KRESGE BUS. ADM. LIBRARY 155 56 NOV 1.8.1988 This listing covers releases issued from 10/21/88-10/27/88. This listing does not affect the legal status of any document published in this issue. SIGNIFICANT ITEMS 33-6806 34-26217 The Commission is publishing for comment proposed rule 144A and The Commission amends Rule 3a12-8 under the Securities Exchange SELF REGULATORY ORGANIZATIONS National Association of Securities Dealers Inc.; Order approving Pro- COMMERCE CLEARING HOUSE, INC. ་་་་་་་་་་་་་་་་་་་་་་་་ད་་་་་་་་་་ ་་་་་་་་་་ད་་་་་ད་་་་་་་་་་་ ་་་་་་་་་་་་་་་་་་་་་་་ ་་་་་་་་་་་་ Setting the standard for 75 years 4025 West Peterson Avenue Chicago, Illinois 60646 The following releases relate to self-regulatory organization rule proposals and/or adoptions: RESALE OF RESTRICTED SECURITIES; DETERMINING HOLDING PERIOD OF ACTION: Proposed rules. SUMMARY: The Securities and Exchange Commission (the "Commission") today is publishing for comment Rule that would profrom the registra comments received will be available for public I. EXECUTIVE SUMMARY The Commission is proposing for comment a new vide a safe harbor Act of 933 (the The rule provides a safe harbor for three tiers of tion requirements of the "Securities Act" or the "Act") for resale of se- transactions. The first tier (the "qualified institucurities to institutional investors. The Commission additionally is publishing for comment an amendment to Rule 144 under the Act to define the required holding period for restricted securities, whether acquired pursuant to Rule 144A or otherwise, as commencing at the time of sale by the issuer or its affiliate. tional buyer tier") would permit unlimited resales of any securities of any issuer, provided that the purchaser was a specified institution with assets in excess of $100 million or that the seller reasonably believed that the purchaser was such a qualified institution. The second tier (the "nonfungible securities tier") would allow unlimited resales of securities to a wider class of specified DATE: Comments should be received on or be- institutions, if (i) securities of the class offered or fore December 31, 1988. ADDRESS: Comments should be submitted in triplicate to Jonathan G. Katz, Secretary, Securities and Exchange Commission, 450 Fifth Street, N. W., Washington, D.C. 20549. Comment letters should refer to File No. S7-23-88. All 115 U.S.C. §§ 77a et seq. sold were not quoted in an inter-dealer quotation system, listed on a securities exchange in the United States, or issued by an open-end investment company, unit investment trust or faceamount certificate company that is registered under Section 8 of the Investment Company Act CCH SEC DOCKET (ISSN: 0091-4061) published weekly by Commerce Clearing House, Inc., 4025 W. Peterson Ave., Chicago, Ill. 60646. Subscription rate $185 per year. Second-class postage paid at Chicago, Illinois and at additional mailing offices. POSTMASTER: SEND ADDRESS CHANGES TO CCH SEC DOCKET, 4025 W. PETERSON AVE., CHICAGO, ILL. 60646. Printed in U. S. A. All rights reserved. © 1988, Commerce Clearing House, Inc. When published as promulgated, U. S. Public Laws, federal regulations and decisions of administrative and executive agencies and courts of the United States are in the public domain. However, their arrangement and compilation, and historical, statutory, and other notes and references, along with all other material in this publication, are subject to the copyright notice. of 1940 (the "Investment Company Act"),2 and (ii) the securities were non-convertible debt securities, non-convertible preferred stock or securities issued by a company subject to a continuous reporting obligation under the Securities Exchange Act of 1934 (the "Exchange Act").3 The third tier of proposed Rule 144A would cover resales of non-convertible debt securities, nonconvertible preferred stock and securities of reporting companies that are traded in a public market in the United States ("fungible securities") to the same class of institutions as permitted in the second tier. The qualified institutional buyer and non-fungible securities tiers of the proposed Rule impose no resale restrictions, requiring only that the seller or any person acting on its behalf take reasonable steps