July 15, 1999
Jonathan G. Katz
Securities and Exchange Commission
450 Fifth Street, N.W., Stop 6-9
Washington, D.C. 20549
Re: The Regulation of Securities Offerings - File No. S7-30-98
Dear Mr. Katz:
General Electric Capital Corporation welcomes the opportunity to submit its comments on the Securities and Exchange Commission's proposal to restructure the regulation of securities offerings in the United States in Release No. 33-7606A (the "Release").
As one of the largest corporate debt and preferred stock issuers in the United States, GE Capital strongly supports measures designed to increase the efficiencies of the United States capital markets for both issuers and investors. We believe it is important for the Commission to take whatever steps are necessary to maintain investors' confidence in these markets, and appreciate the work of the Commission and its staff that has gone into developing the extensive proposals contained in the Release.
However, we believe that many of the proposed changes would adversely affect GE Capital's access to the United States capital markets. These proposed changes do not appear to provide the investing community with benefits sufficient to justify this result.
Background - GE Capital's Offering Programs
GE Capital is an indirect wholly-owned subsidiary of General Electric Company.1 Both GE and GE Capital file periodic reports with the Commission pursuant to §13 of the Securities Exchange Act of 1934. As a wholly-owned subsidiary of GE, GE Capital relies upon the limited disclosure provisions of General Instruction I of Form 10-K and General Instruction H of Form 10-Q in preparing and filing these reports.
In 1998, GE Capital had revenues of $41.4 billion and net income of $3.3 billion. At the end of 1998, GE Capital had $72.7 billion in long-term debt outstanding (including the current portion of long-term debt), $92.8 billion of short-term debt outstanding (excluding the current portion of long-term debt), and interest expense of $8.6 billion (our second largest annual expense as reflected on our income statement). From January 1, 1997 through June 30, 1999, we issued $54 billion of medium- and long-term debt securities. Approximately 36% of this total ($19.6 billion) was issued in the United States pursuant to our domestic Medium-Term Note Program; the balance ($34.4 billion) was issued outside the United States pursuant to our Euro Medium-Term Note Program. We currently issue debt securities denominated in 18 currencies.
Given our significant funding requirements and the fact that, unlike a bank, we do not accept deposits, GE Capital is totally reliant upon the capital markets. Therefore, we constantly strive to maintain efficient access to as many markets as possible. Any proposal that would reduce the efficiency of our access to an important capital market, especially our home market, could adversely affect GE Capital's ability to fund itself in a cost-effective manner.
GE Capital issues medium- and long-term debt instruments in the United States almost exclusively through our Medium-Term Note Program, which is registered with the Commission pursuant to Rule 415(a)(1)(x) on a delayed shelf-registration basis (see Registration No. 333-76479, which is GE Capital's most recent shelf registration statement, and the Prospectus Supplement dated May 3, 1999 filed with the Commission pursuant to Rule 424(b)(3) on May 3, 1999, which describes this program). GE Capital also issues medium- and long-term debt infrequently through separately documented drawdowns off of our shelf registration statement. This rarely occurs, because the MTN facility is much more efficient.
A portion of the debt issued pursuant to the MTN program is issued on a reverse-inquiry basis. Each morning, GE Capital communicates its anticipated funding needs to its MTN dealers. These brokerage institutions, whether named as dealers on GE Capital's MTN program or availing themselves of the "dealer-for-a-day" provisions contained in the program documentation, then contact us with proposed transactions for which they have already lined up prospective investors. At this point, GE Capital decides whether to accept the proposed transaction, and if accepted, commences execution on an in-house basis. The balance of our MTN's are issued when our funding needs so dictate, after discussions as to pricing, size and timing with various members of our dealer group. We do not know whether our dealers engage in preliminary discussions with potential investors in relation to these deals prior to pricing. Many MTN issuances are in small principal amounts; 31 MTN's issued in 1998 (26% of the total number of MTN's issued in that year) were in a principal amount of $10 million or less.
In addition, GE Capital offers debt securities pursuant to a Variable Denomination Floating Rate Demand Note program registered with the Commission pursuant to Rule 415(a)(1)(x) on a shelf registration basis. This program, which is known as the "Interest Plus Program," has grown dramatically since its inception in 1992. Currently more than 147,000 retail investors have funds invested in the Interest Plus Program, and over $3.2 billion of debt is outstanding. This program is one of our most important means of accessing the domestic retail investor, and is very significant to our domestic funding strategy. See Registration No. 333-59977, which is our most recent registration statement with respect to this program. Ford Motor Credit Corporation and General Motors Acceptance Corporation also have similar programs.
