representatives of financial

intermediaries. In addition, the Commission is proposing to amend an

exemption from T+3 clearance and settlement for purchases and sales of

securities pursuant to a firm commitment offering. Such exemption is

proposed to be limited to offerings of asset-backed securities and

structured securities and would provide an extended settlement time

frame to firm commitment offerings under certain conditions.

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

ADDRESSES: Comment letters should refer to File Number S7-7-95 and be

submitted in triplicate to Jonathan G. Katz, Secretary, U.S. Securities

and Exchange Commission, 450 Fifth Street, N.W., Mail Stop 6-1,

Washington, D.C. 20549. The Commission will make all comments available

for public inspection and copying in its Public Reference Room at the

same address.

FOR FURTHER INFORMATION CONTACT: Anita Klein, Michael Mitchell or

Joseph Babits, (202) 942-2900, Division of Corporation Finance; and,

with regard to questions concerning the T+3 settlement proposals, Jerry

W. Carpenter or Christine Sibille, (202) 942-4187, Division of Market

Regulation; and, with regard to questions concerning Rule 15c2-8

proposals, Alexander Dill, (202) 942-4892, Division of Market

Regulation; and, with regard to questions concerning the application of

the proposal to investment companies, Kathleen Clarke, (202) 942-0721,

Division of Investment Management, U.S. Securities and Exchange

Commission, Washington, D.C. 20549.

SUPPLEMENTARY INFORMATION:

I. Introduction and Background

Under the Securities Act of 1933 (the ``Securities Act''),1 a

prospectus used after a registration statement has been filed must meet

the disclosure requirements of Section 10 of the Securities Act.2

The term ``prospectus'' is defined broadly to include any written

communication that ``offers a security for sale or confirms the sale of

any security.'' 3 Because information generally contained in a

confirmation typically does not satisfy the disclosure requirements of

Section 10, a prospectus meeting Section 10(a) requirements must be

sent or given prior to or at the same time with the confirmation.4

In addition, the Securities Act prohibits persons from sending

securities through interstate commerce ``for the purpose of sale or for

delivery after sale, unless accompanied or preceded by a prospectus

that meets the requirements'' of Section 10(a).5

\1\15 U.S.C. 77a et seq.

\2\15 U.S.C. 77j. See also Section 5(b)(1) of the Securities

Act, 15 U.S.C. Sec. 77e(b)(1).

\3\See Section 2(10) of the Securities Act, 15 U.S.C. 77b(10).

\4\The Securities Act provides that ``a communication provided

after the effective date of the registration statement * * * shall

not be deemed a prospectus if it is proved that prior to or at the

same time with such communication a written prospectus meeting the

requirements of'' Section 10(a) is provided. See Section 2(10)(a) of

the Securities Act, 15 U.S.C. 77b(10)(a).

A written confirmation must be sent to a purchaser prior to

settlement pursuant to Rule 10b-10 under the Securities Exchange Act

of 1934, 17 CFR 240.10b-10.

\5\See Section 5(b)(2) of the Securities Act, 15 U.S.C.

77e(b)(2).

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

On October 6, 1993, the Commission adopted Rule 15c6-1 under the

Securities Exchange Act of 1934 (the ``Exchange Act'')6 to

establish three business days after trade (hereinafter, ``T+3'') as the

standard settlement time frame for most broker-dealer trades.7

Rule 15c6-1 covers all securities other than exempted securities,

government securities, municipal securities,8 commercial paper,

bankers' acceptances, or commercial bills. That Rule is scheduled to

become effective on June 7, 1995.9

\6\15 U.S.C. 78a et seq.

\7\17 CFR 240.15c6-1. See Exchange Act Release No. 33023 (Oct.

6, 1993) [58 FR 52891].

\8\The Commission has published notice of a proposed rule change

of the Municipal Securities Rulemaking Board that will require

transactions in municipal securities to settle by T+3. Exchange Act

Release No. 34541 (Aug. 17, 1994) [59 FR 43603].

\9\The effective date was changed from June 1, 1995 to June 7,

1995 in Exchange Act Release No. 34952 (Nov. 9, 1994) [59 FR 59137].

When Rule 15c6-1 was proposed in February 1993, it provided that

public offerings of debt and equity securities would have to be settled

by T+3. Commentators on the proposal raised concerns that new issues of

securities10 could not be settled by T+3 because the prospectus

could not be printed prior to the trade date (the date on which the

securities are priced) and therefore the prospectus printing and

delivery process could not be completed within a T+3 time frame. To

address those concerns, Rule 15c6-1 was modified upon adoption to

provide a limited exemption from T+3 for the sale of securities for

cash pursuant to firm commitment offerings registered under the

Securities Act.11 Accordingly, an underwriter can set any

settlement period for such offerings. Resales of such securities, other

than the sale to an initial purchaser by a broker-dealer participating

in such offering, remain subject to the T+3 time frame.

\10\The term ``new issues'' is used herein to refer to both

initial public offerings by issuers and offerings of additional

securities by reporting companies.

\11\Rule 15c6-1 also contains a specific exemption for sales of

unlisted limited partnership interests.

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

Since the adoption of Rule 15c6-1, members of the brokerage

community have suggested that the Commission eliminate this exemption

from T+3 and ease the problems associated with prospectus delivery

within T+3 by other means. The primary reasons expressed for requiring

T+3 settlement of such offerings are: (i) the secondary market for a

new issue may be subject to greater price fluctuations or instability,

which in turn may expose underwriters, dealers and investors to

disproportionate credit and market risk; and (ii) the bifurcated

settlement cycle created for initial sales and resales of new issues

would be disruptive to broker-dealer operations and to the clearance

and settlement system. In particular, it has been noted that if a

purchaser of a new issue sells on the first or second day after

pricing, the purchaser's broker will not be able to settle with the

buyer's broker on a T+3 schedule because the securities will not yet be

available for settlement purposes. As a result, all such trades by the

purchasers would ``fail'' and result in expense, inefficiencies and

greater settlement risk for all participants.12 A bifurcated

settlement cycle also may require the maintenance of separate computer

systems and additional internal procedures.

\12\A system for when-issued trading could be developed to help

alleviate such failed transactions, but commentators have suggested

that when-issued trading would not be a solution since, among other

reasons, many institutional customers are unable to engage in when-

issued trading. See letter from Joseph McLaughlin, infra footnote

15. [[Page 10725]]

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

According to the brokerage community, the primary reason that

settlement within T+3 currently is not feasible for many new issues is

the amount of time it takes to print and deliver prospectuses. Some of

these timing difficulties can be expected to be alleviated as markets

increasingly rely on electronic delivery of materials. In recognition

of that development, the Commission staff has recently issued an

interpretive letter to facilitate the use of electronic transmission to

satisfy prospectus delivery requirements.13 Until the markets

create systems that make electronic delivery the method of choice, and

most investors have the means to accept electronic delivery, however,

the Commission must address delivery of prospectuses in paper

form.14

\13\See Brown & Wood (Feb. 17, 1995). An earlier no-action

letter granted relief in connection with the use of electronic means

to transmit confirmations. See Thomson Financial Services, Inc.

(Oct. 8, 1993).

\14\The Division of Corporation Finance staff, in addition to

issuing the Brown & Wood letter, is considering generally delivery

under the Securities Act of prospectuses through other non-paper

media (e.g., audiotapes, videotapes, facsimile, directed electronic

mail, and CD ROMs). The staff anticipates submitting to the

Commission in the near future recommendations intended both to

facilitate compliance with the Securities Act's prospectus delivery

requirements and to encourage continued technological developments

of non-paper delivery media.

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

While multiple recommendations have been made that the Commission

eliminate the existing T+3 exemption and facilitate the prospectus

delivery process, members of the brokerage community are not in

unanimity as to how the prospectus delivery process could best be

expedited. Two proposals by members of the brokerage community have

been presented for Commission consideration.15 Those proposals

recommend markedly different solutions to accomplishing prospectus

delivery in a T+3 time frame.16

\15\See letter from Robin Shelby, CS First Boston Corporation;

Goldman Sachs & Co.; Steven Barkenfield, Lehman Brothers Inc.; and

John Ander, Morgan Stanley & Co. Inc. to Anita Klein, Securities and

Exchange Commission, dated Jan. 24, 1995 and letter from Goldman

Sachs to Anita Klein, Securities and Exchange Commission, dated Feb.

3, 1995. See also letter from Joseph McLaughlin, Brown & Wood, on

behalf of the Securities Industry Association, to Anita Klein,

Securities and Exchange Commission, dated Feb. 1, 1995. Copies of

these proposals are available for inspection and duplication at the

Commission's Public Reference Room, 450 Fifth St. NW, Washington,

D.C. 20549, File Number S7-7-95.

\16\Today's proposal is not the first time the Commission has

addressed concerns that the settlement schedule is difficult to meet

in connection with firm commitment offerings of securities for cash.

In 1987, the Commission issued a release, in response to industry

requests, making alternative proposals to expedite the prospectus

delivery process. See Securities Act Release No. 6727 (July 31,

1987) [52 FR 29206]. Those proposals engendered opposition from

commentators and were not adopted by the Commission.

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

The approaches reflected in the two proposals are not mutually

exclusive methods of expediting prospectus delivery. The Commission

therefore is proposing amendments to its rules that would accomplish

both proposals. Comment is sought regarding which alternative should be

implemented or whether the Commission should implement both proposals

and thereby allow market participants a choice as to which approach to

use in any given offering. Alternatively, would some other combination

of the proposals best expedite prospectus delivery? Comment also is

solicited with respect to whether there is a need for any Commission

action with respect to prospectus delivery to accommodate T+3 clearance

and settlement.

II. The Prospectus Delivery Proposals

A. The Four Firms Proposal and Related Commission Proposals

The first proposal to facilitate T+3 settlement was made by a group

of four firms: CS First Boston Corporation, Goldman, Sachs & Co.,

Lehman Brothers Inc. and Morgan Stanley & Co. Incorporated

(hereinafter, the ``Four Firms Proposal''). The Four Firms Proposal is

premised on the view that the process of preparation and delivery of

prospectuses in new issues can be accelerated sufficiently to comply

with T+3 if six steps are taken by the Commission. According to the

proponents, these steps would modify the registration process in ways

that would facilitate the printing of a significant portion of the

final prospectus prior to pricing, and therefore accommodate compliance

with T+3. Certain aspects of the Four Firms Proposal also are proposed

to apply to offerings of investment company shares. Comment is

requested on whether some or all of those aspects of the Four Firms

Proposal should apply to investment companies.

1. Re-ordering of Prospectuses

The Four Firms Proposal first suggests that the contents of

prospectuses could be re-ordered so that all portions likely to be

subject to change at the time of pricing are placed together at the

front. The Four Firms Proposal indicates that this change would

expedite printing of the prospectus because the bulk of it is unlikely

to change as a result of pricing and, therefore, could be printed in

advance of pricing.

In practice, prospectus information has been organized roughly in

the order in which the Commission forms set forth the required items of

disclosure. While information contained in a prospectus need not follow

the order of the items in the form,17 some Commission rules

currently require that certain information is to be included in a

specified part of the prospectus, or in a specified order.18

\17\See Rule 421(a) under the Securities Act, 17 CFR 230.421(a).

Rule 421(a) does require that information in a prospectus be set

forth in a fashion so as not to obscure any of the required

information or any information necessary to keep the required

information from being incomplete or misleading.

\18\Rules specifying information required on the cover pages of

the prospectus are: (i) Item 501(c) of Regulation S-K, 17 CFR

229.501(c) (information that must be contained on the outside front

cover page of the prospectus); and (ii) Item 502 of Regulation S-K,

17 CFR 229.502 (information that must be contained on the inside

front cover page and the outside back cover page). See also Item 501

and Item 502 of Regulation S-B, 17 CFR 228.501 and 228.502.

Rules specifying information required in the forepart of the

prospectus are: (i) Item 503(b) of Regulation S-K, 17 CFR 229.503(b)

(mailing address and telephone number of the registrant's executive

offices); and (ii) Item 503(c) of Regulation S-K, 17 CFR 229.503(c)

(a discussion of the principal risk factors related to the

offering). See also Item 503(b) and Item 503(c) of Regulation S-B,

17 CFR 228.503(b) and 228.503(c).

Other rules, certain Securities Act Industry Guides, and a

Commission release, which are applicable only to limited categories

of transactions, specify location or order of prospectus

information: (i) Items 903(a) and 904(a) of Regulation S-K, 17 CFR

229.903(a) and 229.904(a) specify, respectively, that a summary of a

roll-up transaction be included in the forepart of the disclosure

document and that, immediately following the summary, a reasonably

detailed description of each material risk and effect of the roll-up

transaction be included; (ii) Securities Act Industry Guide 4, 17

CFR 229.801(d), for oil and gas programs, specifies that disclosure

throughout the prospectus should appear in the sequence indicated;

(iii) Securities Act Industry Guide 5, 17 CFR 229.801(e), relating

to interests in real estate limited partnerships, specifies that

suitability standards, if any, to be utilized by the registrant

should be described immediately following the cover page; (iv)

Securities Act Release No. 6900 (June 17, 1991) [56 FR 28979],

relating to limited partnerships, requires that the forepart of the

prospectus begin with a cover page, a table of contents, a summary,

disclosure of risk factors and suitability standards, and requires

that a glossary be located in the back of the prospectus.

