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SEC proposes new rules on initial stock offerings

The Securities and Exchange Commission voted Tuesday to seek investors' opinions on several proposals that would ease regulations for initial stock offerings and information disclosure.

The agency will seek public comment for the next two or three months to find out if investors think the proposals will have a negative effect on them.

"All of this basically says to investors: "Do you use this information? Do you want to read it?' " said Linda Quinn, the SEC's corporate finance division director.

Proposals approved for public comment include:

A proposal that would let companies considering an initial public offering "test the waters" before filing a registration with the SEC. It would allow companies to see if there was a market for their securities without hiring lawyers, underwriters and others necessary to file a registration.

This probably would involve having an investment banking firm call potential investors to ask about their interest.

The initiative would primarily help smaller companies and those offering niche services or products not widely represented in the securities markets. These companies cannot compare themselves easily to other companies that already have publicly traded stock.

A proposal to move some information about executive compensation from a company's proxy statement to the annual 10K report. The initiative's aim, SEC officials said, is to streamline the proxy. But the measure would make it more difficult to determine how much a top executive makes in total because the two documents often are filed at different times.

The proposal would leave salary, bonus and information about stock option grants in the proxy but would move information about an executive's exercise of options and long-term incentive awards to the 10K.

An initiative to let companies leave out a variety of the required footnotes to financial statements, cutting several pages from the documents. A company would be required to include all the information in documents filed with the SEC, however. Companies also would be required to honor shareholders' requests for the information that was left out.

The proposal is to make financial statements more readable, the agency said.