SEC Backs Away from Revised S-3 Rules
March 20, 2006
The SEC has been on the receiving end of some tough criticism
in the past several weeks on issues of great importance to investors and filers,
including a proposal regarding a tightening of disclosure requirements for
S-3 filers. A March 4, 2006 speech by
SEC Chief Counsel David Lynn suggested that filers needed to include
information traditionally disclosed in proxy statements, including
disclosure regarding compensation for officers and directors, in their 10-K
before the release of a proxy statement.
On Friday, however, KMR's Corporate and Financial Weekly Digest reported a dramatic turnabout in the SEC's position: "In a private telephone conversation among four prominent New York attorneys and senior SEC Staff members, the statement by Mr. Lynn with respect to Well-Known Seasoned Issuers ("WKSI") shelf take-down was withdrawn. We understand the Staff's current position to be that they will not object to a take-down from an accelerated shelf registration statement even if the current proxy statement information is not included in the take-down prospectus or a previously filed Form 10-K or proxy statement. The Staff is reported to have stated that the parties must make their own decisions as to whether the registration statement and prospectus satisfy applicable disclosure requirements."
KMP adds that "The Staff apparently does not intend to publish or otherwise make public either its March 4th SEC Speaks position or its changed position."
Broc Romanec, editor of thecorporatecounsel.net blog, observes:
"The bottom line: while a WKSI technically can file an automatic shelf
registration statement after filing its Form 10-K and before filing its proxy,
it cannot conduct an offering under that newly-filed automatic shelf
registration statement until such time as the Part III information is filed (via
10-K/A, proxy statement or prospectus supplement)."
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