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

Under the proposal, the Commission would not raise objections if a

prospectus is re-ordered to place the sections likely to change at the

front in order to expedite the printing process,19 provided that

the cover pages of the prospectus continue to contain the information

currently specified by Commission rules.20 In addition, any

[[Page 10726]] summary section, which logically can appear only near

the front of the prospectus, and the discussion of risk factors must

remain in the forepart of the prospectus, although those sections may

immediately follow a ``pricing information'' section which would

include disclosure likely to be subject to change at pricing, such as:

use of proceeds, the plan of distribution and capitalization.21

Accordingly, certain Commission rules that specify the location of

other information in the forepart of the prospectus, or in a specified

order within the prospectus, are proposed to be eliminated.22 No

revision to the remaining order and location rules, which relate to

specific and limited classes of transactions, are proposed at this

time.23 Comment is requested as to whether the Commission should

require that the summary and risk factors disclosure immediately follow

the cover page of the prospectus. In addition, should other rules that

would continue to specify order or location also be revised to

accommodate expedited printing of prospectuses?

\19\Of course, the information set forth in the prospectus must

nevertheless be presented in a clear, concise and understandable

fashion, as required by Rule 421(b) under the Securities Act, 17 CFR

230.421(b). See also Rule 421(a), supra footnote 17.

\20\But see proposed revision to Item 502(f) of Regulation S-K,

17 CFR 229.502(f).

\21\See proposed revisions to Item 503(c) of Regulation S-K, 17

CFR 229.503(c) and Item 503(c) of Regulation S-B, 17 CFR 228.503(c).

\22\See proposed revisions to Item 503(b) of Regulation S-K, 17

CFR 229.503(b), Item 503(b) of Regulation S-B, 17 CFR 228.503(b) and

Securities Act Industry Guide 4, 17 CFR 229.801(d).

\23\The requirements not proposed to be changed are those set

forth supra footnote 18 other than the rules set forth supra

footnotes 21 and 22.

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

2. Extension of Pricing Period

Under Rule 430A under the Securities Act,24 if a prospectus

supplement containing pricing and other information omitted from a

registration statement is not filed by the later of five business days

after the effective date of the registration statement or any post-

effective amendment thereto, the information omitted must be filed in a

post-effective amendment rather than under Rule 424(b). Unlike a filing

under Rule 424(b), a post-effective amendment must be declared

effective prior to any sale of the securities. The second modification

suggested by the Four Firms Proposal is a revision to Rule 430A to

extend, from five business days to ten business days, the period during

which an offering in reliance on that rule may be priced and a

supplement filed. According to the Four Firms Proposal, issuers delay

the time at which they seek to have registration statements effective,

and therefore printing of the prospectus, because they have only five

days thereafter in which to price and file the required pricing

supplement. By extending the time in which to file the pricing

supplement, the Commission would encourage issuers to have their

filings become effective earlier, and consequently start the printing

earlier.

\24\17 CFR 230.430A.

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

The principal purpose of the five business day limitation was to

ensure that delays in pricing securities under Rule 430A would not

permit delayed offerings to be made by persons that do not meet the

criteria for use of shelf registration.25 An extension of the

five-day period would not appear to defeat the purpose of that

limitation. The Commission therefore proposes to extend the period

during which the pricing supplement may be filed from five business

days to ten business days after the effective date of the registration

statement. Comment is requested as to whether any problems could arise

from the extension, and whether such extension would in fact encourage

earlier printing of all or a portion of the prospectus. Comment also is

requested as to whether a longer period, such as 15, 25 or 30 business

days, would provide additional flexibility and further expedite

prospectus delivery for purposes of complying with T+3.

\25\See Securities Act Release No. 6714 (May 27, 1987) [52 FR

21252].

3. Changes in Offering Size and Estimated Price Range

The Four Firms Proposal also states that delays in printing

prospectuses in 430A offerings arise because a post-effective amendment

must be filed if there is a material decrease in the amount of

securities offered or the pricing of the securities falls outside the

range estimated in the effective registration statement. Printing and

sales are delayed until such amendment is declared effective.

Similarly, where participants decide to increase the size of the

offering, a new registration statement to register the additional

securities must be filed and declared effective.26 The Four Firms

Proposal suggests that no filing with the Commission be required if the

size of the offering is increased or decreased up to 20% or the price

deviates from the estimated price range by up to 20%.

\26\These increases are most common in the context of an initial

public offering, since the lack of an existing market makes it

difficult to estimate market demand and the appropriate price for

such securities.

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

a. Increases in Offering Size. Where a registrant wishes to offer

and sell more securities than were included in the registration

statement at the time it became effective, the Securities Act requires

that it register the additional securities.27 The Commission

understands that the determination of offering size, particularly in

certain market climates, can change at the time when prospectus

printing is imminent. In light of the timing difficulties presented by

that situation, the Commission is proposing changes to facilitate

expedited registration in a Rule 430A offering if it is done solely for

the purpose of increasing an offering size by up to 20%.

\27\See Section 6 of the Securities Act, 15 U.S.C. 77f, and Rule

413 under the Securities Act, 17 CFR 230.413.

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

Under the proposal, a short-form version of such a registration

statement would be accepted.28 Such registration would consist of:

the facing page, a statement incorporating the contents of the earlier

registration statement relating to the offering, all required consents

and opinions, the signature page, and any information required in the

new registration statement that is not in the earlier registration

statement.29 To ensure that no delay would result from Commission

processing, such registration statements would be made effective

automatically upon filing.30 Such a short-form registration

statement would be deemed to be a part of the earlier registration

statement relating to the offering.31

\28\See proposed revisions to General Instructions of Forms SB-

1, SB-2, S-1, S-2, S-3, S-11, F-1, F-2 and F-3.

\29\Information regarding the effect of the increase in offering

size may be required in the new registration statement and would not

have been contained in the earlier registration statement.

A similar short-form procedure was adopted by the Commission for

registration of additional securities for employee benefit plans.

See General Instruction E to Form S-8.

\30\See proposed Rule 462(b), 17 CFR 230.462(b). This

registration statement would be required to be filed within two

business days of the pricing of the securities registered on the

earlier registration statement. While indications of interest may

exceed the amount of securities registered in the earlier

registration statement, no offers would be permitted prior to the

filing of the registration statement with respect to the additional

20% and no sales of the additional 20% would be permitted prior to

the effectiveness thereof.

\31\See newly proposed Rule 430A(b), 17 CFR 230.430A(b).

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

To expedite preparation of such registration statements, the

Commission also would provide that duplicated or facsimile versions of

manual signatures could be included on the signature page of such

registration statements, rather than the manual signatures currently

required.32 In addition, opinions and consents required in such

registration statements could be incorporated by reference to the

extent that the opinions [[Page 10727]] and consents contained in the

earlier effective registration statement were drafted to apply to any

subsequent registration statement filed solely to increase the offering

up to the 20% threshold.33 Where consents cannot be incorporated,

duplicated or facsimile versions of manual signatures would be accepted

in the new consents required to be filed.34 Comment is requested

with regard to whether some or all of these changes to facilitate

expedited registration to increase a Rule 430A offering should be

extended to all registered offerings.

\32\See proposed revisions to Rule 402 under the Securities Act,

17 CFR 230.402. In addition, Items 601(b)(24) of Regulations S-K and

S-B, 17 CFR 229.601(b)(24) and 17 CFR 228.601(b)(24), are proposed

to be revised so that a power of attorney included in the earlier

registration statement relating to the offering may also relate to

the short-form registration statement filed to register the

additional securities.

\33\See Rule 411(c) under the Securities Act, 17 CFR 230.411(c),

proposed Rule 439(b) under the Securities Act, 17 CFR 230.439(b),

and proposed changes to General Instructions of Forms SB-1, SB-2, S-

1, S-2, S-3, S-11, F-1, F-2 and F-3.

\34\See proposed changes to Rules 402 and 439 under the

Securities Act, 17 CFR 230.402 and 230.439.

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

The Commission also is proposing to increase registrants'

flexibility with respect to the amount of securities registered in Rule

430A offerings and thereby minimize the instances in which an increase

in offering size results in the need to file a new registration

statement. Such offerings would be permitted to be registered by

specifying only the title of the class of securities to be registered

and the proposed maximum aggregate offering price in the ``Calculation

of Registration Fee'' section.35 The amount of securities to be

registered and the proposed maximum offering price per unit would no

longer be required to be set forth.36

\35\See proposed revisions to Rule 457(o) under the Securities

Act, 17 CFR 230.457(o). Such flexibility already is provided in

connection with unallocated shelf registration statements.

\36\In most non-shelf offerings, such information currently is

required to be included on the cover page of the registration

statement. See, e.g., the ``Calculation of Registration Fee''

section in Form S-1. The registrant would continue to be required in

Rule 430A offerings to specify in the prospectus, however, the

amount of securities offered and, where the registrant is not a

reporting company, a bona fide estimate of the range of the maximum

offering price.

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

Under the proposal, an issuer would register a specified dollar

amount of a class of securities, such as $50 million of common stock,

and would not be required to register more if the number of shares to

be offered was increased, unless the aggregate amount of the offering

would exceed the total dollar amount registered. If registrants

register a dollar amount greater than what is used for the offering,

Rule 429 under the Securities Act could be used to save any amount of

the registration fee paid to the Commission for the remaining dollar

amount. Under Rule 429, the registrant, in a new registration statement

filed in the future for another offering of that class of securities,

could simply indicate that part of the registration fee had been paid

previously in connection with the earlier registration. Comment is

requested with regard to whether the flexibility provided by specifying

the dollar amount of the class of securities registered should be

extended to all registered offerings.

b. Changes in Offering Size; Deviation from Price Range. The

Commission also is proposing to address the concerns raised in the Four

Firms Proposal with respect to filings resulting from a 20% decrease of

the offering size or a 20% deviation from the estimated price range.

Currently, a post-effective amendment is not required to be filed where

there is a decrease in volume of securities offered or a price chosen

that is outside the disclosed estimated price range, unless the volume

decrease or price change would materially change the disclosure

included in the registration statement at the time of

effectiveness.37

\37\See Securities Act Release No. 6964 (Oct. 22, 1992) [57 FR

48970] for a discussion of the materiality standard as it applies to

these changes.

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

The proposal would provide that a post-effective amendment need not

be filed if there is a decrease in the offering size of up to 20% or a

deviation in price from the estimated price range of up to 20%.38

In addition, the proposal would provide that, where an increase of up

to 20% in the offering size would not require additional securities to

be registered, such an increase also would not result in the need to

file a post-effective amendment.39 Comment is requested with

respect to whether lower thresholds, such as 15%, or higher thresholds,

such as 25%, should be used. Commenters also should consider whether

this proposal would facilitate non-Rule 430A offerings and should be

extended to those offerings as well. While the proposal contemplates

that no post-effective amendment need be filed, issuers would continue

to be responsible for evaluating the effect of such a volume change or

price deviation on the accuracy and completeness of disclosure made to

investors, including disclosure regarding the use of offering proceeds,

dilution and debt coverage.

\38\See proposed revision to Instruction to Paragraph (a) of

Rule 430A, 17 CFR 230.430A. As proposed, a change or deviation

beyond the 20% threshold would continue to require a post-effective

amendment only if it materially changes the previous disclosure.

\39\Id.

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

4. Immediate Takedowns from a Shelf Registration

The Four Firms Proposal also requests that the Commission permit

immediate takedowns after a shelf registration statement becomes

effective. Immediate offerings from an effective shelf registration

statement currently are permitted. At the time of effectiveness, the

shelf registration statement must accurately reflect all information

known. If an offering of securities is certain at the time the

registration statement becomes effective, the relevant information

(e.g., description of securities, plan of distribution and use of

proceeds) must be disclosed and the Rule 430A undertakings should be

included, if the issuer wants Rule 430A pricing flexibility.

Accordingly, no rule amendments are required to address this request.

5. Acceleration of Effectiveness

The Four Firms Proposal also recommends that requests to accelerate

effectiveness of registration statements be accepted by fax

transmission. Rule revisions are proposed to allow such

transmissions.40 The Four Firms Proposal also suggests that the

Commission accept oral acceleration requests. Rule revisions also are

proposed to permit oral requests for acceleration to be made, provided

that a version of the registration statement filed with the Commission

is accompanied by a letter indicating that the registrant and the

managing underwriter may make oral requests for acceleration and that

they are aware of their obligations under the Securities Act.41

Comment is requested regarding whether oral acceleration requests

present greater risks of being transmitted by persons without the

authority to do so, or being transmitted without the knowledge of all

participants in the offering. If so, should written requests continue

to be required?

\40\See Securities Act Rule 461(a), 17 CFR 230.461(a). The

facsimile or duplicate version need not be followed by transmission

of the manually signed version to the Commission.

