U.S. Securities and Exchange Commission issues no-action letter on Securities Act registration for Bank of England bail-in and tasks staff with exemption rulemaking

The U.S. Securities and Exchange Commission’s Division of Corporation Finance issued a no-action letter to the Bank of England on the application of the Securities Act of 1933 registration requirements if the Bank of England exercises its statutory bail-in powers over a failing or likely-to-fail U.K. bank or U.K. regulated investment firm. The staff indicated it would not recommend enforcement action if exchanges of securities carried out in connection with the described bail-in are not registered under the Securities Act. The position applies where the exchanges are conducted in reliance on Section 3(a)(9) and in connection with implementation of the bail-in mechanism described in the Bank of England’s request. The SEC framed the letter as part of efforts to provide greater clarity on how U.S. federal securities laws apply to foreign bail-in processes that may be executed over a single weekend and may affect U.S. investors. The SEC Chairman also instructed the Division to prepare a rulemaking recommendation to the Commission on a potential exemption from the Securities Act’s registration requirements for securities offered and sold in connection with a regulatory bail-in, citing the range of bail-in frameworks used globally. Pending any Commission action on rulemaking, the Division encouraged other foreign regulators and regulated firms to engage with staff on their bail-in frameworks.