SEC Provides New Relief Regarding Issuer Repurchases

In order to facilitate the continued orderly operation of the markets, the Commission today announced that it has used its general exemptive authority under Section 36 of the Securities Exchange Act of 1934 to temporarily modify certain conditions of Rule 10b-18 for issuers that repurchase their own common stock. Today's exemptive relief, which is described below, is not an extension of the emergency orders issued on September 14 and 21. The relief provided in those orders expires today. Today's relief extends from October 1 through October 12. It is the Commission's current expectation that further relief following October 12, 2001 will not be necessary.

The Exemptive Order temporarily eases certain conditions of Rule 10b-18 for issuers repurchasing their own common stock. First, issuers whose common stock trades at sufficiently high levels (meeting an average daily trading volume and public float test) may effect purchases up to ten minutes before the scheduled close of trading on the primary market for such security. An issuer's purchase may not constitute the opening transaction. Second, the volume condition for issuer repurchases has been eased to allow purchases of 100 percent of trading volume.

The Exemptive Order also provides that public companies that repurchase their shares during the period ending October 12, 2001 will not have adverse accounting consequences under the pooling of interests provisions. After the expiration of the Exemptive Order, acquisitions by companies of their own equity securities once again will be governed by the existing accounting literature and related Commission rules and staff interpretations related to pooling-of-interests accounting in the same manner as they were before the Commission issued its Emergency Order on September 14, 2001.