\41\See Securities Act Rule 461(a), 17 CFR 230.461(a). The

liability of persons who sign the registration statement, the

underwriters and others under Section 11(a) of the Securities Act,

15 U.S.C. Sec. 77k(a), is based upon the registration statement at

the time it becomes effective.

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

6. Four-Day Settlement Period

Finally, the Four Firms Proposal suggests that Rule 15c6-1 be

amended to provide that, if the offering is priced after the close of

the market, payment of funds and delivery of securities may occur not

later than the fourth business day thereafter (``T+4''). When such

securities are priced late in the day, it is difficult to print the

final prospectus for delivery by T+3. Further, the majority of

secondary trading in the securities generally does not begin until

[[Page 10728]] the opening of the market on the next business day.

Thus, for these offerings there is less concern about an increase in

failed transactions from secondary market trading or the need for

special systems to accommodate two days of when-issued trading in order

to effect delivery of securities in secondary market trades. The Four

Firms are of the view that only minor systems modifications would be

needed to accommodate a T+4 cycle, so the concerns previously expressed

by the industry about the costs of maintaining systems for T+3 for all

purposes except firm commitment offerings is reduced substantially.

The Commission is proposing to revise Rule 15c6-1 to establish T+4

as the standard settlement cycle for sales in connection with firm

commitment offerings priced after the market closed and invites comment

as to whether such a T+4 settlement period is workable. Specifically,

would this period create confusion in the marketplace?

Some industry participants may believe that a T+4 requirement for

firm commitment offerings is not sufficiently flexible. As an

alternative, the Commission is publishing for comment a provision that

would permit the settlement cycle for a firm commitment offering to be

set for any period equal to or less than T+5.42 Rule 15c6-1(a)

contains an override provision that permits the parties to a contract

to establish an alternate settlement time frame if expressly agreed to

at the time of the transaction. In the release adopting the Rule 15c6-

1, the Commission stated that this provision was not intended to permit

broker-dealers to specify before execution of specific trades that a

group of trades will settle in a time frame other than T+3.

\42\See proposed Rule 15c6-1(e), 17 CFR 240.15c6-1(e).

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

If a situation occurs that requires more time for settlement of a

firm commitment offering, it may be onerous for every broker-dealer in

the offering to expressly set an alternate time frame for each

individual trade. The Commission invites comment as to whether it would

be appropriate to expand the override provision to allow the managing

underwriter to establish T+3, T+4, or T+5 as the settlement time frame

for the entire offering.43 The underwriter would be required to

provide notice of its intent to set an alternate time frame by sending

written notice to prospective purchasers on or before the date the

securities are priced and by providing notice of the alternate time

frame to an exchange where the securities are listed or a registered

securities association through which quotations are disseminated.

Additionally, broker-dealers participating in the offering would retain

their ability to use the specific trade override provision. Commenters

are requested to provide comments on the benefits and drawbacks to this

approach, including whether such an amendment would create uncertainty

in the marketplace.

\43\This provision will be available for firm commitment

offerings subject to a T+3 settlement time frame under paragraph (a)

of Rule 15c6-1, 17 CFR 240.15c6-1(a), and for firm commitment

offerings subject to a T+4 settlement time frame under paragraph (d)

of Rule 15c6-1, 17 CFR 240.15c6-1(d).

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

What are the relative benefits and drawbacks of the proposal

establishing T+4 as the standard settlement cycle for offerings priced

after the close of the market and the proposal giving underwriters the

ability to select an alternate trade date? Would adoption of the first

proposal make it unnecessary to adopt the second proposal? Should T+3

or T+4 be the standard for offerings that are priced after the close of

the market?

B. The SIA Proposal and Related Commission Proposals

In the other proposal received by the Commission, the Securities

Industry Association has recommended that the Commission adopt a rule

allowing prospectus information to be delivered without the use of the

traditional final prospectus (hereinafter, the ``SIA Proposal''). Where

short-form registration44 is not used, the SIA Proposal would

provide that all required prospectus information be delivered to

investors in the preliminary prospectus traditionally disseminated and,

if necessary, a supplementing memorandum.45 This supplementing

memorandum would either set forth or summarize: (i) previously

undisclosed information describing the registered securities (other

than certain price-related information contained in the

confirmation);46 and (ii) previously undisclosed actual or

anticipated changes between the preliminary prospectus circulated to

investors and the final prospectus filed with the Commission.47

\44\Short-form registration is used herein to refer to

registration on Commission Forms S-3 or F-3.

\45\``Preliminary prospectus'' is used herein to refer to either

a preliminary prospectus used in reliance on Rule 430, 17 CFR

230.430, or a prospectus filed in accordance with Rule 430A(a), 17

CFR 230.430A(a), which omits specified price-related information.

\46\This price-related information may be omitted from the

registration statement at the time it is declared effective pursuant

to Rule 430A under the Securities Act. The description of securities

would be made in accordance with Item 202 of Regulation S-K, 17 CFR

229.202, or be a summary of such information.

\47\The final prospectus filed with the Commission would be the

prospectus contained in the registration statement at the time it

becomes effective, as modified subsequently by any prospectus filed

pursuant to Rule 424(b), 17 CFR 230.424(b).

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

For securities offerings that use short-form registration, the SIA

Proposal contemplates different methods of delivery depending upon

whether or not shelf registration is used.48 For shelf offerings,

the SIA Proposal would require delivery of the base prospectus49

contained in the registration statement at the time it is declared

effective and an abbreviated supplementing memorandum.50 The

abbreviated supplementing memorandum in that case would set forth or

summarize only a description of the material changes in the

registrant's affairs pursuant to Item 11 of Form S-3 or Form F-3

(``Item 11 information'') that have not been disclosed in its Exchange

Act reports. For non-shelf offerings using short-form registration, the

SIA Proposal would require delivery of only an abbreviated

supplementing memorandum describing Item 11 information. A preliminary

prospectus would be delivered only at the issuer's discretion.

Supplementing memoranda and abbreviated supplementing memoranda used

under the SIA Proposal would be required to be filed with the

Commission within two business days after first being sent to

investors.

\48\``Shelf registration'' is used herein to refer to

registration of a delayed offering pursuant to Rule 415(a)(1)(x)

under the Securities Act, 17 CFR 230.415(a)(1)(x).

\49\``Base prospectus'' is used herein to refer to a prospectus

contained in a registration statement at the time of effectiveness

that omits information that is not yet known concerning a delayed

offering pursuant to Rule 415(a)(1)(x), 17 CFR 230.415(a)(1)(x).

\50\For medium-term note programs, however, any program

supplement also would be delivered under the SIA proposal.

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

The Commission's proposal varies from the rule proposed by the SIA.

Like the SIA Proposal, however, proposed Rule 434 under the Securities

Act51 would permit issuers to convey prospectus information in

more than one document and allow such documents to be delivered to

investors at separate intervals and in varying manners.52

\51\17 CFR 230.434.

\52\The Commission provided analogous treatment with respect to

prospectus delivery in connection with employee benefit plans when

it adopted revisions to Form S-8 in 1990. See Securities Act Release

No. 6867 (June 13, 1990) [55 FR 23909].

The rule would provide that, in the aggregate, all required

information be disclosed to investors on a timely basis

[[Page 10729]] (i.e., prior to or at the same time as a confirmation is

sent). Reliance upon this rule would allow participants in a firm

commitment underwritten offering of securities for cash (hereinafter,

an ``eligible offering'') to forego last-minute mass printing, shipping

and mailing of a traditional final prospectus, which is generally

undertaken only after pricing of the offering. The proposed rule sets

forth two methods for delivering prospectus information: one that is

available for eligible offerings not using shelf registration, and one

that is available for eligible offerings using short-form registration.

1. Prospectus Delivery Method for Offerings Not Made Using Short-Form

Registration

In all eligible offerings not made using short-form registration,

persons could comply with their prospectus delivery obligations by

delivering a preliminary prospectus, a confirmation and, as needed, a

supplementing memorandum. A supplementing memorandum would be required

to be delivered only if information material to investors with respect

to the offering is not disclosed in the preliminary prospectus or the

confirmation. This method of delivery differs from traditional

prospectus delivery primarily in that it is accomplished in more than

one document. Investors would be delivered information comparable to

that which is currently required to be delivered.

a. Rule 430A Offerings. In Rule 430A offerings, a preliminary

prospectus omitting the price-related information specified in the rule

would be delivered in addition to a supplementing memorandum that

contains such price-related information (to the extent not contained in

the confirmation). The supplementing memorandum also would contain any

other necessary material disclosure missing from the preliminary

prospectus. Together, the preliminary prospectus and the supplementing

memorandum would contain information comparable to the traditional

final prospectus.53

\53\The traditional final prospectus currently reflects the

information set forth in the registration statement at the time of

effectiveness, any post-effective amendment and the pricing

supplement. Post-effective amendments, however, are unlikely to be

filed unless the pricing date exceeds the five business day

limitation allowing for use of a pricing supplement.

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

b. Offerings Not Made in Reliance on Rule 430A. In offerings not

proceeding under Rule 430A, a preliminary prospectus containing price-

related information alone could be delivered to investors. Unlike in

Rule 430A offerings, the price-related information could be included in

the preliminary prospectus. If such information is included in the

preliminary prospectus, a supplementing memorandum would not have to be

delivered unless material changes or material additions to the

information in the preliminary prospectus must be disclosed. In all

cases, the preliminary prospectus and any supplementing memorandum,

together, would contain information comparable to the traditional final

prospectus, which currently reflects the information set forth in the

registration statement at the time it goes effective.

c. Use of Incremental Disclosure. As the SIA Proposal notes, the

use of a preliminary prospectus and a separate supplementing memorandum

may not be feasible in all offerings. Whether the latter document,

which is anticipated to be brief, can convey clearly the missing or

changed information will depend upon the nature and magnitude of the

disclosure differences between the preliminary prospectus and the

prospectus contained in the effective registration statement (as

modified by post-effective amendments). In some cases, the disclosure

that would have to be contained in the supplementing memorandum may not

be able to be described in isolation from other disclosure in the

preliminary prospectus. Where disclosure in many parts of the

preliminary prospectus has changed, participants may find the option of

preparing a supplementing memorandum is not of great benefit.

Comment is requested as to whether the proposal should be limited

either with respect to the amount of time that could elapse between

delivery of the preliminary prospectus and the supplementing

memorandum, or with respect to the magnitude of changes that a

supplementing memorandum could contain. If the latter, how would the

acceptable magnitude be defined?

d. Filing and Review of Registration Statements. Although the

method of delivering prospectus information would change under the

proposed rule, neither the process of filing registration statements

and amendments thereto, nor the Commission's registration statement

review process, would be altered.\54\ The proposed rule would require

that the preliminary prospectus and the supplementing memorandum, taken

together, not materially differ from the disclosure filed with the

Commission in connection with the registration statement.\55\ This

provision would preserve the integrity of the Commission's review

process and ensure that the delivered prospectus disclosure is

comparable to that contained in the registration statement.

\54\Thus, investors that wish to acquire a traditional final

prospectus would have access to one through the Commission, where

the issuer would continue to file all required prospectus disclosure

in the traditional, integrated format. Comment is requested as to

whether access to a final prospectus in traditional, integrated

format should be ensured other than through the Commission's

facilities, such as through the issuer or underwriter(s)'

facilities. See also proposed Rule 434(c)(4), 17 CFR 230.434(c)(4),

with regard to short-form registrants.

\55\The delivered documents could not materially differ from the

prospectus disclosure in the registration statement at the effective

date, in any post-effective amendment thereto and in the pricing

supplement.

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

Under the proposed rule, a supplementing memorandum would be filed

with the Commission pursuant to Rule 424(b)(1) under the Securities Act

within two business days after the earlier of pricing and first use.

Thus, the Commission staff generally would not review supplementing

memoranda prior to use.\56\ Comment is requested as to whether the

proposal should require that the supplementing memorandum be filed

prior to use and, therefore, be subject to staff review.

\56\As under the current practice, the staff will continue to

consider whether recirculation of a prospectus is needed when there

are material changes in disclosure arising after the prospectus

subject to completion has been given to investors. See Rules 460 and

461(b) of Regulation S-K, 17 CFR 230.460 and 230.461(b).

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

e. Comparison With SIA Proposal. The proposed method of prospectus

delivery applicable to non-short form offerings departs from the SIA

Proposal in one significant respect. While the SIA Proposal

contemplates that a supplementing memorandum could summarize previously

undisclosed information, the proposed rule would require full

disclosure of material changes or material additions. Comment is

requested regarding whether a summary version of material information

should be permitted under the proposed rule.

2. Prospectus Delivery Method for Offerings Using Short-Form

Registration

As in the case of non-short-form offerings, the proposed delivery

method for offerings using short-form registration would allow the

disclosure to be contained in more than one document delivered at

different times. In addition, delivery would have to occur prior to or

with a confirmation. Unlike the proposed delivery method for other

offerings, however, the proposal for offerings using short-form

registration relies upon delivery of certain prospectus information by

publication with the Commission.

