NCJ Number
116124
Journal
George Washington Law Review Volume: 57 Issue: 1 Dated: (November 1988) Pages: 77-99
Date Published
1988
Length
23 pages
Annotation
This analysis of the regulatory authority of the Securities and Exchange Commission (SEC) in relation to timing rules for tender offers concludes that Congress needs to clarify the scope of the SEC's rulemaking authority under Section 14(e) of the 1968 Williams Act, which amended the Securities Exchange Act of 1934.
Abstract
The Williams Act was designed to protect investors through disclosure and to avoid regulating the merits and substance of tender offers. However, the SEC has undermined these objectives by promulgating three rules: the 20-day offer period rule, withdrawal rule, and the pro rate acceptance rule. When adopted, these rules confused rather than protected investors. Moreover, they provided management with several advantages over third-party bidders. These rules thus illustrate the danger of giving broad, ambiguous rulemaking authority to the SEC. The three legislative proposals pending in Congress resolve the issue concerning the timing rules but do not clarify the scope of the SEC's rulemaking authority under Section 14(e). Thus, they ignore the dangerous implications of the United States Supreme Court's decision in Schreiber v. Burlington Northern, Inc. To ensure investors confidence in the SEC and the securities markets generally, Congress should clarify the purpose and scope of the SEC's rulemaking authority. 154 footnotes.