SecProbe.io

CORRESP
1
filename1.htm

Retail Ventures, Inc.     Correspondence

September 21, 2005

Mr. H. Christopher Owings

Assistant Director

Division of Corporation Finance

United States Securities and Exchange Commission

100 F Street, N.E.

Washington, D.C. 20549

    Re:
    Retail Ventures, Inc.

Registration Statement on Form S-3 filed May 18, 2005 (File No. 333-125032)

Dear Mr. Owings:

     On behalf of Retail Ventures, Inc., an Ohio corporation (“RVI” or the “Company”), enclosed is
a copy of Amendment No. 1 (“Amendment No. 1”) to the above-referenced Registration Statement (the
“Registration Statement”), as filed with the United States Securities and Exchange Commission (the
“Commission”) on the date hereof. We have also enclosed a copy of Amendment No. 1 marked to show
changes from the Registration Statement filed with the Commission on May 18, 2005.

     The changes reflected in Amendment No. 1 include those made by RVI in response to the comments
of the staff of the Division of Corporation Finance of the Commission (the “Staff”) set forth in
your letter, dated June 17, 2005, to James A. McGrady, Executive Vice President of RVI, with
respect to the Registration Statement. Amendment No. 1 also includes other changes that are
intended to update, clarify and render more complete the information contained therein.

     For your convenience, we set forth each comment from your comment letter in bold typeface and
include the Company’s response below it. Capitalized terms used and not defined herein have the
respective meanings assigned to them in Amendment No. 1. All references to page numbers and
captions correspond to the page numbers and captions in Amendment No. 1, which includes the
prospectus as revised.

Cover Page

    1.

    Please revise your cover page to include only the information required by Item 501 of
Regulation S-K or otherwise key to an investment decision. Further, please revise to
eliminate all defined terms, here and in the forepart of the prospectus.

    The Company has revised the Registration Statement to reflect the Staff’s comment.

    2.

    Please highlight the cross-reference to the risk factor section by prominent type or
another manner. See Item 501(b)(5) of Regulation S-K.

    The Company has revised the Registration Statement to reflect the Staff’s comment.

Available Information, page 2

Documents Incorporated by Reference, page 3

    3.

    Please remove these sections from the forepart of the prospectus. For example, place
this information at the end of the prospectus.

    The Company has revised the Registration Statement to reflect the Staff’s comment.
The “Available Information” and “Documents Incorporated by Reference” sections now
begin on page 17 of Amendment No. 1.

Questions and Answers About the Rescission Offer, page 3

    4.

    Please include a brief discussion addressing the impact to security holders who
decide to reject the rescission offer. Please note that a security holder’s federal right
of rescission may survive the rescission offer and the statute of limitations related to a
rescission offer. In this regard, security holders who do not accept the rescission offer
may exercise their legal rights under Section 12 of the Securities Act throughout the
remaining statutory period, even after the end of the rescission offer. Please provide
corresponding disclosure in a risk factor and in The Rescission Offer section. As part of
the corresponding disclosures, briefly clarify the nature of Section 12 rights and the
length of the statutory period.

    The Company has included disclosure addressing the impact to security holders who
decide to reject the rescission offer beginning on page 5 of Amendment No. 1 in the
“Questions and Answers About the Rescission Offer” section as follows:

    “If you fail to accept the Rescission Offer, it is unclear whether or not your
federal rights of rescission and damages will remain preserved. The staff of the
Securities and Exchange Commission takes the position that a person’s federal right
of rescission may survive the Rescission Offer. However, if you fail to accept the
Rescission Offer, you may be precluded from later seeking similar relief.
Generally, the federal statute of limitations for non-compliance with the
requirement to register securities under the Securities Act of 1933 is one year.

2

    Acceptance or rejection of the Rescission Offer may preclude you from maintaining
an action under state law against Retail Ventures in connection with the units and
the underlying common shares purchased during the rescission period. Retail
Ventures believes, however, that all the sales of its common shares which are the
subject of the Rescission Offer were exempt from registration under state law and,
thus, you may not be entitled to any state law remedies. Retail Ventures does not
make any representation as to the compliance of this Rescission Offer with
applicable state law.”

