February 28, 2010
Campbell on SEC Resale Rules
The SEC's New Resale Rules: A Major Advance in Intelligibility and Sound Policy, by Rutheford B. Campbell Jr., University of Kentucky - College of Law, was recently posted on SSRN. Here is the abstract:
Over the decades, the Securities and Exchange Commission has had trouble formulating sensible rules regarding the resales of securities purchased by investors (holders) from issuers. Often acting through no-action letters, the Commission constructed an approach to holder resales that was murky, ephemeral, and seemingly lacking in sound core principles and theoretical consistency. The most problematic of all the Commission's holder resale rules were in Rule 145, which governed the resale of securities acquired in connection with acquisitions and recapitalizations and which, perhaps more than any other of its resale rules, led to unprincipled outcomes and created interpretative nightmares for the Commission and reselling holders.
The Commission's 2008 amendments to Rule 144 and Rule 145, however, mark an important shift in the substantive rules governing holder resales. The amended Rules, when considered with the Commission's resale "rules" one finds in no-action letters, suggest a significantly improved overall regime for holder resales, one that better balances competing policies, enhances consistency and intelligibility, and reduces transaction costs by eliminating complex and overly burdensome resale conditions.