The SEC’s recent concept release relating to Regulation S-K 4 has resulted in, among other things, a renewed focus on how the regulation affects different aspects of offering documents. One question that has arisen from time to time relates to the “Plan of Distribution” section that appears in structured note offerings.

Item 508(e) of Regulation S-K contemplates the inclusion in this section of a table that sets forth the underwriting commitments and discounts for each underwriter participating in an offering. These tables can be particularly long and detailed in the case of broadly distributed offerings of debt or equity securities, where a significant number of underwriters are involved, each taking responsibility for a specific portion of the securities to be offered. These tables may reflect the result of significant negotiation among the relevant underwriters.

In contrast, most structured offerings are distributed in a different manner. Typically, one named underwriter will have the responsibility for distributing the entire offering. That underwriter may be selling the securities to investors that maintain a brokerage account with it, or it may be selling the securities to selling group members who have actual relationships with the relevant investors.

In these cases, the structured note offering documents have typically omitted this table. Instead, textual disclosure is used to explain the fact that the relevant underwriter is receiving the relevant compensation. This disclosure will typically appear on the cover page, in the “Plan of Distribution,” or some combination of the two.

Item 502 of Regulation S-K contemplates cover page disclosure of the aggregate underwriting discount and the net proceeds to investors. This underwriting discount may be repeated in the “Plan of Distribution” section. In addition, the “Plan of Distribution” section will also describe the nature of the compensation arrangements between the underwriter and any third-party distributors. This compensation disclosure is contemplated by Regulation S-K for inclusion in the “Plan of Distribution” section; however, some market participants prefer to include it on the cover page as well, in part to make it easier for the distributors to find.