On August 17, 2018, the Securities and Exchange Commission (the “Commission") adopted several dozen amendments (available here) to “simplify compliance without significantly altering the total mix of information" (the “Final Rules"). In Release No. 33-10532, the Commission characterized the amended requirements as redundant, duplicative, overlapping, outdated or superseded, in light of subsequent changes to Commission disclosure requirements, U.S. GAAP, IFRS and technology developments.
Securities Regulation
The PCAOB’s Draft Strategic Plan: Overview and Outlook
On August 10, 2018, the Public Company Accounting Oversight Board (PCAOB or Board) released a draft of its five-year strategic plan and sought public comment on the plan through September 10, 2018. This represents the first time that the Board has solicited public input to a draft strategic plan, and follows the Board’s announcement in April of a public survey to permit stakeholder input on the strategic plan even in advance of the draft’s release. In a speech on May 17, 2018, at the Deloitte/University of Kansas Auditing Symposium (Kansas Speech), PCAOB Chairman William D. Duhnke III announced that after the public comment period, the Board plans to finalize the strategic plan in November 2018.[1]
SEC Modifies XBRL Filing Requirements
On June 28, 2018, the Securities and Exchange Commission (the “SEC") adopted a final rule, Inline XBRL Filing of Tagged Data, which substantially alters requirements related to the use of the eXentsible Business Reporting Language (“XBRL") format in operating companies’ financial statement information and funds’[1] risk/return summary information. The rule was published in the Federal Register on August 16, 2018, available here, and will be effective on September 17, 2018.
SEC Proposes to Substantially Lighten Financial Disclosures for Issuers and Guarantors of Registered Debt
On July 24, 2018, the Securities and Exchange Commission (the “Commission") proposed amendments to Rules 3-10 and 3-16 of Regulation S-X (available here) in an effort to “simplify and streamline" the financial disclosures required in offerings of certain guaranteed debt and debt-like securities (collectively referred to as “debt securities"), as well as offerings of securities collateralized by securities of an affiliate of the registrant, registered under the Securities Act of 1933, as amended (the “Securities Act"). These proposed changes would, if implemented, facilitate greater speed to market for such public offerings, significantly reducing the Securities Act disclosure burdens for such registrants, as well as reducing the registrant’s disclosure obligations in its subsequent annual and interim reports required under Securities Exchange Act of 1934, as amended (the “Exchange Act"). Taken together, the proposed changes represent a significant liberalization of the current disclosure requirements.
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.
SEC Amends “Smaller Reporting Company” Definition to Expand Access to Scaled Disclosure Accommodations
On June 28, 2018, the United States Securities and Exchange Commission (the “SEC") approved amendments to the definition of a “smaller reporting company" (a “SRC"). These amendments will expand the number of registrants qualifying for SRC scaled disclosure accommodations in their SEC filings. These scaled disclosure accommodations include, among other things, reduced required business, financial and executive compensation disclosures. A chart briefly summarizing the SRC disclosure accommodations is attached as Exhibit A.
The SEC Identifies Priorities in Draft Strategic Plan Through 2022
On June 19, 2018, the Securities and Exchange Commission (the “SEC") published a draft strategic plan outlining the SEC’s priorities through 2022 (the “2018 Plan"). In the 2018 Plan, the SEC elected to pursue three goals, emphasizing investors, innovation and performance, each of which is summarized below. The 2018 Plan focuses on the “Main Street" investor, responds to new market developments, such as the growth of cryptocurrencies, and improves the regulator’s use of data and analytics.
The SEC Continues to Modernize and Adapt to the Times
The Securities and Exchange Commission (“the Commission”) recently adopted two rule amendments in its latest effort to synchronize Commission policies with the rapidly developing digital age.
The SEC’s Proposed Transaction Fee Pilot for US Equity Securities
In March 2018, the Securities and Exchange Commission (“SEC”) issued a proposed rule, Rule 610T of Regulation NMS (the “Proposal”), which would create a Transaction Fee Pilot for National Market System (“NMS”) stocks (the “Pilot”). The Pilot recently received renewed attention as a result of an email sent by the New York Stock Exchange (“NYSE”) to listed issuers expressing concerns the NYSE has regarding the Pilot.
SEC Corp Fin Staff Releases New Compliance and Disclosure Interpretations on Proxy Rules and Schedules 14A/14C
On May 11, the Division of Corporation Finance (the “Staff”) of the U.S. Securities and Exchange Commission (the “Commission”) released new Compliance and Disclosure Interpretations (“C&DIs”) regarding the proxy rules and Schedules 14A and 14C. These C&DIs replace the Staff’s previous interpretations published in the Proxy Rules and Schedule 14A Manual of Publicly Available Telephone Interpretations and the March 1999 Supplement to the Manual of Publicly Available Telephone Interpretations (collectively, the “Telephone Interpretations”).