Bloomberg L.P.
Company: Bloomberg L.P.
Public Availability Date: December 01, 1997
WSB File No. 120197011
Fiche Locator No. 2815A3
WSB Subject Category: 032
Reference:
Securities Act of 1933, Section 2(a)(10)
--------------------Washington Service Bureau Summary--------------------
...The staff, while not necessarily agreeing with counsel's analysis, will not
recommend Commission action if this limited partnership transmits, over its
multi-media system, THE BLOOMBERG (the network ), an issuer's road show
presentation to network subscribers in reliance on counsel's legal opinion that
such transmissions are not prospectuses within the meaning of 1933 Act section
2(a)(10). The staff particularly notes that a road show transmission will not be
conducted before the registration statement is filed with the Commission in
connection with the particular offering of securities. The company intends to
transmit audio-visual recordings of live road shows. Access to the road shows by
authorized viewers will be on a delayed basis only until it becomes technically
possible to offer live transmission. The sponsoring underwriters will determine
and have exclusive control over the content of the road shows and they will
agree in writing with the company to ensure that the information disclosed is
not inconsistent with the prospectus furnished to viewers. If the company
transmits a road show to authorized subscribers during the actual course of the
live road show, it will transmit on a real-time basis the same road show as the
viewers at the road show are seeing. In circumstances where the road show
presented on the network is presented after the conclusion of the live road
show, the road show presented on the network will be exactly the same road show
as institutional investors and others permitted to attend the live show saw
live. If information changes between the time the road show is recorded and
throughout the period the road show is available on the network, the display
will include text providing a synopsis of such changes. The audience will be
limited to subscribers of the network service that have been specifically
enabled by a particular underwriting house to receive a transmission of the
particular road show in question. In each case, the underwriter will agree in
writing not to enable a viewer to receive the transmission unless the viewer is
an institutional investor, investment adviser or other person of a type the
underwriter would customarily invite to a road show and unless the underwriter
has delivered to the viewer a copy of the most current prospectus before the
scheduled transmission of the road show. If a road show is transmitted during
the waiting period between filing and effectiveness of the registration
statement, a 1933 Act section 10(b) preliminary prospectus will be distributed
to the viewer. The company will receive as compensation the customary rental
fees paid by the subscribers to the network service, which will not be increased
by reason of the road show transmissions, and reimbursement by the issuer or
sponsoring underwriter of any special expenses incurred in attending, recording
and transmitting the road show, neither of which will be contingent on the size
or successful conclusion of any offering.
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INQUIRY LETTER
ORIGINAL TEXT ILLEGIBLE
ONE CITICORP CENTER
153 EAST 53RD STREET
NEW YORK, NY 10022-4677
TELEPHONE(212) 821-8000
October 22, 1997
1933 Act/2(10)
/5
CONFIDENTIAL TREATMENT REQUESTED
Mr. Brian J. Lane
Director, Division of
Corporation Finance
U.S. Securities and
Exchange Commission
Mail Stop 3-1
450 Fifth Street, N.W.
Washington, DC 20549
Dear Mr. Lane:
On behalf of our client, Bloomberg L.P. ("Bloomberg"), we request that
you advise us that the Division of Corporation Finance (the "Division") would
not recommend that the Commission commence enforcement action pursuant to the
Securities Act of 1933, as amended (the "Securities Act"), if Bloomberg
transmitted "road show" meetings concerning public offerings of certain
securities over THE BLOOMBERGsr service to certain subscribers as
described herein, on the basis that such transmissions are not prospectuses
under Section 2(10) of the Securities Act.
Content of road shows. As you know, road shows are an oral means
by which securities underwriters present information to their institutional
customers that are considering making purchases in securities offerings
underwritten by the investment banks. These meetings are designed to present
salient points about the issuer, its industry and the offering. They often
include oral presentation by senior officers of the issuer as well as by members
of the underwriting team working on the offering and research analysts who are
familiar with the company and the industry or industries in which it
participates.