Currently, in recognition of the market following that exists for

issuers [[Page 10730]] using short-form registration, physical delivery

of most issuer-specific information is not required for offerings by

such persons.57 Instead, such information is incorporated by

reference into the prospectus from the issuer's Exchange Act reports.

Delivery of such information is therefore accomplished by publication

of such information through filing with the Commission. Thus, the

traditional final prospectus that is physically delivered by short-form

issuers contains primarily ``offering-specific'' information as to

which the efficient market theory generally has not been applied,

including a description of: the terms of the securities offered, risk

factors specific to the registered transaction, the intended use of

offering proceeds, and the plan of distribution for the securities. The

balance between information physically delivered to investors and

information published would be altered by the proposed rule.

\57\To be eligible to use short-form registration for a primary

offering, an issuer must have a public float of $75 million and must

have been reporting with the Commission for one year. See General

Instructions I.A.3. and I.B.1. to Form S-3 and General Instructions

I.A.1. and I.B.1. to Form F-3.

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

a. Short-Form, Non-Shelf Registration. The proposed rule would

permit participants in non-shelf offerings using short-form

registration to comply with their delivery obligations by distributing

a preliminary prospectus and an abbreviated supplementing memorandum.

The abbreviated supplementing memorandum would be required to contain:

(i) a fair and accurate summary of the description of

securities;58 and (ii) Item 11 information, to the extent not

disclosed in the preliminary prospectus or the registrant's Exchange

Act reports.59

\58\This disclosure would be a fair and accurate summary of that

which is required under Item 202 of Regulation S-K, 17 CFR 229.202.

\59\The abbreviated supplementing memorandum would be required

to be filed with the Commission pursuant to Rule 424(b)(1) under the

Securities Act, 17 CFR 230.424(b)(1) (or, if the disclosure

represents a fundamental change in the information contained in the

registration statement, in a post-effective amendment declared

effective prior to the time a confirmation is sent or given).

Pursuant to Rule 430A, the abbreviated supplementing memorandum

would be deemed to be a part of the registration statement at the

time it became effective.

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

Under the proposed rule, it is likely that the preliminary

prospectus would contain the bulk of offering-specific disclosure that

would have been physically delivered in a traditional final

prospectus.60 Thus, offering-specific information physically

delivered would continue to surpass offering-specific information

published in those offerings. Where Rule 430A is relied upon, certain

price-related information that may be excluded at effectiveness also

would not be in the preliminary prospectus. Such information generally

would not be included in the abbreviated supplementing memorandum, but

it would be on file with the Commission prior to the time confirmations

are sent. The price itself will be set forth in the confirmation.

\60\The information currently required to be physically

delivered in a short-form final prospectus would consist of

disclosure required by Items 501-510 and 202 of Regulation S-K, 17

CFR 229.502-229.510 and 229.202, as well as Item 11 information.

Section 5(b)(1) of the Securities Act, 15 U.S.C. Sec. 77e(b)(1),

prohibits transmission of any prospectus relating to any security

with respect to which a registration statement has been filed unless

the prospectus meets the requirements of Section 10 of the

Securities Act, 15 U.S.C. 77j.

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

b. Short-Form Delayed Shelf Registration. The proposed rule would

permit participants in delayed shelf offerings using short-form

registration to comply with their delivery obligations by distributing

a base prospectus and an abbreviated supplementing memorandum. As in

the case of non-shelf offerings, the abbreviated supplementing

memorandum would be required to contain: (i) a fair and accurate

summary of the description of securities; and (ii) Item 11 information,

to the extent not disclosed in the base prospectus or the registrant's

Exchange Act reports.61

\61\As proposed, an abbreviated supplementing memorandum would

be filed with the Commission in accordance with Rule 424(b)(1), 17

CFR 230.424(b)(1), and would be deemed a part of the registration

statement pursuant to Rule 430A. If the disclosure represents a

fundamental change in the information contained in the registration

statement, however, a post-effective amendment rather than a filing

pursuant to Rule 424(b)(1) would be required. See proposed Rule

434(c)(3), 17 CFR 230.434(c)(3).

Traditionally, the final prospectus delivered to investors in

delayed shelf offerings would include information set forth in both the

base prospectus and a prospectus supplement.62 Information in the

prospectus supplement would no longer be delivered physically to

investors, except to the extent it is disclosed pursuant to the

abbreviated supplementing memorandum. For example, use of proceeds,

syndicate and plan of distribution information and a full description

of securities need not be included in the abbreviated supplementing

memorandum. The proposal would require, however, that the prospectus

supplement in such offerings be filed with the Commission by the time

any confirmation is sent or given to investors.63 In addition,

such prospectus supplement would be deemed a part of the registration

statement upon filing with the Commission.

\62\The base prospectus omits information that is not yet known

with respect to the terms of a specific securities offering. The

omitted information is included in the prospectus supplement filed

after the effective date of the registration statement. The base

prospectus and prospectus supplement, which are physically delivered

together, comprise the final prospectus.

\63\See proposed Rule 424(e), 17 CFR 230.424(e). Prospectus

supplements for shelf offerings generally are required to be filed

with the Commission two or more business days after the earlier of

pricing or first use. See Rule 424(b)(2), 17 CFR 230.424(b)(2).

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

As proposed, Rule 434 would not apply to offerings pursuant to the

Commission's shelf registration rules other than delayed shelf

offerings made by persons using short-form registration.64 It

appears that other types of shelf offerings would not be contemplated

within the parameters of firm commitment underwritten offerings for

cash. Comment is requested, however, with respect to whether any other

type of shelf offerings, including secondary offerings,65 could

take place in connection with a firm commitment underwritten offering

for cash. If so, should the proposed rule be extended to such

offerings?

\64\See proposed Rule 434(b) and (c), 17 CFR 230.434(b) and (c).

\65\These offerings are described in Rule 415(a)(1)(i) under the

Securities Act, 17 CFR 230.415(a)(1)(i).

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

c. Variations from the SIA Proposal. Under the SIA Proposal, in the

case of short-form delayed shelf offerings, publication of prospectus

information would only occur after the time confirmations had been

sent, since the prospectus supplement would not be required to be filed

with the Commission until two business days after the earlier of

pricing or first use. The proposed rule does not incorporate this

aspect of the SIA Proposal because delaying the availability of

disclosure to a time after delivery of the confirmation appears

inconsistent with Sections 5(b) and 2(10)(a) of the Securities Act and

may not be particularly useful to investors.

For non-shelf offerings using short-form registration, the proposed

rule also diverges from the SIA Proposal in that it would require

delivery of a preliminary prospectus, rather than just an abbreviated

supplementing memorandum. Under the SIA Proposal, the abbreviated

supplementing memorandum would include only a summary of Item 11

information. Thus, the SIA Proposal essentially would not require

physical delivery of offering-specific information. The proposed rule

would require physical delivery of certain offering-specific

disclosure.

Comment is requested with respect to whether the proposed rule

strikes the [[Page 10731]] appropriate balance between physical

delivery of prospectus information and publication by filing. Should

the full description of securities required by Item 202 of Regulation

S-K be required to be physically delivered? If so, would such

description cause the abbreviated supplementing memorandum to become so

lengthy that the timing difficulties associated with prospectus

delivery would not be surmounted? Should the proposed rule require

physical delivery of other offering-specific information, such as

disclosure of risk factors?

Offerings registered through short-form registration currently

proceed frequently with delivery of only a final prospectus, although a

preliminary or base prospectus is prepared for filing with the

Commission.66 Those offerings could proceed under the proposed

rule only if a preliminary or base prospectus is delivered. Although

base prospectuses are commonly prepared well in advance of a takedown

from the delayed shelf, comment is requested with respect to whether a

preliminary prospectus could be prepared and delivered sufficiently in

advance of pricing in such offerings to warrant adoption of the

proposed rule as it relates to non-shelf offerings made in short-form

registration. If not, what alternative document should be allowed to be

used to convey the required information? On the other hand, commenters

should address whether physical delivery of all offering-specific

information should be required for offerings using short-form

registration.

\66\Offerings of novel or complex securities, even when done

through short-form registration, are sometimes sold through use of a

preliminary prospectus.

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

3. Conforming Changes to Rule 15c2-8

Although the delivery of a prospectus to investors in advance of

the final prospectus is not required by the Securities Act, paragraph

(b) of Rule 15c2-8 under the Exchange Act67 requires broker-

dealers, in the case of certain initial public offerings, to deliver a

copy of the preliminary prospectus at least 48 hours prior to the

mailing of the confirmation.68 Other provisions of Rule 15c2-8

govern the furnishing of the prospectus to broker-dealers participating

in the offering to ensure that they have the latest available

information when they solicit investors.

\67\17 CFR 240.15c2-8(b).

\68\Any person who is expected to receive a confirmation must

have been sent a preliminary prospectus at least 48 hours prior to

the sending of the confirmation. This requirement is satisfied by

delivering a preliminary prospectus that is current at the time of

its delivery.

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

The Commission is proposing amendments to Rule 15c2-8 to reflect

the provisions of proposed Rule 434 and new means of disseminating

confirmations and prospectuses. The proposed revisions would add new

paragraph (j) that states that, for purposes of Rule 15c2-8, the terms

``preliminary prospectus'' and ``final prospectus'' include the terms

``prospectus subject to completion'' and ``Section 10(a) prospectus,''

respectively, as such terms are used in proposed Rule 434. Also, the

proposals substitute the term ``sending'' for the term ``mailing.''

These proposed revisions are not intended to make substantive changes

to Rule 15c2-8. Commenters are requested to provide their views on

whether these proposals are appropriate in light of proposed Rule 434,

and whether any other changes to Rule 15c2-8 are necessary in light of

Securities Act rule revisions proposed herein.

4. Scope of the Proposed Rule

a. Exchange Offers and Business Combinations; Best Efforts

Offerings. Proposed Rule 434 extends only to offerings where the sole

consideration given in exchange for securities is cash. Offerings such

as exchange offers and business combinations would not be included. In

those offerings, the final prospectus is traditionally used to begin

the process of soliciting votes or consents to a transaction. Thus, the

logistical difficulties of prospectus delivery intended to be minimized

by the proposal should not be associated with those offerings.

The proposed rule also does not extend to offerings that are made

other than on a firm commitment basis with underwriters. The SIA

Proposal would cover agency transactions in securities registered on a

delayed shelf registration statement. In a firm commitment

underwriting, the underwriter(s) agree to purchase the securities from

the issuer for a fixed price and then resells the securities to the

public, thereby assuming the risk of market fluctuations in the price

of securities. According to the SIA Proposal, the prospectus delivery

pressures appear to be greatest in such firm commitment offerings where

the underwriter must make payment of its own funds to the issuer on a

specified date, whether or not its customers have paid for the

securities. In contrast, in a best efforts offering,69 the broker-

dealer is required to pay customers' funds promptly to the issuer (or

to a separate bank or escrow account in the case of a contingency) upon

receipt. In that case, a broker-dealer would not pay out funds that it

has not received, or use its own funds to pay for securities that have

not been sold.

\69\In a best efforts offering, the underwriter acts as an agent

for the issuer and agrees to use its best efforts to sell the

securities on behalf of the issuer.

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

Comment is requested as to whether there are other types of

offerings with comparable timing pressures to which the proposed rule

ought to be expanded. Should the proposal be extended to some or all

agency transactions in delayed-shelf-registered securities? Are such

transactions subject to particular timing pressures in connection with

settlement that are absent in best efforts offerings? Are such

transactions sold to such a large number of investors that mass

printing and delivery is required?

b. Offerings of Asset-backed Securities. The SIA Proposal

recommends including firm commitment underwritten offerings of asset-

backed securities (``ABS'') within the scope of the proposed rule. The

Commission, however, has determined to exclude ABS offerings from

proposed Rule 434 for several reasons.70 First, it appears that

settlement in connection with ABS offerings currently takes place

outside of the T+3 time frame, on approximately a T+10 cycle, and is

likely to continue to do so. The existing settlement schedule is the

result primarily of factors unique to these offerings, which include:

(i) the distinctive structuring process for most ABS offerings; (ii)

the time needed for identification of the specific pool of collateral

which will support the ABS; and (iii) the necessity of assembling the

prospectus (or prospectus supplement), which describes all material

features of the collateral and the transaction's structure, shortly

before sale of the ABS. Furthermore, concerns relating to a bifurcated

settlement cycle do not appear to be a pressing problem in the ABS

market.

\70\``Asset-backed security'' is defined for purposes of this

release the same way it is defined in General Instruction I.B.5. of

Form S-3: a security that is primarily serviced by the cashflows of

a discrete pool of receivables or other financial assets, either

fixed or revolving, that by their terms convert into cash within a

finite time period plus any rights or other assets designed to

assure the servicing or timely distribution of proceeds to the

securityholders.

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

The SIA Proposal treats ABS offerings the same as other offerings

using short-form registration. Unlike other issuers using short-form

registration, however, the special purpose ABS issuer is not required

to have a history of filing Exchange Act reports to use such forms. In

fact, these special purpose issuers typically are newly created with

each securities offering. Investors in ABS offerings have recourse only

to the special purpose issuer's assets as the [[Page 10732]] source of

payment on their ABS.71 The Commission's treatment of short-form

issuers under proposed Rule 434 is predicated, in part, on the fact

that significant issuer-specific information is available through

Exchange Act reports. There is no equivalent source of information

about the special-purpose issuer in ABS offerings.

