SEC Guidance

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On August 17, the SEC adopted amendments intended to simplify and update the disclosure of information to investors and reduce compliance burdens for companies without significantly altering the total mix of information available to investors.  The amendments are effective 30 days after their publication in the Federal Register.

The amendments eliminate certain:

  • Redundant and duplicative requirements, which require substantially similar disclosures as GAAP, International Financial Reporting Standards (IFRS) or other SEC disclosure requirements.
  • Overlapping requirements, which are related to, but not the same as GAAP, IFRS or other SEC disclosure requirements.
  • Outdated requirements, which have become obsolete as a result of the passage of time or changes in the regulatory, business or technological environment.
  • Superseded requirements, which are inconsistent with recent legislation, more recently updated SEC disclosure requirements, or more recently updated GAAP.

Continue Reading SEC Adopts Amendments to Simplify and Update Disclosure Requirements

On July 24, the SEC proposed amendments to Rule 3-10 of Regulation S-X for guarantors and issuers of guaranteed securities registered or being registered, as well as the financial disclosure requirements in Rule 3-16 of Regulation S-X for affiliates whose securities collateralize securities registered or being registered.  Here is the proposing release.  The proposed changes are intended to provide investors with material information given the specific facts and circumstances, make the disclosures easier to understand, and reduce the costs and burdens to registrants.  The proposal will be subject to a 60-day public comment period.
Continue Reading SEC Proposes to Simplify Guarantor and Pledgor Disclosures in Registered Debt Offerings

The most recent edition of The Business Lawyer, published by the ABA’s Business Law Section, includes its Annual Review of Federal Securities Regulation prepared by its Subcommittee on Annual Review from the Committee on Federal Regulation of Securities. The Review outlines significant developments in federal securities law and regulation in 2017. The Review is…

The SEC recently adopted Inline eXtensible Business Reporting Language (XBRL) rules for operating companies and funds, which are intended to improve the quality and accessibility of XBRL data.  While more detail about the rules and the related phase-in period can be found here, our readers that prepare Form 10-Qs should know that the rules…

On June 28, the SEC adopted regulations that could reduce the reporting burden on middle market public companies. In summary, the SEC adopted amendments to the smaller reporting company (SRC) definition to increase the thresholds for eligibility. Under the amendments, companies with a public float of less than $250 million will qualify as SRCs (up from $75 million). The SEC estimates that about 1,000 additional companies will now be eligible for scaled disclosure as a result of the rule amendments. We expect these amendments may also help companies that have undertaken their IPO in the last five years as they roll off emerging growth company eligibility because of the passage of time.
Continue Reading SEC Adopts Rules that Could Ease Disclosure Burden on Middle Market Public Companies

On July 2, the SEC announced that The Dow Chemical Company agreed to settle charges related to the company’s inadequate perquisites disclosure in SEC filings by paying a civil penalty in the amount of $1.75 million, hiring an independent consultant to evaluate and recommend changes to the company’s policies and procedures relating to perquisites disclosure, and implementing such changes.

The SEC’s order finds that from 2011 through 2015, Dow did not ensure that approximately $3 million in executive perquisites were adequately evaluated and disclosed as “other compensation” in the Compensation Discussion & Analysis (CD&A) section of its annual proxy statements. These authorized but undisclosed perquisites included personal use of the Dow aircraft and other expenses.Continue Reading Recent SEC Enforcement Action Reminds Companies that Perquisite Disclosure Does Not Hinge on Business Purpose

Bass, Berry & Sims attorneys Britt Latham and Brian Irving authored an article that was published in The D&O Diary that outlined and discussed the most important trends and developments related to SEC investigations and enforcement proceedings impacting the industry this past year and likely to impact the industry in the coming year. The article includes a discussion of lessons learned from the first year of the Trump administration.

The authors also point to disgorgement as another topic with a changing landscape, with the Supreme Court ruling in Kokesh v. SEC that disgorgement claims are subject to a five-year statute of limitations for enforcing fines, penalties or forfeitures.Continue Reading Britt Latham and Brian Irving Outline SEC Enforcement Trends under Trump Administration

The U.S. Securities and Exchange Commission (SEC) issued a Valentine’s Day notice to public companies yesterday that the SEC will be holding an open meeting on Wednesday, February 21, 2018, at 10:00 a.m. EST to consider, among other things, “whether to approve the issuance of an interpretive release to provide guidance to assist public companies in preparing disclosures about cybersecurity risks and incidents.”
Continue Reading SEC Calendars Open Meeting to Consider Issuing an Interpretive Release on Cybersecurity Disclosures

We thought you may find of interest prepared remarks by SEC Chairman Jay Clayton at the annual Government-Business Forum on Small Business Capital Formation held on November 30, 2017, where he stated, “In the coming months I anticipate that the Commission will consider adopting rules to expand the definition of ‘smaller reporting company’ to permit additional companies to avail themselves of scaled disclosure requirements.” A full transcript of the speech is available at the SEC’s website.

Proposed Rules Would Change Qualifications for Smaller Reporting Companies

As you may recall, in July 2016 the SEC voted to propose amendments that would increase the financial thresholds in the “smaller reporting company” definition. The proposed rules would enable a company with less than $250 million of public float to provide scaled disclosures as a smaller reporting company, as compared to the $75 million threshold under the current definition. The SEC did not, however, propose to increase the $75 million threshold in the “accelerated filer” definition.Continue Reading SEC Chairman Clayton Expects New Rules on Smaller Reporting Company Definition Soon

In monitoring SEC comment letters, we came across this SEC comment letter made public this month. It serves as a reminder to registrants that, when calculating a company’s public float, there is an informal presumption that a 10% or greater stockholder is an affiliate of the company; however, this presumption is rebuttable by the registrant.

The letter stated that “[t]he Staff has consistently taken the position that the determination of ‘control’ status is dependent in large part on the facts and circumstances involved and, therefore, has declined to state definitively what circumstances will result in a person being deemed to be in ‘control’ of an issuer. While the Company recognizes that, as a rule of thumb, more than 10% ownership has become an informal benchmark at which control should be evaluated, such ownership, standing alone, is not dispositive.”Continue Reading SEC Comment about “Affiliate” Stockholder in Public Float Calculation

From the Bass, Berry & Sims Blog Network
From the Bass, Berry & Sims Blog Network

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