[Federal Register: October 18, 2007 (Volume 72, Number 201)]
[Proposed Rules]
[Page 59039-59041]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr18oc07-17]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF THE TREASURY
Office of the Comptroller of the Currency
12 CFR Part 16
[Docket ID OCC-2007-0016]
RIN 1557-AD04
Securities Offering Disclosure Rules
AGENCY: Office of the Comptroller of the Currency, Treasury.
ACTION: Notice of proposed rulemaking.
-----------------------------------------------------------------------
SUMMARY: The Office of the Comptroller of the Currency (OCC) is
proposing to amend its securities offering disclosure rules at part 16
so that the organizing group of a national bank in organization will,
in most cases, not need to provide audited financial statements as part
of a public offering of securities.
DATES: Comments must be received by December 17, 2007.
ADDRESSES: You may submit comments by any of the following methods:
Federal eRulemaking Portal--``Regulations.gov'': Go to
http://www.regulations.gov, select ``Comptroller of the Currency'' from
the agency drop-down menu, then click ``Submit.'' In the ``Docket ID''
column, click on ``OCC-2007-0016'' to submit or view public comments
and to view supporting and related materials for this notice of
proposed rulemaking. The ``User Tips'' link at the top of the
Regulations.gov home page provides information on using
Regulations.gov, including instructions for submitting or viewing
public comments, viewing other supporting and related materials, and
viewing the docket after the close of the comment period.
E-mail: regs.comments@occ.treas.gov.
Fax: (202) 874-4448.
Mail: Office of the Comptroller of the Currency, 250 E
Street, SW., Mail Stop 1-5, Washington, DC 20219.
Hand Delivery/Courier: 250 E Street, SW., Attn: Public
Information Room, Mail Stop 1-5, Washington, DC 20219.
Instructions: You must include ``OCC'' as the agency name and
``Docket ID OCC-2007-0016'' in your comment. In general, OCC will enter
all comments received into the docket and publish them on
Regulations.gov without change, including any business or personal
information that you provide such as name and address information, e-
mail addresses, or phone numbers. Comments, including attachments and
other supporting materials, received are part of the public record and
subject to public disclosure. Do not enclose any information in your
comment or supporting materials that you consider confidential or
inappropriate for public disclosure.
You may review comments and other related materials by any of the
following methods:
Viewing Comments Electronically: Go to http://www.regulations.gov
, select ``Comptroller of the Currency'' from the
agency drop-down menu, then click ``Submit.'' In the ``Docket ID''
column, click on ``OCC-2007-0016'' to view public comments for this
notice of proposed rulemaking.
Viewing Comments Personally: You may personally inspect
and photocopy comments at the OCC's Public Information Room, 250 E
Street, SW., Washington, DC. For security reasons, the OCC requires
that visitors make an appointment to inspect comments. You may do so by
calling (202) 874-5043. Upon arrival, visitors will be required to
present valid government-issued photo identification and submit to
security screening in order to inspect and photocopy comments.
Docket: You may also view or request available background
documents and project summaries using the methods described above.
FOR FURTHER INFORMATION CONTACT: Lee Walzer, Counsel, Legislative and
Regulatory Activities Division, (202) 874-4487; Stuart Feldstein,
Assistant Director, Legislative and Regulatory Activities Division,
(202) 874-5090; Ted Dowd, Senior Attorney, Securities and Corporate
Practices, Division, (202) 874-5210; Beverly Evans, Director, Licensing
Activities, (202) 874-5060.
SUPPLEMENTARY INFORMATION:
[[Page 59040]]
I. Background
12 CFR part 16 generally requires national bank securities
offerings to conform to Securities and Exchange Commission (SEC)
offering rules and procedures set forth in the Securities Act of 1933
(33 Act).\1\ Part 16 cross-references SEC requirements for securities
registration statements, including the requirement that companies
provide audited financial statements.\2\ This requirement applies to
``developmental stage'' companies, which includes entities that are
analogous to national bank charter applicants.\3\ Thus, through the
OCC's incorporation of these SEC requirements, national bank charter
applicants are required to provide audited financial statements in
connection with their registration statements filed with the OCC for an
offer and sale of securities.
