Question
(redacted)
[Please note: There were 2 pages of Facsimile cover letter.]
February 26, 1998
Via Facsimile
Joseph G. Krauss, Esq.
Premerger Notification Office,
Federal Trade Commission,
Bureau of Competition,
Sixth Street and Pennsylvania Avenue, NW,
Room 303,
Washington, D.C. 20580
Re:Interpretation of the Securities Underwriter Exemption (16 C.F.R. 802.60) Under the Hart-Scott-Rodino Antitrust
Dear Mr. Krauss :
Further to my July 8, 1997 letter to Richard B. Smith, Esq. and our recent conversations and in-person discussions, I write pursuant to 16 C. F. R. 803. 30 to request the issuance of an interpretation of the rules promulgated under the Hart-Scott-Rodino antitrust Improvements Act of 1976, as amended, (the Act). As we have discussed, it is requested that the Premerger Notification Office (the PNO) confirm that the securities underwriter exemption ( 6 C. F. R. 803. 60) applies to all acquisitions of voting securities by broker-dealers for the purposes of resale in the ordinary course of business.
Specifically, for the reasons addressed in my July 8 letter, it is requested that the PNO issue an interpretation of the securities underwriter exemption clarifying that the provision extends if any acquisiti0n of voting securities for the purposes of resale in the ordinary course of business if the entity making the purchase is either:
(a)a registered broker or dealer within the meanings of 13 U.S.C. (illegible), or a person that would be required to be as registered in the absence of an exemption under the Securities Exchange Act of 1934 the Exchange Act or its rules promulgated under that statue; or
(b)(illegible)
As described in my July 8 letter as we discussed during our telephone conversation on November 27, 1997 and during several recent meetings, there do no appear to be any issue 0f antitrust enforcement or policy that support withholding the requested clarification. The types of acquisitions that would be covered by the interpretation are akin to other activities conducted in the ordinary course of business by entities that are engaged in securities underwriting or distribution.
Treating all such acquisitions similarly for purposes of the notification and waiting period requirements (the Requirements) of the Act would yield the following benefits, among the others discussed in my July 8 letter. First, such interpretation would provide much-need certainty regarding the applicability of the securities underwriter exemption to transactions that occur under circumstances requiring a swift, even instantaneous, determination as to whether the acquisition would be subject to the Requirements. Second, providing the requested clarification would ensure that the firms that regularly make such acquisitions (illegible) as on a basis that allows (illegible) they compete effectively with their (illegible).
As discussed during our telephone conversation, clarifying that such acquisitions are exempt from the Requirements would not create a loophole that would include transactions that might give rise to significant competitive concerns. The propose clarifications would retain the requirements of the securities underwriter exemption when the acquisition be conducted for purposes of reselling (illegible) securities and (illegible) in the ordinary course of the business of the acquirer. You confirmed during our telephone conversation then the exemption would apply even if the acquirer were (illegible) of such (illegible) as adverse (market changes as long as the purpose of the acquisitions was to obtain securities for resale promptly in the ordinary course of business. As a result, even under the requested interpretation, the range of acquirers and acquisitions that would be covered under the securities underwriter exemption would remain substantially narrower than those eligible for is the institutional investor exemption codified at 16 C.F.R. 802.64.
We appreciate your continuing (illegible) an consideration in, this matter.
Very truly yours,
(redacted)
cc:Catherine McGuire, Esq.
(Securities and Exchange Commission)
Maryanne Kane, Esq.
(Federal Trade Commission)
David Cavicke, Esq.
(Commerce Committee,
United States House of Representatives)
cc: (redacted)