Typically, the road show presentation, which may last an hour or more,
is given in several cities. The attendees include, in addition to
representatives of institutional investors and investment advisers, sales and
trading personnel from the securities firms participating in the offering and
securities analysts. At or before the road show, prospective purchasers are
given copies of the most current prospectus. In the course of the road show, the
presenters may entertain questions from those in attendance. Visual aids, such
as slides, charts and videotapes, often are displayed. Where appropriate,
samples of the issuer's products are sometimes made available. See generally,
Private Financial Network (incoming letter dated March 12, 1997, and
authorities cited therein), 1997 SEC No-Act. LEXIS 406.
Transmission over THE BLOOMBERG. Bloomberg intends to transmit
over its multi-media system audio-visual recordings of live road shows. Access
to the road show by authorized viewers will be on a delayed basis only until it
becomes technically possible to offer "live" transmission. Initially, the road
show will be "audio on demand," which means that an authorized viewer can
receive the road show by typing in a prescribed keystroke routine on the
keyboard attached to THE BLOOMBERG service. The Bloomberg Multimedia
presentation will include complete audio, illustrated with still photographs and
graphics. At a later time, the presentation may include video transmissions.
1 It is anticipated that, generally, viewers will view road shows in
their entirety, but they will be able to interrupt their viewing, and view less
than the entire road show, if they wish.
2
The sponsoring underwriters will determine and have exclusive control
over the content of the road shows. They will agree in writing with Bloomberg to
ensure that the information disclosed in the road show is not inconsistent with
the prospectus furnished to viewers. The issuer will ensure that statements made
by its representatives will not be inconsistent with the prospectus furnished to
viewers.
If Bloomberg transmits a road show to authorized subscribers during the
actual course of the "live" road show, it will transmit on a real-time basis the
same road show as the viewers at the road show are seeing. In such cases, the
sponsoring underwriter may permit the subscribers to submit questions via the
Bloomberg e-mail system to a Bloomberg representative at the road show during
the "live" road show. The sponsoring underwriter may answer such questions
during the road show presentation if it deems the questions to be of general
interest to the audience.
In circumstances where the road show presented on THE BLOOMBERG is
presented after the conclusion of the "live" road show, the road show presented
on Bloomberg will be exactly the same road show as institutional investors and
others permitted to attend the live road show saw live, as the live road show
will have been recorded in its entirety, including the recording of all
questions and answers. The live road show will not be edited for content.
3
The Bloomberg version of the road show will present the charts and oral
presentations at a similar speed (like a slide show) as the live road show.
Until such time as Bloomberg introduces a full video format, the still pictures
accompanying the audio will consist of photographs of the presenters at the road
show, photographs of the issuer's logo, slides and charts presented at the road
show, other photographs from the preliminary prospectus or from documents
incorporated therein by reference, or a clock showing the amount of time left in
the road show. Each road show will be indexed on THE BLOOMBERG service by
subject matter and a brief agenda will be shown to indicate to the viewer by
time segment the presenters and subject matters to be covered.
If information changes between the time the road show is recorded and
throughout the period the road show is available on THE BLOOMBERG, the display
will include text providing a synopsis of such changes. The text also will
provide that the viewer may contact the appropriate institutional salesperson at
the underwriter for further information about such changes.
Limited audience; prospectus delivery. Transmission of a road
show will be subject to certain limitations that are designed to ensure delivery
of the prospectus. The audience will be limited to subscribers of THE BLOOMBERG
service that have been specifically enabled by a particular underwriting house
to receive a transmission of the particular road show in question. In each case,
the underwriter will agree in writing with Bloomberg not to enable a viewer to
receive the transmission unless the viewer is an institutional investor,
investment adviser or other person of a type the underwriter would customarily
invite to a road show and unless the underwriter has delivered to the viewer, by
courier or other means, a copy of the most current prospectus before the
scheduled transmission of the road show.
Currently, users of THE BLOOMBERG can access any document in the
Commission's EDGAR system by entering the issuer's ticker symbol and a key or
other prompt indicating the type of security (e.g., equity, corp, pfd, or mtge),
choosing EDGAR Filings from the menu that is displayed in response and then
selecting a particular filing from a displayed list. In some cases in connection
with the electronic road shows described in this letter, the prospectus also may
be displayed on THE BLOOMBERG service in a way that will allow subscribers to
view it before, during and after they gain access to the road show. In all
cases, however, either the issuer or the underwriters will deliver paper
prospectuses as described above unless they receive advance written consent from
an individual customer to electronic delivery.
