Company Name: W.R. Hambrecht & Co.
Public Availability Date: July 12, 2000
Document Sections:
LETTER OF INQUIRY
APPENDIX
STAFF REPLY LETTER
[LETTER OF INQUIRY]
July 11, 2000 Michael Hyatte, Esq.
Special Counsel
Office of Chief Counsel
Division of Corporation Finance
Securities and Exchange Commission
450 5th Street, NW
Washington, D.C. 20549 Re: W.R. Hambrecht + Co OpenBook Dear Mr. Hyatte: W.R. Hambrecht + Co. ("WRH") intends to offer debt securities by auction over
the Internet. In connection with such offerings, we will deliver via our website
during the auction, among other information and as a part of the prospectus used
to offer such debt securities, a screen summarizing the bids submitted (the
"Auction Screen"). We request that the staff of the Division of Corporation
Finance confirm our view that if WRH delivers a prospectus via its website,
that, as described below, contains a hyperlink to the Auction Screen, and the
issuer of the debt securities makes the filings pursuant to Rule 424 under the
Securities Act of 1933, as amended (the "Securities Act""), WRH and the issuer
will have complied with the requirements of Section 5(b)(1) of the Securities
Act and Rule 424 under the Securities Act. Auction The debt securities to be offered in any auction will be eligible to be
registered on a shelf registration statement pursuant to Securities Act Rule
415(a)(1)(x) on Form S-3. The registration statement relating to any such
offering will contain as originally filed a plan of distribution that reflects
the possible use of an auction underwriting procedure, or will be amended to
contain a plan of distribution that reflects the possible use of an auction
underwriting procedure.
A potential investor that has been approved by WRH or another underwriter to
participate in an auction will access a website operated by WRH that will
provide the investor with a prospectus relating to the debt security being
offered in such auction prior to the admission to such auction. The prospectus
(the "Qualifying Prospectus") provided upon accessing the website in order to
participate in an auction will be formatted as a base prospectus describing the
terms of the debt securities being offered as well as information on the issuer
and a prospectus supplement that will contain the following information:
A description of the debt securities subject to the auction, including a
description of the terms to be set in the auction and the ranges within which
such terms will be fixed,
A summary of the auction process,
A description of the web pages that will be seen by an investor participating
in an auction, and
A hyperlink in the prospectus to the Auction Screen; as discussed in Release
33-7856, Use of Electronic Media (April 28, 2000) (the "Electronic Media
Release"), by inclusion of this hyperlink, the issuer will have acted to make
the Auction Screen part of the Qualifying Prospectus.
Once the auction commences, an investor will be able to submit a bid that will
specify, among other information, a spread over a designated reference U.S.
Treasury security to be used to determine the yield on the debt security subject
to such auction; the Auction Screen will advise the investor of the status of
any bid they submit as well as information concerning bids by other investors
(the "Auction Summary"). All bids will be submitted through the Auction Screen.
The Auction Screen cannot be separately accessed other than as part of the
Qualifying Prospectus. Once an auction is complete, the Qualifying Prospectus delivered to investors
who are awarded debt securities in such auction will be supplemented (the
"Qualifying Pricing Supplement") to include:
the results of the auction including an overview of the information provided
in the final Auction Summary, and
representative reproductions of the Auction Summary appearing on the Auction
Screen. For example, in the case of an auction lasting one hour or more, the
Qualifying Pricing Supplement will include such reproductions at intervals of at
least every 15 minutes, or more frequently if required to reflect substantive
changes. (See Attachment A).