GE Capital also issues Variable Cumulative Preferred Stock (commonly referred to as "Money Market Preferred Stock"). These securities are registered with the Commission pursuant to Rule 415(a)(1)(x) on a delayed shelf registration basis. GE Capital currently has 40 series of this preferred stock outstanding. Money Market Preferred Stock is issued solely to institutional investors. See Registration No. 333-76479, which is our most recent registration statement with respect to this instrument.
All GE Capital debt instruments are rated Aaa by Moody's and AAA by Standard & Poor's, their highest ratings. Our Money Market Preferred Stock is rated Aaa by Moody's and AA by Standard & Poor's. Recent volumes for these programs follow:
($ Amount of
($ Amount of
|1998||116||$9,549,000,000||$2,760,000,000||1 (1 deal)||$70,000,000|
|TOTAL||269||$19,602,000,000||-----||12 (4 deals)||$800,000,000|
In addition, GE Capital and its affiliates also issue medium- and long-term debt outside the United States pursuant to a European Medium-Term Note program. These securities are listed on the Luxembourg Stock Exchange and are issued without SEC registration pursuant to Regulation S under the Securities Act. The following table describes our issuances in the United States and offshore in markets in recent years:
|MTN Program||EMTN Program|
|1999 (through June 30)||$7,608,000,000||$10,490,000,000|
Finally, GE Capital is one of the largest issuers of commercial paper in the world. This paper is issued on a direct-issuance basis primarily to institutional investors, and is not registered with the Commission pursuant to §3(a)(3) of the Securities Act. Our commercial paper is rated A-1+ by Standard & Poor's and P-1 by Moody's, their highest ratings.2 We currently have over $75 billion of commercial paper outstanding, and have issued a total of $1.3 trillion of commercial paper in the first six months of 1999.
This background demonstrates that open and efficient access to the United States capital markets is of paramount importance to GE Capital, and that the Commission's current shelf-registration procedures, which afford us virtually instantaneous access to the domestic market, are extremely efficient. We believe that our ability to issue in the volumes described above further demonstrates that this system satisfies the disclosure needs of our investors. For us, efficiency is measured not only by the direct costs of issuance but also by indirect costs. For example, if regulatory or market changes in a given market require us to hire additional staff or prevent us from continuing to handle documentation for all of these programs on an in-house basis, this could affect our decision as to whether to issue debt in that market. Unfortunately, several of the proposals contained in the Release could compromise our access to the United States capital markets and increase our costs in that market. In some cases, these adverse effects could arise as a result of actions of third parties not within our control.
Analysis of Proposals
Proposed Abolition of Delayed Shelf Registration Practice. GE Capital strongly believes that current delayed shelf registration practice should be preserved, at least for issuers of investment-grade debt and preferred stock.
We understand the Commission's concern regarding the limited amount of information conveyed by the base prospectus in most shelf registration statements. We believe this concern can be addressed without discarding the entire delayed shelf registration concept. For example, in the context of a MTN program such as ours, the rules could be modified to permit, or require, inclusion of the information regarding the MTN program with the Base Prospectus instead of in a separate prospectus supplement, while maintaining the issuer's ability to use this combined document for a non-MTN offering off the shelf.
We also understand that one of the goals of Form B is to do away with what the Commission refers to in the Release as "kitchen sink" disclosure in advance of an offering. However, the extent of disclosure in MTN program documentation is driven by the SEC's disclosure requirements and investors' needs. If the Commission elects to do away with shelf registration and not permit MTN program detail to be conveyed in advance of issuance, this will simply require GE Capital to shift the detailed disclosure from a single program document to the multitude of pricing documents issued under our MTN program. This will prolong transaction execution, increase our costs and provide no additional benefits to our investors.
We would also be concerned with a structure that required us to convey offering information via a post-effective amendment requiring signatures by officers with authority to sign on behalf of GE Capital, as compared with the current system which permits filing of pricing supplements without signature pursuant to Rule 424. The addition of a signing requirement simply imposes a new time-consuming ministerial act. We recognize the Commission's attempt to deal with this issue by the power of attorney approach suggested in the Release. However, it is puzzling to us that the Commission would impose a liability-bearing signing requirement in a manner that precludes review by the signer while at the same time proposing to increase the liability of signers of periodic reports under the Exchange Act in an attempt to increase the quality of those documents. Even with a power of attorney structure, the Commission will increase the prevalence under the Securities Act of the advance signing of blank signature pages at the same time that it is attempting to eliminate that practice under the Exchange Act.
