Release No. 33-6520

March 23, 1984

Confidential Treatment under the Securities Act of 1933

ACTION: Adoption of amendment to rule.

SUMMARY: The Commission is adopting an amendment to Rule 406 under the Securities Act of 1933 (the "Securities Act") which will establish a system of confidential treatment under the Securities Act that is similar in scope and procedure to that under the Securities Exchange Act of 1934 (the "Exchange Act"). The revision is a further step in the integration of the disclosure requirements under the two Acts.

EFFECTIVE DATE: (Insert date thirty days after publication in the Federal Register). Persons wishing to comply with the amendment may, however, do so immediately upon publication.

FOR FURTHER INFORMATION CONTACT: Barry Mehlman or Alan L. Dye at (202) 272-2573, Office of Chief Counsel, Division of Corporation Finance, Securities and Exchange Commission, 450 5th Street, N.W., Washington, D.C. 20549.

SUPPLEMENTARY INFORMATION: As a further step in its continuing effort to integrate the disclosure systems under the Securities Act and Exchange Act, the Commission proposed on November 1, 1983 ¹ to broaden the information eligible for confidential treatment in documents filed under the Securities Act. That proposal which is being adopted today extends the availability of confidential treatment under the Securities Act to the same type of information that may be granted confidential treatment in an issuers periodic reports under the Exchange Act.

Differences in scope of confidential treatment under the Acts are inconsistent with the integration of the disclosure system. With the exception of transaction information, information required to be disclosed in a public offering is generally the same as that required in periodic reports for the trading market. ² Moreover, the differences can result in inconsistent treatment of Securities Act registrants. The proposal was designed to resolve the inconsistencies with integration and among registrants by establishing a system for confidential treatment under the Securities Act that parallels the Exchange Act.

The amended Rule permits requests for confidential treatment of any document required to be filed under the Securities Act. In addition, the revised Rule conforms the procedure for requesting confidential treatment under the Securities Act to that under the Exchange Act. Amended Rule 406 will condition a grant of confidential treatment on the availability of at least one of the nine Freedom of Information Act ("FOIA") ³ exemptions and a determination by the Commission that, under the facts and circumstances of the particular case, disclosure of the information is not necessary for the protection of investors.

The Commission has determined to adopt, without change, the proposed amendment to Rule 406.

Summary of Final Regulatory Flexibility Analysis

The Commission has prepared a final regulatory flexibility analysis in accordance with 5 U.S.C. 604 regarding the amendment to Rule 406. A summary of the corresponding Initial Regulatory Flexibility Analysis was included in the release proposing the amendment to Rule 406 at 48 FR 51155. A copy of the Final Regulatory Flexibility Analysis may be obtained by contacting Barry Mehlman, Division of Corporation Finance, United States Securities and Exchange Commission, 450 Fifth Street, N.W., Washington, D.C. 20549 at (202) 272-2573.

List of Subjects in 17 CFR 230

Forms, Reporting and recordkeeping requirements, Securities.

Text of Amendment

The Commission hereby amends Title 17, Chapter II of the Code of Federal Regulations as follows:

PART 230--GENERAL RULES AND REGULATIONS, SECURITIES ACT OF 1933

1. By revising §230.406, Rule 406, to read as follows:

§230.406 Confidential treatment of information filed with the Commission.

Preliminary Note: Confidential treatment of supplemental information or other information not required to be filed under the Act should be requested under 17 CFR 200.83 and not under this rule.

(a) Any person submitting any information in a document required to be filed under the Act may make written objection to its public disclosure by following the procedure in paragraph (b) of this section, which shall be the exclusive means of requesting confidential treatment of information included in any document (hereinafter referred to as the "material filed") required to be filed under the Act, except that if the material filed is a registration statement on Form S-8 (§239.16b of this chapter) or on Form S-3, F-2, or F-3 (§239.13, 32 or 33 of this chapter) relating to a dividend or interest reinvestment plan, or if the material filed is a registration statement that does not contain a delaying amendment pursuant to Rule 473 (§230.473 of this chapter), the person shall comply with the procedure in paragraph (b) prior to the filing of a registration statement.

