Tender Offer Considerations For Cash Repurchases And Exchange Offers (Part 2)

5. Material Changes

Rule 13e-4(e)(3) specifies that when a material change occurs in the information that the issuer has published, sent or given to security holders, then the issuer must promptly disseminate disclosure of the material change "in a manner reasonably calculated to inform security holders of the change."

In the case of a registered exchange offer, special timing provisions govern the dissemination of material changes when the issuer has disseminated a preliminary prospectus in accordance with Rule 13e-4(d)(2). Rule 13e-4(e)(3) specifies that the offer must remain open from the date on which the issuer disseminates material changes to the tender offer materials to shareholders, as follows:

• 5 business days for a prospectus supplement containing a material change other than price or share levels;
• 10 business days for a prospectus supplement containing a change in price, the amount of securities sought, the dealer's soliciting fee, or other similarly significant change;
• 10 business days for a prospectus supplement included as part of a post-effective amendment to the registration statement; and
• 20 business days for a revised prospectus when the initial prospectus was "materially deficient."

6. Procedural Requirements

Rule 13e-4(f) prescribes the manner in which issuers may conduct an issuer tender offer, including specific requirements with respect to the period during which the tender offer must remain open; the availability of withdrawal rights; pro rata acceptance; any increases in consideration; prompt payment for or return of securities tendered; purchases outside of the tender offer; and the "all holders" and "best price" protections.

a. Offering Period

Rule 13e-4(f)(1)(i) specifies that, unless withdrawn, an issuer tender offer must remain open until expiration of:

• At least 20 business days from commencement of the issuer tender offer; and
• At least 10 business days from the date that notice of an increase or decrease in one of the following is first published, sent or given to security holders:
• • The percentage of the class of securities being sought;¹⁹
  • The consideration being offered (subject to no de minimis exception); or
  • The dealer's soliciting fee to be given.

b. Withdrawal Rights

Rule 13e-4(f)(2) provides that the issuer making an issuer tender offer must permit shareholders to withdraw securities tendered pursuant to the issuer tender offer:

• At any time during the period when the issuer tender offer remains open; and
• If tendered securities have not yet been accepted for payment, after the expiration of 40 business days from the commencement of the tender offer.

c. Pro Rata A

cceptance Rule 13e-4(f)(3) requires that the tender offer by the issuer or affiliate is for fewer than all of the outstanding equity securities of a class, and the number of securities tendered exceeds the number that the issuer is bound or willing to take up and pay for, the issuer must accept and pay for the securities as nearly as may be pro rata, disregarding fractions, according to the number of securities tendered by each security holder during the period that the offer remains open.

Rule 13e-4(f)(3) does not prohibit the issuer making an issuer tender offer from:

• Accepting all securities tendered by security holders who own no more than a specified number of shares less than one hundred and who tender all of their securities, before pro rating securities tendered by others; or
• Accepting by lot securities tendered by security holders who tender all of their shares and who elect to have all or none (or at least a minimum amount and none) accepted, if the issuer first accepts the securities tendered by persons who have not made such an election.

d. Increase in Consideration

Rule 13e-4(f)(4) requires equal treatment of security holders in the event of an increase in the consideration offered. If the issuer increases the consideration offered after the tender offer has commenced, then issuer must pay that increased consideration to all security holders whose tendered securities are accepted for payment.

e. Prompt Payment or Return

Under Rule 13e-4(f)(5), an issuer must either pay the consideration offered, or return the tendered securities, promptly after the termination or withdrawal of the tender offer.

f. Purchases Outside the Tender Offer

Rule 13e-4(f)(6) prohibits purchases outside of the tender offer. Until at least ten business days after the termination of the tender offer, the issuer and its affiliates cannot purchase – other than pursuant to the tender offer – any subject security, any security of the same class and series, or any right to purchase such securities. With respect to exchange offers, this prohibition applies to the purchases of any security being offered in the exchange offer, any securities of the same class and series, and any right to purchase such a security.

g. "All Holders" Requirement

Rule 13e-4(f)(8)(i) provides that the tender offer must be open to all security holders²⁰ of the class of securities subject to the tender offer.²¹

This "all-holders" provision would not prohibit an issuer or affiliate from excluding all security holders in a state where the tender offer is prohibited by administrative or judicial action under a state statute after a good faith effort to comply with the statute.

h. "Best Price" Requirement

Rule 13e-4(f)(8)(ii) requires that the consideration paid to any security holder for securities tendered in the tender offer is the highest consideration paid to any other security holder for securities tendered in the tender offer.

