September 2, 1992
TO: SEC RULES COMMITTEE NO. 67-92
INTERNATIONAL COMMITTEE NO. 18-92
RE: INSTITUTE COMMENT LETTER ON PROPOSED AMENDMENTS TO RULE
144A
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As we previously informed you, the SEC recently proposed
amendments to Rule 144A under the Securities Act of 1933 to
expand the categories of entities eligible to be "qualified
institutional buyers" under the rule and to permit the inclusion
of U.S. government securities for purposes of determining whether
an institution owns and invests on a discretionary basis at least
$100 million in eligible securities. (See Memorandum to SEC
Rules Committee No. 50-92, International Committee No. 15-92,
dated July 24, 1992.) The Institute filed the attached comment
letter with the SEC earlier this week.
The Institute’s comment letter did not oppose the
Commission’s proposal to add bank collective trust funds and
master trusts to the list of eligible purchasers under Rule 144A.
However, the letter did oppose the proposal to treat purchases by
an insurance company for its unregistered separate accounts as
purchases by the insurance company for its own account under the
rule. The letter states that this approach would allow
potentially small entities to purchase Rule 144A securities
(contrary to the intent of the rule) and would be inconsistent
with the treatment of similar types of purchasers, including
investment companies, under the rule.
The Institute’s letter supported the Commission’s proposal
to permit entities to include their investments in U.S.
government securities for purposes of establishing qualified
institutional buyer status under the rule, and further
recommended that securities acquired under repurchase agreements
be counted for this purpose. Finally, the Institute proposed an
amendment to the rule to permit a purchaser that is a member of a
family of investment companies to provide a certification to a
seller of Rule 144A securities that, as of a specified date, the
family owned and invested on a discretionary basis more than $100
million in securities (rather than a specific dollar amount, as
is currently required).
We will keep you informed of developments.
Frances M. Stadler
Assistant Counsel
Attachment