Tag: SEC Investor advisory committee

SEC’s Investor Advisory Committee to consider Rule 10b5-1 plan recommendations

This month, the SEC’s Investor Advisory Committee will be taking up draft subcommittee recommendations regarding two hot topics—Rule 10b5-1 plans and SPACs—both of which have now been posted. The wide berth Rule 10b5-1 gives insiders to conduct transactions under Rule 10b5-1 plans, together with the absence of public information requirements, has long fueled controversy about these plans.  Potential problems with 10b5-1 plans have been recognized in many quarters—including by former SEC Chair Jay Clayton and current Chair Gary Gensler—and the IAC subcommittee believes there is “strong bipartisan support” for improvements to Rule 10b5-1 that would enhance the rule’s effectiveness and “improve transparency regarding insider trades and enable effective investigation and enforcement of violations.” The IAC subcommittee recommends that the SEC “move quickly to close identified gaps in the current rule.” Given the widespread advocacy for modification of Rule 10b5-1, is it practically a fait accompli? This month, the SEC’s Investor Advisory Committee will be taking up draft subcommittee recommendations regarding two hot topics—Rule 10b5-1 plans and SPACs—both of which have now been posted. The wide berth Rule 10b5-1 gives insiders to conduct transactions under Rule 10b5-1 plans, together with the absence of public information requirements, has long fueled controversy about these plans.  Potential problems with 10b5-1 plans have been recognized in many quarters—including by former SEC Chair Jay Clayton and current Chair Gary Gensler—and the IAC subcommittee believes there is “strong bipartisan support” for improvements to Rule 10b5-1 that would enhance the rule’s effectiveness and “improve transparency regarding insider trades and enable effective investigation and enforcement of violations.” The IAC subcommittee recommends that the SEC “move quickly to close identified gaps in the current rule.” Given the widespread advocacy for modification of Rule 10b5-1, is it practically a fait accompli? [Update: This recommendation was approved by the Committee for submission to the SEC, subject to the opportunity to reconsider after addition of a footnote clarifying that the recommendation was not intended to address corporate buybacks.]

SEC Chair Clayton highlights need for complete disclosure even if periodic reports are delayed due to COVID-19

In a statement issued today, SEC Chair Jay Clayton emphasized that, although the timing of certain company filings may be impacted by COVID-19, the SEC is “keenly focused on ensuring that issuers and other registrants continue to provide material information to investors, including information related to the current and expected effects of COVID-19, as promptly as practicable.” In another statement, this one to a meeting this afternoon of the SEC’s Investor Advisory Committee, Clayton stressed the importance of providing information to investors, particularly “in times of economic shock and uncertainty.”  The increased investor demand for information fueled by the uncertainties associated with COVID-19, together with the fact that, as a result of COVID-19, companies may not be able to file required periodic reports on a timely basis, has created “a challenge.”

SEC’s Investor Advisory Committee critical of SEC proposals on proxy advisory firms and shareholder proposals

At a meeting on Friday of the SEC’s Investor Advisory Committee, the Committee members voted (ten in favor, five opposed, with two abstentions) to submit to the SEC a recommendation regarding SEC guidance and rule proposals on proxy advisory firms and shareholder proposals. The recommendation is highly critical of the guidance and of both proposals as unlikely to reliably achieve the SEC’s own stated goals, ultimately advising the SEC to rethink and republish the proposals and reconsider its guidance. (Apparently, the initial draft of the recommendations was even more of a scold, as the author, John Coates, indicated to the Committee that the current version reflected substantial revisions, including removing the word “failure” throughout.) The recommendation contends that the proposals and guidance are almost futile without addressing in parallel more basic proxy plumbing issues (as the Committee had previously recommended) (see this PubCo post), that none of the SEC’s actions at issue adequately identifies the underlying problems that are intended to be remedied, provides a sufficient cost/benefit analysis or discusses reasonable alternatives that might have been proposed.  SEC advisory committees typically have a fair amount of sway, so time will tell whether the recommendation will lead the SEC to do any revamping of its actions.

SEC Investor Advisory Committee wants SEC to consider human capital management disclosure — will it happen?

At a meeting today of the SEC’s Investor Advisory Committee, the Committee voted—14 to 6—to recommend that the SEC consider imposing human capital management disclosure requirements as a part of its Disclosure Effectiveness Review and disclosure modernization project. As the vote count suggests, with a significant bloc of votes against, the debate about the recommendation was quite contentious. Now that the recommendation moves to the SEC, the question is: whose views will prevail?

SEC Chair Clayton discusses human capital disclosure

In remarks for a telephone call on February 6 with SEC Investor Advisory Committee members, SEC Chair Jay Clayton briefly discussed three topics: disclosure requirements in general, human capital disclosure and proxy plumbing, the latter two topics being subjects of the committee’s call.

What’s up with the declining number of IPOs?

At a meeting on Thursday of the SEC’s Investor Advisory Committee, a panel discussed the declining number of IPOs, a topic that seems to be top of mind for many in the securities arena.  Of course, there’s a reason for that; according to a panelist from EY, there were about 8,000 public companies in 1996, but only about 4,000 now. What happened?

SEC’s investor advocate echoes concerns of SEC’s Investor Advisory Committee on Nasdaq Solicitation of Comments

by Cydney Posner The SEC’s Investor Advocate has issued a letter to Nasdaq concerning Nasdaq’s Solicitation of Comments regarding certain Nasdaq shareholder approval rules.  The comments largely echo the comments of the SEC’s Investor Advisory Committee, which were fundamentally skeptical of  the Solicitation. (See this PubCo post.)