Delivery of Term Sheets; Prospectus Delivery Requirements. If the Commission adopts a requirement that term sheets or other documents bearing Securities Act liability be delivered to prospective investors prior to the time an investment decision is made, the flexibility afforded by the current system will be significantly impaired. In addition, our ability to utilize reverse-inquiry methodology will be compromised, if not eliminated. We believe this will prolong transaction execution and preclude us from reacting promptly to market changes. This will also adversely affect the ability of investors to reconfigure their portfolios quickly, which could be particularly onerous during periods of extreme market volatility.
Currently, GE Capital's in-house legal staff prepares all documentation relating to our funding transactions. This process commences once a transaction is priced, with offering documentation delivered on a T+2 basis.3 We have never received a complaint from any of our investors regarding the manner in which they receive their offering documentation or the timing of delivery. If a liability-bearing term sheet were to be required to be physically delivered prior to an investor's investment decision, we would have to review any term sheet prior to its first use. This would slow down what is now a very efficient process, and prevent prospective investors and dealers from interacting on a real-time basis, particularly in the context of reverse-inquiry transactions.4 We also do not understand how this structure will be reconciled with the eventual move to T+1 clearance and settlement.
We are not aware of any reasons that a potential investor in the investment grade debt market would benefit from these changes. We sell our MTNs primarily to sophisticated institutional investors. Given current shelf practice, virtually everything that an investor needs to know regarding our MTN program is available to them in the MTN Prospectus Supplement; the only remaining information is the economic terms of the instrument. While this may argue for permitting dealers to provide term sheets without our review, we do not believe it would be appropriate for us to do so given the severe liability that would be imposed upon us by the Securities Act. We would need to be able to verify that, for example, a dealer bent on using a term sheet as a marketing tool has not included information regarding GE Capital that is inconsistent with our publicly-available information. In addition, we would need to be sure that our MTN program was properly disclosed, and that the correct documents were incorporated by reference. This change would impose greater demands upon our internal resources not only for the reasons described above, but also because we would be required to review term sheets for a greater number of transactions than we currently document. We cannot estimate the magnitude of the increase, as we do not know how many dealer proposals prospective investors turn down before we learn of them.
We also note that earlier filing of proposed transactions may prove troublesome to the broker/dealer community. In the past, we have found dealers to be (understandably) quite concerned about public disclosure of what they consider to be proprietary structures prior to pricing the transaction, and we have undertaken to handle draft term sheets so as to maintain their confidentiality. We would not want a new regulatory approach to discourage creativity on the part of our dealers.
We do not disagree that prospective purchasers of certain equity, high yield debt, structured note transactions or other offerings involving complicated instruments or significant risks could benefit from earlier provision of a comprehensive and understandable offering document, particularly if they are retail investors. In the context of investment grade debt, however, these factors are present only when we issue complex structured or indexed notes. As noted above, we currently require the ability to review any offering materials that a dealer may propose to show to prospective purchasers in these transactions prior to their first use. We believe this is an example of the current regulatory system producing the correct result - earlier disclosure to prospective investors when the complexity or novel nature of the transaction merits it. In short, we do not see a need to fundamentally restructure the manner in which investment grade debt offerings are executed to address possible issues in other markets. We respectfully suggest that if regulatory changes to the offering process need to be made, the Commission consider tailoring the proposed changes to better target the type of offering or the intended audience.
Imposition of Securities Act Liability on Free Writing. As a practical matter, requiring filing of free writing materials in the context of a continuous offering program such as GE Capital's would be unworkable. A particular investor may purchase several notes from us in a short period of time and may be in frequent, if not constant, conversations regarding our securities with one or more dealers. It will be difficult, if not impossible, to measure separate 15-day look-back periods for each note with each dealer. The subjectivity of the definitions of "Offering Information" and "Factual Business Communications" will further complicate this analysis. The result of this requirement would be to impose significant speed bumps upon a process that is currently extremely efficient, both from our point of view as well as from the point of view of the distribution and buy-side communities.
