Pursuant to a legislative requirement, GAO reviewed the Securities and Exchange Commission's (SEC) new rule on the regulation of takeovers and security holder communications. GAO noted that: (1) the rule would revise the regulations applicable to takeover transactions (including tender offers, mergers, acquisitions, and similar extraordinary transactions) to permit significantly more communications before the time a mandated disclosure document must be publicly filed with the SEC; (2) in addition, the rule balances the treatment of cash and stock tender offers, simplifies and centralizes disclosure requirements, and eliminates existing regulatory inconsistencies in merger and tender offers; and (3) SEC complied with applicable requirements in promulgating the rule.