Rule2025-18237
Commission's Rules of Practice
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Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
September 19, 2025
Effective
September 19, 2025
Issuing agencies
Securities and Exchange Commission
Abstract
The Securities and Exchange Commission ("Commission") is amending its Rules of Practice relating to procedures governing Commission review of staff actions made pursuant to delegated authority in connection with the determination of the effective dates of registration statements and post-effective amendments and the determination of the dates and times of qualification of an offering statement and post-qualification amendments under Regulation A.
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<title>Federal Register, Volume 90 Issue 180 (Friday, September 19, 2025)</title>
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[Federal Register Volume 90, Number 180 (Friday, September 19, 2025)]
[Rules and Regulations]
[Pages 45123-45125]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2025-18237]
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SECURITIES AND EXCHANGE COMMISSION
17 CFR Part 201
[Release No. 34-103980]
Commission's Rules of Practice
AGENCY: Securities and Exchange Commission.
ACTION: Final rule.
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SUMMARY: The Securities and Exchange Commission (``Commission'') is
amending its Rules of Practice relating to procedures governing
Commission review of staff actions made pursuant to delegated authority
in connection with the determination of the effective dates of
registration statements and post-effective amendments and the
determination of the dates and times of qualification of an offering
statement and post-qualification amendments under Regulation A.
DATES: Effective Date: The final rules are effective September 19,
2025.
FOR FURTHER INFORMATION CONTACT: John Fieldsend, Special Counsel,
Division of Corporation Finance at 202-551-3430, or Anna Sandor, Senior
Counsel, or Jaea F. Hahn, Senior Counsel, Division of Investment
Management, at 202-551-6787, Securities and Exchange Commission, 100 F
Street NE, Washington, DC 20549.
SUPPLEMENTARY INFORMATION: The Commission is adopting amendments to 17
CFR 201.431 (``Rule 431'').
I. Background
Rule 431 of the Commission's Rules of Practice governs Commission
review of actions made pursuant to delegated authority.\1\ Rule 431(e)
\2\ provides that an action made pursuant to delegated authority shall
have immediate effect and be deemed the action of the Commission. The
rule also provides that, upon filing with the Commission of a notice of
intention to petition for Commission review by an aggrieved person, or
upon the vote of one member of the Commission that a matter be
reviewed, an action made pursuant to delegated authority is
automatically stayed until the Commission orders otherwise. The
automatic stay does not apply to certain delegated actions specified in
Rule 431(e). The Commission is now amending Rule 431(e) to add
determinations of the effectiveness of a registration statement and
post-effective amendments to a registration statement and
determinations of the date and time of qualification of an offering
statement and post-qualification amendments to an offering statement
under Regulation A \3\ to the list of actions for which there shall be
no automatic stay of delegated action when the Commission reviews an
action taken by delegated authority.
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\1\ Congress granted the Commission explicit authority to
delegate certain functions to an individual commissioner, division
directors and others in 1962. Public Law 87-592, 76 Stat. 394. This
authority appears in sections 4A and 4B of the Securities Exchange
Act of 1934 (``Exchange Act''), 15 U.S.C. 78d-1 and 78d-2.
\2\ 17 CFR 201.431(e).
\3\ 17 CFR 230.251 et seq.
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Section 5 of the Securities Act of 1933 (``Securities Act'') \4\
requires that a registration statement be in effect as to a security
before an issuer may sell it.\5\ Under section 8(a) of the Securities
Act (``section 8(a)''),\6\ a registration statement becomes effective
automatically, without Commission or staff action, on the twentieth day
after the registration statement is filed. Securities Act Rule 461 \7\
and Rule 473,\8\ implementing section 8(a), provide for an alternative
process that allows an issuer to delay automatic effectiveness of a
Securities Act registration statement by including a ``delaying
amendment.'' \9\
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\4\ 15 U.S.C. 77a et seq.
\5\ 15 U.S.C. 77e(a).
\6\ 15 U.S.C. 77h(a).
\7\ 17 CFR 230.461.
\8\ 17 CFR 230.473.