---------------------------------------------------------------------------
\1\ See Securities Offering Disclosure Rules, 59 FR 54789, 90
(Nov. 2, 1994) (Final Rule).
\2\ Regulation S-X, 17 CFR 210.3-01(a); Regulation S-B, 17 CFR
228.310(a).
\3\ See Rule 1-02(h), Regulation S-X, 17 CFR 210.1-02(h).
---------------------------------------------------------------------------
This notice of proposed rulemaking (NPRM) is part of an ongoing OCC
effort to reduce unnecessary regulatory burden on national banks,
including applicants for national bank charters. For example, the OCC
is working with the other federal banking agencies to produce a report
required by section 2222 of the Economic Growth and Regulatory
Paperwork Reduction Act of 1996 (EGRPRA), which directs the federal
banking agencies to identify regulations that are outdated,
unnecessary, or unduly burdensome, and to eliminate them if
appropriate. The OCC also recently proposed comprehensive regulatory
revisions aimed at reducing regulatory burden by, among other things,
removing obsolete provisions, streamlining procedures required in
connection with particular types of changes in structure and the
conduct of certain activities, and incorporating into our rules
interpretive opinions that the OCC has previously published.\4\
---------------------------------------------------------------------------
\4\ 74 FR 36550 (July 3, 2007).
---------------------------------------------------------------------------
As a complement to these burden reducing measures, the OCC also has
sought to identify the considerations most relevant to organizing
groups for new community banks. This review encompasses both the
standards and the processes that the OCC applies to such applicants.
The requirement for an organizing group of a national bank charter
applicant to have audited financial statements may not be warranted in
many cases. The process can be time-consuming and expensive. Applicants
for a national bank charter have often found it difficult to schedule
timely audits. This has resulted in costly delays for their securities
offerings. Even after an auditing firm has been hired and the audit has
been completed, there is a risk that an audit will become stale and
need to be updated before the OCC can declare the registration
statement effective.\5\
---------------------------------------------------------------------------
\5\ Regulations S-X and S-B require that audited financial
statements that are 135 days older than the effective date of the
registration statement be updated with interim financial statements.
17 CFR 210.3-12 and 228.310.
---------------------------------------------------------------------------
Moreover, an audited financial statement adds little that benefits
potential investors, since there is no national bank business being
transacted during the organizational phase, and the bank's financial
statements typically are rudimentary, reflecting little more than the
bank account of the organizing group and organizational expenses
incurred.
Finally, the OCC typically does not need to rely on audited
financial statements in deciding applications for de novo national bank
charters. In the case of national banks in organization before the OCC,
unlike the establishment of most businesses whose registration
statements are regulated by the SEC, the chartering of de novo national
banks is a lengthy and comprehensive process that includes extensive
ongoing review of the proposed bank's management, financial resources,
and business plan. This process provides the OCC the opportunity to
carefully consider, on the basis of detailed information, whether the
organizing group has the expertise and resources to operate a viable
national bank.
II. The Proposal
For the reasons stated above, the OCC is proposing to amend part 16
to provide a general waiver of the requirement for an organizing group
seeking to establish a national bank charter to use audited financial
statements as part of a registration statement for the public offering
of securities. The term ``organizing group'' would have the meaning set
forth in 12 CFR 5.20(d)(6) of this chapter.
Under this proposed revision, however, the OCC would retain the
authority to require an organizing group to furnish audited financial
statements if the OCC concludes that to do so would be in the interest
of investors or would further the safe and sound operation of a
national bank. Examples of when the OCC may require audited financial
statements include situations where review of the registration
statement, or any other aspect of the organizing group's application to
charter a national bank, uncovers incomplete or inaccurate information
about the organizing group's finances or capital, or other material
inaccuracies or misstatements.
III. Regulatory Analysis
Regulatory Flexibility Act
Pursuant to Section 605(b) of the Regulatory Flexibility Act, 5
U.S.C. 605(b) (RFA), the regulatory flexibility analysis otherwise
required under Section 604 of the RFA is not required if the agency
certifies that the rule will not have a significant economic impact on
a substantial number of small entities and publishes its certification
and a short, explanatory statement in the Federal Register along with
its rule.
