
[Federal Register: December 28, 2009 (Volume 74, Number 247)]
[Proposed Rules]               
[Page 68545-68552]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr28de09-27]                         

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Proposed Rules
                                                Federal Register
________________________________________________________________________

This section of the FEDERAL REGISTER contains notices to the public of 
the proposed issuance of rules and regulations. The purpose of these 
notices is to give interested persons an opportunity to participate in 
the rule making prior to the adoption of the final rules.

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[[Page 68545]]



SECURITIES AND EXCHANGE COMMISSION

17 CFR Part 230

[Release No. 33-9098; File No. S7-30-09]
RIN 3235-AK29

 
Revisions To Rule 163

AGENCY: Securities and Exchange Commission.

ACTION: Proposed rule.

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SUMMARY: We are proposing amendments to Rule 163(c) under the 
Securities Act of 1933 that would allow a well-known seasoned issuer to 
authorize an underwriter or dealer to act as its agent or 
representative in communicating about offerings of the issuer's 
securities prior to the filing of a registration statement. We believe 
that the proposed amendments should further facilitate capital 
formation by well-known seasoned issuers by removing certain 
impediments to issuer communications with broader groups of potential 
investors regarding offerings of securities.

DATES: Comments must be received on or before January 27, 2010.

ADDRESSES: Comments may be submitted by any of the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://
www.sec.gov/rules/proposed.shtml); or
     Send an e-mail to rule-comments@sec.gov. Please include 
File Number S7-30-09 on the subject line; or
     Use the Federal Rulemaking Portal (http://
www.regulations.gov). Follow the instructions for submitting comments.

Paper Comments

     Send paper comments in triplicate to Elizabeth M. Murphy, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number S7-30-09. This file number 
should be included on the subject line if e-mail is used. To help us 
process and review your comments more efficiently, please use only one 
method. The Commission will post all comments on the Commission's 
Internet Web site (http://www.sec.gov/rules/proposed.shtml). Comments 
are also available for public inspection and copying in the 
Commission's Public Reference Room, 100 F Street, NE., Washington, DC 
20549. All comments received will be posted without change; we do not 
edit personal identifying information from submissions. You should 
submit only information that you wish to make publicly available.

FOR FURTHER INFORMATION CONTACT: Ted Yu, Special Counsel, Office of 
Chief Counsel, at (202) 551-3500, in the Division of Corporation 
Finance, U.S. Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-4561.

SUPPLEMENTARY INFORMATION: We are proposing amendments to Rule 163(c) 
\1\ under the Securities Act.\2\
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    \1\ 17 CFR 230.163(c).
    \2\ 15 U.S.C. 77a et seq.
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Table of Contents

I. Background
II. Purpose of the Proposed Amendments to Securities Act Rule 163(c)
III. Proposed Amendments to Securities Act Rule 163(c)
IV. General Request for Comments
V. Paperwork Reduction Act
    A. Background
    B. Summary of Information Collections
    C. Paperwork Reduction Act Burden Estimates
    D. Request for Comment
VI. Cost Benefit Analysis
    A. Background
    B. Benefits
    C. Costs
    D. Request for Comment
VII. Consideration of Promotion of Efficiency, Competition and 
Capital Formation
VIII. Regulatory Flexibility Act Certification
IX. Small Business Regulatory Enforcement Fairness Act
X. Statutory Authority--Text of the Proposed Amendments

I. Background

    In 2005, we adopted various modifications to the registration, 
communications and offering processes under the Securities Act.\3\ As 
part of those modifications, we liberalized the communications rules 
for a new category of issuers, called ``well-known seasoned issuers'' 
(``WKSIs''), so they would not be unnecessarily constrained in their 
capital formation activities while retaining important investor rights 
and remedies under the Securities Act. A WKSI is an issuer that meets 
the registrant requirements of Form S-3 or Form F-3; has at least $700 
million in worldwide market value of outstanding voting and non-voting 
common equity held by non-affiliates (or has issued, for cash, within 
the last three years at least $1 billion aggregate principal amount of 
non-convertible securities through primary offerings registered under 
the Securities Act); and is not an ``ineligible issuer,'' as defined in 
our rules.\4\ We permitted these issuers to benefit the most from the 
liberalization of our offering and communication rules because they 
have a reporting history under the Exchange Act \5\ and are 
presumptively the most widely-followed issuers in the marketplace.\6\
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    \3\ See Securities Offering Reform, Securities Act Release No. 
8591 (Aug. 3, 2005) [70 FR 44721] (``Securities Offering Reform 
Adopting Release'').
    \4\ See Securities Act Rule 405 [17 CFR 230.405].
    \5\ 15 U.S.C. 78a et seq.
    \6\ See Securities Offering Reform Adopting Release, supra note 
3, at Section II.A.
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    We adopted Rule 163 under the Securities Act as part of our 2005 
reforms.\7\ Pursuant to Rule 163, WKSIs can engage in unrestricted oral 
and written offers \8\ before a registration statement is filed without 
violating the ``gun-jumping'' provisions of the Securities Act.\9\ Rule 
163 exempts an offer made ``by or on behalf of'' a WKSI from the 
prohibition in Section 5(c) of

[[Page 68546]]

the Securities Act \10\ on offers to sell, offers for sale, or offers 
to buy an issuer's securities before the filing of a registration 
statement, so long as the conditions of the rule are met. Under the 
current rule, a communication is deemed to be ``by or on behalf of'' a 
WKSI if the issuer or agent or representative of the issuer, other than 
an offering participant who is an underwriter or dealer, authorizes or 
approves the communication before it is made.\11\
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    \7\ 17 CFR 230.163.
    \8\ Securities Act Section 2(a)(3) [15 U.S.C. 77b(a)(3)] defines 
``offer'' as any attempt or offer to dispose of, or solicitation of 
an offer to buy, a security or interest in a security, for value. 
The term ``offer'' has been interpreted broadly and goes beyond the 
common law concept of an offer. See Diskin v. Lomasney & Co., 452 
F.2d 871 (2d. Cir. 1971); SEC v. Cavanaugh, 1 F. Supp. 2d 337 
(S.D.N.Y. 1998).
    \9\ As we described in the Securities Offering Reform Adopting 
Release, the Securities Act restricts the types of offering 
communications that issuers or other parties subject to the Act's 
provisions (such as underwriters) may use during a registered public 
offering. The nature of the restrictions depends on the period 
during which the communications are to occur. Violations of these 
restrictions generally are referred to as ``gun jumping.'' See 
Securities Offering Reform Adopting Release, supra note 3, at 
Section III.A.
    \10\ 15 U.S.C. 77e(c).
    \11\ See Rule 163(c) [17 CFR 230.163(c)].
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II. Purpose of the Proposed Amendments to Securities Act Rule 163(c)

