Form 3, Form 4 and Form 5 Model Form 16: Joint and Group Reporting
ILLUSTRATIVE FACTS: RST Corporation has 20,000,000 shares of common stock outstanding. On September 14, 2009, Rochester R. Reingold, who owns 1,000,000 shares of RST common stock, and Stanton S. Stewart, who owns 1,500,000 shares of RST common stock, entered into an agreement to vote their stock together at RST’s next annual meeting of shareholders. Their formation of a “group” for purposes of Section 13(d) of the Exchange Act was promptly disclosed in a Schedule 13D filed with the SEC. Separately, Travis T. Travolta, a director of RST, serves as sole trustee of a trust, established for the benefit of his minor son, which owns 3,000,000 shares of RST common stock. The trust has on file with the SEC a Form 3 indicating that it is a ten percent owner of RST common stock. See Model Form 40. Separately, Travolta has on file with the SEC a Form 3 indicating that he is a director and (by virtue of his position as trustee of the trust) a ten percent owner. Travolta’s Form 3 reported his indirect ownership of the 3,000,000 shares of RST common stock held by the trust (resulting from the attribution to Travolta of his son’s pecuniary interest in the shares as beneficiary of the trust) as well as his direct ownership of 10,000 shares he holds in his own name. On September 21, 2009, Travolta caused the trust to sell 5,000 shares of RST common stock for $22 per share.
REPORTING PRINCIPLES: (1) Formation Of A 13(d) Group That Owns More Than 10% Of A Registered Class Requires Each Member Of Group To File A Form 3. When two or more persons form a “group” for purposes of Section 13(d) of the Exchange Act (i.e., enter into an agreement or understanding relating to the voting, holding, acquisition, or disposition of a registered class of stock), and the aggregate holdings of the group exceed 10% of the class outstanding, each member of the group is deemed to be a ten percent owner and must file a Form 3 within ten days of the formation of the group. For a discussion of reporting principles applicable to members of a 13(d) group, see Model Form 5. Accordingly, upon formation of their group on September 14, 2009, Reingold and Stewart each became obligated to file a Form 3 by September 24. (2) Only Securities In Which The Reporting Person Has A Pecuniary Interest Are Reportable. Each member of a 13(d) group is required to report only those securities in which he or she has or shares a pecuniary interest. Because neither Reingold nor Stewart has a pecuniary interest in the securities owned by the other, each is required to report only the securities held in his own name. (3) Members Of A 13(d) Group May File A Single, “Joint” Report. Rule 16a‑3(j) permits members of a 13(d) group to file a single report on behalf of some or all members of the group, even where no member of the group has a pecuniary interest in securities owned by any other member of the group. Accordingly, Reingold and Stewart may either file separate Forms 3 to report their individual holdings or file a single, joint Form 3 reporting each insider’s total holdings. (4) Multiple Beneficial Owners Of Same Securities May File A Single, “Joint” Report. In addition to permitting members of a 13(d) group to file joint reports, Rule 16a‑3(j) permits joint reporting by two or more persons who are deemed to be beneficial owners of the same securities. (In either case, joint reporting does not commit the insiders to continue to file joint reports in the future, and any insider may choose instead to report his or her future transactions on individual reports. Similarly, an insider who has filed individual reports may at any time choose to become a party to a joint report.) The RST common stock held by Travolta in trust for his minor son is deemed to be beneficially owned by both Travolta (see Model Form 42) and the trust (see Model Form 40). Accordingly, each has an obligation to report the trust’s September 21 sale of 5,000 shares of common stock on Form 4 within two business days (i.e., by September 23). They may satisfy their respective reporting obligations by filing separate Forms 4 reporting the same transaction or by filing a joint Form 4. They have elected to file a joint Form 4. Joint filings may also be useful when a general partner and the partnership beneficially own the same securities (see Model Form 37), or where multiple corporations in a “chain” of subsidiaries all are ten percent owners by virtue of a stock position owned by the bottom-tier subsidiary. See Model Form 39. (5) Joint Filers Must Identify A “Designated Filer” In Box 1 And Check The “Joint Filing” Box In Box 6. Joint and group filers should designate one of the joint filers to serve as the “designated filer” for purposes of Box 1 of the report. (This designation requires no formal or written action and is evidenced merely by the inclusion of that filer’s name in Box 1 of the report. The person whose name is entered first in an electronic filing becomes the designated filer.) In addition, joint filers should check the line for “Form filed by More than One Reporting Person” in Box 6. Box 4 of Form 3 or Box 5 of Form 4 or Form 5 should reflect information relating to the designated filer, but if any joint filer has a different