Disclosure

Did You Check The Right Box? New SEC Guidance on Clawback Disclosures

April 16, 2025 | Posted by Gina Hancock; Krista P. Hanvey; James J. Moloney Topic(s): Corporate Governance; Disclosure; Securities Regulation

On April 11, 2025, the Securities and Exchange Commission (the “Commission”) published six new Compliance & Disclosure Interpretations (“C&DIs”) relating to the Form 10-K restatement and clawback analysis check boxes and the related disclosures under Item 402(w) of Regulation S-K available here.

As a refresher, the cover of Form 10-K includes two check boxes—the first one indicates when the financial statements included in the Form 10-K reflect the correction of an error to previously issued financial statements and the second one when those error corrections are restatements that required a clawback recovery analysis under Rule 10D-1(b) of the Securities Exchange Act of 1934 (i.e. pursuant to the registrant’s mandatory clawback policy). In addition, Item 402(w) of Regulation S-K requires registrants to include narrative disclosure regarding the clawback policy analysis in the event of a restatement that covers how the recoverable amount was calculated, the value of any recoverable amount that remains outstanding and whether the registrant is relying on the impracticability of recovery exception (and the justification of such reliance).

Below is a summary of the new C&DIs:

Additional Helpful Updates to SEC’s S-3 Registration and Foreign Private Issuer C&DIs

March 31, 2025 | Posted by Hillary H. Holmes; Andrew L. Fabens; Peter Wardle Topic(s): Capital Markets; Corporate Governance; Disclosure; Securities Regulation

On March 20, 2025, the Division of Corporation Finance (the “Division”) of the Securities and Exchange Commission announced that it has updated certain Compliance and Disclosure Interpretations (“C&DIs”) related to Securities Act forms, Exchange Act forms, Regulation S-K and Securities Act Rules.

Things To Do This Week: Validate EDGAR Codes

March 19, 2025 | Posted by Michael A. Titera; Mellissa Campbell Duru; Julia Lapitskaya; Ronald O. Mueller; Lori Zyskowski Topic(s): Capital Markets; Corporate Governance; Disclosure; Securities Regulation

Those lucky individuals who are responsible for EDGAR codes (for companies and Section 16 filers) are strongly encouraged to confirm this week that those EDGAR codes, specifically the CCCs (CIK Confirmation Codes) and Passphrases, are both (1) valid AND (2) current. EDGAR codes are valid if they are correct and are current if they have been established or reset since September 2019. Valid and current CCCs and Passphrases will be required to enroll in EDGAR Next via the EDGAR Next dashboard, and after Friday, March 21, the process for obtaining valid and current codes will be more tedious.

SEC Expands Accommodations for Draft Registration Statements

March 10, 2025 | Posted by Andrew L. Fabens; Hillary H. Holmes; Peter Wardle; Harrison Tucker Topic(s): Capital Markets; Disclosure; IPOs; Registered Securities Offerings; Registration Statements; Securities Regulation

On March 3, 2025, the Division of Corporation Finance of the Securities and Exchange Commission (“SEC”) announced that it is further expanding existing accommodations to allow more companies to confidentially submit draft registration statements for nonpublic review. These accommodations provide more flexibility for certain companies to initiate registration of their securities, spin-offs, and other offering processes without making the process initially public.

Proxy Reporting of 5% Shareholders’ Beneficial Ownership Based on 13G Filings

February 21, 2025 | Posted by Elizabeth A. Ising; Lori Zyskowski; Ronald O. Mueller; Stella Kwak Topic(s): Disclosure; Proxy Statements and Annual Meetings; Securities Regulation

Among the many new rules and considerations affecting proxy season disclosures this year, one of the more subtle changes affects beneficial ownership disclosure pursuant to S-K Item 403(a). That rule requires companies to report the beneficial ownership of their greater than 5% shareholders “as of the most recent practicable date,” with beneficial ownership being determined in accordance with Exchange Act Rule 13d-3. In years past, all Schedule 13G filers were required to file amendments within 45 days after the end of the calendar year to report any change to their previously reported holdings.

SEC Signals Potential Strategy Shift in Climate Disclosure Rule Litigation

February 14, 2025 | Posted by Lauren M. Assaf-Holmes; Ronald O. Mueller; Lori Zyskowski; Thomas J. Kim; James J. Moloney Topic(s): Corporate Governance; Disclosure; Environmental/Climate Change; ESG; Securities Regulation

On Tuesday, Mark Uyeda, Acting Chairman of the Securities and Exchange Commission (the “SEC”), issued a statement signaling potential updates to the SEC’s position in the ongoing legal challenges to its climate disclosure rule. As previously reported, the SEC stayed its climate disclosure rule last year pending the outcome of the related consolidated litigation before the Eighth Circuit Court of Appeals.

