Investor Protection & Securities:: Enforcement:: Statement of Policy Regarding No-Action Determinations 

Statement of Policy Regarding

No-Action Determinations 

Introduction
Under the Missouri Securities Act of 2003, the commissioner of securities is authorized to provide limited guidance to those planning transactions or engaged in activities covered by the securities laws.  Specifically, the commissioner may “provide interpretative opinions or issue determinations that the commissioner will not institute a proceeding or an action under this act against a specified person for engaging in a specified act, practice, or course of business . . . .” 1

These “no-action letters” enhance capital formation and ease business planning by guiding those structuring transactions.  Moreover, as public documents, these tools inform issuers, members of the bar, and the public regarding the application of the securities laws.

The commissioner has issued this statement to inform interested persons about no-action letters and to clearly establish the parameters for seeking the same.  The policy is presented in the form of answers to the most common questions regarding no-action letters.  Click on any of the following questions for the policy’s response:

• “Should I ask for a no-action letter?”
• “What types of questions will the commissioner not answer?”
• “How do I request a no-action letter?”
• “What must my letter contain?”
• “What will I receive from the commissioner?”
• “What about any communications I have with the Securities Division staff?”

 

“Should I ask for a no-action letter?”
A no-action letter is a written response from the commissioner that the Division will not take enforcement action against the applicant given the facts presented.  The commissioner makes no analysis of the provided facts but only states whether the transaction would merit enforcement.  Applicants typically ask for a no-action determination when they only want assurance that, whatever the reason, the commissioner will not commence enforcement activity for a specified transaction.

Because of their structure, participants, and other factors, some transactions do not require the securities laws’ protections.  Accordingly, planners sometimes request a no-action determination to confirm that, given the transaction’s particular circumstances, a minor or technical variation from a statute or rule will not result in an enforcement activity.  In effect, a party is requesting permission to structure a transaction or engage in an activity that would otherwise involve technical noncompliance with the law.  Please note:  If you request a no-action determination for that sort of assurance, your letter must explain your special circumstances how compliance with the securities laws in your situation creates a unique hardship that is not consistent with those laws’ purposes.  

“What types of questions will the commissioner not answer?”
The commissioner will not respond to requests that involve:

• Hypothetical situations, transactions, or anonymous parties.  As explained below, the securities laws do not allow the commissioner to give relief to unspecified parties.

• Requests for confidential treatment. Under Missouri law, the commissioner cannot confidentially respond to requests.  Missouri law treats those requests as “public records” and they are available for public examination. 2

• Requests in connection with past transactions.  Because no-action letters help plan courses of action, the commissioner need not respond to completed transactions.

• Requests in connection with pending or ongoing litigation.  The commissioner will not comment on issues that are being litigated.

• Requests regarding plain reading of statutes or well-settled areas of the law. In the interests of administrative economy and restraint, the commissioner will not answer two types of questions: (1)  those that can be easily answered with a plain reading of the statute or rule and (2) those dealing with well-settled areas of the securities laws.

“How do I request a no-action letter?”
You must send a written letter describing your request (see “What must my letter contain?”) to the following address:

Secretary of State
Securities Division
Attention:  [No-Action Determination]
600 W. Main Street
P.O. Box 1276
Jefferson City, MO 65102

You must include in your request a $100 fee. 3  Fees must be paid by check, draft, or money order (cash is not acceptable) payable to the Missouri Secretary of State. 4

“What must my letter contain?”
In your letter, you must specify the activity or transaction that is the subject of the request and who is engaging in that activity or transaction.  Without this information, the Missouri Securities Act of 2003 prohibits the commissioner from answering your question. 5

Your letter must contain a thorough description of the facts or the transaction.  You will get a quicker response if you detail as much as the commissioner needs to know.  It will slow the response time if the commissioner’s staff must contact you to determine further facts.

Your letter must also contain a concise statement of a single issue presented.  Presenting more than one question runs the risk that the commissioner will unnecessarily opine on issues other than the ultimate question.  Although the commissioner will not reject your request if it includes more than one issue, the commissioner’s response may be delayed.  This is because the commissioner’s staff will have to contact you to isolate the single issue to which the commissioner should respond.

Your letter should also contain an objective legal analysis of the question with appropriate citations and support.  Your letter can advocate for your position but should also contain a thorough analysis examining both sides of the question.

Your letter must also include copies of any documents necessary for the commissioner to make his determination.  For instance, if you are seeking a no-action determination regarding a proposed transaction, you would want to include copies of the offering documents or advertising.  If your letter does not include these documents, the commissioner’s staff will contact you to complete the file.  As noted, this increases the response time.

“What will I receive?”
If you requested a no-action letter, then you will receive a letter in which the commissioner states whether he would recommend or direct that the Securities Division take action based upon the facts in your letter.  Because that determination will be based upon the facts in your letter, you will also receive a copy of your letter (the commissioner will incorporate your letter by reference). 

“What about any communications I have with the Securities Division staff?”

After you send in a request, the commissioner’s staff may have reason to contact you.  In order to assist the commissioner, they may have further questions or requests for other documents. 

You should not think that any discussions with the staff represent statements or conclusions by the commissioner.  “Informal discussions with the commissioner or members of the Staff of the Securities Division shall not be taken to signify any determination or approval concerning the matters discussed.” 6  The statements or communications from the Securities Division staff are not binding and are of no legal consequence.

1. Section 409.6-605(d), RSMo.