An issuer involved in an auction initially will file with the Securities and
Exchange Commission the Qualifying Prospectus (which describes the auction
process and the information to be displayed on the Auction Screen during the
auction) pursuant to Rule 424 under the Securities Act. After the auction is
completed, the issuer also will file the Qualifying Pricing Supplement (which
will describe the results of the auction, including summary information on the
number, amount and levels of the bids submitted in the auction and the Auction
Summary reproductions) pursuant to Rule 424 under the Securities Act. The issuer
will not make any additional filings of the interim information that appears on
the Auction Screen during the conduct of an auction. Conclusion While we do not believe that the Auction Screen should be deemed an "offer" and
therefore a "prospectus" as defined in Section 2(a)(10) of the Securities Act,
if the Auction Screen were deemed to be "prospectus", its separate use would
raise issues under Section 5(b)(1). By delivering the Qualifying Prospectus
electronically and by making the Auction Screen an embedded part of the
Qualifying Prospectus, as contemplated by the Electronic Media Release, we have
prevented any separate access or use of the Auction Screen that could violate
Section 5(b)(1). By filing the Qualifying Prospectus and the Qualifying Pricing Supplement
pursuant to Rule 424, we are of the opinion that the requirements of Rule 424
under the Securities Act are fulfilled. Consistent with the approach detailed in
the Electronic Media Release, the information to be contained in the Qualifying
Prospectus by hyperlink to the Auction Screen would be described in such
prospectus and filed as part of such prospectus under Rule 424. The Qualifying
Pricing Supplement, which contains information on the result of the auction and
the Auction Summary reproductions, would also be filed under Rule 424(b). The
issuer would not make any additional filings pursuant to Rule 424 to reflect the
information that appears moment by moment on the Auction Screen during the
auction because we believe that such changes will not be substantive changes
and, therefore, not subject to the filing requirements of Rule 424. If you have any questions regarding this matter, please feel free to contact
Robert S. Goldberg at (212) 313-5915. Very truly yours,
[APPENDIX]
Attachment A
[STAFF REPLY LETTER]
July 12, 2000 RESPONSE OF THE OFFICE OF CHIEF COUNSEL
DIVISION OF CORPORATION FINANCE Re: W.R. Hambrecht + Co. Incoming letter dated July 11, 2000 Based on the facts presented, the Division's view is that W.R. Hambrecht + Co.
may conduct auctions of debt securities by registrants subject to the periodic
reporting requirements of the Securities Exchange Act of 1934 through the
Internet system described in your letter in compliance with Section 5(b)(1) of
the Securities Act of 1933. W.R. Hambrecht + Co. may comply with the
requirements of Rule 424 by filing
a preliminary prospectus supplement in the manner described in your letter;
and
a final prospectus supplement that provides a fair and accurate description of
the information, including price information, as will have been presented
electronically in the Internet auction, by presenting
the final terms of the offering;
the interim screen shots described in your letter; and
any other interim screen shots that evidence a substantive change in the
information already filed with the Commission.
In reaching these positions, we note particularly
that the Internet auction screens will be a part of the prospectus permitted
by Section 10 of the Securities Act;
that, because they are part of the electronic prospectus permitted by Section
10 of the Securities Act, the Internet auction screens will be accessible only
through that electronic prospectus;
your view that a complete presentation of all bidding and other auction
activity visible to participants on the Internet auction screens need not be
filed under Rule 424 because the filings that will be made under Rule 424 will
include all substantive changes from information already filed with the
Commission; and
that, because the Internet auction screens, as described in your letter, are
part of the prospectus, all bidding and other auction activity visible to
participants on the Internet auction screens are part of the prospectus.
The positions expressed above merely represent the Division's views regarding
compliance with Section 5(b)(1) of the Securities Act and the filing
requirements of Rule 424. Because the positions expressed above are limited to
the presentation and manner of conducting the Internet auction, we take no
position regarding whether any announcement of the Internet auction would
constitute a "prospectus," as defined in Section 2(a)(10) of the Securities Act.
Further, we are not prescribing the method for filing the Internet auction
screens on the EDGAR system. On this subject, you should consult Regulation S-T,
including Rule 304 thereof, and the Commission's interpretations regarding the
use of electronic media. These positions are based on the representations made to the Division in your
letter. Any different facts or conditions might require another conclusion. Sincerely, Michael Hyatte
Special Counsel
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