Rule 13e-4(f)(10) specifies that the "best price" requirement does not prohibit more than one type of consideration being offered in a tender offer, provided that: (i) security holders have an equal right to elect among each of the types of consideration offered; and (ii) the highest consideration of each type paid to any security holder is paid to any other security holder receiving that type of consideration.

Under Rule 13e-4(f)(11), if the offer and sale of securities constitute consideration offered in the tender offer, and the issuer has made a good faith effort to register or qualify the offer and sale in a particular state but is prohibited by the appropriate authority of that state, the issuer may offer security holders in that state an alternative form of consideration. The alternative form of consideration need not be offered or paid to security holders in any other state.

7. Antifraud Provisions

Rule 13e-4(j) specifies antifraud requirements applicable to issuer tender offers, prohibiting issuers and affiliates, in connection with an issuer tender offer, from:

• Employing any device, scheme or artifice to defraud any person;
• Making any false statement of material fact or omission of material fact necessary to make the statements made, in light of the circumstances under which they were made, not misleading; or
• Engaging in any act, practice, or course of business that operates or would operate as a fraud or deceit on any person.

Rule 13e-4(j) also states that, as a means reasonably designed to prevent fraudulent, deceptive, or manipulative practices in connection with an issuer tender offer, it is unlawful for an issuer or affiliate to make an issuer tender offer unless it complies with the requirements of Rule 13e-4(b), (c), (d), (e), (f), and (j). In addition, the other antifraud and antimanipulation provisions of the Exchange Act would apply to an issuer tender offer, including Section 10(b) and Rule 10b-5 thereunder, as well as Section 14(e).

8. Exemptions

Certain transactions are exempt from the application of the rule under Rule 13e-4(h) from the issuer tender offer provisions. Specifically, Rule 13e-4 does not apply to:

• Calls or redemptions pursuant to the governing instrument;
• Offers to purchase evidenced by a scrip certificate, order form, or similar document that represents a fractional interest in a share of stock;
• Offers to purchase shares of dissenting shareholders in accordance with a statutory procedure;
• Tender offers subject to Exchange Act Section 14(d);
• Offers to purchase from owners of up to a specified number of shares less than 100, provided that the offer satisfies the "all holder" provisions of the rule with respect to shareholders who own a number of shares equal to or less than the specified number of shares (except that the issuer can exclude participants in certain plans for employees or security holders, and can exclude security holders who do not own their shares as of a specified date); and the equal consideration provisions of rule are satisfied or consideration paid is determined on the basis of a uniformly applied formula based on the subject security's market price;
• Issuer tender offers made solely to effect a rescission offer, provided that: (1) the offer is registered under the Securities Act; and (2) the consideration equals the price paid by each security holder, plus legal interest if the issuer elects or is required to pay legal interest;
• Offers by closed-end management investment companies to repurchase equity securities under Investment Company Act Rule 23c-3;
• Issuer tender offers by a foreign private issuer under certain conditions relating to: (1) the maximum percentage of U.S. holders of the subject class of securities; (2) the equal treatment of U.S. holders and other holders; and (3) dissemination of informational documents; and
• Transactions exempted by the SEC, on written request or on its own motion, either unconditionally or subject to conditions.

An offer may qualify for the "Tier I" exemption from the tender offer rules if it can be established that 10% or less of the securities are held by U.S. resident holders, looking through to the beneficial owners. For the purpose of this exemption, holders of notes held in bearer form may be presumed to be outside the United States unless the issuer "knows or has reason to know that these securities are held by U.S. residents." Under recently adopted amendments to the Tier I exemption, an offeror may calculate ownership by U.S. resident holders as of any date no more than 60 days before, and no more than 30 days after, the public announcement of the transaction, rather than as of the date that is 30 days prior to the publication of the offering document as was previously required. In situations where the offeror is unable to conduct the necessary analysis of beneficial holders within the 90-day period, the SEC now permits the use of a date not more than 120 days before the public announcement. Under the recently effective amendments, individual holders of more than 10% of the subject securities are no longer excluded for the purposes of calculating the level of U.S. ownership.

9. SEC Staff Review

When a Schedule TO is filed, the SEC Staff may review and comment on the disclosure in the Schedule TO, the Offer to Purchase or Offer to Exchange, and any other related documents, as well as review and comment on compliance with Rule 13e-4 and Regulation 14E. The Staff Office of Mergers & Acquisitions in the Division of Corporation Finance reviews the Schedule TO. Typically, the Staff tries to issue comment quickly (within 5-7 business days), because the tender offer is only required to be open for 20 business days. The Staff's comments may require that the issuer file amendments to the Schedule TO and disseminate changes in order to address the Staff's concerns.

