Securities Regulation:

SEC's Oversight of Privately Placed Transactions Among Large Investors

GGD-93-37: Published: Feb 19, 1993. Publicly Released: Feb 19, 1993.

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Pursuant to a congressional request, GAO reviewed the Securities and Exchange Commission's (SEC) procedures for collecting and analyzing data for reports on the implementation of Rule 144A.

GAO found that: (1) SEC has issued two of three reports on the effects of the rule on U.S. markets and used multiple sources of data to monitor the market and prepare its reports; (2) difficulties in collecting data included the unknown scope of Rule 144A transactions and market participants, lack of reporting requirements for privately placed security transactions to SEC or other agencies, and differing market participant views on the makeup of Rule 144A placements; (3) the first SEC report examined 27 Rule 144A transactions which totalled $2.7 billion, however, the data lacked consistent format, detail, and information for reliable conclusions to be made; (4) the second SEC report was more extensive, covering 89 Rule 144A placements totalling $8.5 billion and included more comprehensive data, used standardized questions, expanded the number and sources of participants, and utilized a refined data collection method; (5) SEC identified two additional sources of data to improve its coverage of the marketplace and to verify data from other sources; and (6) sufficient Rule 144A monitoring may be difficult to achieve due to the voluntary nature of Rule 144A reporting requirements and a reluctance of participants to divulge transactions.

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