    In addition, corresponding disclosures have been added beginning on page 6 of
Amendment No. 1 under a new subtitle, “Risk Factors Relating to the Rescission
Offer,” in the “Risk Factors” section and on page 14 of Amendment No. 1 in “The
Rescission Offer” section.

Risk Factors, page 7

    5.

    Please disclose any risks the security holder assumes if the security holder does not
accept the rescission offer.

    The Company has included disclosure regarding risks the security holder assumes if
the security holder does not accept the rescission offer beginning on page 6 of
Amendment No. 1 under a new subtitle, “Risk Factors Relating to the Rescission
Offer,” in the “Risk Factor” section as follows:

    “If you affirmatively reject or fail to accept this Rescission Offer, you may be
precluded from later rescinding the purchase of units purchased during the
rescission period or receiving damages if you have sold such units at a loss.

    Our primary purpose in making the Rescission Offer is to extinguish or reduce our
contingent liabilities under securities laws. Although it is unclear whether our
Rescission Offer will extinguish our liability, if any, for our potential
securities law violations, you are urged to consider this possibility.

    Based on the current market price of Retail Ventures’ common shares, the 401(k)
Plan participants who would benefit economically from accepting this Rescission
Offer are those who sold units purchased during the rescission period at a loss.
If you do not accept this Rescission Offer, you may not be able to receive such
damages once this Rescission Offer expires.

    Whether our Rescission Offer will extinguish our contingent liability depends in
part on whether a court or the Securities and Exchange Commission would view
acceptance or non-acceptance of our Rescission

3

    Offer as a waiver precluded by applicable federal or state securities laws. The
staff of the Securities and Exchange Commission takes the position that a person’s
federal right of rescission may survive a rescission offer. Nevertheless, there
have been certain instances in which a court has indicated that non-acceptance of a
rescission offer could terminate a company’s liability for rescission damages under
federal law.

    Generally, the statute of limitations for non-compliance with the requirement to
register securities under federal securities laws is one year and the statute of
limitations for non-compliance with state laws vary by state, with the limitation
time period under many state statutes typically not beginning until the facts
giving rise to a violation are known. We may assert, among other defenses, in any
litigation initiated by a person eligible to participate in this Rescission Offer
who accepts or rejects the Rescission Offer, that such person is estopped from
asserting such claims.

    Our Rescission Offer is not an admission that we did not comply with federal
securities registration requirements or federal and state disclosure requirements,
nor is it a waiver by us of any applicable statute of limitations.

    We may continue to have potential liability after this Rescission Offer relating to
our issuances of common shares in possible violation of securities laws.

    The Securities Act of 1933 does not expressly provide that a rescission offer will
terminate a purchaser’s right to rescind a sale of shares which was not registered
under the Securities Act of 1933 or accompanied by the requisite prospectus.
Accordingly, should 401(k) Plan participants reject this Rescission Offer, we may
continue to be potentially liable under the Securities Act of 1933 for the purchase
price of the units plus applicable interest.”

    6.

    Please include a risk factor discussing how a total or partial acceptance will affect
your continued business vitality and what impact a partial acceptance could have upon the
market value of the remaining securities.

    The Company does not believe that a discussion of how acceptance of the Rescission
Offer will affect its continued business vitality or the market value of its common
 shares would be appropriate as it considers the possibility of a significant
financial outlay to be remote.

    MFS Heritage Trust Company has been instructed not to effect repurchases if the
price the participant paid per unit plus applicable interest is less than the
market value of a common share as of the expiration date of the Rescission Offer.
The Company’s current market price (closing market price of
$11.96 on September 20, 2005) is significantly
above the highest price

4

    at which any shares were purchased during the rescission period ($9.70) and would
have to fall dramatically before the expiration date for the cost of repurchases to
be significant. The Company has no reason to believe such a dramatic decline in
market price is likely and believes speculation to the contrary would be
irresponsible.

    The Company has reviewed all transactions involving both purchases and withdrawals
from the Retail Ventures Stock Fund during the rescission period that involved 200
shares or more. Applying the first-in first-out method of comparing cost to selling
price, the Company estimates that 70 participants in the 401(k) Plan incurred
losses of approximately $204,000 in the aggregate. The Company estimates that no
more than $350,000 will be needed to pay damages, which amount will
have no effect on
the Company’s continued business vitality.

Background and Reason for Rescission Offer, page 13

    7.