This change would reduce the costs and expenses associated with the
formation of a national bank and will not have a significant economic
impact. Therefore, pursuant to Section 605(b) of the RFA, the OCC
hereby certifies that this proposal will not have a significant
economic impact on a substantial number of small entities. Accordingly,
a regulatory flexibility analysis is not needed.
Executive Order 12866
The OCC has determined that this proposal is not a significant
regulatory action under Executive Order 12866. We have concluded that
the changes made by this rule will not have an annual effect on the
economy of $100 million or more. The OCC further concludes that this
proposal does not meet any of the other standards for a significant
regulatory action set forth in Executive Order 12866.
Paperwork Reduction Act
In accordance with the requirements of the Paperwork Reduction Act
of 1995 (PRA), the Agencies may not conduct or sponsor, and the
respondent is not required to respond to, an information collection
unless it displays a currently valid Office of Management and Budget
(OMB) control number.
The information collection requirements contained in this notice of
proposed rulemaking have been submitted to OMB for review and approval
under existing OMB control number 1557-0120 (Securities Offering
Disclosure Rules).
The OCC is proposing to revise part 16 to add a waiver of audited
financial statements for the organizing group of a national bank
charter applicant for any
[[Page 59041]]
registration statement for bank securities submitted by such group. The
PRA burden in part 16 is currently approved under OMB Control No. 1557-
0120. Therefore, we submitted the entire information collection for
review. The numbers below reflect the entire burden for part 16
following adoption of the rule and the review of the entire information
collection to ensure accuracy of the estimates.
Title of Information Collection: Securities Offering Disclosure
Rules--12 CFR Part 16.
OMB Number: 1557-0120.
Estimated Number of Respondents: 48.
Estimated Number of Responses: 48.
Average Hours per Response: 9.375.
Total Estimated Annual Burden: 450.
Affected Public: National bank charter applicants.
Estimated Net Burden Change: -60 hours.
Unfunded Mandates Reform Act of 1995
Section 202 of the Unfunded Mandates Reform Act of 1995, Public Law
104-4 (2 U.S.C. 1532) (Unfunded Mandates Act), requires that an agency
prepare a budgetary impact statement before promulgating any rule
likely to result in a Federal mandate that may result in the
expenditure by State, local, and tribal governments, in the aggregate,
or by the private sector of $100 million or more in any one year. If a
budgetary impact statement is required, Section 205 of the Unfunded
Mandates Act also requires an agency to identify and consider a
reasonable number of regulatory alternatives before promulgating a
rule. The OCC has determined that this proposed rule will not result in
expenditures by State, local, and tribal governments, or by the private
sector, of $100 million or more in any one year. Accordingly, this
proposal is not subject to Section 202 of the Unfunded Mandates Act.
List of Subjects in 12 CFR Part 16
National banks, Reporting and recordkeeping requirements,
Securities.
Authority and Issuance
For the reasons set forth in the preamble, chapter I of title 12 of
the Code of Federal Regulations is proposed to be amended as follows:
PART 16--SECURITIES OFFERING DISCLOSURE RULES
1. The authority citation for part 16 continues to read as follows:
Authority: 12 U.S.C. 1 et seq. and 93a.
2. Add Sec. 16.15(e) to read as follows:
Sec. 16.15 Form and content.
* * * * *
(e) Notwithstanding paragraph (a) of this section, an organizing
group seeking to establish a national bank charter pursuant to Sec.
5.20 of this chapter shall not be required to include audited financial
statements as part of its registration statement, unless the OCC
determines that factors particular to the proposal indicate that
inclusion of such statements would be in the interest of investors or
would further the safe and sound operation of a national bank. The term
``organizing group'' shall have the meaning set forth in Sec.
5.20(d)(6) of this chapter.
Dated: October 12, 2007.
John C. Dugan,
Comptroller of the Currency.
[FR Doc. E7-20600 Filed 10-17-07; 8:45 am]
BILLING CODE 4810-33-P