\9\ Certain Securities Act registration statements become
effective automatically upon filing with the Commission. See, e.g.,
17 CFR 230.462.
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If an issuer includes a delaying amendment, effectiveness of the
registration statement is delayed until: (i) the issuer files an
amendment specifically stating that the registration statement shall
become automatically effective in accordance with section 8(a) of the
Securities Act, or (ii) such date as the Commission, acting pursuant to
section 8(a), may determine (the ``acceleration process'').\10\ To use
the acceleration process, the issuer submits a request that the
Commission accelerate the effective date of a registration statement
pursuant to Securities Act Rule 461. Following the issuer's request for
acceleration of effectiveness, the staff, acting pursuant to its
delegated authority, will accelerate the effective date of the
registration statement if it meets the criteria under section 8(a) and
Securities Act Rule 461.\11\
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\10\ 17 CFR 230.473.
\11\ See 17 CFR 200.30-1(a)(5). In addition, the Director of the
Division of Corporation Finance has delegated authority to determine
to be effective applications for registration of securities on a
national securities exchange prior to 30 days after receipt of a
certification pursuant to section 12(d) of the Exchange Act (15
U.S.C. 78l(d)), and to accelerate at the request of the issuer the
effective date of registration statements filed pursuant to section
12(g) of the Exchange Act (15 U.S.C. 78l(g)). See 17 CFR 200.30-
1(f)(1) and (f)(6). The Director of the Division of Investment
Management possesses similar delegated authority to accelerate
effectiveness of a registration statement under the Securities Act
and the Exchange Act. See 17 CFR 200.30-5.
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Regulation A provides an exemption from the Securities Act
registration requirements for certain offers and sales of
securities.\12\ Any issuer relying on this exemption must file an
offering statement,\13\ and the Commission must qualify the offering
statement before the issuer may sell securities.\14\ As with a
registration statement, the Commission has delegated its authority to
qualify an offering statement to the Division of Corporation
Finance.\15\
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\12\ See Conditional Small Issues Exemption under the Securities
Act of 1933 (Regulation A), Release No. 33-10591 (Dec. 19, 2018) [84
FR 520 (Jan. 31, 2019)].
\13\ See 17 CFR 230.252.
\14\ See 17 CFR 230.251(D)(2)(i)(A).
\15\ See 17 CFR 200.30-1(b)(2).
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The ability to use the acceleration and qualification processes
provides issuers flexibility to time their securities offerings based
on prevailing market conditions and other transactional considerations.
Once a registration statement is effective, market participants such as
issuers, underwriters, and the exchange on which the securities will be
listed, if any, can immediately engage in market activities related to
sales in reliance on the effective registration statement, and often
do. Similar considerations apply to sales made in reliance on
Regulation A.
We believe that when the acceleration and qualification processes
are used, having a stay of the staff's determination go into effect
automatically upon the filing of a notice of intent or petition for
review, or upon the vote of one member
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of the Commission that a matter be reviewed, would be unnecessary and
disruptive to the registration and qualification processes.\16\ Once
the registration statement is effective, or the offering statement is
qualified, the issuer, underwriters, if any, and other market
participants may commence sales of the securities. As a result, an
automatic stay of the staff's determination to accelerate effectiveness
or to qualify an offering statement after sales have commenced would
disrupt the sales process, and market participants could experience
costs and uncertainty as a result.
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\16\ In adopting Rule 431(e), the Commission recognized that, in
the context of a staff action pursuant to delegated authority to
authorize a subpoena enforcement proceeding, an automatic stay would
``disrupt judicial proceedings commenced on the basis of [the staff
action]'' and was unnecessary due to the presence of a federal judge
overseeing the subpoena enforcement proceeding. Rules of Practice,
Release No. 34-5833 (June 9, 1995) [60 FR 32738, 32778 (June 23,
1995)].
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For example, an offering delay or interruption due to an automatic
stay could adversely impact the issuer's or selling securityholder's
access to capital by delaying the ability to raise the necessary
financing, as well as subjecting the issuer or selling securityholder
to the risk of adverse changes in financing conditions during the
automatic stay, which could result in a decrease in the amount of
financing or a worsening of financing terms, or even jeopardize
offering completion. An automatic stay implemented after an offering
has commenced could similarly negatively affect the issuer or any
selling securityholders and also create uncertainty for underwriters
that have sold securities and investors that have purchased securities
in the affected offering.