The consequences of an inadvertent failure to file Free Writing Materials is not clear, particularly if one of our dealers failed to file documentation of an oral statement it made during the Offering Period that constituted Free Writing. The implication of the Release is that this would constitute a form violation, thereby giving purchasers a one-year rescission right against GE Capital. Any creation of rescission rights for actions taken by third parties would present unacceptable risks for GE Capital. A portion of our debt issuances are hedged at the time of issuance. Rescission of the underlying debt issuance would not enable us to unwind the derivative transaction as of right; instead the transaction would be marked to market under ISDA early termination methodology. In addition, we match fund by, for example, issuing fixed-rate debt to eliminate interest rate risk from fixed-rate assets. Again, rescission of a debt instrument would expose us to interest rate risk. Both scenarios could penalize GE Capital even though it was a member of our dealer group that failed to comply with a filing requirement.
In addition, this structure could give a purchaser seeking a means to exit from an investment no longer viewed favorably an incentive to bring nuisance actions against issuers alleging that a remote distribution participant failed to file an oral statement that constituted Free Writing Materials. Given the subjective nature of the proposed regulations and the evidentiary difficulties inherent in any allegation based upon oral statements, any such action would be difficult to dispose of in a summary judgment motion. This may result in the creation of another avenue for the sort of strike suit practice that the Commission has sought to eliminate in recent years.
To mitigate these risks, we would be compelled in our program documentation to prohibit dealers from engaging in any communications with prospective purchasers other than delivering the offering documentation prepared by us. This would impair, rather than enhance the amount of information provided to prospective investors. In addition, we might be forced to eliminate the dealer-for-a-day provisions from our MTN program. This would restrict the ability to underwrite our debt securities to very large broker/dealers with the internal controls to be able to regulate this risk (as well as the financial strength to stand behind the concomitant indemnities we would require should they fail to do so 5).
Form B Eligibility; Staff Review Policy. The proposed disqualifications from Form B eligibility, while seemingly innocuous on their face, would present significant risk to GE Capital's access to the United States capital markets.
The proposed disqualification of issuers that use underwriters that have violated provisions of the federal securities laws or that were convicted of securities fraud or business-related fraud or perjury in the prior five years exposes GE Capital to the risk that it may inadvertently use such an underwriter in a single MTN transaction and then be disqualified from using Form B. It is not clear how long the disqualification would last, or if a violation relating to a single note under an ongoing MTN program would disqualify the particular note or all subsequent issuances.
If this provision were limited to violations of federal securities laws, this risk would be significantly abated (particularly if the Commission were to publish current cumulative lists of registered broker/dealers that have been found to have violated provisions of the federal securities laws in the past five years).6 The breadth of the general fraud provisions contained in the proposal would make it virtually impossible for us to determine that we have no risk of this disqualification occurring. Again, we would be forced to limit our underwriting business to the largest underwriters, which would produce the negative consequences described above.
We are also troubled by the proposal to disqualify issuers that are engaged in good faith disagreements with the Staff regarding comments on periodic reports. While we fully expect to maintain our policy of promptly responding to Staff concerns with our registration statements and periodic filings, we are uncomfortable with the possibility that our ongoing access to the United States capital markets could be compromised in this way. We suggest that the Commission instead adopt rules enabling the Staff to petition the Commission on an expedited basis to disqualify a particular issuer from further use of Form B if the Staff can demonstrate that the issuer is refusing to address Staff comments in bad faith. We believe the severity of the remedy requires the review by the Commission of any proposal by the Staff to revoke Form B eligibility.
Similarly, we are concerned by the uncertain status of our offering program should an inadvertent mistake cause a particular post-effective amendment to be ineligible for that form. While we understand the Commission's concern with the potential for abuse of Rule 401(g) in the context of automatic effectiveness of Form B, the consequences of an inadvertent violation are not at all clear. Given the draconian possibilities, it is important that this uncertainty be addressed in any rulemaking.
Finally, we would also like to comment on the proposal to continue the Staff's current practice of requiring pre-clearance of novel transactions. While this introduces some uncertainty into the registration process, we have found the Staff to be responsive when such a transaction has arisen. However, we have also found that there are widely divergent views as to when a proposed transaction is sufficiently novel to require Staff pre-clearance. Particularly in light of the proposed repeal of Rule 401(g) with respect to Form B transactions and the proposed "red flag" post-filing screen by the Staff of all Form B filings, we believe it would be appropriate for the Commission to provide guidance in this area.
