Corporate & Securities Law

By Jim Hamilton

Commission Proposes Rule 163 Changes Concerning Underwriters and Dealers

The SEC proposed amendments to Securities Act Rule 163(c) (Release No. 33-9098). This rule currently allows well-known seasoned issuers, or "WKSIs," to engage in unrestricted oral and written offers filing a registration statement. The exemption does not currently apply, however, to communications by an offering participant who is an underwriter or dealer. The proposed amendments would extend the Rule 163 exemption to 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.

The Commission noted that WKSIs may want to assess the level of investor interest in their securities before filing a registration statement, but lack sufficient knowledge about potential investors to contact them directly, or may prefer not to contact investors directly for other reasons. The amended rule 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 including the securities in the registration statement through a post-effective amendment. According to the SEC, allowing authorized underwriters or dealers to be agents or representatives of a WKSI would provide these issuers with access to the underwriters? or dealers? existing networks of investors to assess market interest in the issuer?s securities.

Comments must be received within 30 days from the date of publication in the Federal Register.

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Full post as published by Jim Hamilton's World of Securities Regulation on December 22, 2009 (boomark / email).