On August 4, 2020, the Division of Corporation Finance (the “Division") of the Securities and Exchange Commission (the “SEC") issued guidance relating to the submission of supplemental materials and information subject to Rule 83 confidential treatment requests in light of COVID-19 concerns (available here). The Division is providing a temporary secure file transfer process for the submission of supplemental materials pursuant to Securities Act Rule 418 and Exchange Act Rule 12b-4, including supplemental materials subject to a Rule 83 confidential treatment request. This secure file transfer process is a temporary accommodation to the SEC’s rules and procedures for receiving confidential information (as discussed in a prior client alert, available here), due to ongoing health and safety concerns related to COVID-19.
JOBS Act
Everyone Jump In! All Issuers Will Be Allowed to “Test-the-Waters”
On September 26, 2019, the SEC announced (available here) that it has adopted a new rule, Rule 163B (available here) under the Securities Act of 1933, that allows all issuers to “test-the-waters." This accommodation, which had previously been available only to emerging growth companies (EGCs), allows issuers and authorized persons (e.g., underwriters) to engage in discussions with, and provide written offering material to, certain institutional investors prior to, or following, the filing of a registration statement, to determine market interest in potential registered securities offerings. Rule 163B will become effective 60 days after publication in the Federal Register.
SEC to Host Roundtable on Short-Termism on July 18
The Securities and Exchange Commission has announced (available here) that it will hold a roundtable on July 18, 2019, to hear from investors, issuers and other market participants about short-termism’s impact on capital markets and whether the reporting system or other SEC regulations should be changed to address those concerns. The event will begin at 12:30 p.m. ET in the SEC’s headquarters and be open to the public in person and via live webcast on SEC.gov, as well as archived for later viewing. The agenda and access information are available here. The roundtable is related to a request for comment that the SEC published in December 2018, when the SEC announced it may be reconsidering quarterly reporting (our post about that SEC request for comment on quarterly reporting is available here).
SEC Seeks to Simplify and Harmonize Private Offering Exemptions
On June 18, 2019, the Securities and Exchange Commission issued a concept release (available here) announcing that it isseeking comment on “possible ways to simplify, harmonize, and improve the exempt offering framework to promote capital formation and expand investment opportunities while maintaining appropriate investor protections.”
SEC Streamlines Procedure for Confidential Treatment Extensions
On April 16, 2019, the Division of Corporation Finance (the “Division") of the Securities and Exchange Commission (“SEC") announced streamlined procedures for confidential treatment extensions for material contracts where the Division has previously granted confidential treatment (available here). These procedures were announced in light of the recently adopted redacted exhibit rules that permit registrants to redact confidential information from certain exhibits without filing a confidential treatment request (for more on the redacted exhibit rules, see our related prior client alert and blog post). Under the SEC’s rules, a registrant that has previously obtained a confidential treatment order for a material contract must file an extension application under Securities Act Rule 406 or Exchange Act Rule 24b-2 to continue to protect such confidential information from public release prior to the expiration of the existing order. Of note, a registrant cannot use the SEC’s recently adopted redacted exhibit rules to refile a redacted material contract that was granted confidential treatment under the old rules, but instead must rely on the confidential treatment extension process.
SEC Issues Guidance Relating to New Rules and Procedures for Redacting Confidential Information
On April 1, 2019, the Division of Corporation Finance (the “Division”) of the Securities and Exchange Commission (the “SEC”) issued guidance relating to the recently adopted rules and procedures that permit registrants to redact confidential information from certain exhibits without filing a confidential treatment request (available here). The guidance provides additional information on the Division’s process for reviewing redacted information and certain matters relating to the transition to the new rules and procedures.
SEC Continues to Modernize and Simplify Disclosure Requirements
On March 20, 2019, the Securities and Exchange Commission (SEC) adopted amendments (available here) to modernize and simplify disclosure requirements for public companies, investment advisors, and investment companies (the Final Rules). The Final Rules form part of the SEC’s ongoing efforts to simplify disclosure requirements. The Final Rules are largely consistent with the proposed amendments outlined in the SEC’s October 11, 2017 proposing release (available here, and discussed in our client alert available here).
SEC Proposes Long-Awaited Expansion of “Test-the-Waters” to All Issuers – Use With Caution
On February 19, 2019, the Securities and Exchange Commission (the “SEC") proposed a new rule that would allow all issuers to engage in “testing the waters." Specifically, the SEC proposed an exemption (the “Proposed Rule") to certain provisions of Section 5 of the Securities Act of 1933 (the “Securities Act") commonly referred to as “gun-jumping" provisions. This exemption would permit any issuer or authorized person (e.g., an underwriter) to engage in oral or written communications with potential investors that the issuer reasonably believes are qualified institutional buyers (“QIBs") or institutional accredited investors (“IAIs"). Currently, this exemption to the gun-jumping provisions is only available to emerging growth companies (“EGCs"). The SEC believes that the Proposed Rule may “help issuers better assess the demand for and valuation of their securities," which may in turn “enhance the ability of issuers to conduct successful offerings and lower their cost of capital." This goal is consistent with the SEC’s overall effort to increase the number of public companies and reduce the regulatory burden of capital raising.
SEC Expands Regulation A to Allow Offerings by Reporting Companies
On December 19, 2018, the Securities and Exchange Commission (the “SEC") adopted amendments to Regulation A allowing U.S. and Canadian companies that file reports under Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act"), to conduct securities offerings using Regulation A. The amendments were mandated by the Economic Growth, Regulatory Relief, and Consumer Protection Act, which was signed into law in May 2018.
House of Representatives Adopts Bipartisan Financial Reform – JOBS Act 3.0
On July 17, 2018, the U.S. House of Representatives overwhelmingly passed, by a vote of 406-4, bipartisan financial reform legislation titled the “JOBS and Investor Confidence Act of 2018," frequently referred to as JOBS Act 3.0. The JOBS Act 3.0 builds upon the 2012 Jumpstart Our Business Startups (“JOBS") Act, and on the Fixing America’s Surface Transportation Act (the “FAST Act"), which was enacted in 2015 and is commonly referred to as JOBS Act 2.0.