In today’s post, Broc Romanek has some interesting “inside” info regarding new Item 703 of Regulation S-K which requires public companies to disclose in a table (sample table here via Blank Rome LLP) any purchase made by or on behalf of the company or any affiliated purchaser of the company of shares or other units of any class of the company’s equity securities registered pursuant to Section 12 of the Exchange Act. He states as follows:
[A]t the ABA-JCEB meeting this week, the SEC staff apparently stated that stock repurchases by a 401(k) plan or other employee benefit plan may be required to be reported when the plan is an “affiliated purchaser” within the meaning of Rule 10b-18(a)(3). This could be a real problem in cases where a benefit plan is administered in-house, instead of being handled by a brokerage firm, transfer agent or other outside party. I would wait until the staff has a position in writing on this one before taking any drastic actions, such as hiring a third-party administrator.
The post goes on to describe what an “affiliated purchaser” is within the meaning of the Rule:
(i) A person acting, directly or indirectly, in concert with the issuer for the purpose of acquiring the issuer’s securities; or
(ii) An affiliate who, directly or indirectly, controls the issuer’s purchases of such securities, whose purchases are controlled by the issuer, or whose purchases are under common control with those of the issuer; Provided, however, that “affiliated purchaser “shall not include a broker, dealer, or other person solely by reason of such broker, dealer, or other person effecting Rule 10b-18 purchases on behalf of the issuer or for its account, and shall not include an officer or director of the issuer solely by reason of that officer or director’s participation in the decision to authorize Rule 10b-18 purchases by or on behalf of the issuer.
You can read a good summary of the new rules here (from Palmer & Dodge LLP).
If any other bloggers or readers with expertise in this area of the law have comments on this development, please email me and I will be glad to post them for readers.