For those of you who have been waiting for those big changes to Dodd-Frank to materialize, don’t hold your breath; at least as far as the SEC is concerned, the vast majority of those rules are expected to remain in place. In case you missed it, SEC Chair Jay Clayton, speaking at the annual meeting of the WSJ’s CFO Network, said that “regulators are evaluating how postcrisis rules have performed in practice, and that he had concerns about some of the unintended side effects from some regulations. But any changes will be around the edges, keeping the core of postcrisis overhauls in place, he added. ‘I don’t think Dodd-Frank is changing a great deal, just to put a pin in it,’ he said.” And that tinkering may well be focused primarily on bank-related rules. Of course, there’s always the possibility that Congress may act, but so far it’s been all hat and no cattle. Case in point: the much ballyhooed Financial Choice Act of 2017, which passed the House, but went nowhere in the Senate. (See this PubCo post.)
The SEC has now posted its release regarding FAST Act Modernization and Simplification of Regulation S-K, which proposes amendments to rules and forms based primarily on the staff’s recommendations in its Report to Congress on Modernization and Simplification of Regulation S-K (required by the FAST Act). (See this PubCo post.) That Report, in turn, was premised on the review that the SEC conducted as part of its Disclosure Effectiveness Initiative and the related Concept Release, which addressed a broader range of potential changes. (See this PubCo post and this PubCo post.) A new approach to confidential treatment, not addressed in the Report, is also proposed. As indicated by the title, the proposed amendments are intended to modernize and simplify a number of disclosure requirements in Reg S-K, and related rules and forms, in a way that reduces the compliance and cost burdens on companies while continuing to provide effective disclosure for investors, including improvements designed to make the disclosures more readable, less repetitive and more easily navigable.
In his first public speech as SEC Chair, Jay Clayton outlined for the Economic Club of New York eight principles that he aims to guide his tenure as Chair. In discussing these principles and some ways in which he plans to put them into practice, Clayton seemed to stress the need to focus more intently on the various costs of regulatory compliance—in dollars, in time, in effort, in complexity and in economic impact. In particular, Clayton drew attention to a reduction in the number of public companies in recent years—a “roughly 50% decline in the total number of U.S.-listed public companies over the last two decades”—attributing the decline at least in part to the expansion of disclosure requirements, in some cases beyond materiality. To address this issue, he asserted, the SEC “should review its rules retrospectively” from the perspective of the cumulative effect of required disclosure, not just each incremental slice. Finally, he noted that the SEC “has several initiatives underway to improve the disclosure available to investors, “ including implementation of recommendations contained in the SEC staff’s Report on Modernization and Simplification of Regulation S-K (see this PubCo post). According to Clayton, the staff “is making good progress on preparing rulemaking proposals based on this report….”
by Cydney Posner According to this article in the WSJ, SEC Commissioner Michael Piwowar, who will probably become acting Chair when current Chair Mary Jo White steps down this month, has agreed with fellow Commissioner Kara Stein about various rulemakings that they might pursue in the interim until nominee Jay […]
by Cydney Posner The SEC has just issued a proposal to amend the rules to require that exhibits to registration statements and reports contain hyperlinks to the exhibits in the exhibit index and that these filings all be made in HTML format. The proposal, which was made in “furtherance of […]
by Cydney Posner Much attention has been paid to the decline in spending on R&D and capital investments attributed to short-termist myopia. Hedge fund activists have been impugned for pressuring companies to return capital to shareholders in the form of buybacks and dividends at the expense of funding R&D and […]