\71\While the sponsor/depositor associated with the offering may

be a seasoned, reporting company, the reporting history of the

sponsor/depositor usually is not relevant because there is no

recourse to the sponsor/depositor.

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

In addition, most ABS offerings are registered as delayed offerings

under the Commission's shelf registration rule. While the base

prospectus includes a general description of the securities that may be

offered from time to time, the terms of a specific ABS offering are

included in the prospectus supplement. Such supplement details the

characteristics of specific pool assets and the structure of the

transaction, and is of significant length and complexity. The

Commission's proposed rule would provide that only a summary of such

information be physically delivered in short-form delayed shelf

offerings. In the case of ABS offerings, a summary of such terms would

not serve as an adequate substitute for the complete description in the

prospectus supplement.

Treating ABS offerings the same as non-short-form offerings under

the proposed rule, and thereby requiring use of a preliminary

prospectus, also would not be appropriate. Offerings of ABS differ

significantly from conventional offerings of corporate securities. The

principal focus in ABS offerings is on the structure of the transaction

and the nature of the collateral generating the payment streams

supporting the ABS. As a particular offering evolves, a variety of

structures may be considered as the sponsor attempts to meet investors'

needs by adjusting the impact of, e.g., prepayment rate and cash flow

variables on particular classes within the structure. The process of

developing a satisfactory structure typically extends almost to the

time when the security is priced. Consequently, a preliminary

prospectus (or, in the case of a delayed shelf offering, a preliminary

prospectus supplement) is virtually never utilized.

Finally, even in the rare instance when an ABS offering may employ

a preliminary prospectus, the complexity of the disclosure and the

structural modifications occurring during the course of the offering do

not lend themselves to incremental delivery of prospectus information.

Nevertheless, comment is requested regarding whether any ABS offerings

could be accomplished within the strictures of the proposed rule while

maintaining the present quality of prospectus disclosure.

c. Offerings of Structured Securities. As in the case of asset-

backed securities, the SIA Proposal would extend relief to structured

securities. The Commission's proposed Rule 434, however, would exclude

offerings of such securities. These securities usually have terms that

are highly complex, with many employing one or more indices as a basis

for determining the issuer's payment obligations (e.g., coupon,

principal, redemption payments). Structured securities often are

designed with specific market risks in mind, as well as risks relating

to the issuer. Consequently, a structured security's value is derived

not only from the creditworthiness of its issuer, but also from any

underlying assets, indices, interest rates or cash flow upon which the

security is predicated.

The incremental distribution of information proposed under the

rule, when combined with the complex nature of these securities, may

result in material disclosure not being readily accessible to

investors. Additionally, issuers of securities with complex terms or

formulas for the calculation of payment obligations may not be able to

develop a summary description (as contemplated by the rule for short-

form offerings) that is an adequate substitute for the complete

description presently delivered to investors. A complete description of

offering-specific information is of particular importance to investors

in making an investment decision, given the market risks resulting from

the structure of these securities.

Comment is solicited regarding the exclusion or inclusion of these

securities with respect to the proposed rule. Comment is requested as

to whether the proposed incremental delivery procedure would impede an

investor's ability to consider and evaluate material information about

structured securities. Can structured securities be adequately

summarized? Also, are there additional concerns that further warrant

the exclusion of structured securities? Comment also is solicited

regarding whether ``structured securities'' as used in proposed Rule

434 should be defined. If so, how should such securities be defined?

For example, should such definition conform to the proposed definition

in Rule 15c6-1(c)(2) discussed below?

d. Investment Companies. The proposed rule provides that it does

not apply to the offering of any security of any company registered or

required to be registered under the Investment Company Act of

194072 or any company that is treated as a business development

company under that Act.

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

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

In making its proposal, the SIA did not specifically address the

applicability to registered investment companies. The Commission

understands that open-end investment company (mutual fund) initial

offerings typically do not raise the prospectus delivery logistical

concerns that have led to these proposals. Mutual fund shares are

normally offered on a continuous basis, and a preliminary prospectus is

not generally printed. Moreover, the Commission has concerns that

separate delivery of a document that supplements and modifies a

prospectus may be inconsistent with efforts to simplify investment

company prospectuses.

Comment is requested on whether adoption of a T+3 settlement period

will raise prospectus delivery concerns with respect to initial

offerings of closed-end funds and unit investment trusts. Commenters

favoring the application of proposed Rule 434 to investment companies

should address the effects of the proposal on retail investors' ability

to understand their investment in these types of companies, as well as

the specific investment company-related rules that would require

modification.

5. Feasibility of the Proposal

A number of concerns have been raised about the feasibility of the

SIA Proposal for issuers and underwriters and the utility of the

disclosure to investors.73 Comment is requested with respect to

each of the issues raised under the following captions.

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

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

a. Investor Confusion and Resistance. Investors may be obliged to

read multiple documents to ascertain the required information about the

transaction and securities. While prospectuses included in short-form

registrations currently are not self-contained, given the incorporation

by reference of issuer-specific information, would investors expect and

require an integrated disclosure document for other offerings, e.g.,

initial public offerings?

Because a supplementing memorandum could reflect additions to, or

changes from, the disclosure contained in a preliminary prospectus,

thereby modifying or superseding such information, would investors be

confused and frustrated in attempting to determine the important and

relevant information? Is this process further

[[Page 10733]] exacerbated when a preliminary prospectus is distributed

before staff comments on the document are resolved and multiple changes

to the document are reflected in the supplementing memorandum? Are

concerns that investors might not be shown all changes made in response

to staff comments appropriate? Is the purported function of the

supplementing memorandum inconsistent with its anticipated brevity?

Investors also may be required to examine multiple documents in

order to obtain price-related information. Purchasers in secondary

trades may receive prospectus information that does not disclose

pricing information included only in the confirmations in connection

with the primary offering. Would such delivery be adequate with respect

to secondary market trading transactions effected during the prospectus

delivery period specified in Securities Act Section 4(3) and Rule 174

thereunder?74

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

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

Investors who receive a supplementing memorandum may not have

retained, or may have difficulty locating, a copy of the preliminary

prospectus previously sent. Does this possibility compromise the

utility of this proposed method for prospectus delivery?

Is there a risk that investors who receive more than one

preliminary prospectus will be unwilling to be responsible for matching

related supplementing memoranda to such preliminary prospectuses? How

significant are concerns relating to investor confusion from mismatches

or the inability to match related documents?

Will investors require the delivery of a traditional final

prospectus (even if delivered after the confirmation) for convenience

of reference or for other reasons?

b. Monitoring Delivery. Because prospectus information would be

delivered incrementally, would participants in the offering require re-

delivery of the preliminary prospectus at the time any supplementing

memorandum is delivered? If so, to what extent would this negate the

intended benefits of the modified delivery method? Would new

recordkeeping burdens be incurred in connection with recording the

delivery of the prospectus where delivery is effected incrementally?

Would other variables exist under this delivery scheme that would

impose substantial additional monitoring and recordkeeping burdens on

underwriters? In the event an issuer delivers more than one version of

the preliminary prospectus, would recordkeeping regarding which

investors received which versions be burdensome? Commenters also should

consider whether broker-dealers will be able to comply with Rule 15c2-8

and, if not, specifically discuss why compliance would not be feasible.

c. Third Parties' Opinions. Would issuers' and underwriters'

counsel have difficulty giving opinions as to the adequacy of

disclosure in the supplementing memorandum and preliminary prospectus,

particularly if the supplementing memorandum only summarizes certain

changes fully set forth in the filing declared effective? Auditors also

may be expected to perform additional work. The additional work

required by third parties may result in higher legal and accounting

costs to issuers. How likely is it that disagreements, or the time

required to reach agreement, among the parties about the content of a

supplementing memorandum will negate the purported benefits of the

proposal?

III. Revision of the Rule 15C6-1 Exemption

Because the difficulties associated with prospectus delivery within

a T+3 time frame were the principal reason for the current exemption

for firm commitment offerings in Rule 15c6-1, the Commission believes

that the necessity for such exemption should be reconsidered in light

of the proposals to alleviate those timing difficulties. It is

consistent with the purposes of Rule 15c6-1 to establish T+3 as the

standard settlement cycle for firm commitment offerings. It has been

estimated that approximately $20 billion in new issues may be subject

to settlement risk in any given day.\75\ Rule 15c6-1 was intended to

reduce the credit and market risk inherent in the settlement of

securities transactions. Thus, by including these trades within a T+3

settlement time frame, the goal of risk reduction will be greatly

enhanced. Moreover, by revising the exemption, the Commission believes

that it will provide certainty to the industry in the form of a written

standard.

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

4.

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

As discussed above in connection with the SIA Proposal, offerings

of asset-backed securities raise concerns different from other

offerings, and it does not appear that settlement of such offerings

typically will occur within a T+3 time frame. The Commission therefore

preliminarily believes that it would be appropriate to continue to

exempt from T+3 settlement sales of asset-backed securities sold

pursuant to a firm commitment offering.

The release adopting Rule 15c6-1 includes an interpretation with

respect to the treatment of a type of asset-backed security, mortgage

pass-throughs in the to-be-announced market. With respect to the

purchase or sale of such securities, the Commission interprets Rule

15c6-1 to permit settlement to occur within three days after the date a

specific pool of mortgages is identified as collateral for the

securities for purposes of the sales agreement with the customer. The

Commission invites comment as to whether a similar interpretation

should be applied to all asset-backed securities. If such an

interpretation is provided, is an express exemption still needed for

offerings of asset-backed securities?

While it appears that offerings of structured securities\76\

currently settle within a T+5 settlement cycle, it may be difficult to

settle offerings of structured securities by T+3 because of the time

difficulties associated with prospectus delivery. As proposed, Rule 434

would not apply to such securities. The revisions contemplated in

connection with the Four Firms Proposal, however, would provide the

same benefits with respect to prospectus delivery in offerings of

structured securities as to other offerings. Although an exemption for

offerings of structured securities may create problems in secondary

market trading as described above, the Commission currently believes

that it is preferable that the exemption for firm commitment offerings

be continued for offerings of structured securities because of the

possible difficulties of settling such instruments within a T+3 time

frame. The Commission invites comment as to the feasibility of this

approach. In addition, the Commission invites comment as to the

proposed Rule 15c6-1 definition of structured securities. Does the

definition provide sufficient guidance as to the class of securities

included?

\76\For purposes of Rule 15c6-1, a structured security is

proposed to be defined as a security whose cash flow characteristics

depend upon one or more indices or that have imbedded forwards or

options or a security where an investor's investment return and the

issuer's payment obligations are contingent on, or highly sensitive

to, changes in the value of underlying assets, indices, interest

rates or cash flows. See proposed Rule 15c6-1(c)(2), 17 CFR

240.15c6-1(c)(2).

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

The Commission invites commenters to address the merits of the

proposed Rule 15c6-1 amendments. Assuming the adoption of the proposals

relating to prospectus delivery, should the exemption for firm

commitment [[Page 10734]] offerings be modified? Comment is

specifically requested on the treatment of asset-backed securities and

structured securities and particularly whether any exemption from the

requirements of Rule 15c6-1 is needed for offerings of such securities.

Would any exemption be needed if managing underwriters are given the

ability to set alternate settlement time frames as previously

discussed? Further, the Commission also invites comment on whether

offerings of any other classes of securities pursuant to a firm

commitment underwriting may need to be exempted from the scope of Rule

15c6-1.

IV. Cost-Benefit Analysis

To evaluate fully the costs and benefits associated with the

proposals, the Commission requests commenters to provide views and

empirical data as to the costs and benefits associated with such

proposals. The proposals are expected to benefit issuers and other

participants in certain offerings by lowering the transaction costs

associated with the printing and delivery of prospectuses, and by

providing them additional flexibility in reacting to changes in market

conditions and in clearance and settlement of trades. For example, mass

printing and delivery of a supplementing memorandum or abbreviated

supplementing memorandum, due to its expected brevity, would be

expected to consume far less time and be less expensive for issuers to

undertake than would production of a traditional final prospectus.

Furthermore, the proposals are not expected to diminish investor

protection; rather, investors would be expected to benefit from the

proposals since offering participants would be required to settle

certain underwritten offerings in T+3 as opposed to T+5.

V. Summary of Initial Regulatory Flexibility Analysis

The Commission has prepared an Initial Regulatory Flexibility

Analysis (``IRFA''), pursuant to the requirements of the Regulatory

Flexibility Act,\77\ regarding the proposed rule and amendments to

existing regulations. The IRFA notes that the proposed rule and

amendments are intended to provide entities with, and reflect the

availability of, greater flexibility and efficiency with respect to the

timing of printing and delivery of prospectus information, thereby

facilitating compliance with Rule 15c6-1 under the Exchange Act and

access to the public securities markets. As discussed more fully in the

analysis, the proposed rule and amendments to Securities Act

regulations are anticipated to decrease costs associated with

fulfilling entities' prospectus delivery obligations under the

Securities Act. The proposed amendments to Exchange Act regulations are

not anticipated to have any significant economic impact on entities.

