Investors to get more information on mergers, offers; SEC changes rules for faster communications; Regulations


WASHINGTON -- The Securities and Exchange Commission approved rules aimed at giving investors more information about tender offers and mergers, and easing regulatory delays for some corporate combinations.

SEC officials described the regulatory moves as the most sweeping change of merger and acquisition rules in a generation. "It's a win for investors, a win for companies. I don't see any losers in this," said Brian Lane, the SEC's corporation finance director.

The changes will let companies get more information about business combinations to investors sooner than current regulations allow. The new rules, for example, will permit communications before the filing of a registration statement or proxy statement, and let companies give out more information before proposed tender offers officially commence.

The SEC also will require companies to make written communications about pending business combinations, such as studies, news releases, and Web postings, available to all shareholders on the same day via the SEC's Electronic Data Gathering, Analysis, and Retrieval computer disclosure system, known as Edgar. The new rule could also cover slides and scripts from presentations in some instances.

"We think this will help all investors get the information they need," said Mauri Osheroff, the SEC's associate corporation finance director. The changes are due to go into effect in January.

The rule changes come as the SEC and Chairman Arthur Levitt have stepped up efforts to give investors access to more information. On Monday, Levitt asked companies to let all investors participate in conference calls that now often are restricted to brokerage analysts.

Some commissioners asked Lane before the vote whether requiring such Edgar filings could drive some companies to disclose less in writing and more by means of the spoken word, which is exempt from the rule and by definition would include some shareholders and not others.

Lane responded that where corporate combinations are involved, he believes companies prefer disclosing more rather than less information to shareholders.

"The mergers and acquisitions context is different," he said. "Our experience tells us that companies are quite interested in providing written information to the public."

The new SEC rule didn't change the current requirement for companies to give shareholders a prospectus, proxy statement or tender offer material before they vote or tender their securities, Osheroff said.

The rule changes also would ease regulatory delays that now apply to stock tender offers, eliminating different treatment than that given cash tender offers.

Currently, bidders can begin cash tender offers as soon as required information is filed with the SEC and distributed to shareholders. Stock tender offers, though, must wait until the SEC has approved a registration statement filed with the commission.

Under new rules, those making stock tender offers would have the option of commencing their offers to shareholders before the registration statement has been approved. Securities that are tendered in response to an offer, though, couldn't actually be purchased until the registration statement is approved and other conditions are met.

Also yesterday, the SEC ordered the four U.S. options exchanges to develop a plan to link electronically so they can give investors access to the best possible prices.

The commission, seeking to counter foot-dragging by some of the exchanges, gave them 90 days to submit a linkage plan for approval. The order called for a plan "to permit the efficient transmission of orders among the various options exchanges on a nondiscriminatory basis."

The order would apply to the 863 options -- most of which have high volume -- that are listed on more than one exchange. They account for 29 percent of the 2,953 options traded on any U.S. exchange, according to data from the Options Clearing Corp., a not-for-profit company owned by the options markets.

The SEC has been pushing for options linkages for two decades.

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