II. Considerations for Liability Management Transactions

A. Debt versus Equity Tender Offers

The requirements of Rule 13e-4 result in significantly less flexibility for tender offers or exchange offers for convertible or exchangeable debt securities, common stock and preferred stock, when compared to tender offers or exchange offers for straight debt securities. For example, it is not possible for issuers to "sweeten" a tender offer or exchange offer for convertible or exchangeable debt securities, preferred stock or common stock with an "early tender premium" as is sometimes the case in tender offers or exchange offers for straight debt securities. Under this approach, holders that tender early in the offering period, typically within the first ten business days, may receive the "total consideration." Holders that tender after the early tender period terminates will receive lesser consideration for their securities. The early tender feature benefits the issuer because it may have greater visibility regarding the success of the tender offer. An issuer needs to be mindful that the falling away of the "premium" may, under certain circumstances, constitute a change in consideration that may require that the tender stay open for an additional ten days, as discussed above.

Moreover, in a straight debt tender offer, an issuer has the flexibility to choose to accept tenders of securities on a "first come, first served" basis, or offer limited or no withdrawal rights, or conduct a Dutch auction or modified Dutch auction for pricing purposes.

B. SEC Staff Relief for Investment Grade Debt Securities

The requirements of Regulation 14E may still be limiting for an issuer conducting a tender offer for straight debt securities. Specifically, if an issuer must keep the offer open for 20 business days or extend the offer period if there are any changes in the consideration or percentage sought, it can adversely affect the tender because the issuer is subject to market risk during this time. Most debt tender offers occur when interest rates are low – the issuer is trying to lower its cost of funds by retiring high interest rate debt securities with the proceeds from new securities issued at a lower rate, or a lower-interest rate credit facility. If interest rates decline during the offer period, an issuer will not retire as much debt and if rates increase, the retired debt will come at a higher price. Longer offer periods translate into increased uncertainty.

Because the SEC staff believes that issuer debt tender offers for cash for any and all non-convertible, investment grade debt securities may present considerations that differ from any and all or partial issuer tenders for a class or series of equity securities or non-investment grade debt, it consistently has granted relief to issuers of investment grade debt in the context of tenders for their debt securities. An issuer need not keep the tender open for 20 business days, provided the following conditions are met:²²

• Offers to purchase were made for any and all of the investment grade debt, non-convertible debt of a particular series or class;
• The offer is open to all record and beneficial holders of that series or class;
• The offer is conducted so as to afford all record and beneficial holders of that series or class the reasonable opportunity to participate, including dissemination of the offer on an expedited basis in situations where the tender offer is open for a period of less than ten calendar days; and
• The tender offer is not being made in anticipation of or in response to other tender offers for the issuer's securities.

Following these no-action letters, investment grade debt issuers were no longer subject to the 10- and 20-business day requirements.

C. Modified Dutch Auctions

Typically, in its tender offer documents, an issuer will specify the amount of securities it is seeking to purchase, as well as the price at which it will purchase these securities (or the method of calculating the purchase price). However, in some cases, an issuer may specify the amount of securities to be tendered, but may set the price using a modified "Dutch auction" pricing structure. In this structure, the issuer sets a cascading range of prices at which a holder may tender its securities. The purchase price will be the highest price at which the issuer is able to buy all of the securities for which it has solicited a tender (or a smaller amount, if not all the securities are tendered). This price is often referred to the "clearing price."²³

The SEC Staff has permitted tender offers to proceed without the issuer disclosing the range of prices in the tender offer documents, so long as the aggregate amount of securities to be purchased is disclosed (and the range of securities to be purchased if the offer were fully subscribed). Usually, the permitted price range is very narrow – often no more than 15% of the minimum price. In this regard, modified issuer Dutch auction tender offers have been permitted under Rule 13e-4, subject to several additional conditions:

• Disclosure in the tender offer materials reflects the minimum and maximum consideration to be paid;
• Pro rata acceptance occurs throughout the offer with all securities purchased participating equally in prorationing;
• Withdrawal rights are available throughout the offer;
• The issuer makes a prompt announcement of the purchase price, if determined prior to the expiration of the offer; and
• The purchase of all accepted securities is made at the highest price paid to any security holder under the offer.²⁴

In prior no-action letter guidance, the Staff had noted its belief that issuers conducting modified Dutch auction tender offers could not satisfy the requirements of (then) Schedule 13e-4 by stating a range of shares to be sought in the tender offer.

