Assessment of Shelf Registration: How Much Diligence is Due Investors?

Abstract

Investment Banking and Diligence: What Price Deregulation?, by Joseph Auerbach* and Samuel Hayes, III." Boston, Massachusetts: Harvard Business School Press, 1986. 274 pages. $24.95. It has been over four years since the Securities and Exchange Commission (SEC) adopted its controversial Rule 415, commonly known as the Shelf Registration Rule. Under the Shelf Registration Rule, eligible public issuers may file a single registration statement for a class of debt or equity securities and then sell the securities on a non-fixed price basis at any time during a maximum two-year period. While many commentators have attempted to assess the Shelf Registration Rule's impact, the full ramifications of the Rule for investor protection have yet tobe determined. The Shelf Registration Rule is but one component of the SEC's integrated disclosure system, a deregulatory initiative begun during the Carter Administration and put into final form under the leadership of SEC Chairman John S.R. Shad during the Reagan Administration. The integrated disclosure system is designed to avoid unnecessary corporate disclosure by permitting issuers to incorporate periodic reports made under the Securities Exchange Act of 19346 ("1934 Act") into Securities Act of 1933 ("1933 Act") registration statements.