    Rule 163 was adopted with the purpose of liberalizing the 
communication rules for WKSIs so that they could engage in oral and 
written communications, subject to certain enumerated conditions, 
before the filing of a registration statement for the offered 
securities. We believed that this rule, along with other modifications 
to the registration and offering process under the Securities Act 
adopted at the same time, would encourage more issuers to conduct their 
offerings on a registered basis, thereby enhancing investor 
protection.\12\ At the time we adopted the rule and the automatic shelf 
registration process,\13\ we expected that a WKSI would usually have a 
shelf registration statement on file that it could use for any of its 
registered offerings--an expectation shared by some commenters.\14\ 
Accordingly, we expected that it would be unusual for WKSIs to make 
offers prior to the filing of a registration statement in reliance on 
the Rule 163 exemption.\15\ We have since learned, however, that many 
WKSIs have not filed automatic shelf registration statements or that 
the automatic shelf registration statements they have filed may not 
register all of the types of securities that they may want to 
offer.\16\ If a WKSI wants to make offers before a registration 
statement is filed, it must rely on the Rule 163 exemption, and many 
WKSIs do not have registration statements on file.\17\ As noted above, 
the Rule 163 exemption is not available for communications made by an 
offering participant that is an underwriter or dealer.
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    \12\ See Securities Offering Reform Adopting Release, 70 FR at 
44777 (``We hope that providing these automatic shelf issuers more 
flexibility for their registered offerings, coupled with the 
liberalized communications rules we are adopting, will encourage 
these issuers to raise their necessary capital through the 
registration process'').
    \13\ Under the automatic shelf registration process, eligible 
WKSIs can register unspecified amounts of different specified types 
of securities using Form S-3 or Form F-3 registration statements 
that are effective upon filing.
    \14\ See letter from the Committee on Federal Regulation of 
Securities of the American Bar Association's Section of Business 
Law. http://www.sec.gov/rules/proposed/s73804/dljohnson021105.pdf.
    \15\ See Securities Offering Reform Adopting Release, supra note 
3, at Section III.D.2.b.ii.
    \16\ According to the data analyzed by the staff in our Office 
of Economic Analysis, 50% of the 2,273 registrants that indicated 
that they were WKSIs as of the end of their 2006 or 2007 fiscal 
years have filed an automatic shelf registration statement on either 
Form S-3 or F-3. At the time we proposed the modifications to the 
registration, communication, and offering processes under the 
Securities Act, we recognized that some issuers may have concerns 
regarding possible market overhang effect and solicited comments on 
whether the automatic shelf registration procedure should be made 
mandatory in order to eliminate concerns over any such effect. See 
Securities Offering Reform, Release No. 33-8501 (Nov. 14, 2004) [69 
FR 67392] (``Securities Offering Reform Proposing Release'') at 
Section V.B.2. Commenters believed that use of the automatic shelf 
registration process should be optional. See, e.g., letter from the 
Committee on Federal Regulation of Securities of the American Bar 
Association's Section of Business Law. As we noted in the Securities 
Offering Reform Adopting Release, we did not mandate the use of the 
automatic shelf registration process by WKSIs so that issuers would 
have the flexibility to file a registration statement on any form 
for which they are eligible and, if they wished, delay the effective 
date of their registration statements. See Securities Offering 
Reform Adopting Release, supra note 3, at Section V.B.2.a.ii.
    \17\ If a WKSI had filed a registration statement covering the 
securities being offered, then it would not need the exemption 
because Securities Act Section 5(c)'s prohibitions on offers being 
made before a registration statement has been filed would no longer 
apply to the securities included in the registration statement.
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    Some methods used in capital raising transactions have highlighted 
certain impediments in Rule 163 to a WKSI's communications with broader 
groups of potential investors regarding offerings of the issuer's 
securities.\18\ Specifically, WKSIs may want to assess the level of 
investor interest in their securities before filing a registration 
statement (or a post-effective amendment to an already-filed automatic 
shelf registration statement) \19\ for the offered securities. Although 
Rule 163 currently allows these issuers to communicate directly with 
potential investors to determine their interest in purchasing 
securities without violating the ``gun-jumping'' provisions of the 
Securities Act, we understand that many of these issuers either do not 
have sufficient knowledge about potential investors to contact them 
directly or prefer not to contact investors directly out of concern 
that any such contact could itself constitute and reveal material, non-
public information about the issuers' capital-raising plans without the 
opportunity to first obtain a confidentiality agreement. Consequently, 
these issuers wish to be able to engage underwriters or dealers to 
approach their broader base of institutional clients on the issuers' 
behalf to ascertain their clients' interest in investing in the 
issuers' securities before filing a registration statement.\20\ Because 
Rule 163 does not permit an offering participant who is an underwriter 
or dealer to make communications, or to authorize or approve 
communications, as an agent or representative of a WKSI, a WKSI without 
a registration statement on file or without having particular classes 
of securities included in the registration statement cannot engage 
underwriters or dealers to have discussions with potential investors on 
its behalf. This reduces the benefits of our earlier reforms for 
issuers considering registered offerings and could lead such issuers to 
conduct unregistered offerings, with the resultant loss of the rights 
and remedies available under the Securities Act to investors in 
registered offerings.
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    \18\ See, e.g., Lynn Cowan, Follow-On Deals Take a Night Shift--
Increasing Number of Companies Work After-Hours to Line Up Orders, 
Wall St. J., Apr. 27, 2009 (``In a trading environment that can 
still be volatile, bankers and companies don't want to follow the 
traditional practice of marketing a deal over several days and then 
gauging investor interest. Instead, they are reaching out to large 
institutional investors such as mutual funds to make sure there's 
sizable interest, swiftly building a book of orders after the 
closing bell, and pricing before the market reopens the next 
day.''); Lynn Cowan, ``Wall Crossings'' Provide Fund-Raising Edge, 
Wall St. J., Dec. 29, 2008 (``In a wall crossing, institutional 
investors are lined up to buy substantial chunks of new stock ahead 
of a public sale. In order to participate in what is essentially a 
private placement, those investors sign a confidentiality agreement 
that lets them cross the wall and become insiders. In exchange for 
gaining access to inside information, they are barred from trading 
in the stock until the public end of the deal is done. They gain no 
price advantage for signing on early.'').
    \19\ Under Securities Act Rule 413(b), a WKSI can add new 
classes of securities or securities of an eligible subsidiary to an 
automatic shelf registration statement at any time before the sale 
of those securities. In order to add new classes of securities, an 
issuer must file a post-effective amendment, which will be 
immediately effective, to register an unspecified amount of the new 
class of securities.
    \20\ We understand that underwriters or dealers generally do not 
reveal the identity of the issuer to potential investors before 
securing agreements to retain the confidentiality of the information 
until it is publicly disclosed or is no longer material, non-public 
information. See, e.g., Cowan, ``Wall Crossings'' Provide Fund-
Raising Edge, supra note 18. See also the discussion in Section III 
below on the applicability of Regulation FD to communications made 
in reliance on Rule 163.
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    To address this concern, we are proposing to amend the ``by and on 
behalf of an issuer'' definition in Rule 163(c) so that, under certain 
circumstances, underwriters or dealers can be agents or representatives 
of

