The new SEC Chairman, Jay Clayton, testified on June 27 to the Senate Appropriations Subcommittee about the SEC’s budget request. His comments clearly show that rulemaking is in the pipeline at the Staff level to facilitate capital formation in the public markets. In this regard, Chairman Clayton states, “U.S. capital markets remain the envy of the world, but fewer companies are choosing to enter the public capital markets than in the past, and, as a result, investment opportunities for Main Street investors are more limited.” The following is an excerpt of Chairman Clayton’s comments.
Continue Reading Testimony on the Fiscal Year 2018 Budget Request
SEC Comment About “Reasonably Possible” Litigation Loss
In monitoring SEC comment letters, we came across this SEC comment letter made public last week. It serves a reminder to registrants about their loss contingency disclosures, particularly those involving a “reasonably possible” loss per ASC 450. In the letter the SEC staff comments, “In regards to this [disclosed litigation] matter as well as any additional matters for which you believe it is at least reasonably possible that a material loss has been incurred but are unable to estimate the amount of loss, please supplementally tell us (a) the procedures you undertake on a quarterly basis to attempt to develop a range of reasonably possible loss for disclosure and (b) the specific factors that are causing your inability to estimate and when you expect those factors to be alleviated for each matter.”
Continue Reading SEC Comment About “Reasonably Possible” Litigation Loss
SEC Staff Says No to Hyperlinking Non-GAAP Reconciliations in the Earnings Press Release
In monitoring SEC comment letters, we came across this SEC comment letter made public today, which we thought of particular interest to our readership given its direct application to almost all public companies. In the letter, the SEC Staff expressly concludes that simply including a URL address in an earnings press release that directs readers to a website where the non-GAAP reconciliation is located does not comply with the requirements in Item 10(e)(1)(i) of Regulation S-K (i.e., “must include….in the filing…a reconciliation”) and the general rules regarding disclosure of non-GAAP financial measures outlined in Regulation G (i.e., “must accompany that non-GAAP financial measure with…a reconciliation”). Although this is the Staff’s current position, we believe this may be an interesting area to watch in light of the SEC’s recent rulemaking in the hyperlinking space (see this post) as well as continued innovation in electronic communication and IR practices.
3 Takeaways from the Recent House Passage of the Financial CHOICE Act
Last week, as reported by The Wall Street Journal, POLITICO and others, the House voted for a sweeping rewrite of the Dodd-Frank Act. According to Politico, “The legislation, approved without a single Democratic vote, represents the GOP’s opening salvo in the debate over easing the rules on the financial system, a move sparked by the election of President Donald Trump and Republican control of Congress.”
For our prior coverage of the CHOICE Act, see these posts here and here.
Below are three takeaways on the CHOICE Act passage:
- There is a strong GOP push to significantly revise the rules governing Wall Street. In addition to the CHOICE Act, on Monday, June 12, the U.S. Department of the Treasury released its much anticipated financial regulatory reform report. This report stems from the President’s February 2017 Executive Order on “Core Principles for Regulating the U.S. Financial System” where the Secretary of the Treasury was to “identify any laws, treaties, regulations, guidance, reporting and record keeping requirements, and other Government policies that inhibit Federal regulation of the U.S. financial system in a manner consistent with the core principles.”
Continue Reading 3 Takeaways from the Recent House Passage of the Financial CHOICE Act
Effective Today – New EGC “Check the Box” on Cover Pages of Most SEC Forms, including 8-K, S-1/3/4/11 and 10-K/Q
Recently, the SEC adopted technical amendments for self-executing provisions of the JOBS Act—mostly relating to EGCs.
One important update that impacts virtually all companies is the update related to amending the cover pages for numerous filings. Broadly speaking, the cover page has been revised to include a “check the box” item to indicate that the person filing the report is an “emerging growth company” and an additional box to check as follows: “If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act.”
10 FAQs on the New SEC Rules on Exhibit Hyperlinks (plus two bonus questions!)
This post was updated on August 16, 2017, and September 12, 2017, to include the eleventh and twelfth FAQs, respectively.
