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SEC Adopts Integration Rule

Rule 155 Provides New Safe Harbor

By John M. Baker, Esq.


The SEC recently adopted new Rule 155 under the Securities Act of 1933 to provide safe harbors for a registered offering following an abandoned private offering, or a private offering following an abandoned registered offering, without integrating the registered and private offerings in either case. Release No. 33-7943 (Jan. 26, 2001).

The integration doctrine, which has existed since 1933, prevents an issuer from improperly avoiding registration by artificially dividing a single offering so that Securities Act exemptions appear to apply to the individual parts where none would be available for the whole.

Rule 155 provides a safe harbor for abandoned offerings meeting its requirements but does not alter the existing five-factor test for integration.

The new rule, which was originally proposed in 1998 as part of the much broader Aircraft Carrier proposals, will be effective March 7, 2001.

The adopting release is available online at http://www.sec.gov/rules/final/33-7943.htm


Copyright 2000, John M. Baker, Esq., Stradley, Ronon, Stevens & Young, LLP, 1220 19th Street, N.W., Suite 700, Washington, DC 20036 – (202) 822-9611- Fax (202) 822-0140 This article was originally posted to the FundLaw List, http://www.egroups.com/group/fundlaw. To subscribe to FundLaw, send a blank e-mail to fundlaw-subscribe@egroups.com


Nothing herein is intended as legal or financial advice. The law is different in different jurisdictions, and the facts of a particular matter can change the application of the law. Please consult an attorney or your financial advisor before acting upon the information contained in this article.  


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