SEC Lawsuit Against Elon Musk: Late is Late . . . Whether You Report on Schedule 13G or 13D

January 31, 2025 | Posted by James J. Moloney; Brian J. Lane Topic(s): Disclosure; Securities Regulation

In an interesting development in the week leading up to the 2025 inauguration of President Donald Trump, the U.S. Securities and Exchange Commission (“SEC”) announced a legal action against Elon Musk. In its complaint filed with the U.S. District Court for the District of Columbia (the “Court”) on January 14, 2025 (the “Complaint”), the SEC alleges Musk failed to timely file a Schedule 13D after acquiring over five percent of the outstanding shares of common stock (the “Shares”) of Twitter, Inc. (the “Company” or “Twitter”). The late filing resulted in a violation of Section 13(d)(1) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 13d-1(a) thereunder, both of which impose strict liability for such reporting failures. The SEC is seeking permanent injunctive relief, disgorgement of any ill-gotten gains, prejudgment interest, and civil penalties.

California Solicits Input On—and Issues Enforcement Update For—Future Climate Reporting

December 18, 2024 | Posted by Elizabeth A. Ising; Cynthia M. Mabry; Aaron K. Briggs Topic(s): Disclosure; Environmental/Climate Change; ESG

Request for Comments. On December 16, 2024, the California Air Resources Board (“CARB”) issued a request for public feedback and information regarding certain implementing regulations for Senate Bill (“SB”) 253 (the Climate Corporate Data Accountability Act) and SB 261 (the Climate-Related Financial Risk Act). As a reminder, SB 253 requires U.S. companies doing business in California with annual revenues over $1 billion to begin reporting Scope 1 and 2 greenhouse gas (“GHG”) emissions in 2026 and Scope 3 GHG emissions in 2027. SB 261 requires U.S. companies doing business in California with annual revenues over $500 million to biennially report on climate-related risks and their steps to mitigate such risks, with the first report due on or before January 1, 2026. Both SB 253 and SB 261 make CARB responsible for the laws’ enforcement and for adopting certain implementing regulations.

Preparing for California’s Climate Reporting Legislation – Takeaways from Recent Amendments and Early AB 1305 Reporting Trends

October 25, 2024 | Posted by Elizabeth A. Ising; Aaron K. Briggs; Cynthia M. Mabry; Michael K. Murphy Topic(s): Corporate Governance; Disclosure; Environmental/Climate Change; ESG

Last year, California adopted a trio of laws requiring certain public and private companies to provide climate-related disclosures. As a quick refresher:

Climate Corporate Data Accountability Act (Senate Bill 253). For U.S. companies doing business in California with annual revenues over $1 billion, Senate Bill (“SB”) 253 requires them to report their greenhouse gas (“GHG”) emissions annually beginning in 2026 (for Scope 1 and 2 GHG emissions) and 2027 (for Scope 3 emissions).
Greenhouse Gases: Climate-related Financial Risk (Senate Bill 261). For U.S. companies doing business in California with annual revenues over $500 million, SB 261 effectively requires them to begin biennial reporting in 2025 regarding their “climate-related financial risks” and adopted measures to reduce or adapt to them.
Voluntary Carbon Market Disclosures (Assembly Bill 1305). For companies that make certain environmental claims, adopt particular environmental goals, or purchase, use, market, or sell voluntary carbon offsets in California, Assembly Bill (“AB”) 1305 requires annual website disclosure providing support for those claims, goals, or offsets.

Early Insights from the Insider Trading Policies Filed by S&P 500 Companies under the SEC’s New Exhibit Requirement

September 9, 2024 | Posted by Aaron K. Briggs; Thomas J. Kim; Brian J. Lane; Julia Lapitskaya; James J. Moloney; Ronald O. Mueller; Michael A. Titera; Lori Zyskowski Topic(s): Audit Committee; Capital Markets; Corporate Governance; Disclosure; Securities Regulation

I. Introduction

For fiscal years beginning on or after April 1, 2023, domestic public companies are required to disclose whether they have adopted insider trading policies and procedures governing the purchase, sale, and/or other dispositions of their securities by their directors, officers and employees, or the companies themselves, and if so to file those policies and procedures as an exhibit to their annual reports on Form 10-K.[1] While calendar year companies must comply with these requirements in their Form 10-K for, or proxy statement following, the fiscal year ending December 31, 2024, 49 S&P 500 companies had addressed these requirements in filings as of June 30, 2024.[2]