In this regard, the Staff appeared to be concerned that an issuer would have discretion to select a number from within that range that might be purchased in the tender offer.²⁵ More recently, in a recent no-action letter to Alliance Semiconductor Corporation,²⁶ the Staff considered a modified Dutch auction tender offer where the issuer suggested that the total number of securities may be disclosed in terms of the maximum number that can be purchased, subject to the number of shares tendered and at which price those shares are tendered. In the proposed tender offer, the Offer to Purchase was to state that the maximum number of shares was 10,909,090, and that if the offer was fully subscribed, the issuer would buy an amount of shares between 10,000,000 and 10,909,090, with exact number dependent on the terms of the offer, not a decision on the part of the issuer. As a result of this structure, the amount that would be purchased in the tender offer was determined as a function of the prices at which shares are validly tendered and the number of shares tendered. Alliance Semiconductor argued that Rule 13e-3(f)(1)(ii) would not require extending the offer for 10 days after the purchase price – and hence exact number of shares to be purchased – was determined, and that the disclosure of the range of shares presented would satisfy the requirement of Item 1004(a)(1)(i) of Regulation M-A to disclose the "total number and class of securities."

In providing its response that no Enforcement action would be recommended if the offer was conducted as described in the letter, the Staff particularly noted that:

• The total number and dollar value of securities being sought in the offer is disclosed in the offer materials as required by Item 1004(a)(1)(i) of Regulation M-A;
• The maximum number of shares that may be purchased in the offer is stated on the cover page of the offer to purchase;
• The offer to purchase discloses the range of shares that will be purchased if the offer is fully subscribed; and
• The exact number of shares to be purchased in the offer will be based on the purchase price established by the shareholders determined in accordance with the terms of the offer as disclosed in the offer to purchase.

D. Concerns with "Creeping" Tender Offers and Purchases Outside of the Offer

In certain circumstances, purchases of securities in the market or through negotiated transactions could be deemed to constitute a tender offer that is not in compliance with the rules described above. Further, when a tender offer commences around the time of open market or negotiated purchases, security holders could potentially object to the terms of the transactions outside of the tender offer.

Courts that have addressed the issue of tender offer "integration" have taken disparate approaches. Most cases have arisen in connection with claims of violations of the "best price" and "all holders" provisions applicable to tender offers, or violations of the prohibitions on purchases outside of a tender offer. Some courts have strictly construed the time frame of the tender offer to start with public announcement or commencement and end with withdrawal or termination, while others have adopted an approach of determining whether the questioned transaction was an integral part of the tender offer. More specifically, several courts have held that share purchases by the acquiror made in advance of a tender offer are not improper, because the tender offer rules are only applicable upon announcement or commencement of the tender offer.²⁷ Some courts, however, have taken a broader view in interpreting whether transactions occurring before or after the precise technical commencement and termination or withdrawal of the tender offer were considered part of the tender offer.²⁸

Issuers must carefully structure any ongoing market purchases or negotiated acquisitions of securities so as to comply with the prohibitions on purchases outside of the tender offer in Rules 13e-4 and 14e-5. In this regard, it is often important to analyze whether the targeted securities in the outside purchases are of a separate class from the class of securities that are the subject of a tender offer. The term "class" is not defined specifically for the purposes of Rule 13e-4 and Regulation 14E, however the term has been defined for other purposes under the Exchange Act. In Section 12(g)(5) of the Exchange Act, the term "class" is defined to include "all securities of an issuer which are of substantially similar character and the holders of which enjoy substantially similar rights and privileges." Further, the SEC has provided guidance regarding the determination of whether different series of preferred stock are the same "class" for the purposes of Rule 144A, stating that the test under Rule 144A to determine whether securities would be of the same class would be the same test as under Section 12(g)(5) of the Exchange Act and would be interpreted in the same manner.29

E. Regulation M

While Regulation M does not apply to investment grade non-convertible debt securities, it does apply to equity securities, non-investment grade debt and convertible debt. An issuer that engages in a tender offer must ensure that it complies with Regulation M. Rule 102 under Regulation M makes it unlawful for an issuer or its affiliates "to bid for, purchase, or attempt to induce any person to bid for or purchase, a covered security during the applicable restricted period." This prohibition is intended to prevent an issuer from manipulating the price of its securities when the issuer is about to commence or is engaged in a distribution. If debt being exchanged in an exchange offer is convertible into the issuer's equity securities, under certain circumstances, repurchases of convertible debt securities could be deemed a forced conversion and, therefore, a "distribution" of the underlying equity security for Regulation M purposes.