Because of the potential disruptive consequences of an automatic
stay in this scenario, we are amending Rule 431(e). Rather than
automatically stay delegated actions to accelerate the effectiveness of
registration statements or to determine the qualification of offering
statements, we believe that it is appropriate that the Commission
consider on a case-by-case basis whether to impose a stay when, in the
context of an effectiveness or qualification decision, (1) a person
aggrieved by an action taken pursuant to delegated authority files a
notice of intention to petition for Commission review of a staff
delegated action pursuant to Rule 430 \17\ or (2) a single member of
the Commission votes to bring a staff delegated action before the full
Commission for review pursuant to Rule 431. This will allow the full
Commission, on a case-by-case basis, to assess, among other appropriate
considerations, whether: (1) there is a likelihood of inadequate
disclosure in the registration or offering statement; and (2) the
balance of harms from the potential inadequate disclosures are
sufficient to justify the imposition of a stay given the potential
disruptive consequences that a stay would cause.
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\17\ 17 CFR 201.430.
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Furthermore, we are extending this approach to include post-
effective amendments to a registration statement and post-qualification
amendments to an offering statement. Under section 8(c) of the
Securities Act, a post-effective amendment to a registration statement
becomes effective on a date determined by the Commission so long as the
amendment does not, ``upon its face, appear[ ] . . . to be incomplete
or inaccurate in any material respect.'' The Commission similarly
determines the date and time to qualify post-qualification amendments
to an offering statement.\18\ Staff has, and exercises, delegated
authority to take effective post-effective amendments and qualify post-
qualification amendments.\19\ Just as an automatic stay would be
disruptive and create unnecessary uncertainty in the context of a staff
determination to take a registration statement effective or to qualify
an offering statement, similar consequences could flow from an
automatic stay when the staff takes effective a post-effective
amendment or qualifies a post-qualification amendment.
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\18\ See 17 CFR 230.252(e).
\19\ The Director of the Division of Corporation Finance has
delegated authority to determine the effective dates of post-
effective amendments to registration statements filed pursuant to
section 8(c) of the Securities Act and to determine the dates and
times of qualification of post-qualification amendments. See 17 CFR
200.30-1(a)(1) and 17 CFR 200.30-1(b)(2). The Director of the
Division of Investment Management possesses similar delegated
authority to determine effective dates of post-effective amendments
under the Securities Act. See 17 CFR 30-5(c).
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Although we are eliminating the automatic stay for determinations
of the effectiveness of a registration statement and post-effective
amendments and determinations of the qualification of an offering
statement and post-qualification amendments under Regulation A, there
are still important safeguards to help ensure robust investor
protection. For example, Securities Act section 8(b) allows the
Commission to issue an order preventing a registration statement from
becoming effective,\20\ and section 8(d) permits the Commission to
issue a stop order to suspend the effectiveness of a registration
statement.\21\ Similarly, Securities Act Rule 258 allows the Commission
to enter an order suspending a Regulation A exemption at any time.\22\
We therefore believe that this amendment to Rule 431(e) will provide
issuers, investors, and other market participants with greater
predictability and certainty in the registration and qualification
processes while also maintaining investor protection and appropriate
regulatory safeguards.\23\
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\20\ 15 U.S.C. 77h(b).
\21\ 15 U.S.C. 77h(d).
\22\ 17 CFR 230.258.
\23\ We also are making a technical correction to Rule 431(e)(1)
(17 CFR 201.431(e)(1)) to amend an erroneous cross reference. The
correct reference is to 17 CFR 200.30-14(h)(5) through (6).
