SEC Division of Corporation Finance no-action letter: A.G. Edwards & Sons, Inc.

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION r^/ASHINGTON, D.C. 20549 DIVISION OF CORPORATION FINANCE May 31, 2006 Mark S. Mandel, Esq. Morgan, Lewis & Bockius LLP 101 Park Avenue New Yorh NY 10178-0060 Re: A.G. Edwards & Sons, Inc., Administrative Proceeding File No. 3-12310-Waiver Request under R€gulation A and Rule 505 of Regulation D Dear Mr. Mandel:
This is in response to your letter dated today, written on behalf of A.G. Edwards & Sons, Inc. ("A.G. Edwards") and constituting an application for reliefunder Rule 262 ofRegulation A and Rule 505(b)(2)(iii)(C) ofRegulation D under the Securities Act of 1933 ("Secunties Act"). You requested ielief from disqualifications from exemptions available under Regulation A and Rule 505 ofRegulation D that arose by virtue ofthe entry ofan order dated today against A.G. Edwards and others as respondents by the Secwities and Exchange Commission in the referenced administrative proceeding (the "Order"). The disqualiircations arose because the Order was issued under Section l5(b) ofthe Securities Exchange Act of 1934 and contained paragraphs numbered IV.D and IV.E, which ordered A.G. Edwards, among other things, to provide written descriptions of its material auction practices and procedures for auction raie securities. The order also was issued under Section 8A of the Securities Act and also censured A.G. Edwards, ordered A.G. Edwards to cease and desist from committing or causing any violations and any fuhrre violations ofSection 17(a)(2) ofthe Securities Act, and ordered A.G. Edwards to pay a civil money penalty in the amount of$125,000. For purposes of this letter, we have assumed as facts the representationset forth in your letter and the findings supporting entry of the Order against A.G. Edwards. We have also assumed that A.G. Edwards has complied and will continue to comply with the Order, On the basis of your letter, I have determined that A.G. Edwards has made a showing of good cause urder Rule 262 and Rule 505(b)(2)(iii)(C) that it is not necessary under the circumstances to deny th€ exemptions available under Regulation A and Rule 505 of Regulation D by reason ofentry of the Order against A.G. Edwards. Accordingly, pursuant to delegated authority, A.G. Edwards is granted relieffrom any disqualifications flom €xemptions otheru'ise available under Regulation A and Rule 505 ofRegulation D that arose as a result of entry ofthe Order against it. Very truly yours, I //)n V -4- 'f/wq 9 /r"rp".'Yz￾vt Chief, Office of Small Business Policy

lvlorgan, Lewls & Bockius ttP
101 Park Avenue
New York, NY l0'178-0060
Tel: 2't2.309.6000
Fax: 212.309.6001 w,llw.morganlewr5.c0m
Mark S. Matrdel
212.309.7068 mmandel@morganlewis com
f\ay 3l -zooo
VIA FEDERAL EXPRESS
Gerald J. LaPorte, Esq.
Chiel Office of Small Business Policy
Division of CorPoration Finance
U.S. Securities and Exchange Commission
450 Fifth Street, N.W. Room 3501
Washinston D.C. 20549-0310
Morgan t€wis
COUNSELORS AT LAW
Re:
Dear Mr. Laporte:
we submit this letter on behalf of our client A.G. Edwards & Sons, Inc. ("Edwards")' which has Settledtheabove-referencedproceedingbythesecuritiesandExchangeCommission(the lCo.n.isrion") into auction iate securiliei practices which allegedly violated Section 17(a)(2) of the Securities Act of 1933 (the "Securities Act")' Edwards requests, pursuanr ro Rule 262 ofRegulation A and Rule 505(b)(2xiiixc) of R;grl"ii; il, promulgated under the Securities Act, a waiver ofany disqualification from exe?nptions under Regulation A and Rule 505 ofRegulation D that may be applicable to ga*.0, o. any of its affiliates as a result of the entry of the order described below. Edwards *q"".tr ,rt"t ,tt"se waivers be granted by the commission. It is our understanding that the Staff ofihe Di,ri.ion of Enforcement does not object to the grant ofthe requested waiver. BACKGROUND The staffof the Division of Enforcement has engaged in settlement discussions with Edwards as o"" oiu group ofbroker-dealers in connection with the investigation described above. As a result ofihese discussions, each firm agreed to the entry ofa Commission Order (the "Order")' r-NY/t984521 3

Ndoryan L€\Mis
Gerald J. Laporte, Esq. couNsatols lT LAt
Under the Order, the Commission made findings, without admission or denial by Edwards, that Edwards violated Section l7(a)(2) ofthe Securities Act by engaging in one or more practices described in the Order. Additionally, the Order requires that Edwards cease and desist from committing or causing any violations or future violations of the referenced provisions, pay a civil money penalty of $ 125,000 to th€ United States Treasury, and comply with the undertakings specified in the Order. DISCUSSION Edwards understands the entry of the Order may disqualif,it and its affiliated entities from participating in certain offerings otherwise exempt under Regulation A and Rule 505 of Regulation D promulgated under the Securities Act, insofar as the Contemplated Order may be deemed to cause Edwards to be subjecto an order of the Commission pursuant to Section 15(b) of the Exchange Act. The Commission has the authority to waive the Regulation A and Rule 505 of Regulation D exemption disqualifications upon a showing ofgood cause that such disqualifications are not necessary under the circumstances. See 17 C.F.R. $$ 230.262 and 230.50s(bx2xiiD(c). For the following reasons, Edwards requests that the Commission waive any disqualifying effect that the Order may have on Edwards, or any of its affrliates, based on a determination that it is not necessary under the circumstances that such exemption under Regulation A and Rule 505 of Regulation D be denied.

1. Edwards' conduct to be addressed in the Order does not relate to offerinss under
   Regulation A or D.
2. The disqualification ofEdwards from the exonptions available under Regulation
   A and Rule 505 ofRegulation D would, we believe, have an adverse impact on third parties that have retained Edwards and its aff,rliates in connection with transactions that rely on these exemptions.
3. The disqualitications would be unduly and disproportionately severe given: (i) the
   lack ofany relationship between the violations addressed in the Conternplated Order and any Regulation A or D related activity conducted by Edwards; and (ii) the fact that the Commission staffhas negotiated a settlement with Edwards and reached a satisfactory conclusion to this matter that includes a cease and desist order, together with a censure and the payrnent of a civil money penalty.
4. Edwards has a strong record of compliance with securities laws. In addition,
   Edwards voluntarily cooperated with the Division of Enforcement's above-captioned investigation and agreed to pursue a global settlement of this matter at the request ofthe Division of Enforcement. In light of the foregoing, we believe that disqualification is not necessary in the public interest or I -l.IY/ I 98452 I.3

Gerald J. Laporte, Esq.
Morgan t€wis couNrrLots rr r.lt for the protection ofinvestors, and that Edwards has shown good cause that relief should be granted. Accordingly, we respectfully wge that the Commission, pursuant to delegated authority, waive the disqualification provisions in Regulation A and Regulation D to the extent that they may be applicable to Edwards and any of its affiliates as a result of the entry of the Order. Please do not hesitate to contacthe undersigned at 212.309.7068, ifyou have any questions regarding this request. Mark S. Mandel Douglas L. Kelly, A.G. Edwards, Inc. l-NY/198452t 3