[[Page 68547]]

WKSIs under the rule.\21\ By preventing underwriters or dealers from 
acting on behalf of issuers, the current definition may be causing 
unnecessary impediments to the ability of WKSIs to communicate with a 
broader group of potential investors regarding the possibility and 
terms of securities offerings by the issuers. If adopted, the proposed 
amendments will enable WKSIs to better gauge the level of interest in 
the market for an offering and explore possible terms for such an 
offering before filing a registration statement or including the 
securities in the registration statement through a post-effective 
amendment. Allowing authorized underwriters or dealers to be agents or 
representatives of a WKSI will provide these issuers with access to the 
underwriters' or dealers' existing networks of investors to assess 
market interest in the issuer's securities.
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    \21\ We are proposing to amend the ``by or on behalf of'' 
definition solely for purposes of Rule 163,
    which, by its terms, is available only to WKSIs.
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    The proposed amendments would remove impediments from the ability 
of WKSIs to raise capital through registered offerings rather than 
through private offerings which, as we previously recognized, often 
require issuers to offer liquidity discounts to potential investors due 
to the corresponding resale restrictions imposed on the securities 
sold.\22\ We also believe that investors would benefit from our 
existing regulatory framework of specific disclosure requirements that 
apply to registered offerings,\23\ from greater liquidity for the 
acquired securities because they will not be acquired in private 
transactions with corresponding resale restrictions,\24\ and from 
important rights and remedies under the Securities Act.\25\ We believe 
the proposed amendments are consistent with our traditional recognition 
of the ``broad remedial purposes'' of the Securities Act and the 
underlying ``public policy which strongly supports registration.'' \26\
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    \22\ See Securities Offering Reform Proposing Release, supra 
note 16, at Section XI.C.3.
    \23\ See, e.g., Regulation S-K [17 CFR 229.10 et seq.].
    \24\ We have previously recognized that securities sold pursuant 
to registration statements generally enjoy more liquid markets than 
unregistered securities. See, e.g., Securities Offering Reform 
Proposing Release, supra note 16, at Section XI.C.3.
    \25\ While communications made pursuant to Rule 163 are exempt 
from the prohibitions of Securities Act Section 5(c), they are still 
considered offers and, therefore, subject to liability provisions 
applicable to such offers. These provisions include Securities Act 
Section 12(a)(2) [15 U.S.C. 77l(a)(2)], Securities Act Section 17(a) 
[15 U.S.C. 77q(a)], Exchange Act Section 10(b) [15 U.S.C. 78j(b)], 
and Exchange Act Rule 10b-5. In addition, written communications 
made in reliance on Rule 163 must be filed as free writing 
prospectuses when the related registration statement is filed, and 
will be subject to liability as such.
    \26\ See Notice of Adoption of Rules 145 and 153A, Prospective 
Rescission of Rule 133, Amendment of Form S-14 under the Securities 
Act of 1933, and Amendment of Rules 14a-2 and 14c-5 under the 
Securities Act of 1934, Securities Act Release No. 5316 (Oct. 6, 
1972) [37 FR 23631]; Notice of Adoption of Rule 144 Relating to the 
Definition of the Terms ``Underwriter'' in Sections 4(1) and 2(11) 
and ``Brokers' Transactions'' in Section 4(4) of the Securities Act 
of 1933, Adoption of Form 144, and Rescission of Rules 154 and 155 
under that Act, Securities Act Release No. 5223 (Jan. 11, 1972) [37 
FR 591].
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III. Proposed Amendments to Securities Act Rule 163(c)

