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FDIC proposes overhaul of securities offerings disclosure requirements

In an effort to create a unified regulatory scheme applicable to state nonmember banks and state savings associations, the FDIC recently proposed rules that would (i) rescind 12 CFR part 390, subpart W, entitled “Securities Offerings,” (ii) rescind the 1996 Statement of Policy on the “Use of Offering Circulars in Connection with the Public Distribution of Bank Securities” and (iii) replace them with new rules regarding securities disclosures that would be applicable to both classes of institutions.

Among other items, the proposal:

  • references SEC requirements for, and exemptions from, preparing registration statements and prospectuses and sets forth rules for the offering and sale of securities by issuers, underwriters, and dealers;
  • references OCC regulations for stock offerings made in connection with mutual-to-stock conversions; and
  • makes technical amendments with respect to insured mutual state-chartered savings banks mutual-to-stock conversions.

The proposed rules would apply to securities offerings to be made by FDIC-supervised institutions in organization, FDIC-supervised institutions that intend to issue securities but that are subject to an enforcement order, FDIC-supervised institutions converting from a mutual-to-stock form of ownership, and subsidiaries of State savings associations in one of the above categories. 

Comments on the proposed rules must be received on or before April 5, 2021.

In practice, we do not expect the new rules to drastically impact offering disclosures going forward because state nonmember banks and state savings associations already look to existing SEC and OCC disclosure rules to satisfy their disclosure obligations. Nevertheless, the proposed requirements of filing offering documents and receiving FDIC approval prior to commencing an offering, if finalized, may introduce additional burdens on certain financial institutions.  

If you or your management team has questions or concerns regarding the proposed rules or if you wish to submit comments, please contact Wes Scott or Richard Hills or your regular contact in Waller’s Financial Services Industry Team.

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