    We note your disclosure that although all of the relevant purchases of the common
stock at issue were made in the open market, you have determined that some of the common
shares purchased “[m]ay not have been properly registered in accordance with the
Securities Act.” We also note your disclosure that “[s]ome participants may not have
received the required prospectus during the Rescission Period.” Please expand your
disclosure to provide further detail. For example, please specify the section(s) of the
Securities Act that may have been violated and describe the circumstances under which the
possible violations arose. Please also disclose how and when you discovered that you may
have issued shares that were not properly registered under the Securities Act.

    The Company has revised the Registration Statement to reflect the Staff’s comment
and has expanded disclosure beginning on page 13 of Amendment No. 1 under
“Background and Reason for Rescission Offer” as follows:

    “In Release No. 33-6281 issued January 15, 1981, the Securities and Exchange
Commission took the position that, if participants’ 401(k) plan contributions can
be invested in employer securities, all of the securities offered pursuant to the
plan must be registered under the Securities Act of 1933. This is true regardless
of whether the plan acquires the shares from the employer or on the open market and
whether the shares are purchased with employee contributions or the company’s
match. Based on this interpretation of the Securities Act of 1933, Retail Ventures
registered 600,000 common shares for inclusion in the Retail Ventures, Inc. Common
Stock Fund.

    Although all purchases by Reliance Trust Co. were made in the open market and in a
manner consistent with the 401(k) Plan and the investment

5

    elections of the 401(k) Plan participants, Retail Ventures has determined that (i)
more common shares have been purchased by Reliance Trust Co. on behalf of MFS
Heritage Trust Company and allocated to the Retail Ventures, Inc. Common Stock Fund
than were registered in accordance with the Securities Act of 1933 and (ii) certain
participants in the 401(k) Plan may not have received the prospectus required to be
delivered under the Securities Act of 1933. Specifically, the Company was advised
by its prior legal counsel that the Retail Ventures, Inc. Common Stock Fund under
the 401(k) Plan was over-subscribed (meaning that the number of common shares that
had been purchased pursuant to the 401(k) Plan was greater than the number of
common shares covered by the Company’s original registration statement on Form S-8
filed with respect to the 401(k) Plan). At the time, the Company was in the
process of changing legal counsel. The Company and its new legal counsel
investigated the facts and confirmed the over-subscription of the Company’s common
 shares. During such investigation, the Company also discovered that, while 401(k)
Plan participants had been receiving information relating to the Company common
 shares, the information delivered to 401(k) Plan participants did not constitute a
fully compliant prospectus under the Securities Act of 1933. It is a violation of
Section 5(b) of the Securities Act of 1933 to sell a security for which a
registration statement has been filed unless accompanied or preceded by a
prospectus that meets the requirements of Section 10 of the Securities Act of
1933.”

    8.

    We note your disclosure at the top of page 15 stating your belief that “[n]o
violation of state securities laws occurred in connection with such sales.” Please revise
to fully disclose the extent to which the offeree’s right to sue is affected by the
rescission offer under state law, including possible remedies. For example, please
discuss whether rejection of the rescission offer would limit any common law or statutory
remedies. Please also discuss how a security holder can preserve any statutory remedies,
and for how long.

    Consistent with the practice of other registrants, the Company has included the
following disclosure on page 14 of Amendment No. 1 under the “Background and
Reason for Rescission Offer” section:

    “Retail Ventures does not make any representation as to the compliance of this
Rescission Offer with state laws which might be applicable to rescission offers.
However, under state law, acceptance or rejection of the Rescission Offer may
preclude you from maintaining an action against Retail Ventures in connection with
the units and the underlying common shares purchased during the rescission period.
The statutory limitations for non-compliance with state laws vary by state, with
the limitation time period under many state statutes typically not beginning until
the facts giving rise to a violation are known. You may wish to consult with an
attorney regarding all of your legal rights and remedies before deciding whether or
not to accept the Rescission Offer.”

6

    The Company supplementally advises the Staff that, based on its informal review of
the applicable state securities laws, it believes that the sales were exempt from
registration in all such states. In addition, as indicated in response #6 above,
even if exemptions were not applicable or any statute of limitations did not bar a
state law action against the Company, the Company believes that, at this time,
damages resulting from successful claims against the Company for its failure to
register or to deliver a complia