    We are proposing to amend Rule 163(c) to provide that an 
underwriter or dealer could be an agent or representative of a WKSI 
under Rule 163 if the following conditions are satisfied:
     The underwriter or dealer receives written authorization 
from the WKSI to act as its agent or representative before making any 
communication on its behalf; \27\
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    \27\ See proposed Rule 163(c)(1).
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     The issuer authorizes or approves any written or oral 
communication before it is made by an authorized underwriter or dealer 
as agent or representative of the issuer; \28\ and
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    \28\ See proposed Rule 163(c)(2). One way that an issuer could 
satisfy this condition is to approve the contents of the information 
that will be conveyed by the authorized underwriter or dealer to 
potential investors through oral communications.
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     Any authorized underwriter or dealer that has made any 
authorized communication on behalf of the issuer in reliance on Rule 
163 is identified in any prospectus contained in the registration 
statement that is filed for the offering to which the communication 
relates.\29\
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    \29\ See proposed Rule 163(c)(3).
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    All other provisions of Rule 163 would continue to apply, including 
that:
     All communications made by or on behalf of the issuer and 
in reliance on Rule 163 would continue to be subject to Regulation FD; 
\30\
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    \30\ Rule 163(e) [17 CFR 230.163(e)]; Regulation FD [17 CFR 
243.100 et seq.]. We note that the amendments we are proposing today 
do not affect any other provision of existing Rule 163, including 
the continued applicability of Regulation FD to communications made 
in reliance on the exemption. As discussed below, communications 
made in reliance on Rule 163 are not considered to be in connection 
with a registered securities offering for purposes of the exclusion 
from Regulation FD.
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     Every written communication that is an offer made in 
reliance on the Rule 163 exemption would contain substantially the 
legend required by the rule; \31\ and
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    \31\ Rule 163(b)(1) [17 CFR 230.163(b)(1)]. Under the proposed 
amendments, issuers or their agents or representatives would 
continue to have the ability under Rule 163(b)(1) to ``cure'' a 
failure to include the required legend in any written communication 
made in reliance on the exemption.
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     Every written communication that is an offer made in 
reliance on the Rule 163 exemption would be filed with the Commission 
as a free writing prospectus when the registration statement, or 
amendment to the registration statement, is filed.\32\
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    \32\ As is currently the case, the filing condition of Rule 
163(d) would apply only if and when a registration statement, or an 
amendment to the registration statement, is filed. Accordingly, if 
no such registration statement is filed, a free writing prospectus 
used pursuant to Rule 163 does not have to be filed. Issuers or 
their agents or representatives would continue to have the ability 
under Rule 163(b)(2) to ``cure'' a failure to meet the filing 
condition when making any written communication in reliance on the 
Rule 163 exemption.
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    We believe that the proposed expansion of Rule 163 to permit 
authorized underwriters and dealers to communicate on behalf of a WKSI 
would enable the issuer to communicate with a broader group of 
potential investors in a manner that would not adversely affect the 
market for the issuer's securities. This proposed expansion also would 
be in the interest of investors as it would allow underwriters or 
dealers acting on behalf of an issuer to communicate directly with 
investors. If an issuer decides to sell securities pursuant to a 
registration statement after its authorized underwriter or dealer 
determines that there is sufficient interest, investors would have the 
same rights and remedies as any other investor in a registered offering 
under the Securities Act.
    Under the proposed amendments to Rule 163, the first condition is 
that the underwriter or dealer must receive written authorization from 
the issuer to act as its agent or representative before engaging in any 
communication on behalf of the issuer in reliance on the proposed 
amended rule.\33\ The proposed amendments are for the limited purpose 
of enabling issuers to authorize underwriters or dealers to approach 
potential investors on their behalf regarding a possible offering of 
the issuers' securities.\34\ We are not proposing to amend the rule to 
permit unrestricted communications by any market participant. We do not 
believe an underwriter or dealer should be able

[[Page 68548]]

to rely upon Rule 163, without prior authorization from the issuer, to 
gauge interest in the market for an issuer's securities and then 
present the issuer with an unsolicited proposal for an offering of that 
class of securities. Such activities would go beyond the limited 
purpose of the proposed amendments to Rule 163. By requiring that the 
underwriter or dealer receive written authorization before making pre-
filing offers on behalf of the issuer in reliance on Rule 163, the 
proposed amendments require that the issuer be involved with any 
communications made by the underwriters or dealers in reliance on Rule 
163.\35\
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    \33\ See proposed Rule 163(c)(1).
    \34\ As we noted at the time we liberalized the communication 
regime for WKSIs, we believe that communications made by WKSIs have 
less potential for conditioning the market for the securities to be 
sold in a registered offering because of the market's familiarity 
with such large, more seasoned issuers and the ongoing market 
following of their activities. See Securities Offering Reform 
Adopting Release, supra note 3, at Section III.C.
    \35\ We note that the requirement for prior written 
authorization in proposed amended Rule 163(c) is not intended to 
limit or otherwise affect the existing ability of an underwriter or 
dealer that is not acting on behalf of an issuer from making 
``reverse inquiry'' offers in registered offerings. Under the 
``reverse inquiry'' process, which is commonly used in medium-term 
note programs, an investor may be allowed to purchase securities 
from the issuer through an underwriter or dealer that is not 
designated in the prospectus as the issuer's agent by having such 
underwriter approach the issuer with an interest from the investor. 
See Joseph McLaughlin and Charles J. Johnson, Jr., Corporate Finance 
and the Securities Laws (4th ed. 2006). If the reverse inquiry 
process is used in offerings for which the issuer has already filed 
a registration statement, the requirement in proposed Rule 163(c)(1) 
for prior written authorization should not affect reverse inquiry 
offers since Section 5(c) of the Securities Act permits offers to be 
made after the filing of a registration statement.
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    The second condition of the proposed amended rule is that the 
issuer must authorize or approve any written or oral communication 
before it is made by an authorized underwriter or dealer.\36\ Any 
written or oral communication made by an authorized underwriter or 
dealer under the proposed amended Rule 163(c) would be considered an 
issuer communication. Any written communication that is approved or 
authorized by the issuer and made pursuant to the proposed amended rule 
on behalf of the issuer would need to be filed as a free writing 
prospectus when a registration statement for the offering is filed.\37\ 
An oral communication made by an authorized underwriter or dealer 
pursuant to the proposed amended rule would not be subject to a filing 
requirement.
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    \36\ See proposed Rule 163(c)(2).
    \37\ Rule 163(b)(2) [17 CFR 230.163(b)(2)].
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    The proposed rule amendment is not intended to permit 
communications authorized by persons other than the WKSI. Thus, while 
the proposed amended Rule 163(c) would permit underwriters and dealers 
to act as the issuer's agents or representatives for purposes of making 
a communication, they would not be permitted, in turn, to authorize or 
approve a communication to be made by another person.
    We emphasize that the amendments that we are proposing today do not 
change the applicability of Regulation FD to communications made in 
reliance on Rule 163. As is the case today, communications made in 
reliance on the proposed amended rule would not be considered to be in 
connection with a registered securities offering for purposes of the 
exclusion from Regulation FD.\38\ Therefore, WKSIs would need to 
continue to comply with the provisions of Regulation FD with regard to 
any communications made pursuant to proposed amended Rule 163 to which 
Regulation FD would apply (including pre-filing communications made on 
behalf of the issuer by an authorized underwriter or dealer). If an 
authorized underwriter or dealer acting on behalf of an issuer desires 
to communicate material non-public information \39\ in reliance on 
proposed amended Rule 163 to persons enumerated in Regulation FD,\40\ 
the issuer, or the underwriter or dealer acting on its behalf, would 
first need to obtain a confidentiality agreement from the enumerated 
persons or the issuer would need to publicly disclose the information 
in the manner \41\ and within the timeframe set forth in Regulation 
FD.\42\ Moreover, any misuse of the information for trading by any 
person subject to a confidentiality agreement would be covered under 
either the ``temporary insider'' or the misappropriation theory of 
insider trading.\43\
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    \38\ Rule 163(e); Exchange Act Rule 100(b)(2)(iv) [17 CFR 
243.100(b)(2)(iv)].
    \39\ When we adopted Regulation FD, we recognized that, while 
not necessarily per se material, ``events regarding the issuer's 
securities,'' such as ``public or private sales of additional 
securities,'' were one of the types of information or events that 
should be reviewed carefully to determine whether they are material. 
See Selective Disclosure and Insider Trading, Release No. 33-7881 
(Aug. 15, 2000) [65 FR 51716] (``Regulation FD Adopting Release'') 
at Section II.B.2.
    \40\ Rule 100(b)(1) [17 CFR 243.100(b)(1)]. Regulation FD 
provides that when an issuer, or person acting on its behalf, 
discloses material non-public information to certain enumerated 
persons (in general, securities market professionals and holders of 
the issuer's securities who may trade on the basis of the 
information), it must make public disclosure of that information. 
See Regulation FD Adopting Release, supra note 39, at Section I.
    \41\ Under Regulation FD, the required public disclosure may be 
made by filing or furnishing a Form 8-K, or by another method or 
combination of methods that is reasonably designed to affect broad 
non-exclusionary distribution of the information to the public. See 
Exchange Act Rule 101(e) [17 CFR 243.101(e)].
    \42\ The timing of the required public disclosure depends on 
whether the selective disclosure of material non-public information 
was intentional or non-intentional. For an intentional selective 
disclosure, the issuer must make public disclosure simultaneously; 
for a non-intentional disclosure, the issuer must make public 
disclosure promptly. See Exchange Act Rule 100(a) [17 CFR 
243.100(a)].
    \43\ See Regulation FD Adopting Release, supra note 39, at 
Section II.B.1.a.
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    The third condition in proposed amended Rule 163(c) is that an 
authorized underwriter or dealer who makes a communication on behalf of 
a WKSI in reliance on Rule 163 must be identified in the prospectus 
contained in the registration statement for the offering of the 
issuer's securities related to the communication.\44\ This 
identification would provide investors with information to supplement 
disclosure about the plan of distribution of the WKSI's securities.\45\
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    \44\ See proposed Rule 163(c)(3).
    \45\ See Item 508 of Regulation S-K [17 CFR 229.508] and 
Securities Act Rule 430B [17 CFR 230.430B]. Item 508 of Regulation 
S-K requires the identification of the underwriters through which 
the securities are offered and certain disclosures regarding the 
identified underwriters, such as the nature of any material 
relationships between the underwriters and the issuer as well as the 
nature and amount of underwriter compensation. Underwriters for 
securities offered pursuant to a registration statement are subject 
to Section 11 liability for untrue statements of material facts or 
omissions of material facts required to be included in a 
registration statement or necessary to make the statements in the 
registration statement not misleading at the time the registration 
statement became effective.
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Request for Comment