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II. Administrative Law Matters
The Commission finds, in accordance with section 553(b)(A) of the
Administrative Procedure Act (``APA''), that these revisions relate
solely to agency organization, procedures, or practice and do not
constitute a substantive rule. They are therefore not subject to the
APA provisions regarding notice of rulemaking, opportunity for public
comment, and advance publication of the amendments. For the same
reason, and because these amendments do not affect the rights or
obligations of non-agency parties, the provisions of the Small Business
Regulatory Enforcement Fairness Act are not applicable. Additionally,
the provisions of the Regulatory Flexibility Act, which apply only when
notice and comment are required by the APA, are not applicable. These
amendments do not contain any collection of information requirements as
defined by the Paperwork Reduction Act of 1995.
III. Economic Analysis
We are adopting amendments relating to procedures governing
Commission review of staff actions made pursuant to delegated
authority. These amendments expand the list of actions for which there
will be no automatic stay when a delegated action is reviewed by the
Commission; they do not impose any substantive regulatory obligations
on any person or otherwise. Staff already reviews certain registration
statements and post-effective amendments for compliance with the
Securities Act and Exchange Act and regulations thereunder before
declaring a registration statement effective pursuant to delegated
authority. Staff similarly reviews certain offering statements and
post-qualification amendments to those offering statements filed under
Regulation A before qualifying them.
The amendments are likely to benefit an affected issuer (as well as
underwriters, investors, and any selling
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securityholders) by avoiding the costs and uncertainty resulting from
an automatic stay in the event that a petition for review is filed
pursuant to Rule 430 by a person aggrieved by an action taken pursuant
to delegated authority, or the Commission reviews the action on its own
initiative under Rule 431. The amendments do not preclude an aggrieved
party from filing a petition for Commission review of an action taken
by delegated authority, or a member of the Commission from bringing
such an action before the full Commission.
In light of this, we do not believe the amendments will have a
substantial economic impact, including an effect on efficiency,
competition, or capital formation. Further, we do not believe that the
amendments would impose substantial new burdens on private parties or
have significant impacts on competition for purposes of section
23(a)(2) of the Exchange Act.
Statutory Authority
These technical amendments are being adopted pursuant to statutory
authority granted to the Commission under sections 4A and 23(a) of the
Exchange Act.
List of Subjects in 17 CFR Part 201
Administrative practice and procedure.
Text of Amendments
For the reasons stated in the preamble, the Commission is amending
title 17, Chapter II of the Code of Federal Regulations as follows:
PART 201--RULES OF PRACTICE
Subpart D--Rules of Practice
0
1. The authority citation for part 201, subpart D, continues to read as
follows:
Authority: 15 U.S.C. 77f, 77g, 77h, 77h-1, 77j, 77s, 77u, 77sss,
78c(b), 78d-1, 78d-2, 78l, 78m, 78n, 78o(d), 78o-3, 78o-10(b)(6),
78s, 78u-2, 78u-3, 78v, 78w, 80a-8, 80a-9, 80a-37, 80a-38, 80a-39,
80a-40, 80a-41, 80a-44, 80b-3, 80b-9, 80b-11, 80b-12, 7202, 7215,
and 7217.
0
2. Amend Sec. 201.431 by revising paragraphs (e)(1) and (2) and adding
paragraph (e)(3) to read as follows:
Sec. 201.431 Commission consideration of actions made pursuant to
delegated authority.
* * * * *
(e) * * *
(1) To grant a stay of action by the Commission or a self-
regulatory organization as authorized by 17 CFR 200.30-14(h)(5) and
(6);
(2) To commence a subpoena enforcement proceeding as authorized by
17 CFR 200.30-4(a)(10); or
(3) To determine the effectiveness of a registration statement, or
a post-effective amendment thereto, or the qualification of an offering
statement, or a post-qualification amendment thereto, as authorized by
17 CFR 200.30-1(a)(1), 200.30-1(a)(5), 200.30-1(b)(2), 200.30-1(f)(1)
and 200.30-1(f)(6), or 17 CFR 200.30-5(b), 200.30-5(c)(3), 200.30-
5(c)(4), and 200.30-5(c)(6).
* * * * *
By the Commission.
Dated: September 17, 2025.
Vanessa A. Countryman,
Secretary.
[FR Doc. 2025-18237 Filed 9-18-25; 8:45 am]
BILLING CODE 8011-01-P
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</html>Indexed from Federal Register on September 19, 2025.
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