Division of Corporation Finance

Outdated or Superseded Compliance and Disclosure Interpretations

The following interpretations originally appeared in the Division's Compliance and Disclosure Interpretations, but were removed when they became outdated or superseded. The first bracketed date following each interpretation was the last date of its publication or revision. The second bracketed date following each interpretation is the date on which it was moved to Archives.

Securities Act Sections

Question 103.04 and Question 139.01

Question: Where the offer and sale of convertible securities or warrants are being registered under the Securities Act, and such securities are convertible or exercisable within one year, must the underlying securities be registered at that time if there is no available exemption from registration for such conversion (such as Section 3(a)(9)) or exercise?

Answer: Yes. If such securities are not convertible or exercisable within one year, the issuer may choose not to register the underlying securities at the time of registering the convertible securities or warrants. However, the underlying securities must be registered no later than the date such securities become convertible or exercisable by their terms, if no exemption for such conversion or exercise is available. Where securities are convertible only at the option of the issuer, the underlying securities must be registered at the time the offer and sale of the convertible securities are registered since the entire investment decision that investors will be making is at the time of purchasing the convertible securities. The security holder, by purchasing a convertible security that is convertible only at the option of the issuer, is in effect also deciding to accept the underlying security. [Nov. 26, 2008] [Added to Archives Aug. 14, 2009]

Securities Act Rules

Question 212.05

Question: Can a registration statement under Rule 415 be made effective without an opinion of counsel as to the legality of the securities being issued when no immediate sales are contemplated?

Answer: No. However, when sales are not expected in the near future, the registrant may file a qualified opinion of counsel and have its registration statement be made effective, subject to the understanding that an unqualified opinion will be filed prior to the time any sales are made or contracts of sale are entered into with regard to securities covered by the registration statement. An updated opinion of counsel with respect to the legality of the securities being offered may be filed in a Form 8-K report rather than a post-effective amendment to a Form S-3 shelf registration statement. [Jan. 26, 2009] [Added to Archives Aug. 14, 2009]

Question 257.08

Question: Will a Rule 506 offering lose "covered security" status under Section 18 of the Securities Act if an issuer fails to file a notice of the exempt offering with the SEC or a state securities regulator?

Answer: No. "Covered security" status under Section 18 of the Securities Act is not conditioned upon the filing of a notice of exempt offering with the SEC or a state securities regulator. [Jan. 26, 2009] [Added to Archives September 14, 2009]

Securities Act Forms

Question 118.02

Question: If an automatic shelf registration statement initially registers one or more classes of securities and a separate class of securities is subsequently added to that automatic shelf registration statement by post-effective amendment, when must the Exhibit 5 legality opinion for the separate class of securities be filed? More generally, when must the Exhibit 5 legality opinion for the specific securities sold in a particular offering be filed?

Answer: A form of Exhibit 5 legality opinion must be filed at the time a class of securities is first included in an automatic shelf registration statement, whether as part of the initial registration statement or in a post-effective amendment to the registration statement. The signed opinion covering the specific securities sold in a particular offering must be filed as part of the registration statement or incorporated by reference into the registration statement no later than the time of the offering of such securities. [Feb. 27, 2009] [Added to Archives Aug. 14, 2009]

Regulation S-K

230.07 X is a director of the registrant. X's child is employed by the registrant and receives yearly compensation exceeding $120,000. The child's compensation is not reported under Item 402 since the child is not one of the registrant's named executive officers, nor is the child an officer or director. The registrant was advised that the child's compensation should be disclosed under Item 404(a) as a transaction in which the director has a material interest. [Mar. 13, 2007] [Added to Archives Aug. 14, 2009]

Exchange Act Section 16 and Related Rules and Forms

Question 133.08

Question: Where a transaction is executed in increments at different prices on the same day, or a series of transactions are executed at different prices on the same day, must the number of securities transacted at each price be reported in Column 4 of Form 4 or Form 5?

Answer: Yes. The number of securities transacted at each price on the same day must be reported in Column 4. It is not acceptable to report the aggregate number of securities and a weighted average price. For example, a sale of 500 shares is executed with 150 shares sold at $10.00 per share, 220 shares sold at $10.25 per share, and 130 shares sold at $10.15 per share. The Form 4 must report the number of securities sold at each price. In addition, securities that are sold at the same price on different days may not be aggregated. [May 23, 2007] [Added to Archives June 26, 2008]

Exchange Act Sections 13(d) and 13(g) and Regulation 13D-G Beneficial Ownership Reporting

Question 103.05

Question: Rule 13d-1(a) states that a Schedule 13D must be filed within 10 days after the acquisition of more than five percent of a class of equity securities registered under Section 12 of the Exchange Act. Is the Schedule 13D due 10 days after the trade date or the settlement date of a securities transaction that creates the reporting obligation?

Answer: The Schedule 13D beneficial ownership report must be filed within 10 days of the trade date of the securities transaction. Although under contract law the date on which the ownership of the shares is transferred may be the settlement date, an investor may, at a minimum, exercise investment power over the securities that were acquired through the trade as of the trade date. For purposes of calculating the 10-day time period, the trade date counts as day number one. [Sep. 14, 2009] [Added to Archives November 16, 2009]

Non-GAAP Financial Measures

Question 105.04

Question: A company issues its quarterly earnings release within 48 hours of its quarterly earnings conference call. However, on the conference call the company discloses material non-public information relating to its results of operations for the quarter that was not disclosed in the earnings release, and thus does not satisfy the exemption in Item 2.02(b) of Form 8-K with respect to that information. Is the company required to furnish an Item 2.02 Form 8-K with respect to all responsive information disclosed on the conference call, or just the information omitted from the earnings release?