4
Road shows that are conducted by the underwriters with which Bloomberg
will be dealing, in connection with offerings that are to be registered under
the Securities Act, never are conducted before the filing of the registration
statement because section 5(c) of the Securities Act prohibits the making of
pre-filing offers, by oral means or otherwise.
5 If the road show is transmitted during the "waiting period" between
filing and effectiveness of the registration statement, a Section 10(b)
preliminary prospectus (the so-called "red herring") will be the one the
underwriter will distribute to the viewer. If the road show is transmitted after
the effectiveness of the registration statement, a Section 10(a) statutory
prospectus will be distributed.
In the case of an offering as to which a registration statement has been
filed but has not yet become effective, the road show will be specially coded so
that viewers that have the capacity to copy, print out or down-load information
from THE BLOOMBERG service will not be able to do so for the road show and so
that a viewer will be able to view the program any number of times during a
single 24-hour period (which will commence upon his or her first accessing the
program) and not thereafter.
6
Each road show presentation will be preceded and concluded with the
following statement:
A preliminary prospectus has been furnished to each person authorized to receive
this transmission. You should refer to the prospectus, and to the registration
statement of which it is a part, for more complete information about the
offering. By electing to view this transmission, you represent, warrant and
agree that you will not videotape, record or otherwise attempt to reproduce or
re-transmit the contents of this transmission.
If the registration statement is not effective when a road show is
transmitted, the transmission also will include visual statements complying in
substance with Rule 134(b) under the Securities Act, to the effect that the
securities may not be sold and offers to buy cannot be accepted before the
effective date.
7
Compensation to Bloomberg. Bloomberg will receive as compensation
the customary rental fees paid by subscribers to THE BLOOMBERG service, which
will not be increased by reason of the road show transmissions, and
reimbursement by the issuer or sponsoring underwriter of any special expenses
incurred in attending, recording and transmitting the road show, neither of
which will be contingent on the size or successful conclusion of any offering.
Bloomberg also may decide to collect fees for access to a road show on a
subscription/pay-per-view basis for the viewers authorized by the underwriters,
as described above. In all such cases, the subscribers would have been
authorized by the underwriter to receive the electronic road show, as described
above.
Analysis. In Private Financial Network, supra, the
Division considered a similar factual pattern in which electronic road shows are
to be made available to a limited audience under circumstances where the viewer
will be given a prospectus in advance, the viewer will be prohibited from
copying or redistributing the road show, and the viewer will be reminded that
the principal source of information about the issuer and the offering is the
documents filed with the Commission in the Securities Act registration. The
limitations on the character of the audience in Bloomberg's case are essentially
the same as in Private Financial Network. The road show transmission should be
viewed as the equivalent of oral statements and not as the delivery of a
document that would be a prospectus within the meaning of Section 2(10) of the
Securities Act.
8
In Net Roadshow, Inc. (July 30, 1997), the Division indicated that it
would not recommend enforcement action to the Commission if Net Roadshow, Inc.
transmits an issuer's road show presentation over the Internet for the purposes
and pursuant to the procedures described in the in-coming letter. Those purposes
and procedures are in all material respects identical to those discussed above.
The rationale supporting the Division's position in that instance supports also
the position we are asking the Division to express here.
Conclusion. In view of the foregoing, we are of the opinion that
the transmission of road shows over the Bloomberg under the circumstances
described above should not be deemed to involve the transmission of a prospectus
within the meaning of Section 2(10) of the Securities Act and we respectfully
request that the Division advise us that it would not recommend that the
Commission commence enforcement action pursuant to the Securities Act if
Bloomberg transmitted "road show" meetings concerning public offerings over THE
BLOOMBERG service under the circumstances above.
* * *
In accordance with the procedures set forth in Securities Act Release
Nos. 6269 (Dec. 5, 1980) and 5127 (Jan. 25, 1971), seven copies of this letter
are submitted herewith, and the specific subsections of the particular statute
to which this letter pertains are indicated in the upper right-hand corner of
the first page of this letter and each copy. We respectfully request the
opportunity to meet with the staff if the staff proposes to deny or withhold any
part of the no-action relief requested herein. Pursuant to Rule 81(b) of the
Commission's Regulation Concerning Information and Requests, 17 C.F.R.