F. Special rules for European Tenders

It may be the case that the holders of an issuer's debt securities are located in foreign jurisdictions. For instance, if an issuer sold its securities pursuant to Rule 144A in the United States and pursuant to Regulation S outside the United States. Many frequent debt issuers issue and sell their debt securities pursuant to Euro medium-term note programs or market and sell U.S. registered securities into the European Union ("EU") or other foreign jurisdictions. For these tenders, an issuer must not only focus on the various considerations described above, but also must be cautious that its tender does not violate any rules in the home country of its security holders.

In the EU, there are two directives about which an issuer should be concerned. First, The Market Abuse Directive ("MAD"). As its name suggests, MAD is intended to prevent abuses relating to insider trading. Similar to Regulation FD, MAD requires that an issuer announce without delay information directly concerning it. MAD applies to financial instruments admitted to trading on a regulated market or for which a request for admission to trading has been made. The statute is intended to address insider dealing, market manipulation and the dissemination of false or misleading information. Under MAD, an issuer should perform an analysis similar to that under Regulation FD – is the insider in possession of material non-public information. In the case of a debt tender, the terms of the transaction likely was announced, so an issuer need only consider whether it possesses other information that may be considered material.

In the EU, an issuer need also be mindful of anti takeover restrictions contained in Directive 2004/25/EC. This directive pertains to takeover bids for the securities of issuers governed by the laws of a member state, where all or some of the securities are admitted to trading on a regulated market. A takeover bid means a public offer (other than by the offeree issuer itself) is made to the holders of securities to acquire all or some of the securities with the objective of acquiring control. Though not directly applicable, the directive provides guidance that an issuer should follow in conducting a tender for its own securities. In particular, all holders must be treated equally and must have sufficient time and information to enable them to reach an informed decision.

Footnotes

1 This News Bulletin does not address tender offer rules applicable to third-party tender offers for an issuer's securities, such as Rules 14d-1 through 14d-11.

2 475 F. Supp. 783, 823–24 (S.D.N.Y. 1979), aff'd on other grounds, 682 F.2d 355 (2d. Cir. 1982), cert. denied, 460 U.S. 1069 (1983). See also SEC v. Carter Hawley Hale Stores, Inc., 760 F.2d 945, 950 (9th Cir. 1985).

3 See Rand v. Anaconda-Ericsson, Inc., 794 F.2d 843, 848-49 (2d Cir. 1986), cert. denied, 479 U.S. 987 (1986) (citing Hanson Trust PLC v. SCM Corp., 774 F.2d 47 (2d Cir. 1985)).

4 Regulation 14E applies to tender offers for any securities other than "exempt securities" as defined by Section 3(a)(12) of the Exchange Act. As a result, the rules that comprise Regulation 14E apply to tender offers for debt securities, equity securities, and the securities of companies that do not have a class of securities registered under Section 12 of the Exchange Act or are otherwise required to file reports under the Exchange Act.

5 Rule 14d-1(g) states that when "computing any time period under section 14(d)(5) or section 14(d)(6) of the Act or under Regulation 14D or Regulation 14E, the date of the event which begins the running of such time period shall be included." Therefore, the date on which the tender offer is first published or sent to holders of the subject securities is counted as the first day of the 20 business day period.

6 See SEC Release No. 34-42055 (Oct. 22, 1999).

7 In tender offers for straight debt securities, it is standard practice to provide holders with withdrawal rights. These withdrawal rights typically expire after an initial period, often after the first ten business days. An issuer also should consider whether it should reinstate limited withdrawal rights following the occurrence of any material change in the terms of the tender offer or the waiver of a material condition.

8 SEC No Action Letter, American Financial Corporation (Dec. 20, 1982).

9 SEC No Action Letter, American Financial Corporation (Mar. 9, 1989).

10 SEC No Action Letter, Republic New York Corporation (Mar. 5, 1985).

11 The Staff has previously indicated that "[the Trust Indenture] Act generally would apply . . . to preferred securities issued by a trust that represent an interest in debt issued by a single obligor." See SEC Division of Corporation Finance, Compliance and Disclosure Interpretations: Trust Indenture Act of 1939 (#101.04) (March 30, 2007), available at http://www.sec.gov/divisions/corpfin/guidance/tiainterp.htm .

