Securities Alert

April 1, 1997 Advisory

Rule 144 Holding Periods Reduced by One Year

In February 1997 the Securities and Exchange Commission approved shortening the holding period for restricted securities pursuant to Rule 144 from two years to one and the holding period under Rule 144(k) from three years to two. This development, which becomes effective on April 29, 1997, will provide investors in private placements with a faster means of selling their shares in the absence of a registration statement and may reduce the discounts negotiated by private placement investors due to the shorter period of market risk they are required to incur.

SEC Proposes Changes to Regulation S
In conjunction with the revisions to Rule 144 described above, the Securities and Exchange Commission recently proposed changes to the Regulation S offshore offering safe harbor. These proposed changes would extend the restricted period during which resales of securities issued in exempt offshore transactions pursuant to Regulation S are forbidden from 40 days to two years to conform them to the Rule 144 period applicable to U.S. investors. The SEC has noted that Regulation S has been abused by issuers that place securities offshore temporarily to evade registration requirements only to see investors sell them in the United States immediately after the 40 day holding period expires. The proposed revision to the Regulation S holding period and the change in the Rule 144 holding period would curtail abuses of Regulation S by placing US. investors on equal footing with overseas investors.