SEC May Enact Rules to Stem Trading Abuses

The Securities and Exchange Commission is expected today to make a rule change designed to end trading abuses in U.S. stock that is sold at a discount overseas and then resold to the U.S., agency Chairman Arthur Levitt said. The rule, Regulation S, was adopted in 1990 to make it easier for companies to raise money abroad by selling securities outside the U.S. without following registration rules that apply to domestic stock offerings. Some small companies and middlemen have been accused by the SEC of setting up offshore fronts to buy the securities and sell them at a substantial profit a short time later in the U.S. The new regulation would require foreign investors who buy the securities to wait two years before they can resell shares in the U.S.