The proposed rule could impose minimal additional reporting,

recordkeeping or compliance requirements, while the proposed amendments

would not impose any new reporting, recordkeeping or compliance

requirements on any entities. No alternatives to the proposed rule and

amendments consistent with their objectives and the Commission's

statutory mandate were found.

\77\5 U.S.C. 603 (1988).

It is expected that the overall effect of the proposed rule and

amendments will provide entities increased efficiency in raising

capital from the public securities markets. The proposal to provide for

the incremental delivery of prospectus information, if adopted, would

apply to any entity engaged in a public distribution with respect to an

eligible offering. The proposed amendments to Securities Act

regulations are intended to streamline the registration process and

thereby facilitate compliance with prospectus delivery within T+3 and

would apply to any entity engaged in a public offering of securities.

The proposed amendments to Exchange Act regulations are intended to

reflect the availability of expedited delivery of prospectus

information provided by the proposed new rule and amendments to the

Securities Act regulations.

Commenters are encouraged to comment on any aspect of the analysis.

Such comments will be considered in the preparation of the Final

Regulatory Flexibility Analysis if the proposed rule and amendments are

adopted. A copy of the IRFA may be obtained from Michael Mitchell,

Division of Corporation Finance, Securities and Exchange Commission,

450 Fifth Street, NW., Mail Stop 3-3, Washington, DC 20549, (202) 942-

2900.

VI. General Request for Comments

Any interested person wishing to submit written comments on any

aspect of the proposed rule and amendments to the rules and forms, as

well as on other matters that might have an impact on the proposals

contained herein, is requested to do so. In addition, the Commission

requests comment on whether any further changes to the rules and forms

are necessary or appropriate to facilitate T+3 at this time. Comment is

requested specifically from investors, broker-dealers, underwriters,

issuers, analysts and other persons that rely on the information

provided in the prospectus supplement. Comments should be submitted in

triplicate to Jonathan G. Katz, Secretary, U.S. Securities and Exchange

Commission, 450 Fifth Street, NW., Washington, DC 20549 and should

refer to file number S7-7-95.

VII. Statutory Bases

The proposed rule and the amendments to the Commission's rules and

forms under the Securities Act are being proposed pursuant to sections

6, 7, 8, 10 and 19(a) of the Securities Act of 1933, as amended. The

proposed revisions to the Commission's rules under the Exchange Act are

being proposed pursuant to sections 3, 10, 12, 15 and 23 of the

Securities Exchange Act of 1934, as amended.

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

Brokers, Investment companies, Reporting and recordkeeping

requirements, Securities, Small businesses.

Text of Proposed Amendments

In accordance with the foregoing, Title 17, chapter II of the Code

of Federal Regulations is proposed to be amended as follows:

PART 228--INTEGRATED DISCLOSURE SYSTEM FOR SMALL BUSINESS ISSUERS

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

follows:

Authority: 15 U.S.C. 77e, 77f, 77g, 77h, 77j, 77k, 77s,

77aa(25), 77aa(26), 77ddd, 77eee, 77ggg, 77hhh, 77jjj, 77nnn, 77sss,

78l, 78m, 78n, 78o, 78w, 78ll, 80a-8, 80a-29, 80a-30, 80a-37, 80b-

11, unless otherwise noted.

2. By revising paragraph (b) and paragraph (c) of Sec. 228.503 to

read as follows:

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

* * * * *

(b) Address and telephone number. Include in the prospectus the

complete mailing address and telephone number of the small business

issuer's principal executive offices.

(c) Risk factors. Small business issuers discuss, on the page

immediately following the cover page of the prospectus (or following

the summary, if included), or on the page immediately following a

section containing pricing information where such section immediately

follows the cover page (or following the summary, if included), any

factors that make the offering speculative or risky. These

[[Page 10735]] factors may include no operating history, no recent

profit from operations, poor financial position, the kind of business

in which the small business issuer is engaged or proposes to engage, or

no market for the small business issuer's securities.

Instruction to Item 503(c). ``Pricing information'' as used in

paragraph (c) includes disclosure required by Items 504 and 508 of

Regulation S-B (Sec. 228.504 and Sec. 228.508) and information

regarding the small business issuer's capitalization.

3. By amending Sec. 228.601 to revise the third sentence of

paragraph (b)(24) to read as follows:

Sec. 228.601 (Item 601) Exhibits.

* * * * *

(b) * * *

(24) Power of attorney. * * * A power of attorney that is filed

with the Commission shall relate to a specific filing, an amendment

thereto, or a related registration statement that is to be effective

upon filing pursuant to Rule 462(b) under the Securities Act

(Sec. 230.462(b) of this chapter). * * *

* * * * *

PART 229--STANDARD INSTRUCTIONS FOR FILING FORMS UNDER SECURITIES

ACT OF 1933, SECURITIES EXCHANGE ACT OF 1934 AND ENERGY POLICY AND

CONSERVATION ACT OF 1975--REGULATION S-K

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

follows:

Authority: 15 U.S.C. 77e, 77f, 77g, 77h, 77j, 77k, 77s,

77aa(25), 77aa(26), 77ddd, 77eee, 77ggg, 77hhh, 77iii, 77jjj, 77nnn,

77sss, 78c, 78i, 78j, 78l, 78m, 78n, 78o, 78w, 78ll(d), 79e, 79n,

79t, 80a-8, 80a-29, 80a-30, 80a-37, 80b-11, unless otherwise noted.

* * * * *

5. By revising the last sentence of the introductory text of

paragraph (f) of Sec. 229.502 to read as follows:

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

prospectus.

* * * * *

(f) * * * Such disclosure need not be included on the inside front

cover page of the prospectus, if it is included, under appropriate

caption, elsewhere in the prospectus.

* * * * *

6. By revising paragraph (b) and paragraph (c) of Sec. 229.503 to

read as follows:

Sec. 229.503 (Item 503) Summary information, risk factors and ratio

of earnings to fixed charges.

* * * * *

(b) Address and telephone number. Registrants shall include in the

prospectus the complete mailing address, including zip code, and the

telephone number, including area code, of their principal executive

offices.

(c) Risk factors. Registrants, where appropriate, shall set forth,

on the page immediately following the cover page of the prospectus (or

following the summary, if included), or on the page immediately

following a section containing pricing information where such section

immediately follows the cover page (or following the summary, if

included), under an appropriate caption, a discussion of the principal

factors that make the offering speculative or one of high risk; these

factors may be due, among other things, to such matters as an absence

of an operating history of the registrant, an absence of profitable

operations in recent periods, the financial position of the registrant,

the nature of the business in which the registrant is engaged or

proposes to engage, or, if common equity or securities convertible into

or exercisable for common equity are being offered, the absence of a

previous market for the registrant's common equity.

Instruction to Item 503(c). ``Pricing information'' as used in

paragraph (c) includes disclosure required by Items 504 and 508 of

Regulation S-K (Sec. 229.504 and Sec. 229.508) and information

regarding the registrant's capitalization.

* * * * *

7. By amending Sec. 229.601 to revise the fourth sentence of

paragraph (b)(24) to read as follows:

Sec. 229.601 (Item 601) Exhibits.

* * * * *

(b) * * *

(24) Power of attorney. * * * A power of attorney that is filed

with the Commission shall relate to a specific filing, an amendment

thereto, or a related registration statement that is to be effective

upon filing pursuant to Rule 462(b) under the Securities Act

(Sec. 230.462(b) of this chapter). * * *

* * * * *

8. Guide 4 (referenced in Sec. 229.801(d)) is amended by removing

the first sentence of the Guide.

Note: The text of Guide 4 does not and the amendments will not

appear in the Code of Federal Regulations.

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

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

follows:

Authority: 15 U.S.C. 77b, 77f, 77g, 77h, 77j, 77s, 77sss, 78c,

78l, 78m, 78n, 78o, 78w, 78ll(d), 79t, 80a-8, 80a-29, 80a-30, and

80a-37, unless otherwise noted.

* * * * *

10. By amending Sec. 230.402(a) to add a sentence between the

fourth and fifth sentences to read as follows:

Sec. 230.402 Number of copies; binding; signatures.

(a) * * * Registration statements filed pursuant to Rule 462(b)

under the Act (Sec. 230.462(b)), however, may include duplicated or

facsimile versions of manual signatures of persons required to sign,

and such signatures shall be considered manual signatures for purposes

of the Act and rules and regulations thereunder. * * *

* * * * *

11. By amending Sec. 230.424 by redesignating paragraphs (e) and

(f), respectively, as paragraphs (f) and (g) and by adding paragraph

(e) to read as follows:

Sec. 230.424 Filing of prospectuses; number of copies.

* * * * *

(e) Ten copies of each form of prospectus which, but for the

application of Rule 434 under the Act (Sec. 230.434) would be filed

pursuant to paragraphs (b)(2) or (b)(5) of this section, shall be filed

pursuant to this paragraph with the Commission on or prior to the date

on which a confirmation is sent or given.

* * * * *

12. By amending Sec. 230.430A by removing the word ``five'' and

adding, in each place it appears, the word ``ten'' in paragraph (a)(3);

by adding a sentence at the end of Instruction to paragraph (a); by

redesignating paragraphs (c), (d), and (e) as paragraphs (d), (e), and

(f) and by adding paragraph (c) to read as follows:

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

effectiveness.

* * * * *

Instruction to paragraph (a): * * * Notwithstanding the

foregoing, any increase or decrease in volume up to 20% or deviation

in the price range of up to 20% may be reflected in the form of

prospectus filed with the Commission pursuant to Rule 424(b)(1)

(Sec. 230.424(b)(1)) or Rule 497(h) (Sec. 230.497(h)), provided that

in the case of a volume increase no form of prospectus filed

pursuant to Rule 424(b)(1) (Sec. 230.424(b)(1)) may be used if the

total dollar value of securities offered exceeds that which was

registered.

* * * * *

(c) Where a registration statement is filed to increase the amount

of securities in a Rule 430A (Sec. 230.430A) offering and it is to be

effective upon filing pursuant to Rule 462(b) (Sec. 230.462(b)),

[[Page 10736]] such registration statement upon its effectiveness shall

be deemed part of the earlier filed registration statement with respect

to such offering.

* * * * *

13. By adding Sec. 230.434 to read as follows:

Sec. 230.434 Prospectus delivery requirements in firm commitment

underwritten offerings of securities for cash.

(a) Where securities, other than asset-backed securities and

structured securities, are offered for cash in a firm commitment

underwritten offering and the conditions described in paragraph (b) or

paragraph (c) of this section are satisfied:

(1) The prospectus subject to completion and the supplementing

memorandum described in paragraphs (b)(1) and (b)(2) of this section,

taken together, and the prospectus subject to completion and the

supplementing memorandum described in paragraphs (c)(1) and (c)(2) of

this section, taken together, shall constitute prospectuses that meet

the requirements of Section 10(a) of the Act (15 U.S.C. 77j(a)) for

purposes of Section 5(b)(2) and Section 2(10)(a) of the Act (15 U.S.C.

77e(b)(2) and 77b(10)(a)); and

(2) Such Section 10(a) prospectuses shall have:

(i) Been sent or given prior to or at the same time that a

confirmation is sent or given for purposes of Section 2(10)(a) of the

Act; and

(ii) Accompanied or preceded the transmission of the securities for

purposes of sale or for delivery after sale for purposes of Section

5(b)(2) of the Act.

(b) With respect to offerings of securities (other than offerings

pursuant to Rule 415 under the Act (Sec. 230.415)) that are registered

on any form other than Form S-3 or Form F-3 (Secs. 239.13 and 239.33 of

this chapter) under the Act the following conditions are satisfied:

(1) A prospectus subject to completion and any supplementing

memorandum described in paragraph (b)(3) of this section are sent or

given prior to or at the same time with the confirmation;

(2) Except for information omitted from the prospectus in a

registration statement at the time of effectiveness in accordance with

Rule 430A (Sec. 230.430A), such prospectus subject to completion and

supplementing memorandum, together, are not materially different from

the prospectus in the registration statement at the time of its

effectiveness or post-effective amendment thereto at the time of its

effectiveness; and

(3) A supplementing memorandum setting forth all information

material to investors with respect to the offering that is not

disclosed in the prospectus subject to completion or the confirmation

is filed with the Commission pursuant to Rule 424(b)(1) under the Act

(Sec. 230.424(b)(1)).