12 SEC No-Action Letter, BBVA Privanza International Limited and Banco Bilbao Vizcaya Argentaria, S.A., (Dec. 23, 2005).

13 The requirements of Rule 13e-4 applicable to issuers are also applicable to affiliates of the issuer. For the purposes of this discussion of Rule 13e-4, references made to the issuer also include affiliates of the issuer.

14 For the purposes of Rule 13e-4, the term "commencement" means 12:01 a.m. on the date that the issuer has first published, sent or given the means to tender to security holders. The term "means to tender" includes the transmittal form or a statement regarding how the transmittal form may be obtained.

15 Instruction 1 to Schedule TO provides that information previously disclosed in the Schedule TO may be omitted in an amendment disclosing a material change.

16 At the time of making the initial Schedule TO filing, the issuer will be required to pay a filing fee computed in accordance with Rule 0-11 of the Exchange Act. If a fee has been paid under Section 6(b) of the Securities Act with respect to any of the securities issued in connection with the proposed transaction, then the required fee is reduced by that amount. Similarly, the fee required for a Securities Act registration statement would be reduced by the amount of any fee paid in connection with the Schedule TO filing.

17 See Instruction 1 to Rule 13e-4(c). The filing person need not respond to the specific line items of Schedule TO when filing precommencement written communications, and no fee is required with the filing.

18 Instruction 2 to Rule 13e-4(e)(2) provides that a preliminary prospectus cannot omit information under Rule 430 or 430A of the Securities Act. Instruction 3 to Rule 13e-4(e)(2) provides that when a preliminary prospectus is used and the issuer must disseminate material changes, the tender offer must remain open for the period specified in Rule 14d-4(d)(2). If a preliminary prospectus is used, tenders may be requested in accordance with Securities Act Rule 162(a), pursuant to Instruction 4 to Rule 13e-4(e)(2).

19 An issuer may accept for payment up to an additional two percent of the class without triggering the additional 10 business days. For the purposes of this rule, the "percentage of the class" is calculated in accordance with Section 14(d)(3) of the Exchange Act.

20 Rule 13e-4(a)(6) specifies that the term "security holders" means both holders of record and beneficial owners of securities of the class which is the subject of the tender offer. As a result, a tender offer open to only holders of record would not satisfy the "all holders" requirement.

21 The SEC has indicated that a tender offer may be made for fewer than all outstanding securities, but all security holders must be eligible to accept the offer if they choose. See Release No. 34-23421 (July 11, 1986).

22 See, SEC No-Action Letter, Salomon Brothers Inc. (Mar. 12, 1986); SEC No-Action Letter, Goldman Sachs & Co. (Mar. 26, 1986); SEC No-Action Letter, Merrill Lynch, Pierce, Fenner & Smith Inc. (July 2, 1986).

23 Under the SEC's guidance, all security holders whose securities are accepted in a modified Dutch auction issuer tender offer subject to Rule 13e-4 must be paid the highest consideration paid to any other security holder whose securities are accepted. See Release No. 34-23421 (July 11, 1986). The Release also notes that "pure" dutch auctions are not permitted under Rule 13e-4, stating: "In a pure dutch auction cash tender offer, the bidder invites security holders to tender securities to it at a price to be specified by the tendering security holder, rather than at a price specified by the bidder. Securities are accepted, beginning with those for which the lowest price has been specified, until the bidder has purchased the desired number of securities."

24 See Release No. 34-23421 (July 11, 1986) at note 64.

25 See SEC No-Action Letter, Tektronix, Inc. (June 19, 1987); SEC No-Action Letter, Janet S. Thiele (Dec. 21, 1987).

26 SEC No-Action Letter, Alliance Semiconductor Corp. (Sept. 22, 2006).

27 See, e.g., Lerro v. Quaker Oats Co., 84 F.3d 239, 257 (7th Cir. 1996); Kahn v. Virginia Retirement Sys.,13 F.3d 110, 113 (4th Cir. 1993); Heine v. The Signal Companies, Inc., 1977 US Dist. LEXIS 17071 (S.D.NY 1977).

28 See, e.g., Millionerrors Investment Club v. General Electric Co. PLC, 2000 Dist. Lexis 4803 (W.D. Pa. Mar. 21, 2000); Perera v. Chiron Corporation, 1996 US Dist. Lexis 22503 (ND. Cal. May 8, 1996); Field v. Trump, 850 F.2d 938 (2d Cir. 1988), cert. denied, 109 S. Ct. 1122 (1989).

29 Release No. 33-6862 (Apr. 23, 1990).

Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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