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Outdated or Superseded Compliance and Disclosure Interpretations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originally appeared in the Division's Compliance and Disclosure Interpretations, but were removed when they became outdated or superseded.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 August 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 August 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 August 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 August 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]