Because any such pre-clearance review would be conditioned upon the novelty of the terms of the security, and not the disclosure issues posed by factors relating to the issuer, we suggest that if a substantially similar security has been previously issued, then it is no longer sufficiently novel to require Staff pre-clearance, regardless of the differences between the initial issuer and the proposed subsequent issuer. Substantial similarity should be deemed to exist if the instrument's fundamental economic terms and structure are the same; immaterial differences should not require subsequent pre-clearance. In addition, we suggest that the proposed subsequent issuer be able to rely upon the fact that the proposed security was previously issued in an SEC-registered transaction if there is no objection from the Staff in the public record, without being required to determine whether the Staff had in fact reviewed that security.
Impact of the Release Upon the Interest Plus Program is Not Clear. The application of many of the proposals contained in the Release to the Interest Plus program would not be workable. In particular, the imposition of the term sheet requirement could not be accomplished in this program. There are no indications that this program, or any similarly structured programs, has been the subject of any abuse. As noted above, this program is a significant component of our domestic funding strategy and one of our most important means of access to domestic retail investors. We strongly oppose any regulatory change that could threaten the Interest Plus program.
Alteration in Periodic Report Signing Requirements. As a daily issuer under our shelf registration statements, GE Capital adheres to a policy of maintaining a comparable level of disclosure between our Securities Act registration statements and our Exchange Act periodic reports. To that end, our periodic reports are prepared by our Office of the Controller in close cooperation with our Executive Vice President and Chief Financial Officer, and are also reviewed by counsel. These reports are then presented to the GE Capital Board of Directors prior to being signed and filed. We believe that the delegation by our Board of Directors to our CFO (who is also a board member), Office of the Controller and counsel produces reports that meet all SEC regulatory requirements.
The proposals contained in the Release regarding the certifications required of the signers of Forms 10-K and 10-Q would constitute what we believe is an unwarranted imposition upon the time of our directors, without improving the quality of disclosure to our investors. While we cannot comment as to whether the approach proposed by the Commission may make sense for infrequent issuers given the higher risks that may be posed by their securities, the amount of time and resources the Commission would require of board members under the proposal would be wholly disproportionate to the limited risk inherent in an investment-grade debt program such as GE Capital's.
If the Commission believes that change is required of all issuers, we respectfully suggest that it would be appropriate to permit the board to delegate responsibility to review periodic reports to a committee of the board (such as the Audit Committee or a newly-created Disclosure Committee). We point to the proposal to expand the role of the Audit Committee in the recent report of the Blue Ribbon Committee on Improving the Effectiveness of Corporate Audit Committees as an example of a more workable solution. Delegating authority for matters such as this is also consistent with well-accepted principles of corporate governance.
Apparent Reassertion of the Presumptive Underwriter Doctrine in Rule 144A Transactions. GE Capital utilizes Rule 144A from time to time in structured capital markets transactions. The proposal to treat certain QIBs that resell their securities as presumptive underwriters will require us to impose holding periods on purchasers in Rule 144A transactions. We anticipate that this would, in turn, force the QIBs to impose the liquidity discounts that are present in §4(2) private placements. This is precisely the result that Rule 144A was successfully designed to eliminate. We are not aware of any abuses in Rule 144A transactions that would justify this increase in costs.
Changes in Due Diligence Practice. As an issuer of AAA/Aaa-rated debt securities, we and our underwriters engage in streamlined due diligence procedures that are calibrated to the risks inherent in the securities we issue. We support the Commission's exclusion of investment-grade debt from the proposed revisions to Rule 176. Including investment-grade debt will simply increase the likelihood that underwriters will attempt to impose some or all of the practices enumerated in that rule upon issuers such as us, which would significantly increase our offering costs without providing any incremental protections to our investors. We share the Commission's view that there is no need for additional guidance in this area.
Clarification of Securities Law "Metaphysics" Issues. We support the Commission's proposals to demystify some of the so-called "metaphysical" issues that are present in the current securities laws. In particular, the clarification of the integration doctrine would be helpful to us. We encourage the Commission to consider taking similar action with respect to the integration doctrine as applied under the Investment Company Act of 1940.
Although the Release contains several proposals that would be beneficial to GE Capital (such as deregulating offers in the pre-filing period, allowing delivery of final prospectuses to be effected by notice of availability rather than by physical delivery and providing for immediate effectiveness), the benefits we would recognize from these changes are slight. The potential detriments to us from the provisions of the Release discussed above could be severe, and far outweigh the benefits we may otherwise realize.
