The Senate has confirmed the appointment of Elad Roisman as SEC Commissioner, replacing Republican Commissioner Michael Piwowar. He hails from that pipeline to the SEC, the Senate Banking Committee, where, according to Investment News, he served as Chief Counsel. Prior to that position, he served as counsel to SEC Republican Commissioner Daniel Gallagher.
On the White House lawn before he boarded a helicopter for the Hamptons and his New Jersey golf club for the weekend, reporters had the opportunity to lob a few questions at the president. While most of the questions were about security clearances and the criminal trials of his former staff, a different topic suddenly emerged in connection with an early morning tweet about quarterly reporting. The president said that, in his discussions with leaders of the business community regarding ways to improve the business environment, Indra Nooyi, the outgoing CEO of Pepsico, had suggested that one way to help business would be to trim the periodic reporting requirements from quarterly to semiannually. The argument is that the change would not only save time and money, but would also help to deter “short-termism,” as companies would not need to focus on meeting analysts’ expectations on a quarterly basis at the expense of longer term thinking. (For more on short-termism, see, e.g., this PubCo post.) He agreed that “we are not thinking far enough out,” and had asked the SEC to look into it.
Here’s some mighty fine reading: Cooley Alert: SEC Amends Rule 701(e) and Issues Concept Release Regarding Rule 701 and Form S-8.
Just under the wire to satisfy a Congressional mandate, the SEC today voted unanimously to adopt an amendment to Rule 701(e) to raise the threshold that triggers the requirement for delivery of additional disclosure to investors. The Commissioners also voted to issue a concept release soliciting comment on potential revisions to modernize Rule 701 and Form S-8, as Chair Jay Clayton observed, in light of “developments and innovations in labor markets and compensation practices.” The amendment to Rule 701(e) will become effective immediately on publication in the Federal Register. Companies that “have commenced an offering in the current 12-month period will be able to apply the new $10 million disclosure threshold immediately upon effectiveness of the amendment.” Here is the press release, here are the final rules, and here is the concept release.
Right after celebrating its second birthday, proposal to change the definition of “smaller reporting company” is adopted (updated)
[This post has been updated to reflect the adopting release, which has now been posted here, as well as posted statements from the Commissioners.] The pressure has been coming from all directions—the Congress, the Treasury—indeed, there’s been nary an advisory committee that hasn’t weighed in on this topic: time for the SEC to change the definition of “smaller reporting company.” After all, the proposal has just celebrated its second birthday—has it aged like a fine wine or is it moldy and stinky like an old piece of cheese? The verdict: moldy cheese that made no one happy, but they all ate it anyway.
The pressure has been coming from all directions—the Congress, the Treasury—indeed, there’s been nary an advisory committee that hasn’t weighed in on this topic: time for the SEC to change the definition of “smaller reporting company.” After all, today is the second birthday for this proposal—has it aged like a fine wine or is it moldy and stinky like an old piece of cheese? The verdict: moldy cheese that made no one happy, but they all ate it anyway.
This morning, the SEC unanimously voted to amend the definition of “smaller reporting company” to allow more companies to take advantage of the scaled disclosures permitted for companies that meet the definition. (Here is the press release.) The amendments raise the SRC cap from “less than $75 million” in public float to “less than $250 million” and include as SRCs companies with less than $100 million in annual revenues if they also have either no public float or, in a change from the proposal, a public float that is less than $700 million. The change was intended to promote capital formation and to reduce compliance costs for small public companies. (The SEC also voted to mandate Inline XBRL and to propose a number of changes to the whistleblower program, but those will be covered in subsequent posts.)
Yesterday, the SEC released for public comment a draft of its proposed strategic plan, which outlines the SEC’s priorities through FY 2022. The plan identifies three strategic goals related to investors, innovation and SEC performance. According to the press release, the plan “highlights the SEC’s commitment to serving the long-term interests of Main Street investors; becoming more innovative, responsive, and resilient to market developments and trends; and leveraging staff expertise, data and analytics to bolster performance.” While not exactly long on detail, the plan does provide a general idea of SEC priorities.