SEC Responds to No-Action Request Regarding Exemption from Regulation M

The SEC's Division of Trading and Markets issued a no-action letter that grants Lloyds Banking Group ("LBG") plc. exemption from the Exchange Act Regulation M Rule 102 ("Activities by Issuers and Selling Security Holders during a Distribution"). The LBG requested an exemption to continue to conduct specified transactional activities outside the U.S. during the distribution of LBG Ordinary Shares by way of a placement of shares to interested purchasers by the United Kingdom Financial Investments ("Placing"), which included:

• hedging activities
• asset management activities
• insurance activities
• trustee and personal representative-related activities
• collateral activities

Additionally, LBG requested that Scottish Windows Investment Partnership Limited ("SWIP") and Lloyds TSB Offshore Private Clients Limited be permitted to continue to engage in unsolicited asset management activities.

The SEC granted LBG the exemption from Rule 102, allowing LBG to continue to engage in the activities mentioned in the request for no-action letter. However, the SEC noted that it did not concur with LBG's analysis, and that the banking group was still subject to certain conditions, including:

• None of the transactions LBG described in the request letter shall occur in the U.S., with the exception of the unsolicited asset management activities of SWIP and Lloyds TSB Offshore Private Clients Limited.
• All transactions described in the request letter shall be effected in the ordinary course of business and not for the purpose of facilitating the Placing.
• LBG and each of the Companies shall retain all documents and other information required to be maintained pursuant to this exemption for at least two years following the completion of Placing.
• LBG must comply with Regulation M ("Distributions") except as otherwise exempted by the no-action letter.

See: SEC No-Action Letter.