We fear that the consequences of adoption of these provisions are likely to exacerbate the concerns that the Commission is seeking to address. For example, we believe that the imposition of Securities Act liability on free writing will discourage, rather than encourage, additional disclosure outside of the prospectus. In addition, the logistical impediments and costs inherent in the proposal to require delivery of term sheets prior to the investment decision could lead more transactions into the private or offshore markets. It may not be the issuers that lead any migration away from the domestic markets. Our fear is that the institutional buy-side community may move to different markets where their current ability to purchase investment-grade debt instruments quickly and efficiently is preserved. If this were to occur, issuers such as GE Capital would have to follow.
As noted above, one option that the Commission may want to consider is to exclude non-convertible investment grade debt securities from the scope of any securities regulatory restructuring that is adopted.7 The existing delayed shelf registration system could be preserved for this category of transactions, and an alternative, or separate, approach could be developed incorporating aspects of the Release that the Commission determines would be beneficial to other transactions.
As GE Capital is not a participant in the equity, convertible debt or non-investment grade debt markets, we cannot comment upon the potential impact of any of the Release's provisions on those markets. We are convinced, however, that the current structure works exceedingly well for non-convertible investment grade debt transactions, both from an issuer's and an investor's point of view. While the amount of debt that GE Capital issues may not be typical, we believe that our approach to the market, at least in broad terms, is similar to that of many other United States financial services companies.
We encourage the Commission to carefully consider the impact of any proposed changes to the regulation of securities offerings in the United States on the investment grade debt market in general, and also upon financial services companies such as GE Capital that must access the capital markets frequently. To the extent there is a perceived need to address issues that arise in specific areas of the United States capital markets, we suggest that the Commission tailor its regulatory response to that portion of the market and refrain from embarking upon a wholesale restructuring of the securities regulatory system.
Jeffrey S. Werner
Senior Vice President - Corporate
Treasury and Global Funding
|cc:||The Honorable Arthur Levitt, Chairman|
|The Honorable Norman S. Johnson, Commissioner|
|The Honorable Isaac C. Hunt, Jr., Commissioner|
|The Honorable Paul R. Carey, Commissioner|
|The Honorable Laura S. Unger, Commissioner|
|Harvey J. Goldschmid, General Counsel, Office of the General Counsel|
|Brian J. Lane, Director, Division of Corporation of Finance|
|Anita T. Klein, Senior Special Counsel, Division of Corporation Finance|
-- GE Capital's immediate parent is General Electric Capital Services, Inc., which in turn is directly wholly-owned by GE. GECS also accesses the United States capital markets. In addition, GE Global Insurance Holding Corporation, a wholly-owned subsidiary of GECS, and GE Financial Assurance Holdings, Inc., a wholly-owned subsidiary of GE Capital, both have filed shelf registration statements with the Commission. All of these entities file periodic reports with the Commission pursuant to §13 of the Exchange Act on the limited disclosure basis discussed in the text with respect to GE Capital. The comments in this letter apply equally to GECS, GE Global Insurance and GE Financial Assurance. -- Commercial paper issued by GECS is accorded the same ratings by both ratings agencies. For a more complete description of our commercial paper program, see our no-action letter regarding engaging in limited advertising of our commercial paper (publicly available July 13, 1994). -- An exception to this practice occurs when a dealer proposes a novel structure. In these cases, we expect our in-house legal staff to be involved by the dealer earlier in the process so that any issues may be identified and analyzed prior to receiving a commitment from a prospective investor. -- We believe the same issues would reduce, if not eliminate, the incentive of underwriters to present us with bought deals. This would eliminate an efficient means to access the domestic market. -- We note that it appears to us that nothing would preclude a prospective plaintiff from naming officers and directors of GE Capital, or GE Company as a controlling person, in any action arising from these facts. If this is even remotely possible, then the Commission's long-standing position against indemnification of officers, directors and controlling persons for Securities Act liability would be entirely inappropriate in this context. -- We are aware of the internet site maintained by NASD Regulation, which discloses, among other things, criminal events related to registered broker/dealers. However, this source would not work in this context. According to NASDr's web site (www.pdpi.nasdr.com), it would take us approximately ten business days to receive information regarding a registered broker/dealer's criminal events once we were to request it on-line. In addition, it takes NASDr approximately 15 business days to post new information regarding a registered broker/dealer once it is received. These delays make this source unsuitable for the real-time reliance that the Release would require. -- We would recommend that any such exclusion be crafted to include preferred stock instruments with debt-like characteristics, such as the Money Market Preferred Stock issued by GE Capital.