to ensure that the buyer is aware that the seller may rely on the exemption from the Securities Act's registration requirements afforded by Rule 144A. In contrast, the fungible securities tier requires that the seller or any person acting on its behalf take reasonable steps to prevent the purchaser from reselling the securities in the United States unless they are registered under the Securities Act or an exemption from registration is available. The rule sets forth a non-exclusive method by which that obligation can be satisfied. The proposed Rule provides a safe harbor exempion from the registration requirements of the Securities Act that would not be exclusive. Atempted reliance on the new safe harbor would not preclude the availability of any other exempion from registration under the Act. The Commission also is considering adoption of each tier of the Rule independently, or adoption of two tiers without the third. Moreover, the Commission may choose to proceed with one or wo tiers of the Rule prior to reaching a final letermination as to adoption of the other(s). 3. Amendments to Rules 144 and 145 The Commission also is proposing for comment 215 U.S.C. § 80a-8. 315 U.S.C. § 78a et seq. 4 See Salomon Brothers Inc, How Big Is the World Bond Market?-1988 Update 1 (May 20, 1988); H. Lund, R. Sibert nd P. Chamberlain (eds.), Private Placements: National nd International Markets 109 (1984) (hereinafter “Lund"). 5 See Salomon Brothers Inc, supra n. 4, at 1 (dollardenominated corporate bonds issued in the U.S. capital narket); cf. Lund, supra n. 4, at 109. "See Salomon Brothers Inc, supra n. 4, at 1. 7Id. Data include straight, convertible and floating-rate debt. 8 See E. Shapiro and C. Wolf, The Role of Private Place amendments to Rules 144 and 145. Rule 144 permits the public resale of restricted securities when certain conditions, including a minimum holding period, are met. Under the proposed amendments, the time that must elapse before public resale of restricted securities (whether acquired in reliance on Rule 144A or otherwise) would be redefined to commence when the securities are sold by the issuer or its affiliate. Because Rule 145 holding periods are determined by reference to Rule 144, Rule 145 is proposed to be amended to reflect the proposed changes to Rule 144. The proposed changes to the holding period requirements, which would permit subsequent unaffiliated purchasers to satisfy the requirements through use of the period in which their seller held the securities, would affect trading in all restricted securities, not only those sold under proposed Rule 144A. The proposals thus involve issues that extend beyond the implications for proposed Rule 14A and may be considered by the Commission separately. Accordingly, commentators should address not only the impact of adoption of the two proposals in tandem, but also the potential separate effect of each. II. THE PRIVATE PLACEMENT MARKET A. Market Characteristics The U.S. private placement market is one of the world's largest securities markets. 4 Its volume of bonds outstanding ranks fifth among the bond markets of the world.5 About thirty percent of all privately placed bonds outstanding in the world were issued in the U.S. market. At year-end 1987, the aggregate value of outstanding bonds that were issued in the U.S. private market was only slightly less than the aggregate value of outstanding Eurodollar bonds.7 While the U.S. private placement market is not new, its importance as a source of funds has ments in Corporate Finance (1972); A. Brimmer, Life Insurance Companies in the Capital Market (1962); A. Cohan, Private Placements and Public Offerings: Market Shares Since 1935 (1961); Mendel, Institutional Investment Through Private Placement of Corporate Securities, 53 Col. L. Rev. 804 (1953); Hale, The Yearbook of Private Placement Financing (1953); Cross, Investment Banking and "Private Placements," 175 Comm. & Fin. Chron. 1693 (1952); Whipple and Silloway, Direct Placement of Corporate Loans-A Logical Development, 175 Comm. & Fin. Chron. 1701 (1952); Conklin, Direct Placements, 6 J. of Fin. 85 (June 1951); E. Corey, Direct Placement of Corporate Securities 3 (1951); Ketchum, Direct Placements 6J. of Fin. (June 1951); |