US Market Regulation and Global Offerings with a US Tranche

US Securities & Exchange Commission (SEC) rules curtail market activities by participants in a distribution of securities during the distribution in order to protect against manipulative or deceptive marketing practices. The continuing globalization of the capital markets raises the need for exemptive relief from those rules in multinational offerings with a US tranche. Recently, the SEC has taken important exemptive action under Rules 10b-6 and 10b-7 in the context of multinational offerings. Exemptive letters under those rules were issued in March 1987, in a simultaneous French-US equity offering for Rhone-Poulenc SA, and in May 1987, in a global equity offering for Philips NV. These letters illustrate that counsel in multinational offerings involving a US tranche need to be aware that underwriters' expectations regarding trading practices during an offering may not be the same in Europe as in the US and that, as a result, there may be a need in such offerings for exemptive relief. The letters also demonstrate the need for US market regulation rules to be carefully reviewed in the context of time differences and multiple currencies that the language of the rules does not accommodate.