(b) The person shall omit from the material filed the portion thereof which it desires to keep undisclosed (hereinafter called the "confidential portion"). In lieu thereof, the person shall indicate at the appropriate place in the material filed that the confidential portion has been so omitted and filed separately with the Commission. The person shall file with the material filed:

(1) As many copies of the confidential portion, each clearly marked "Confidential Treatment", as there are copies of the material filed with the Commission. Each copy shall contain an appropriate identification of the item or other requirement involved and, notwithstanding that the confidential portion does not constitute the whole of the answer or required disclosure, the entire answer or required disclosure, except that in the case where the confidential portion is part of a financial statement or schedule only the particular financial statement or schedule need be included. All copies of the confidential portion shall be in the same form as the remainder of the material filed;

(2) An application making objection to the disclosure of the confidential portion. Such application shall be on a sheet or sheets separate from the confidential portion, and shall contain (i) an identification of the portion; (ii) a statement of the grounds of the objection referring to and analyzing the applicable exemption(s) from disclosure under §200.80 of this chapter, the Commissions rule adopted under the Freedom of Information Act (5 U.S.C. 552), and a justification of the period of time for which confidential treatment is sought; (iii) a detailed explanation of why, based on the facts and circumstances of the particular case, disclosure of the information is unnecessary for the protection of investors; (iv) a written consent to the furnishing of the confidential portion to other government agencies, offices, or bodies and to the Congress; and (v) the name, address and telephone number of the person to whom all notices and orders issued under this rule at any time should be directed.

(3) The copies of the confidential portion and the application filed in accordance with this paragraph (b) shall be enclosed in a separate envelope marked "Confidential Treatment" and addressed to the Secretary, Securities and Exchange Commission, Washington, D.C. 20549.

(c) Pending a determination as to the objection, the material for which confidential treatment has been applied will not be made available to the public.

(d) If it is determined by the Division, acting pursuant to delegated authority, that the application should be granted, an order to that effect will be entered, and a notation to that effect will be made at the appropriate place in the material filed. Such a determination will not preclude reconsideration whenever appropriate, such as upon receipt of any subsequent request under the Freedom of Information Act and, if appropriate, revocation of the confidential status of all or a portion of the information in question.

(e) If the Commission denies the application, or the Division, acting pursuant to delegated authority, denies the application and Commission review is not sought pursuant to §201.26 of this chapter, confirmed telegraphic notice of the order of denial will be sent to the person named in the application pursuant to paragraph (b)(2)(v) of this section. In such case, if the material filed may be withdrawn pursuant to an applicable statute, rule, or regulation, the registrant shall have the right to withdraw the material filed in accordance with the terms of the applicable statute, rule, or regulation, but without the necessity of stating any grounds for the withdrawal or of obtaining the further assent of the Commission. In the event of such withdrawal, the confidential portion will be returned to the registrant. If the material filed may not be so withdrawn, the confidential portion will be made available for public inspection in the same manner as if confidential treatment had been revoked under paragraph (h) of this section.

(f) If a right of withdrawal pursuant to paragraph (e) of this section is not exercised, the confidential portion will be made available for public inspection as part of the material filed, and the registrant shall amend the material filed to include all information required to be set forth in regard to such confidential portion.

(g) In any case where a prior grant of confidential treatment has been revoked, the person named in the application pursuant to paragraph (b)(2)(v) of this section will be so informed by registered or certified mail. Pursuant to §201.26 of this chapter, persons making objection to disclosure may petition the Commission for review of a determination by the Division revoking confidential treatment.

(h) Upon revocation of confidential treatment, the confidential portion shall be made available to the public at the time and according to the conditions specified in paragraphs (h)(1)-(2):

(1) Upon the lapse of five days after the dispatch of notice by registered or certified mail of a determination disallowing an objection, if prior to the lapse of such five days the person shall not have communicated to the Secretary of the Commission his intention to seek review by the Commission under §201.26 of this chapter of the determination made by the Division; or

(2) If such a petition for review shall have been filed under §201.26 of this chapter, upon final disposition adverse to the petitioner.

(i) If the confidential portion is made available to the public, one copy thereof shall be attached to each copy of the material filed with the Commission.

AUTHORITY:

The Commission is adopting these amendments to Rule 406 under Sections 7, 10, and 19(a) of the Securities Act.

Secs. 7, 10, 19(a), 48 Stat. 78, 81, 85; secs. 205, 209, 48 Stat. 906, 908; sec. 8, 68 Stat. 685; sec. 308(a)(2), 90 Stat. 57; 15 U.S.C. 77g, 77j, 77s(a).

By the Commission.

George A. Fitzsimmons

Secretary

¹ Release No. 33-6495 (November 1, 1983) (48 FR 51155) November 7, 1983.

²See Release Nos. 33-6231 (September 2, 1980) 45 FR 63630, 33-6331 (August 6, 1981) 46 FR 41902 and 33-6383 (March 3, 1982) 47 FR 11380.

³ 5 U.S.C. 552.