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The Securities and Exchange Commission on Wednesday said it will vote June 29 on whether to loosen its “quiet-period” rules, which govern what companies may say publicly to investors before they go public. Commissioners at the agency are expected to adopt the proposal at the meeting, one day before William Donaldson steps down as SEC chairman. The SEC on Oct. 26 voted unanimously to propose new quiet-period regulations; these regulations allow executives with companies planning initial public offerings to provide basic information about their businesses and management philosophies, whether in media interviews or on their Web sites. Critics contend that the current rules, which date to the 1930s, are unclear about what issuers may disclose during the 30-day period. Regulators historically have maintained strict restrictions on corporate communications during the quiet period, fearing that companies could mislead potential investors. Even if the rules are relaxed, however, companies will remain liable for any fraudulent statements during the period, according to the SEC proposal. That means shareholders or the agency could sue a company that willfully makes false claims or that provides inaccurate information. The SEC also could delay an IPO if it determines the issuer is not providing balanced information. “Well-known, seasoned” companies — defined as those with market capitalization of at least $700 million and that have been public for more than a year — would have more latitude than smaller concerns in what they can disclose during the quiet period before secondary or follow-up offerings. Large companies also could advertise stock offerings on television, provided they take legal responsibility for any commercials and file relevant information about the ads with the SEC. The move to revise quiet-period practices arose after Google Inc.’s $1.7 billion IPO was nearly postponed last year after Playboy magazine published an interview with the company’s founders shortly before the Internet search-giant’s public market debut. SEC spokesman John Heine declined to comment on the agency’s proposal. If the rules are approved, they are unlikely to be implemented immediately. The regulations are expected to be packaged with other planned reforms aimed at easing corporate capital formation. In one measure many consider long overdue, the SEC is likely to adopt rules allowing companies to deliver prospectuses over the Internet rather than through the mail. Copyright �2005 TDD, LLC. All rights reserved.

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