     We are soliciting comment on all conditions of the 
proposed amendments to Rule 163(c).
     Should an underwriter or dealer be required to obtain 
written authorization from the issuer to act as its agent in order to 
make offers pursuant to proposed amended Rule 163(c)? If not, why?
     Should the issuer be required to authorize or approve any 
written or oral communications before it is made by an underwriter or 
dealer acting as its agent?
     Should any written communications made by such authorized 
underwriters or dealers be required to be filed as any other issuer 
free writing prospectus under Rule 163? If not, why?
     What effect, if any, would the proposed amendments to Rule 
163 have on the timing of the subsequent registered offering and what 
effect would such timing have on the ability of other investors in the 
registered offering, such as those investors who may not be approached 
until after the registration statement has been filed, to evaluate the 
offering?
     To what extent would the proposed amendments to Rule 163 
enable WKSIs to reach a broader group of investors and affect their 
ability to raise capital

[[Page 68549]]

through registered offerings? Are there any other modifications that 
should be made to the conditions of Rule 163 that may facilitate the 
ability of WKSIs to raise capital with appropriate protections? What 
other effects, if any, would the proposed amendments have on the 
ability of WKSIs to raise capital? Would the proposed amendments have 
any effect on the ability of issuers other than WKSIs to raise capital? 
Please explain in detail and provide supporting empirical data.
     What are the reasons that WKSIs may not have filed 
automatic shelf registration statements or included certain classes of 
securities on filed automatic shelf registration statements? How would 
the proposed amendments to Rule 163 affect an issuer's decision to file 
an automatic shelf registration statement? Please provide empirical 
data to the extent available.
     Should we limit the types of investors that an authorized 
underwriter or dealer could approach under proposed amended Rule 163, 
such as to qualified institutional buyers, as defined in Securities Act 
Rule 144A(a)(1),\46\ or to other types of investors who may not need 
the protections afforded by the Securities Act's registration 
provisions? \47\ If so, why?
---------------------------------------------------------------------------

    \46\ 17 CFR 230.144A(a)(1).
    \47\ See The Resale of Restricted Securities; Changes to Method 
of Determining Holding Period of Restricted Securities Under Rules 
144 and 145, Securities Act Release No. 6806 (Oct. 25, 1988) [53 FR 
33147].
---------------------------------------------------------------------------

     Should an underwriter or dealer that made any authorized 
communications on behalf of an issuer in reliance on the proposed 
amended Rule 163 be required to be identified in the prospectus 
contained in the registration statement that is filed for the offering 
related to the communications?

IV. General Request for Comments

    We request and encourage any interested person to submit comments 
regarding:
     The proposed rule changes that are the subject of this 
release;
     Additional or different changes; or
     Other matters that may have an effect on the proposal 
contained in this release.
    We request comment from the point of view of registrants, investors 
and other users of information who may be affected by the proposed rule 
changes. With respect to any comments, we note that they are of 
greatest assistance to our rulemaking initiative if accompanied by 
supporting data and analysis of the issues addressed in those comments.

V. Paperwork Reduction Act

A. Background

    Our proposed amendments contain ``collection of information'' 
requirements within the meaning of the Paperwork Reduction Act of 1995 
(PRA).\48\ We are submitting these to the Office of Management and 
Budget (OMB) for review in accordance with the PRA.\49\ The title for 
the information collection is ``Rule 163 (17 CFR 230.163)(OMB Control 
No. 3235-0619).'' An agency may not conduct or sponsor, and a person is 
not required to respond to, a collection of information unless it 
displays a current valid control number. The information collection 
requirements related to proposed amendments to Rule 163(c) would apply 
only to WKSIs and authorized offering participants choosing to rely on 
the proposed amended rule. Specifically, any free writing prospectus 
used by a WKSI or by an authorized offering participant would have to 
be filed and be publicly available on the EDGAR system if and when the 
WKSI files a registration statement (or a post-effective amendment to 
an automatic shelf registration statement) to cover the securities 
offered pursuant to the proposed amended rule. Although WKSIs would not 
be required to engage offering participants to make authorized 
communications, if they did, the information collection requirement 
would be mandatory.
---------------------------------------------------------------------------

    \48\ 44 U.S.C. 3501 et seq.
    \49\ See 44 U.S.C. 3507 and 5 CFR 1320.11.
---------------------------------------------------------------------------

    The estimates of reporting and cost burdens provided in this PRA 
analysis address the time, effort and financial resources necessary to 
provide the proposed collections of information and are not intended to 
represent the full economic cost of complying with the proposal.