Answer: The company will have an Item 2.02 Form 8-K filing obligation only with respect to the material non-public information relating to its results of operations for the quarter that was disclosed on the earnings call but not disclosed in the earnings release. A transcript of this portion of the conference call will satisfy this requirement. Regulation FD also may impose disclosure requirements in these circumstances. [Jan. 11, 2010] [Added to Archives Jan. 15, 2010]

Exchange Act Form 8-K

Question 106.01

Question: Item 2.02 contains a conditional exemption from its requirement to furnish a Form 8-K where earnings information is presented orally, telephonically, by webcast, by broadcast or by similar means. Among other conditions, the company must provide on its website any financial and other statistical information contained in the presentation, together with any information that would be required by Regulation G. Would an audio file of the initial webcast satisfy this condition to the exemption?

Answer: Yes, provided that: (1) the audio file contains all material financial and other statistical information included in the presentation that was not previously disclosed, and (2) investors can access the audio file and replay it through the company's website. Alternatively, slides or a similar presentation posted on the website at the time of the presentation containing the required, previously undisclosed, material financial and other statistical information would satisfy the condition. In each case, the company must provide all previously undisclosed material financial and other statistical information, including information provided in connection with any questions and answers. Regulation FD also may impose disclosure requirements in these circumstances. [April 2, 2008] [Added to Archives Jan. 11, 2010]

Question 106.02

Question: A company issues its earnings release after the close of the market and the 5:30 p.m. EDGAR deadline, and holds a properly noticed conference call to discuss its earnings two hours later. That conference call contains material, previously undisclosed, information of the type described under Item 2.02 of Form 8-K. Because of this timing, the company is unable to furnish its earnings release on a Form 8-K before its conference call. Accordingly, the company cannot rely on the exemption from the requirement to furnish the information in the conference call on a Form 8-K. What must the company file with regard to its conference call?

Answer: The company must furnish the material, previously non-public, financial and other statistical information required to be furnished on Item 2.02 of Form 8-K as an exhibit to a Form 8-K and satisfy the other requirements of Item 2.02 of Form 8-K. A transcript of the portion of the conference call or slides or a similar presentation including such information will satisfy this requirement. In each case, all material, previously undisclosed, financial and other statistical information, including that provided in connection with any questions and answers, must be provided. Regulation FD also may impose disclosure requirements in these circumstances. [April 2, 2008] [Added to Archives Jan. 11, 2010]

Question 106.03

Question: Item 2.02 contains a conditional exemption from its requirement to furnish a Form 8-K where earnings information is presented orally, telephonically, by webcast, by broadcast or by similar means. Among other conditions, the company must provide on its website any material financial and other statistical information not previously disclosed and contained in the presentation, together with any information that would be required by Regulation G. When must all of this information appear on the company's website?

Answer: The required information must appear on the company's website at the time the oral presentation is made. In the case of information that is not provided in a presentation itself but, rather, is disclosed unexpectedly in connection with the question and answer session that was part of that oral presentation, the information must be posted on the company's website promptly after it is disclosed. Any requirements of Regulation FD also must be satisfied. A webcast of the oral presentation would be sufficient to meet this requirement. See also Exchange Act Form 8-K Question 106.01. [April 2, 2008] [Added to Archives Jan. 11, 2010]

Question 106.04

Question: Company XYZ issues its earnings release after the close of the market on Tuesday. Company XYZ then files its earning release as an exhibit to its Form 10-Q on Wednesday morning, prior to holding its conference call Wednesday afternoon. Must Company XYZ also furnish a Form 8-K under Item 2.02 in order to rely on the Item 2.02 exemption for its conference call?

Answer: No. Assuming that all of the other conditions are met, Company XYZ's filing of the earnings release as an exhibit to its Form 10-Q before the conference call takes place would be sufficient for it to rely on the Item 2.02 exemption for the conference call. [April 2, 2008] [Added to Archives Jan. 11, 2010]

Question 106.05

Question: Does a company's failure to furnish to the Commission the Form 8-K required by Item 2.02 in a timely manner affect the company's eligibility to use Form S-3?

Answer: No. Form S-3 requires the company to have filed in "a timely manner all reports required to be filed in twelve calendar months and any portion of a month immediately preceding the filing of the registration statement . . ." Because an Item 2.02 Form 8-K is furnished to the Commission, rather than filed with the Commission, failure to furnish such a Form 8-K in a timely manner would not affect a company's eligibility to use Form S-3. While not affecting a company's Form S-3 eligibility, failure to comply with Item 2.02 of Form 8-K would, of course, be a violation of Section 13(a) of the Exchange Act and the rules thereunder. [April 2, 2008] [Added to Archives Jan. 11, 2010]

Question 106.06

Question: Company ABC issued a press release on April 3, 200X that contained previously non-public material information. Specifically, Company ABC announced that it would not meet its previous earnings estimates for the fiscal period ended March 31, 200X. The press release also stated that it expected its adjusted earnings (a non-GAAP financial measure) for the fiscal period ended March 31, 200X to be in the range of $1.20 to $1.25. Does Company ABC have to furnish its press release pursuant to Item 2.02 of Form 8-K and satisfy the requirements of Item 2.02 applicable to non-GAAP financial measures?

Answer: Company ABC's press release would be subject to Item 2.02 of Form 8-K because it contained non-public material information regarding its results of operations for a completed fiscal period. The adjusted earnings range presented also would be subject to the requirements of Item 2.02 applicable to non-GAAP financial measures. [April 2, 2008] [Added to Archives Jan. 11, 2010]