1. What are the new rules on exhibit hyperlinks generally?
On March 1, 2017, the SEC voted to adopt new rules and form amendments to make it easier for investors and other market participants to find and access exhibits in registration statements and periodic reports. The amendments will require registrants to include a hyperlink to each exhibit in the filing’s exhibit index. Currently, someone seeking to retrieve and access an exhibit that has been incorporated by reference must review the exhibit index to determine the filing in which the exhibit is included, and then must search through the registrant’s filings to locate the relevant filing.
The amendments require registrants that file registration statements or reports subject to the exhibit requirements under Item 601 of Regulation S-K, or that file Forms F-10 or 20-F, to include a hyperlink to each exhibit listed in the exhibit index of these filings, and to submit such registration statements and reports on EDGAR in HyperText Markup Language (HTML) format.Continue Reading 10 FAQs on the New SEC Rules on Exhibit Hyperlinks (plus two bonus questions!)
What to Expect in the New Financial CHOICE Act (2.0)
In the past couple days, much has been written about the contents of a leaked memo from Jeb Hersarling, Chair of the House Financial Services Committee, to the Committee’s Leadership Team. The memo, of which we have obtained a copy and posted here, outlines proposed changes from the original Financial CHOICE Act, introduced last year. The original version of the Financial CHOICE Act is located here.
According to sources, the current word (for whatever current “word” is worth nowadays) is that the revised draft of the Financial CHOICE Act may come out end of month with a pretty quick mark-up in March. Additionally, some think that if the repeal of the Durbin Amendment (which limits the fees that may be charged to retailers for debit card processing) remains in the bill, then that provision may hold it all up given that opposition doesn’t necessarily divide along party lines, but rather along who has a large bank or retail headquarter in their district.Continue Reading What to Expect in the New Financial CHOICE Act (2.0)
SEC Reconsidering Conflict Minerals Rule Implementation
Late Tuesday evening, Acting Chairman Michael Piwowar issued two statements — available here and here — announcing that he was directing the SEC Staff to reconsider whether the 2014 guidance on the conflict minerals rule is still appropriate and whether any additional relief is warranted. As a result, the SEC has created a website where interested parties can submit comments.
Continue Reading SEC Reconsidering Conflict Minerals Rule Implementation
Quick Fact Sheet on Trump’s Pick for SEC Chair, Jay Clayton
President-elect Donald Trump on Wednesday chose Jay Clayton, a former Sullivan & Cromwell deal lawyer, as his nominee to head the SEC. Below are a few quick facts about his pick.
Bio Highlights:
- Practice involves public and private mergers and acquisitions transactions, capital markets offerings, regulatory and enforcement proceedings, and other matters where multidisciplinary advice and experience is valued.
- Clayton also advises several high-net-worth families regarding their public and private investments.
- Thought leadership posted on his bio indicates significant interest/experience in cybersecurity.
- JD – University of Pennsylvania, 1993
Continue Reading Quick Fact Sheet on Trump’s Pick for SEC Chair, Jay Clayton
SEC Chief Accountant Wes Bricker Delivers Keynote Address Before the 2016 AICPA Conference
On December 5, 2016, Wes Bricker, the SEC’s Chief Accountant, delivered an insightful keynote address before the 2016 AICPA Conference on current SEC and PCAOB developments. The speech was entitled, “Working Together to Advance High Quality Information in the Capital Markets.” The speech covered a number of diverse topics, including an update on the Office of Chief Accountant, internal control over financial reporting, revenue recognition implementation, non-GAAP reporting, valuation practices, auditor independence, the PCAOB, IFRS and audit committees, among others. The full speech is linked here. Below is an excerpt of Mr. Bricker’s comments directed to audit committees, which included questions from audit committee members that he found helpful during his time as an audit engagement partner in generating dialogue:
Continue Reading SEC Chief Accountant Wes Bricker Delivers Keynote Address Before the 2016 AICPA Conference