B. Summary of Information Collections

    The proposed amendments to Rule 163(c), if adopted, would revise 
the ``by and on behalf of an issuer'' definition used in the rule so 
that, under certain circumstances, underwriters or dealers could be 
agents or representatives of WKSIs and communicate on behalf of the 
issuers before a registration statement (or a post-effective amendment 
to an automatic shelf registration statement) covering the offered 
securities has been filed. The proposal could increase the number of 
free writing prospectuses filed pursuant to Rule 163 as a result of the 
WKSIs' new ability to engage underwriters or dealers to make 
communications, which, if written, would be free writing prospectuses, 
on their behalf.
    One of the conditions of the proposed amendments to Rule 163(c) is 
the identification of any authorized underwriters or dealers that made 
communications in reliance on the rule in the prospectus contained in 
the registration statement (or post-effective amendment to an automatic 
shelf registration statement) filed for the offered securities. This 
proposed condition does not impose a new disclosure requirement because 
an authorized underwriter or dealer that made a communication on behalf 
of a WKSI in reliance on the proposed amended rule would generally be 
an underwriter or dealer for the offering related to that communication 
and would, therefore, already be required to be identified under Item 
508 of Regulation S-K, regardless of the proposed condition.

C. Paperwork Reduction Act Burden Estimates

    At the time we adopted Rule 163, we estimated that most WKSIs would 
have an automatic shelf registration statement on file and would 
therefore not rely on the exemption provided in the rule. Accordingly, 
we estimated that 53 free writing prospectuses would be filed under 
Rule 163 per year and that issuers would spend 13.25 hours per year on 
such filings.\50\ We have since learned that many WKSIs have not filed 
automatic shelf registration statements; the staff estimates that only 
50% of the 2,273 registrants that were WKSIs as of the end of their 
2006 or 2007 fiscal years have filed an automatic shelf registration 
statement on either Form S-3 or F-3. Therefore, we believe it is 
appropriate to update our PRA estimates of the costs and burdens 
imposed by the collection of information requirements of the proposed 
amended Rule 163. For the free writing prospectus rules, as was the 
case when we proposed Rule 163,\51\ we estimate that 25% of the burden 
of preparation is carried by the issuer internally and 75% of the 
burden is carried by outside professionals retained by the issuer at an 
average cost of $400 per hour. The portion of the burden carried by 
outside professionals is reflected as a cost, while the portion of

[[Page 68550]]

the burden carried by the issuer internally is reflected in hours.
---------------------------------------------------------------------------

    \50\ See Securities Offering Reform Proposing Release, supra 
note 16, at Section X.C.2. The calculation for the incremental 
burden hours issuers would spend under Rule 163 was 13.25 hours (53 
free writing prospectuses filed, multiplied by 0.25 hours per 
filing).
    \51\ See Securities Offering Reform Proposing Release, supra 
note 16, at Section X.C.
---------------------------------------------------------------------------

    The fact that many WKSIs do not have automatic shelf registration 
statements on file (or do not have the securities they propose to offer 
already included in their filed registration statements), along with 
our proposal to permit underwriters or dealers to make communications 
pursuant to Rule 163, may result in greater use of the Rule 163 
exemption by issuers and potentially greater numbers of free writing 
prospectuses filed pursuant to the rule. However, since some 
communications made by underwriters or dealers in reliance on Rule 163 
would be oral rather than written, and since an oral communication that 
is an offer need not be filed with the Commission as a free writing 
prospectus, the potential increase might be small. As a result of these 
two counteracting effects, we estimate for this analysis that the 
number of free writing prospectuses will double from our estimate at 
the time that Rule 163 was proposed. More specifically, we estimate 
that the incremental increase in the number of free writing 
prospectuses that may be filed pursuant to the proposed amended rule 
and number of incremental burden hours will be 53 free writing 
prospectuses and 13.25 hours per year, resulting in issuer personnel 
time of 3.3 hours and a cost of approximately $3,980 for the services 
of outside professionals. The following table illustrates the 
incremental annual compliance burden of the collection of information 
in hours and in cost for the proposed amendments to Rule 163:

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                      Incremental
                                                         annual         Hours/form      Incremental       25% Issuer          75%        $400 prof. cost
                                                       responses                           burden                         Professional
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               (A)              (B)                (C)=(A)*(B)  (D)=(C)*0.25     (E)=(C)*0.(F)=(E)*$400
                                                   -----------------------------------------------------------------------------------------------------
Rule 163 filing...................................              53             0.25            13.25              3.3             9.95           $3,980
--------------------------------------------------------------------------------------------------------------------------------------------------------

D. Request for Comment

    Pursuant to 44 U.S.C. 3506(c)(2)(B), we request comments to (1) 
evaluate whether the proposed collection of information is necessary 
for the proper performance of the functions of the agency, including 
whether the information would have practical utility; (2) evaluate the 
accuracy of our estimate of the burden of the proposed collection of 
information; (3) determine whether there are ways to enhance the 
quality, utility and clarity of the information to be collected; and 
(4) evaluate whether there are ways to minimize the burden of the 
collection of information on those who are to respond, including 
through the use of automated collection techniques or other forms of 
information technology.
    Any member of the public may direct to us any comments concerning 
the accuracy of these burden estimates and any suggestions for reducing 
these burdens. Persons submitting comments on the collection of 
information requirements should direct the comments to the Office of 
Management and Budget, Attention: Desk Officer for the Securities and 
Exchange Commission, Office of Information and Regulatory Affairs, 
Washington, DC 20503, and should send a copy to Elizabeth M. Murphy, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-1090, with reference to File No. S7-30-09. 
Requests for materials submitted to OMB by the Commission with regard 
to the collection of information should be in writing, refer to File 
No. S7-30-09, and be submitted to the Securities and Exchange 
Commission, Records Management, Office of Filings and Information 
Services, 100 F Street, NE., Washington, DC 20549. Because the OMB is 
required to make a decision concerning the collection of information 
between 30 and 60 days after publication, your comments are best 
assured of having their full effect if the OMB receives them within 30 
days of publication.

