By:  Cydney Posner

Corporate Counsel, from the ABA Business Law section meeting, reported on two items of note from a session with Corp Fin Director John White and Deputy Director Marty Dunn concerning public offerings in which adverse developments come to light after pricing but before closing:

  • With respect to creating a new "time of sale" (which companies and bankers will usually want to do so that the new adverse information would be part of the disclosure package that the investor considered in making the investment decision), the speakers emphasized that investors must be advised that they have two choices, either: (i) keep the existing sale and retain rights attached to that original sale or (ii) mutually agree to terminate and enter into a new sale. The "time of sale" cannot be changed unilaterally.
  • With respect to recirculation, Corp Fin Assistant Directors will no longer be deciding how and when recirculation is necessary. In light of new Rule 159 (which looks at whether information was conveyed at the time of sale under a facts-and-circumstances analysis), ADs "will no longer use their delegated authority to declare registration statements effective to inquire as to the details of how new information was conveyed. Rather, to serve as a reminder of the company's obligation in selected circumstances, the Assistant Directors might ask for a straight-forward representation that the information will indeed be conveyed. This representation can be provided orally."

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