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At a meeting of the ABA Subcommittee on Securities Regulation last Friday, Tom Kim, Chief Counsel, SEC Division of Corporation Finance, indicated that the SEC's proposed amendment to Rule 163 under the Securities Act has lost momentum as a result of negative feedback received from investors. The proposed amendment, which was generally supported by corporate issuers, underwriters and their counsel, would have allowed underwriters or dealers acting on behalf of well-known seasoned issuers (WKSIs) to offer securities before the filing of a registration statement, enabling WKSIs to better gauge investor interest in their securities before publicly launching an offering.
Mr. Kim also noted that the SEC staff is paying attention to fixed income investors' concerns that they are being asked to make corporate bond investment decisions too quickly. The Credit Roundtable, a group of fixed income investors, has asked the SEC staff to consider imposing a "speed bump" or delay of at least one hour in the corporate bond offering process in order to improve investors' ability to conduct diligence before books are closed. The Credit Roundtable's other recommendations for the corporate bond offering process include increased access to management conference calls and easier access to disclosure documents through the use of hyperlinks.
Mr. Kim indicated that because these timing and disclosure concerns go to the "core" of the SEC's investor protection mission, they are being taken very seriously by the staff. The staff plans to hold a roundtable in the fall of 2010 to discuss these issues and is unlikely to act on the recommendations before then. Interested parties are encouraged to contact the Division with their views.
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