VI. Cost Benefit Analysis

A. Background

    We believe that the definition of ``by or on behalf of an issuer'' 
currently in Rule 163(c) may be causing unnecessary impediments to the 
ability of WKSIs to communicate with a broader group of potential 
investors about offerings of the issuers' securities by preventing 
underwriters or dealers from acting on behalf of such issuers. Further, 
the current definition may also be impeding potentially useful 
discourse with prospective investors regarding the possibility and 
terms of securities offerings by the issuers. Accordingly, we believe 
that it is appropriate to propose to amend the definition in Rule 
163(c) so that, under certain circumstances, underwriters or dealers 
could be agents or representatives of WKSIs under Rule 163. We believe 
that the proposed amendments would enable WKSIs to better gauge the 
level of interest in the market for an offering and explore possible 
terms for such an offering before filing a registration statement (or a 
post-effective amendment to an already filed automatic shelf 
registration statement) covering the offered securities while retaining 
for investors important rights and remedies under the Securities Act.

B. Benefits

    The purpose of the proposed amendments to Rule 163(c) is to allow 
authorized underwriters or dealers to communicate on behalf of WKSIs 
before a registration statement (or a post-effective amendment to an 
already filed automatic shelf registration statement) covering the 
offered securities has been filed. By removing impediments to the 
ability of WKSIs to communicate with a broader group of potential 
investors and access the capital markets through registered offerings, 
we believe that investors should benefit from our existing regulatory 
framework of specific disclosure requirements and remedies that apply 
in registered offerings and greater liquidity for the acquired 
securities because they will not be acquired in private transactions 
with corresponding resale restrictions. For WKSIs, the ability to 
engage offering participants who are underwriters or dealers for the 
purpose of communicating with a broader group of potential investors 
should allow greater access to capital through the use of the 
underwriters' or dealers' existing networks of investors and the 
increased flexibility in evaluating the possible terms of offerings.
    The proposed amendments to Rule 163(c) would maintain the existing 
Securities Act liability scheme for communications made in reliance on 
the proposed amended rule and, because all communications made in 
reliance on proposed amended Rule 163 would be considered issuer 
communications regardless of whether they are made by an issuer or an 
authorized underwriter or dealer, the existing filing conditions in the 
rule would continue to apply to any written

[[Page 68551]]

communications made in reliance on the rule. We believe that investor 
protection is further enhanced by removing certain impediments that 
WKSIs face in reaching a broader group of prospective investors in 
their capital raising activities through registered offerings rather 
than private offerings, while retaining for such investors important 
rights and remedies under the Securities Act, including available 
remedies under Securities Act Sections 11 and Section 12(a)(2).\52\
---------------------------------------------------------------------------

    \52\ 15 U.S.C. 77k and 77l(a)(2).
---------------------------------------------------------------------------

C. Costs

    The proposed amendments to Rule 163(c) may involve certain costs. 
To the extent that a communication made on behalf of a WKSI pursuant to 
the proposed amended rule is a written communication, it would be a 
free writing prospectus that the issuer would have to file as with any 
other written communication made in reliance on Rule 163. For purposes 
of the PRA, we estimate the incremental costs to be issuer personnel 
time of 3.3 hours and approximately $3,980 for the services of outside 
professionals. If the communications are made orally, however, there 
would be no significant incremental costs because such communications 
would not have to be transcribed and filed in written form.
    Another cost that may arise from the proposed amendments to Rule 
163(c) is a possible decrease in the number of automatic shelf 
registration statements filed by WKSIs prior to an offering. In 
adopting the rules for automatic shelf registration statements for 
WKSIs, we hoped to provide sufficient flexibility for WKSIs to 
encourage capital formation through the registration process. Expanding 
Rule 163(c) to allow WKSIs to engage underwriters and dealers to act as 
their agent or representative in communicating with a broader group of 
investors may result in WKSIs waiting to file automatic shelf 
registration statements until after they have gauged the market's 
interest in an immediate offering. This decision not to file a 
registration statement in advance of identifying the classes of 
securities to be sold may delay the dissemination to the market of 
certain information regarding the issuer and its plans, such as the 
possibility that the issuer is contemplating an immediate offering of 
those types of securities. We believe, however, that many WKSIs will 
still file automatic shelf registration statements, even if they have 
no plans for an immediate offering, to have the capacity to sell their 
registered securities on an immediate basis without having to wait for 
an automatic shelf registration statement to be filed.
    To the extent that the proposed amended rule would encourage more 
WKSIs to file automatic shelf registration statements, these filings, 
as is the case today, would not be subject to review by the staff of 
the Division of Corporation Finance because they become effective 
automatically upon filing. Investors may lose the benefit of better 
disclosure prompted by staff review. These filers, however, would 
continue to be obligated to disclose, on an annual basis, written, 
unresolved staff comments on their periodic report disclosures that 
were issued more than 180 days prior to the fiscal year end covered by 
the report and that the issuer believes are material.
    The proposed amendments to Rule 163 would enhance access to the 
capital markets for only WKSIs. As a result, it is possible that other 
issuers, smaller than WKSIs or ineligible to be WKSIs, may encounter a 
more competitive capital-raising environment if they attempt to solicit 
investments from the same class of potential investors as those 
targeted by the WKSIs.
    As proposed, an issuer must authorize an underwriter or dealer in 
writing before the underwriter or dealer can make any communications 
pursuant to the proposed amended rule. Arranging for this authorization 
may result in additional costs for issuers and underwriters or dealers.

D. Request for Comment

    We request comments on this cost-benefit analysis and any of the 
costs and benefits associated with the proposed amendments to Rule 
163(c). We solicit quantitative data to assist with our assessment of 
the costs and benefits of the proposed rule amendments.