(c) With respect to offerings of securities (other than offerings

pursuant to Rule 415(a)(1)(i)-(ix) and (xi) (Sec. 230.415(a)(1)(i)-(ix)

and (xi)) that are registered on Form S-3 or Form F-3 (Secs. 239.13 and

239.33 of this chapter) the following conditions are satisfied:

(1) A prospectus subject to completion and the abbreviated

supplementing memorandum described in paragraph (c)(2) of this section

are sent or given prior to or at the same time with the confirmation;

(2) The abbreviated supplementing memorandum delivered to investors

sets forth:

(i) If not disclosed in the prospectus subject to completion, a

description of securities required to be disclosed pursuant to Item 202

of Regulation S-K (17 CFR 229.202 of this chapter), or a fair and

accurate summary thereof; and

(ii) If not disclosed in the registrant's Exchange Act reports or

the prospectus subject to completion, all material changes in the

registrant's affairs required to be disclosed pursuant to Item 11 of

Form S-3 or Form F-3 (Secs. 239.13 and 239.33 of this chapter), as

applicable;

(3) The abbreviated supplementing memorandum described in paragraph

(c)(2) of this section is filed with the Commission pursuant to Rule

424(b)(1) under the Act (Sec. 230.424(b)(1)) or, if the disclosure

represents a fundamental change in the information set forth in the

prospectus filed as part of the registration statement declared

effective or any post-effective amendment thereto, is filed in a post-

effective amendment to the registration statement that is declared

effective prior to the time any confirmation is sent or given;

(4) In an offering made pursuant to Rule 415(a)(1)(x) under the Act

(Sec. 230.415(a)(1)(x)), a form of prospectus is filed pursuant to Rule

424(e) under the Act (Sec. 230.424(e)), and in an offering not made

pursuant to Rule 415(a)(1)(x) under the Act (Sec. 230.415(a)(1)(x)), a

prospectus meeting the requirements of Section 10(a) of the Act other

than by virtue of paragraph (a)(1) of this section is filed with the

Commission prior to the effective date of the registration statement;

and

(d) The information contained in any form of prospectus filed with

the Commission pursuant to Rule 424(e) under the Act (Sec. 230.424(e))

shall be deemed to be a part of the registration statement as of the

time such information is filed with the Commission.

(e) For purposes of this section, asset-backed securities shall

mean asset-backed securities as defined in General Instruction I.B.5 of

Form S-3 (Sec. 239.13 of this chapter).

(f) For purposes of this section, prospectus subject to completion

shall mean any prospectus that is either a preliminary prospectus used

in reliance on Rule 430 (Sec. 230.430), a prospectus filed in

accordance with Rule 430A(a) (Sec. 230.430A(a)), or a prospectus

omitting information that is not yet known concerning a delayed

offering pursuant to Rule 415(a)(i)(x) under the Act

(Sec. 230.415(a)(1)(x)) that is contained in a registration statement

at the time of effectiveness.

(g) Notwithstanding paragraphs (a) through (f) of this section,

this section shall not apply to the offering of any security of any

company registered or required to be registered under the Investment

Company Act of 1940 (15 U.S.C. 80a-1 et seq., as amended) or any

company that is exempt from the requirement to register under that Act

through filing either a notification of election or a notice of intent

to file a notification of election to be treated as a business

development company under that Act.

14. By designating the existing text as paragraph (a) and adding

paragraph (b) to Sec. 230.439 to read as follows:

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

(a) * * *

(b) In a registration statement filed pursuant to Rule 462(b) under

the Act (Sec. 230.462(b)), any required consent may be incorporated by

reference into the registration statement from a previously filed

registration statement relating to the offering, provided that the

consent contained in the previously filed registration statement

expressly provides for such incorporation. Any consent filed in a Rule

462(b) (Sec. 230.462(b)) registration statement may contain duplicated

or facsimile versions of required signatures, and such signatures shall

be considered manually signed for purposes of the Act and the rules

thereunder.

15. By amending Sec. 230.457 to revise paragraph (o) to read as

follows:

Sec. 230.457 Computation of fee.

* * * * * [[Page 10737]]

(o) Where an issuer is offering securities pursuant to Rule 430A

under the Act (Sec. 230.430A) or where an issuer eligible to use Form

S-3 (Sec. 239.13 of this chapter) is registering securities pursuant to

General Instruction I.B.1 or I.B.2 to Form S-3 to be offered on a

delayed or continuous basis pursuant to Rule 415(a)(1)(x) under the Act

(Sec. 230.415(a)(1)(x)), or pursuant to General Instruction H. to Form

S-4 (Sec. 239.25 of this chapter) in connection with a business

combination transaction pursuant to Rule 415(a)(1)(viii) under the Act

(Sec. 230.415(a)(1)(viii)), the registration fee may be calculated on

the basis of the maximum offering price of all the securities listed in

the ``Calculation of Registration Fee'' table.

16. By revising the first sentence of paragraph (a) and adding two

new sentences immediately after the first sentence of paragraph (a) to

Sec. 230.461 to read as follows:

Sec. 230.461 Acceleration of effective date.

(a) Requests for acceleration of the effective date of a

registration statement shall be made by the registrant and the managing

underwriters of the proposed issue, or, if there are no managing

underwriters, by the principal underwriters of the proposed issue, and

shall state the date upon which it is desired that the registration

statement shall become effective. Such requests may be made in writing

or orally, provided that, if oral requests are to be made, a letter

indicating that fact and stating that the registrant and the managing

or principal underwriters are aware of their obligations under the Act

must accompany the filing of the registration statement with the

Commission. Written requests may be sent to the Commission by facsimile

transmission. * * *

* * * * *

17. By revising the section heading, designating the existing text

as paragraph (a), and adding paragraph (b) to Sec. 230.462 to read as

follows:

Sec. 230.462 Effective date of certain registration statements.

(a) * * *

(b) A registration statement and any post-effective amendment

thereto shall become effective upon filing with the Commission if:

(1) The registration statement is for the sole purpose of

registering additional securities of the same class(es) as were

included in an earlier registration statement for the same offering

filed pursuant to Rule 430A under the Act (Sec. 230.430A) and declared

effective by the Commission;

(2) The new registration statement is filed within two business

days of the pricing of the earlier registration statement; and

(3) The new registration statement registers no more than 20% of

the amount of such class(es) of securities that were registered in the

earlier registration statement.

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

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

as follows:

Authority: 15 U.S.C. 77f, 77g, 77h, 77j, 77s, 77sss, 78c, 78l,

78m, 78n, 78o(d), 78w(a), 78ll(d), 79e, 79f, 79g, 79j, 79l, 79m,

79n, 79q, 79t, 80a-8, 80a-29, 80a-30 and 80a-37, unless otherwise

noted.

* * * * *

19. By amending Form SB-1 (referenced in Sec. 239.9) by adding one

check box to the cover page immediately before ``Calculation of

Registration Fee,'' by adding a Note to appear immediately after the

Calculation of Registration Fee table, and by adding paragraph H to

General Instructions to read as follows:

Note: The text of Form SB-1 does not and the amendments will not

appear in the Code of Federal Regulations.

Form SB-1

Registration Statement Under the Securities Act of 1933

* * * * *

If this Form is registering additional securities pursuant to

Rule 462(b) under the Securities Act, please check the following box

and list the Securities Act registration statement number of the

earlier effective registration statement for the same offering. [ ]

33-____________

* * * * *

Calculation of Registration Fee

* * * * *

Note: For offerings made pursuant to Rule 430A under the

Securities Act, only the title of the class of securities to be

registered, the proposed maximum aggregate offering price for that

class of securities and the amount of registration fee need to

appear in the Calculation of Registration Fee table. Any difference

between the dollar amount of securities registered for such

offerings and the dollar amount of securities sold may be carried

forward on a future registration statement pursuant to Rule 429

under the Securities Act.

* * * * *

General Instructions

* * * * *

H. Registration of Additional Securities

With respect to offerings registered pursuant to Rule 462(b)

under the Securities Act, the registrant may file a registration

statement consisting only of the following: the facing page; a

statement that the contents of the earlier registration statement,

identified by file number, are incorporated by reference; required

opinions and consents; the signature page; and any information

required in the new registration statement that is not in the

earlier registration statement. Any opinion or consent required in

such a registration statement may be incorporated by reference from

the earlier registration statement with respect to the offering, if:

(i) Such opinion or consent expressly provides for such

incorporation; and (ii) such opinion relates to the securities

registered pursuant to Rule 462(b). See Rule 411(c) and Rule 439(b)

under the Securities Act.

* * * * *

20. By amending Form SB-2 (referenced in Sec. 239.10) by adding one

check box to the cover page immediately before ``Calculation of

Registration Fee,'' by adding two sentences to the end of the Note

following the Calculation of Registration Fee table, and by adding

paragraph C to General Instructions to read as follows:

Note: The text of Form SB-2 does not and the amendments will not

appear in the Code of Federal Regulations.

Form SB-2

Registration Statement Under the Securities Act of 1933

* * * * *

If this Form is registering additional securities pursuant to

Rule 462(b) under the Securities Act, please check the following box

and list the Securities Act registration statement number of the

earlier effective registration statement for the same offering. [ ]

33-____________

* * * * *

Note: * * * For offerings made pursuant to Rule 430A under the

Securities Act, only the title of the class of securities to be

registered, the proposed maximum aggregate offering price for that

class of securities and the amount of registration fee need to

appear in the Calculation of Registration Fee table. Any difference

between the dollar amount of securities registered for such

offerings and the dollar amount of securities sold may be carried

forward on a future registration statement pursuant to Rule 429

under the Securities Act.

* * * * *

General Instructions

* * * * *

C. Registration of Additional Securities

With respect to offerings registered pursuant to Rule 462(b)

under the Securities Act, the registrant may file a registration

statement consisting only of the following: the facing page; a

statement that the contents of the earlier registration statement,

identified by file number, are incorporated by reference; required

opinions and consents; the signature page; and any information

required in the new registration statement that is not in the

earlier registration statement. Any opinion or consent required

[[Page 10738]] in such a registration statement may be incorporated

by reference from the earlier registration statement with respect to

the offering, if: (i) Such opinion or consent expressly provides for

such incorporation; and (ii) such opinion relates to the securities

registered pursuant to Rule 462(b). See Rule 411(c) and Rule 439(b)

under the Securities Act.

* * * * *

21. By amending Form S-1 (referenced in Sec. 239.11) by adding one

check box to the cover page immediately before ``Calculation of

Registration Fee,'' and by adding two sentences to the end of the Note

following the Calculation of Registration Fee table, and by adding

paragraph V to General Instructions to read as follows:

Note: The text of Form S-1 does not and the amendments will not

appear in the Code of Federal Regulations.

Form S-1

Registration Statement Under the Securities Act of 1933

* * * * *

If this Form is registering additional securities pursuant to

Rule 462(b) under the Securities Act, please check the following box

and list the Securities Act registration statement number of the

earlier effective registration statement for the same offering. [ ]

33-____________

* * * * *

Note: * * * For offerings made pursuant to Rule 430A under the

Securities Act, only the title of the class of securities to be

registered, the proposed maximum aggregate offering price for that

class of securities and the amount of registration fee need to

appear in the Calculation of Registration Fee table. Any difference

between the dollar amount of securities registered for such

offerings and the dollar amount of securities sold may be carried

forward on a future registration statement pursuant to Rule 429

under the Securities Act.

General Instructions

* * * * *

V. Registration of Additional Securities

With respect to offerings registered pursuant to Rule 462(b)

under the Securities Act, the registrant may file a registration

statement consisting only of the following: the facing page; a

statement that the contents of the earlier registration statement,

identified by file number, are incorporated by reference; required

opinions and consents; the signature page; and any information

required in the new registration statement that is not in the

earlier registration statement. Any opinion or consent required in

such a registration statement may be incorporated by reference from

the earlier registration statement with respect to the offering, if:

(i) Such opinion or consent expressly provides for such

incorporation; and (ii) such opinion relates to the securities

registered pursuant to Rule 462(b). See Rule 411(c) and Rule 439(b)

under the Securities Act.

* * * * *

22. By amending Form S-2 (referenced in Sec. 239.12) by adding one

check box to the cover page immediately before ``Calculation of

Registration Fee,'' by adding two sentences to the end of the Note

following the Calculation of Registration Fee table, and by adding

paragraph III to General Instructions to read as follows:

Note: The text of Form S-2 does not and the amendments will not

appear in the Code of Federal Regulations.

Form S-2

Registration Statement Under the Securities Act of 1933

* * * * *

If this Form is registering additional securities pursuant to

Rule 462(b) under the Securities Act, please check the following box

and list the Securities Act registration statement number of the

earlier effective registration statement for the same offering. [ ]

33-____________

* * * * *

Note: * * * For offerings made pursuant to Rule 430A under the

Securities Act, only the title of the class of securities to be

registered, the proposed maximum aggregate offering price for that

class of securities and the amount of registration fee need to

appear in the Calculation of Registration Fee table. Any difference

between the dollar amount of securities registered for such offering

and the dollar amount of securities sold may be carried forward on a

future registration statement pursuant to Rule 429 under the

Securities Act.

General Instructions

* * * * *

III. Registration of Additional Securities

With respect to offerings registered pursuant to Rule 462(b)

under the Securities Act, the registrant may file a registration

statement consisting only of the following: the facing page; a

statement that the contents of the earlier registration statement,

identified by file number, are incorporated by reference; required

opinions and consents; the signature page; and any information

required in the new registration statement that is not in the

earlier registration statement. Any opinion or consent required in

such a registration statement may be incorporated by reference from

the earlier registration statement with respect to the offering, if:

(i) such opinion or consent expressly provides for such

incorporation; and (ii) such opinion relates to the securities

registered pursuant to Rule 462(b). See Rule 411(c) and Rule 439(b)

under the Securities Act.

