On November 28, the Securities and Exchange Commission published a list of rules to be reviewed pursuant to the Regulatory Flexibility Act (RFA). The RFA requires federal agencies to review rules that have a significant impact on a substantial number of small entities within 10 years of the publication of such rules as final rules. The purpose of the review is to determine whether the rules should be continued without change or amended or rescinded in light of the continued need for the rule, the nature of comments received concerning the rule, the complexity of the rule and the extent to which the rule overlaps, duplicates or conflicts with other federal or state rules. Among the rules listed for review by the Staff of the SEC during the next 12 months is Rule 155 adopted under the Securities Act of 1933.
Rule 155 provides a non-exclusive safe harbor from integration of private and registered offerings. In case of a registered offering following an abandoned private offering, conditions in the rule include that no securities were sold in the private offering, all offering activity was terminated before the filing of a registration statement, that the registration statement disclose information about the abandoned private offering and that the registration statement is not filed until at least 30 calendar days following termination of all offering activity in the private offering, with certain exceptions.
In case of a private offering following an abandoned registered offering, conditions include that no securities were sold in the registered offering, that the issuer has withdrawn the registration statement for the abandoned offering and that the offerings under the private offering are not commenced earlier than 30 days after the effective date of the withdrawal of the registration statement.
The SEC Staff may well review the continued applicability of Rule 155 in its present form in light of its proposed amendment of Rules 506 and 144A to eliminate the ban on general advertising and general solicitation in certain circumstances, as these proposed amendments themselves affect a practical, if partial, “integration” of public/private offerings. See the September 17, 2012, Katten Client Advisory.