VII. Consideration of Promotion of Efficiency, Competition and Capital 
Formation

    Securities Act Section 2(b) \53\ requires us, when engaging in 
rulemaking where we are required to consider or determine whether an 
action is necessary or appropriate in the public interest, to consider, 
in addition to the protection of investors, whether the action will 
promote efficiency, competition, and capital formation. The proposed 
amendments to Rule 163(c) are intended to remove certain impediments to 
communications by or on behalf of WKSIs with a broader group of 
potential investors before filing a registration statement (or a post-
effective amendment to an already-filed automatic shelf registration 
statement) covering the securities being offered. We anticipate the 
proposed rule amendments will enhance a WKSI's ability to identify and 
communicate with investors regarding potential investments with the 
issuer and, as a result, make the capital formation process more 
efficient for these issuers. WKSIs will benefit from their authorized 
underwriter's or dealer's existing networks of investors when assessing 
market interest in their securities offerings, thereby potentially 
increasing their access to capital and improving their ability to issue 
securities on favorable terms to the issuer.
---------------------------------------------------------------------------

    \53\ 15 U.S.C. 77b(b).
---------------------------------------------------------------------------

    The proposed amendments to Rule 163 would enhance access to the 
capital markets for only WKSIs. As a result, it is possible that other 
issuers may not have the same capital-raising efficiencies if they 
attempt to solicit investments from the same class of potential 
investors as those targeted by the WKSIs, potentially creating a 
competitive advantage for some WKSIs. As we discussed in the Securities 
Offering Reform Adopting Release, these potential effects are justified 
in order to ensure that investors have appropriate access to 
information about issuers of different sizes.\54\
---------------------------------------------------------------------------

    \54\ See Securities Offering Reform Adopting Release, supra note 
3, at Section X.
---------------------------------------------------------------------------

    We request comment on whether the proposed rule amendments, if 
adopted, would promote efficiency, competition, and capital formation. 
Commenters are requested to provide empirical data and other factual 
support for their views, if possible.

VIII. Regulatory Flexibility Act Certification

    Section 3(a) of the Regulatory Flexibility Act \55\ requires the 
Commission to undertake a Regulatory Flexibility Analysis of the effect 
of its rules on small entities unless the Commission certifies that the 
rules do not have a significant economic impact on a substantial number 
of small entities. Securities Act Rule 157 \56\ defines an issuer to be 
a ``small business'' or ``small organization'' for purposes of the 
Regulatory Flexibility Act if it had total assets of $5 million or less 
on the last day of its most recent fiscal year.
---------------------------------------------------------------------------

    \55\ 5 U.S.C. 603(a).
    \56\ 17 CFR 240.0-10(a).
---------------------------------------------------------------------------

    Pursuant to Section 605(b) of the Regulatory Flexibility Act,\57\ 
the Commission hereby certifies that the proposed amendments to Rule 
163(c), if

[[Page 68552]]

adopted, will not have a significant economic impact on a substantial 
number of small entities. Rule 163 is, by its terms, available only to 
WKSIs. We believe that few, if any, small entities will be able to meet 
the $700 million non-affiliate equity market capitalization threshold 
\58\ or the $1 billion non-convertible securities issuance threshold 
\59\ to be considered WKSIs. For this reason, the proposed rule 
amendments, if adopted, should not have a significant economic impact 
on a substantial number of small entities.
---------------------------------------------------------------------------

    \57\ 5 U.S.C. 605(b).
    \58\ To satisfy this threshold, the worldwide market value of 
the issuer's outstanding voting and non-voting common equity held by 
non-affiliates must be $700 million or more as of a date within 60 
days of the determination date. See Securities Act Rule 405 [17 CFR 
230.405]
    \59\ To satisfy this threshold, the issuer must have issued for 
cash more than an aggregate of $1
    billion in non-convertible securities, other than common equity, 
through registered primary offerings over the prior three years. See 
Securities Act Rule 405 [17 CFR 230.405].
---------------------------------------------------------------------------

    We solicit written comments regarding this certification. We 
request that commenters describe the nature of any impact on small 
entities and provide empirical data to support the extent of the 
impact.

IX. Small Business Regulatory Enforcement Fairness Act

    For purposes of the Small Business Regulatory Enforcement Fairness 
Act of 1996,\60\ a rule is ``major'' if it has resulted, or is likely 
to result, in:
---------------------------------------------------------------------------

    \60\ 5 U.S.C. 801 et seq.
---------------------------------------------------------------------------

     An annual effect on the U.S. economy of $100 million or 
more;
     A major increase in costs or prices for consumers or 
individual industries; or
     Significant adverse effects on competition, investment, or 
innovation.
    We request comment on whether the proposed amendments to Rule 
163(c) would be a ``major rule'' for purposes of the Small Business 
Regulatory Enforcement Fairness Act. We solicit comment and empirical 
data on: (1) The potential effect on the U.S. economy on an annual 
basis; (2) any potential increase in costs or prices for consumers or 
individual industries; and (3) any potential effect on competition, 
investment, or innovation.

X. Statutory Authority--Text of the Proposed Amendments

    We are proposing the amendments pursuant to Sections 7, 10, 19, and 
28 of the Securities Act, as amended.

List of Subjects in 17 CFR Part 230

    Reporting and recordkeeping requirements, Securities.

    For the reasons set out in the preamble, we are proposing to amend 
title 17, chapter II of the Code of Federal Regulations as follows:

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

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

    Authority: 15 U.S.C. 77b, 77c, 77d, 77f, 77g, 77h, 77j, 77r, 
77s, 77z-3, 77sss, 78c, 78d, 78j, 78l, 78m, 78n, 78o, 78t, 78w, 
78ll(d), 78mm, 79t, 80a-8, 80a-24, 80a-28, 80a-29, 80a-30, and 80a-
37, unless otherwise noted.
* * * * *
    2. Amend Sec.  230.163 by revising paragraph (c) to read as 
follows:


Sec.  230.163  Exemption from section 5(c) of the Act for certain 
communications by or on behalf of well-known seasoned issuers.

* * * * *
    (c) For purposes of this section, a communication is made by or on 
behalf of an issuer if the issuer or an agent or representative of the 
issuer, other than an offering participant who is an underwriter or 
dealer, authorizes or approves the communication before it is made. 
Provided, however, an offering participant who is an underwriter or 
dealer may be an agent or representative of the issuer for purposes of 
this section if:
    (1) The underwriter or dealer receives written authorization from 
the issuer to act as its agent or representative prior to making any 
communication in reliance on this exemption;
    (2) The issuer authorizes or approves any written or oral 
communication before it is made by an underwriter or dealer authorized 
pursuant to the provision of this section to act as agent or 
representative of the issuer; and
    (3) Any underwriter or dealer authorized pursuant to the provision 
of this section that has made any communication authorized pursuant to 
the provision of this section is identified in the prospectus contained 
in the registration statement or amendment that may be filed for the 
offering of the issuer's securities related to the communication.
* * * * *

    By the Commission.

    Dated: December 18, 2009.
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-30589 Filed 12-24-09; 8:45 am]

BILLING CODE 8011-01-P