* * * * *

23. By amending Form S-3 (referenced in Sec. 239.13) by adding one

check box to the cover page immediately before ``Calculation of

Registration Fee,'' by adding two sentences to the end of the Note

following the Calculation of Registration Fee table, and by adding

paragraph IV to General Instructions to read as follows:

Note: The text of Form S-3 does not and the amendments will not

appear in the Code of Federal Regulations.

Form S-3

Registration Statement Under the Securities Act of 1933

* * * * *

If this Form is registering additional securities pursuant to

Rule 462(b) under the Securities Act, please check the following box

and list the Securities Act registration statement number of the

earlier effective registration statement for the same offering. [ ]

33-____________

* * * * *

Note: * * * For offerings made pursuant to Rule 430A under the

Securities Act, only the title of the class of securities to be

registered, the proposed maximum aggregate offering price for that

class of securities and the amount of registration fee need to

appear in the Calculation of Registration Fee table. Any difference

between the dollar amount of securities registered for such

offerings and the dollar amount of securities sold may be carried

forward on a future registration statement pursuant to Rule 429

under the Securities Act.

General Instructions

* * * * *

IV. Registration of Additional Securities

With respect to offerings registered pursuant to Rule 462(b)

under the Securities Act, the registrant may file a registration

statement consisting only of the following: the facing page; a

statement that the contents of the earlier registration statement,

identified by file number, are incorporated by reference; required

opinions and consents; the signature page; and any information

required in the new registration statement that is not in the

earlier registration statement. Any opinion or consent required in

such a registration statement may be incorporated by reference from

the earlier registration statement with respect to the offering, if:

(i) such opinion or consent expressly provides for such

incorporation; and (ii) such opinion relates to the securities

registered pursuant to Rule 462(b). See Rule 411(c) and Rule 439(b)

under the Securities Act.

* * * * *

24. By amending Form S-11 (referenced in Sec. 239.18) by adding

paragraph G to General Instructions, by adding one check box to the

cover page immediately before ``Calculation of Registration Fee'' and

by adding two sentences to the end of the Note following the

Calculation of Registration Fee table to read as follows:

Note: The text of Form S-11 does not and the amendments will not

appear in the Code of Federal Regulations. [[Page 10739]]

Form S-11

For Registration Under the Securities Act of 1933 of Securities of

Certain Real Estate Companies

General Instructions

* * * * *

G. Registration of Additional Securities

With respect to offerings registered pursuant to Rule 462(b)

under the Securities Act, the registrant may file a registration

statement consisting only of the following: the facing page; a

statement that the contents of the earlier registration statement,

identified by file number, are incorporated by reference; required

opinions and consents; the signature page; and any information

required in the new registration statement that is not in the

earlier registration statement. Any opinion or consent required in

such a registration statement may be incorporated by reference from

the earlier registration statement with respect to the offering, if:

(i) such opinion or consent expressly provides for such

incorporation; and (ii) such opinion relates to the securities

registered pursuant to Rule 462(b). See Rule 411(c) and Rule 439(b)

under the Securities Act.

* * * * *

Form S-11

Registration Statement Under the Securities Act of 1933

* * * * *

If this Form is registering additional securities pursuant to

Rule 462(b) under the Securities Act, please check the following box

and list the Securities Act registration statement number of the

earlier effective registration statement for the same offering. [ ]

33-____________

* * * * *

Note: * * * For offerings made pursuant to Rule 430A under the

Securities Act, only the title of the class of securities to be

registered, the proposed maximum aggregate offering price for that

class of securities and the amount of registration fee need to

appear in the Calculation of Registration Fee table. Any difference

between the dollar amount of securities registered for such

offerings and the dollar amount of securities sold may be carried

forward on a future registration statement pursuant to Rule 429

under the Securities Act.

* * * * *

25. By amending Form F-1 (referenced in Sec. 239.31) by adding one

check box to the cover page immediately before ``Calculation of

Registration Fee,'' by adding two sentences to the end of the Note

following the Calculation of Registration Fee table, and by adding

paragraph V to General Instructions to read as follows:

Note: The text of Form F-1 does not and the amendments will not

appear in the Code of Federal Regulations.

Form F-1

Registration Statement Under the Securities Act of 1933

* * * * *

If this Form is registering additional securities pursuant to

Rule 462(b) under the Securities Act, please check the following box

and list the Securities Act registration statement number of the

earlier effective registration statement for the same offering. [ ]

33-____________

* * * * *

Note: * * * For offerings made pursuant to Rule 430A under the

Securities Act, only the title of the class of securities to be

registered, the proposed maximum aggregate offering price for that

class of securities and the amount of registration fee need to

appear in the Calculation of Registration Fee table. Any difference

between the dollar amount of securities registered for such

offerings and the dollar amount of securities sold may be carried

forward on a future registration statement pursuant to Rule 429

under the Securities Act.

General Instructions

* * * * *

V. Registration of Additional Securities

With respect to offerings registered pursuant to Rule 462(b)

under the Securities Act, the registrant may file a registration

statement consisting only of the following: the facing page; a

statement that the contents of the earlier registration statement,

identified by file number, are incorporated by reference; required

opinions and consents; the signature page; and any information

required in the new registration statement that is not in the

earlier registration statement. Any opinion or consent required in

such a registration statement may be incorporated by reference from

the earlier registration statement with respect to the offering, if:

(i) such opinion or consent expressly provides for such

incorporation; and (ii) such opinion relates to the securities

registered pursuant to Rule 462(b). See Rule 411(c) and Rule 439(b)

under the Securities Act.

* * * * *

26. By amending Form F-2 (referenced in Sec. 239.32) by adding one

check box to the cover page immediately before ``Calculation of

Registration Fee,'' by adding two sentences to the end of the Note

following the Calculation of Registration Fee table, and by adding

paragraph IV to General Instructions to read as follows:

Note: The text of Form F-2 does not and the amendments will not

appear in the Code of Federal Regulations.

Form F-2

Registration Statement Under the Securities Act of 1933

* * * * *

If this Form is registering additional securities pursuant to

Rule 462(b) under the Securities Act, please check the following box

and list the Securities Act registration statement number of the

earlier effective registration statement for the same offering. [ ]

33-____________

* * * * *

Note: * * * For offerings made pursuant to Rule 430A under the

Securities Act, only the title of the class of securities to be

registered, the proposed maximum aggregate offering price for that

class of securities and the amount of registration fee need to

appear in the Calculation of Registration Fee table. Any difference

between the dollar amount of securities registered for such

offerings and the dollar amount of securities sold may be carried

forward on a future registration statement pursuant to Rule 429

under the Securities Act.

General Instructions

* * * * *

IV. Registration of Additional Securities

With respect to offerings registered pursuant to Rule 462(b)

under the Securities Act, the registrant may file a registration

statement consisting only of the following: the facing page; a

statement that the contents of the earlier registration statement,

identified by file number, are incorporated by reference; required

opinions and consents; the signature page; and any information

required in the new registration statement that is not in the

earlier registration statement. Any opinion or consent required in

such a registration statement may be incorporated by reference from

the earlier registration statement with respect to the offering, if:

(i) such opinion or consent expressly provides for such

incorporation; and (ii) such opinion relates to the securities

registered pursuant to Rule 462(b). See Rule 411(c) and Rule 439(b)

under the Securities Act.

* * * * *

27. By amending Form F-3 (referenced in Sec. 239.33) by adding one

check box to the cover page immediately before ``Calculation of

Registration Fee,'' by adding two sentences to the end of the Note

following the Calculation of Registration Fee table, and by adding

paragraph IV to General Instructions to read as follows:

Note: The text of Form F-3 does not and the amendments will not

appear in the Code of Federal Regulations.

Form F-3

Registration Statement Under the Securities Act of 1933

* * * * *

If this Form is registering additional securities pursuant to

Rule 462(b) under the Securities Act, please check the following box

and list the Securities Act registration statement number of the

earlier effective registration statement for the same offering. [ ]

33-____________

* * * * *

Note: * * * For offerings made pursuant to Rule 430A under the

Securities Act, only the title of the class of securities to be

registered, [[Page 10740]] the proposed maximum aggregate offering

price for that class of securities and the amount of registration

fee need to appear in the Calculation of Registration Fee table. Any

difference between the dollar amount of securities registered for

such offerings and the dollar amount of securities sold may be

carried forward on a future registration statement pursuant to Rule

429 under the Securities Act.

General Instructions

* * * * *

IV. Registration of Additional Securities

With respect to offerings registered pursuant to Rule 462(b)

under the Securities Act, the registrant may file a registration

statement consisting only of the following: the facing page; a

statement that the contents of the earlier registration statement,

identified by file number, are incorporated by reference; required

opinions and consents; the signature page; and any information

required in the new registration statement that is not in the

earlier registration statement. Any opinion or consent required in

such a registration statement may be incorporated by reference from

the earlier registration statement with respect to the offering, if:

(i) such opinion or consent expressly provides for such

incorporation; and (ii) such opinion relates to the securities

registered pursuant to Rule 462(b). See Rule 411(c) and Rule 439(b)

under the Securities Act.

* * * * *

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

1934

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

as follows:

Authority: 15 U.S.C. 77c, 77d, 77g, 77j, 77s, 77eee, 77ggg,

77nnn, 77sss, 77ttt, 78c, 78d, 78i, 78j, 78l, 78m, 78n, 78o, 78p,

78q, 78s, 78w, 78x, 78ll(d), 79q, 79t, 80a-20, 80a-23, 80a-29, 80a-

37, 80b-3, 80b-4 and 80b-11, unless otherwise noted.

* * * * *

29. Section 240.15c2-8(b) is amended by revising the phrase

``mailing'' to read ``sending''.

30. Section 240.15c2-8(c) is amended by revising the phrase

``mail'' to read ``send''.

31. Section 240.15c2-8(d) is amended by revising the phrase

``mail'' to read ``send''.

32. Section 240.15c2-8 is amended by adding paragraph (j) to read

as follows:

Sec. 240.15c2-8 Delivery of prospectus.

* * * * *

(j) For purposes of this section, the term preliminary prospectus

shall include the term prospectus subject to completion as used in 17

CFR 230.434(f), and the term final prospectus shall include the term

Section 10(a) prospectus as used in 17 CFR 230.434(f).

33. Amend Sec. 240.15c6-1 by revising the phrase ``paragraph (b)''

contained in paragraph (a) to read ``paragraphs (b), (d), and (e)''; by

revising the phrase ``Paragraph (a)'' contained in the introductory

text of paragraph (b) to read ``Paragraphs (a) and (d)''; by revising

the phrase ``the sale for cash of securities'' contained in paragraph

(b)(2) to read ``the sale for cash of asset-backed securities or

structured securities''; and by adding paragraphs (c), (d), and (e) to

read as follows:

Sec. 240.15c6-1 Settlement cycle.

* * * * *

(c) For purposes of this section:

(1) Asset-backed security means an asset-backed security as defined

in General Instruction I.B.5 of Form S-3 (Sec. 239.13 of this chapter);

and

(2) Structured security means a security whose cash flow

characteristics depend upon one or more indices or that have imbedded

forwards or options or a security where an investor's investment return

and the issuer's payment obligations are contingent on, or highly

sensitive to, changes in the value of underlying assets, indices,

interest rates or cash flows.

(d) Paragraph (a) of this section shall not apply to securities

that are sold pursuant to a firm commitment underwritten offering

registered under the Securities Act of 1933 and that are priced after

4:30 p.m. Eastern time on the date such securities are priced, provided

that a broker or dealer shall not effect or enter into a contract for

the purchase or sale of such securities that provides for payment of

funds and delivery of securities later than the fourth business day

after the date of the contract unless otherwise expressly agreed to by

the parties at the time of the transaction.

(e) For purposes of paragraphs (a) and (d) of this section, the

parties to a contract shall be deemed to have expressly agreed to an

alternate date for payment of funds and delivery of securities at the

time of the transaction for a contract for the sale for cash of

securities pursuant to a firm commitment offering registered under the

Securities Act of 1933 if:

(1) The alternate date is no later than the fifth business day

after the date of the contract;

(2) The managing underwriter has selected such date for all

securities sold pursuant to such offering;

(3) Information disclosing the alternate date is contained in a

written notice sent or given to all prospective purchasers on or before

the date the securities which are sold pursuant to such offering are

priced;

(4) The managing underwriter provides written notification to all

exchanges on which the securities are listed and all registered

securities associations through which quotations for such securities

are disseminated prior to the date the securities which are sold

pursuant to such offering are priced; and

(5) The parties to the contract have not expressly agreed to

another date for payment of funds and delivery of securities at the

time of the transaction.

Dated: February 21, 1995.

By the Commission.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 95-4647 Filed 2-24-95; 8:45 am]

BILLING CODE 8010-01-P