Transcript www.americansecuritization.com

Summary of Offering
Reform Rules
Presented by Ed Gainor
Key Elements of Offering Reform
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Increased freedom to communicate with prospective investors
prior to delivery of a final prospectus
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Removal of restrictions on electronic road shows
Liability (for some purposes) is determined at the time a
contract of sale is made, without regard to information
conveyed to investors after that date
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Free writing prospectuses
Misstatements or omissions not cured by later correction in
final prospectus
Access equals delivery
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Final prospectus no longer need be delivered at or prior to
settlement
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Free Writing Prospectuses
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Since December 1, the “free writing prospectus” has largely
replaced computational material in the marketing of ABS
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FWP may contain virtually any type of information
Lower standard of liability for FWPs than for comp mats
Conditions for Use
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Registration statement must be on file
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So, FWPs may be disseminated in shelf offerings
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In S-1 offerings, FWPs must be preceded or accompanied
by a preliminary prospectus
Depositor must not be “ineligible issuer”
Legend, filing and record retention requirements
No impermissible legends or disclaimers
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Free Writing Prospectuses
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Legend, Filing and Retention Requirements
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Must include required legend
Filing
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Issuer FWP or FWP containing “issuer information” must be
filed on or prior to date of first use
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Underwriter FWP generally need not be filed at all
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Final terms sheet must be filed within 2 days of first use
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FWP containing solely comp mats may be filed by later of
prospectus filing date or 2 days after first use
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Many complexities in the filing requirements
Copy of every FWP not filed must be retained for 3 years
Limited continuing importance of the computational material rules
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Less strict filing deadline for comp mats
Use by ineligible issuers
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Road Shows
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Various prior restrictions on electronic road shows no longer apply
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In shelf offerings, no longer need a preliminary prospectus
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Still need to provide preliminary prospectus in Form S-1
offerings
Need not be recorded in front of a live audience
May be edited
May be provided in multiple versions
No restrictions on number of times the recording may be
accessed
No restrictions on printing or downloading (of the road show
presentation itself)
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Downloading of visual aids used in road show may be restricted
if visual aids are not filed as FWPs
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Road Shows
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Live road shows are oral presentations and therefore not free
writing prospectuses
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Even if transmitted via the internet or telephone in real time to
a live audience
Visual aids used in road show are not FWPs if they are
provided “in a manner designed” to make them available “only
as part of the road show and not separately”
Road shows that are not live and are graphically transmitted are
electronic road shows
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Electronic road shows are FWPs and are therefore subject to
the conditions for use of FWPs
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But, generally need not be filed if they satisfy the new definition
of “electronic road show”
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Requires participation by the depositor, sponsor, or servicer
Treatment of visual aids is the same as for live road shows
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Liability
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Rule 159: Liability under Sections 12(a)(2) and 17(a)(2) of the
Securities Act is determined at the time of formation of the
contract of sale without regard to information conveyed to
investors after that date
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Misstatements or omissions not cured by later correction in
final prospectus
This is in addition to liability under Section 11 for material errors
or omissions in the final prospectus
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Liability
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If terms of the offering change or material error in disclosure is
discovered, liability may be avoided if each investor that has
committed to purchase agrees to terminate the old contract and
enter into a new contract
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Not clear precisely what procedures must be followed
Investor must receive
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Corrected disclosure
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clear disclosure of his rights
Cannot be “deemed” to agree
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Prospectus Delivery
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Access equals delivery
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No longer necessary to deliver a prospectus, physically or
electronically, at or prior to settlement
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Prospectus need only be filed when required
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Confirmation of sale should include a notice that the sale
was made pursuant to a registration statement
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Attorneys at Law
1919 M Street, NW
Suite 800
Washington, DC 20036
Telephone 202.775.1880
Facsimile 202.775.8586
174867
One Battery Park Plaza
34th Floor
New York, NY 10004
Telephone 917.777.4200
Facsimile 917.777.4299