Subject: File No. S7-38-04
From: Harrison Clay, General Counsel
Affiliation: WR Hambrecht + Co
January 31, 2005
The following comments to the SEC's proposed rules governing electronic roadshows are submitted on behalf of W.R. Hambrecht + Co., LLC. We support the SEC's efforts to permit the use of electronic roadshows without many of the conditions in the electronic roadshow no-action letters. We believe that it is in investors' interests to have greater access to the presentations that are traditionally given in roadshows and we believe that allowing issuers to share this information via the internet or other electronic means with greater certainty on the securities laws implications will improve the public offering process for issuers and investors. We also believe that it is important to preserve the spontaneity and flexibility of live roadshow presentations without imposing further regulatory burdens on the communications that take place at such live roadshows.
Specifically, our comments to the proposed reforms are as follows:
(1) We seek clarification on the filing requirements with respect to material used at electronic roadshows. Based on our interpretation of the proposed release we understand that issuers would be allowed to broadcast multiple electronic roadshows on the internet as long as (a) a bona fide version of the roadshow was readily available to any potential investor at the same time and (b) certain presentation materials (such as slides) used or distributed at electronic roadshows are filed as a free writing prospectus. However, we would like for the SEC to clarify precisely how broad the free writing prospectus filing requirements are. For example, would the verbal script that accompanies any slide material be required to be filed along with the slides as a free writing prospectus, or only a copy of the slides? If non-material changes were made to the slides used in a subsequent electronic roadshow, would the issuer be required to file the amended slide presentation? We believe that it would be in the interests of issuers to have clear guidance from the SEC on the SEC's expectations with respect to filing material used in electronic roadshow presentations.
(2) We do not believe that the SEC needs to include a definition of road show to describe roadshow activities.
(3) We believe that the proposal will encourage issuers to use electronic roadshows that are more readily available to the average investor. Under the proposal, the issuer will maintain the flexibility of the traditional live roadshows, but will be able to make version(s) of its roadshow available to potential investors via the internet or other electronic means without running the risks of violating Section 5 of the Act (assuming compliance with proposed Rule 433). The limitations imposed by the no-action letters on roadshows require an issuer that would like to broadly disseminate the core presentation of their roadshow to file the roadshow as part of their prospectus (as seen in the Google and Kraft offerings). We believe the regime that exists under the no-action letters limits the desirability of broadly disseminating roadshows via the internet or other electronic means
(4) We do not believe that issuers should be required to disseminate electronic roadshows, as certain issuers may prefer not to have any roadshow or to present their roadshow only live to a limited number of institutional investors. Requiring issuers to disseminate electronic roadshows would add to the already considerable complexity and costs of public offerings while potentially inhibiting useful communication between issuers and investors.
(5) We do not believe that the SEC needs to include any more conditions on electronic roadshows then are contemplated by the current proposals.
(6) We believe that the proposed definition of a "bona fide" roadshow is adequate.
(7) We do not believe that there is any reason to discourage transmission of different versions of a roadshow. We believe that allowing an issuer to electronically broadcast their live roadshows to investors at numerous different times will maintain the spontaneity and flexibility of the roadshow while broadening the number of investors that are able to view the presentation. For example, an issuer may choose to have multiple electronic roadshows that are disseminated to registered investment advisors that vary from the "bona fide" roadshow that is made generally available to investors. In such a situation we believe that investors will be sufficiently protected from any selective disclosure issues by the proposed requirements that a "bona fide" roadshow is available and that any material issuer information disclosed at such roadshow that has not otherwise been otherwise filed, is filed.
(8) Issuers should be allowed to edit a retransmitted roadshow. We believe that potential investors will be sufficiently protected from any selective disclosure issues that could arise as as result of retransmitted, edited presentations by the proposed rules. Allowing issuers to edit their roadshows without further regulatory obligations will enhance the usefulness of the roadshow and encourage issuers to electronically disseminate them.
(9) We do not believe that visual presentations such as slides or power presentations used but not distributed at live road shows should be considered free writing prospectuses. The content of such slides, absent the accompanying verbal commentary, may not be meaningful to investors. We believe that requiring issuers to file the presentations used (but not distributed) at live roadshows would reduce the desired flexibility and spontaneity of the oral, live roadshow and inhibit communication between issuers and potential institutional investors that attend such live roadshows.
(10) We do not believe that the use of electronic media to distribute an otherwise oral presentation to an audience overflow room should be considered a written communication as it would inhibit communication between issuers and potential investors by imposing regulatory burdens and filing requirements on issuers for purely logistical reasons.
(11) We believe that electronic roadshows in business combination transaction should be treated in the same manner as electronic roadshows used in the sale of securities.
WR Hambrecht + Co
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