Use of Electronic Media

1
Use of Electronic Media

• Emphasis on Online IPOs

2
Q(g)---Press Release While in registration

• Recall Release 33-5180 (1971)
• Publicly held company in registration continue
  communicate with public as to
• Ordinary-course business
• Financial information
• Included press releases
• Should be strictly factual
• No forecasts or predictions

3
Interpretative Release III and Business
Developments

• Reiterated 5180 BUT also applicable to
• Non-reporting issuer with history ordinary course
  business communications on website
• BUT investors may be less able to distinguish
  production promotion from stock promotion
• Itshibishi ReleaseFactual?
• Confident will be able to meet schedule
• IRIII silent about forecastconspicuous by
  absence?

4
Red Herring 100 IRIII

• Does the pressrelease constitute an offer?
• Would it make difference if company included on
  its website link to article in RH
• IR III discusses when issuer by link to another
  website adopts referenced info
• Depends in part how referenced
• Context implies info attributable to issuer

5
Liberalizing Free Writing

• See Beller on Securities Act Reform
• Donaldson has suggested another look
• The Merger/Exchange Act approach
• No restriction before or after filing RS
• Must file with the SEC and deemed a prospectus
  for purposes of 12(a)(2)
• Imposes liability to purchaser for misrep and
  burden on def. as to reasonable care

6
Interpretative Release III SEC Lukewarm re Online
IPOs

• Refers to Wit Capital No-Action Letter
• Cautions about need to comply with S5
• Outlines Permissible Communications
• Oral, 134Preliminary Prospectus
• No sale or contract until effective
• Can solicit offers to buy
• Lukewarmconcern about retail investors

7
Interpretative Release I did facilitate Online IPO

• Provided for delivery of prospectus by electronic
  media, including the Internet
• Must have individual investors consent
• Must notify investor of availability on site
• By email with sites URL acceptable
• Obtaining permanent copydownloading
• Evidence of deliveryconfirmation of accessing,
  downloading, or printing

8
WR Hambrecht Agreement

• Must provide mail and email address
• Agree to receive prospectus, confirmation at WRH
  election by mail or email
• Can deliver by email notice of sites URL
• Right to request paper copy
• Opportunity to read and print (download?)
• Notice to be deemed delivery??

9
Compare with Wit Capital Sequenced Steps on Cul
de Sac

• 1. Must first register
• 2. Can then reach the prospectus page
• 3. Must open (or have) an account
• 4. Must consent to electronic delivery
• 5. Pre-conditional offer pageacknowledges
  receipt of prospectus
• 6. Agrees to receive notices by email
• 7. Can enter a conditional offer to buy
• 8. Must execute customer account agreement

10
CSFB Equity New Issues Page

• Must register to access beyond this page
• Access Quanta Services, Inc.
• Does much more than the principal products or
  classes of products
• Company revenues of 1.643 million Adjusted
  EBITDA of 104 million.
• No Rule 134(d) legend/disclaimer as to
  offer/solicitation
• General disclaimer nothing on site is an offer to
  sale
• CSFB the book running underwriter

11
HARRISdirect IPO Center

• Page with prospectus/invitation to participate
  includes 134(b),(d) legends
• Offering Status/Your Status
• Accepting Indications of Interest
• Opportunity to submit indications/shares
• Changes to Received under Status
• Priced Accepting Reconfirmations
• Reconfirmation received
• Allocation Complete/number shares/or none