¤200.81(b), we further request that the staff accord confidential treatment of
this letter and the staff response thereto until the earlier of 120 days from
the date of such response or Bloomberg's first public announcement of the
information contained in this letter. The request for confidential treatment is
being submitted because certain of the facts set forth above are not now public
and premature disclosure of them could adversely affect Bloomberg. If you have
any questions or seek any additional information regarding this request, please
telephone me at (212) 821-8206.
Very truly yours,
Roger D. Blanc
STAFF REPLY LETTER
October 22, 1997
RESPONSE OF THE OFFICE OF CHIEF COUNSEL
DIVISION OF CORPORATION FINANCE
Re: Bloomberg L.P. ("Bloomberg")
Incoming letter dated October 22, 1997
Based on the facts presented, but without necessarily agreeing with your
analysis, the Division will not recommend enforcement action to the Commission
if Bloomberg transmits an issuer's road show presentation to Bloomberg
subscribers for the purposes and pursuant to the procedures described in your
letter, in reliance upon your counsel's opinion that such transmissions are not
prospectuses within the meaning of Section 2(a)(10) of the Securities Act of
1933. The Division notes that a road show transmission will not be conducted
before the registration statement is filed with the Commission in connection
with the particular public offering of securities.
Your request for confidential treatment pursuant to Rule 81(b), of the
Commission's Regulation Concerning Information and Requests 17 C.F.R.
¤200.81(b), has been granted until the earlier of: (a) 120 days from the date of
this response; or (b) the date that any information contained in your letter or
this response is made publicly available by Bloomberg.
This position is based on the representations made to the Division in
your letter, as well as your counsel's opinion as described therein. Any
different facts or conditions therefore might require different conclusions.
Moreover, this response represents the Division's position on enforcement action
only and does not express any legal conclusion on the question presented.
Because regulatory responses to legal issues raised by technological
developments may evolve, you should be aware that this no-action position may be
reevaluated in the future.
Sincerely,
Broc Romanek
Special Counsel
1The technology currently used by Bloomberg involves a closed-circuit
system to dedicated Bloomberg terminals as well as to individual computers that
can receive "open" Bloomberg data feeds. In each case, the user has an
individual, private pass word that is used to obtain access to Bloomberg data.
In the future, if Bloomberg uses the Internet or other publicly available data
transmission facilities, it will use pass words or other security measures to
limit access to persons who have proper authorization.
2This corresponds to the ability of a member of the audience of a live
road show to arrive late, leave the room at any time and then reenter.
3Bloomberg will reserve the right to edit out dead time arising
through logistical, organizational or similar problems at live road shows and to
give the issuer and/or underwriter the opportunity to edit out misstatements or
mistakes.
4See "Use of Electronic Media for Delivery Purposes,"
Securities Act Release Nos. 7233 (October 6, 1995), 1995 SEC LEXIS 2662, and
7289 (May 9, 1996), 1996 SEC LEXIS 1298.
5See, e.g., Loss & Seligman, FUNDAMENTALS OF SECURITIES REGULATION 80
(3d ed. 1995).
6This could be accomplished by assigning special passwords for this
purpose and changing the passwords each day, or by other means.
7The legend, based on Rule 134(b) but modified to refer to the
transmission over THE BLOOMBERG and to conform to the Commission's recently
proposed "plain English" guidelines, will read as follows:
The issuer of the securities discussed in this transmission has filed a
registration statement with the Securities and Exchange Commission covering the
offer and sale of the securities. The registration statement has not yet become
effective. These securities may not be sold nor may offers to buy them be
accepted before the registration statement becomes effective. This transmission
does not offer any securities to you or ask you to buy any securities. The
securities will not be sold in any State in which the sale would be illegal
before registration or qualification under the securities laws of that State.
8While such oral communications are not prospectuses, the issuer and
the underwriters, respectively, will remain subject to the antifraud provisions
of the Securities Act and the Securities Exchange Act of 1934 in connection with
any statements they make.