relationship, that relationship should be indicated separately when inputting information for that filer into the electronic filing system. In addition, any information explaining the relationships among the filers, and any other required information relating to any filer, may be described in a footnote or in the “remarks” section of the report, or in a “joint filer statement” attached to the report an exhibit (and listed in an “exhibit index” in the remarks section of the form). (6) Each Joint Filer Must Have EDGAR Codes. All joint filers must have their own EDGAR codes. It is not sufficient for the designated filer, alone, to have EDGAR codes. See Release No. 34‑47809, § III. and n. 102. Accordingly, each joint filer should obtain from the SEC an individual Central Index Key (CIK) and CIK Confirmation Code (CCC) by filing a Form ID. (7) EDGAR Codes Of Other Joint Filers Should Be Entered Separately. To identify the other persons on whose behalf the report is being filed, all joint filers other than the designated filer must be identified in the report. Identification of the other joint filers is accomplished by entering their CIK and CCC codes as part of the filings. The electronic filing system will generate a separate Box 1 for each joint filer, which will appear at the end of the report, after Table II and before the caption “Explanation of Responses.” Any separate information about any joint filer (e.g., the filer’s address or the capacities in which the filer is an insider) may be addressed in a footnote or in the remarks section of the report. (8) All Joint Filers Must Sign The Report. Joint reporting does not excuse any of the reporting persons from the obligation to sign the report. Accordingly, both Reingold and Stewart must sign their joint Form 3, and Travolta must sign the joint Form 4 both individually and in his capacity as trustee of the trust. The signature lines for all joint filers will appear at the end of the report on the SEC’s website. (9) Joint Filers May Authorize The Designated Filer Or Another Person To Sign Reports On Their Behalf. Reporting persons may authorize other persons to execute reporting forms on their behalf by executing a power of attorney or a confirming statement. See Model Form 17. For joint filing to provide any significant benefit or convenience, persons eligible to file joint reports should consider authorizing the designated filer or some other person to execute reports on their behalf. (10) Not All Group Members Or Beneficial Owners Must Join In Joint Reports. It is not necessary for all members of a 13(d) group, or all beneficial owners of the same securities, to participate in joint reporting. So long as at least two group members or beneficial owners find it desirable to file a joint report, they may do so. In such cases, the joint filers should report only the securities in which they have a pecuniary interest, and should not identify any other group members or beneficial owners as reporting persons. (11) Joint Filers May Include Issuer Securities Owned Individually. A reporting person who files jointly for the purpose of reporting securities beneficially owned with others may also choose to include in joint Forms 4 or Forms 5 securities of the issuer that he or she owns separately. (If reporting persons choose to file their initial Forms 3 jointly, however, they should include all securities beneficially owned by the joint filers, including jointly owned securities and individually owned securities.) Accordingly, Travolta has chosen to include in the Form 4 filed jointly with the trust the 10,000 shares of RST common stock that he owns in his own name, with a footnote explaining that he is the sole beneficial owner of those shares. The SEC has indicated that multiple insiders may report jointly “only if they all have an interest in a transaction or holding reported.” See Release No. 34‑47809, § III. (May 7, 2003). If, in the future, Travolta were to engage in a reportable transaction in his individually owned shares, only Travolta would have an interest in the transaction reported. In the Form 4 or Form 5 filed to report the transaction, however, Travolta would be required to report his indirect ownership of the shares held by the trust. Accordingly, in reporting future transactions in his individually owned shares, Travolta may (but is not required to) file additional joint reports with the trust. (12) No More Than Ten Joint Filers May Be Included In Electronic Report. The SEC’s electronic filing system will not accept CIK and CCC codes from more than ten joint filers of a report. Where more than ten insiders join in a report, the SEC’s EDGAR office advises that insiders should file electronically by having ten insiders file a single report, and then having the remaining insiders file a separate report. Each report should include an exhibit (or remarks) listing all of the joint filers, and a footnote (or remarks) explaining that the two reports (or more, if there are more than 20 joint filers) relate to the same transaction(s). See Section 16 Electronic Reporting: Frequently Asked Questions (August 14, 2003) (Q. 13) (which was not included in the Compliance and Disclosure Interpretations).
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