On August 20, the staff of the Division of Corporation Finance (the staff) of the Securities and Exchange Commission released several new Compliance and Disclosure Interpretations (C&DIs) relating to interactive data/eXtensible Business Reporting Language (XBRL), with a focus on items relating to Inline XBRL format requirements.
Continue Reading SEC Division of Corporation Finance Issues C&DIs Regarding Inline XBRL

Investment Advisers

On August 21, by a vote of 3 to 2, the Securities and Exchange Commission issued interpretive guidance on an investment adviser’s fiduciary duties with respect to voting of proxies for client accounts. The guidance makes clear that advisers may agree with their clients that the client, and not the adviser, will vote proxies, but such guidance is generally impractical for advisers to private funds and registered investment companies (because there is no practical way to assign voting power to the funds).
Continue Reading SEC Issues New Guidance Regarding Proxy Voting Responsibility of Investment Advisers and the Applicability of Proxy Rules to Proxy Voting Advice

On August 20, the Securities and Exchange Commission announced it had charged Florida-based TherapeuticsMD Inc. with Regulation FD violations stemming from alleged sharing of material non-public information with research analysts without also publicly disclosing the information, in what appears to be the first such Regulation FD enforcement case brought by the SEC in the last six years.
Continue Reading SEC Announced Charges for Regulation FD Violations

On August 8, the Securities and Exchange Commission proposed amendments to modernize the required disclosures under Regulation S-K regarding a company’s business description, legal proceedings and risk factors (the Proposal). The Proposal is part of the Staff’s disclosure effectiveness initiative to improve its disclosure regime for investors and registrants. The Proposal would implement a more principles-based approach with respect to the disclosure rules relating to the registrant’s business description and risk factors. The SEC notes that its aim for using such an approach, as opposed to prescriptive requirements, would be to “elicit more relevant disclosures” about the items because the current requirements “may not reflect what is material to every business.” The following are key elements of the proposed amendments.
Continue Reading SEC Proposes to Modernize Business, Legal Proceedings and Risk Factor Disclosures Required by Regulation S-K

On June 21, the Securities and Exchange Commission adopted a panoply of final rules dealing with the following aspects of the regulation of security-based swaps (SBS):

  • Capital requirements for nonbank SBS Dealers (SBSDs) and Major SBS Participants (MSBSPs).
  • Increased minimum net capital requirements for broker-dealers that use internal models to compute net capital (ANC broker-dealers).
  • Capital requirements tailored to security-based swaps and swaps for broker-dealers that are not registered as an SBSD or MSBSP to the extent they trade those instruments.
  • Margin requirements for nonbank SBSDs and MSBSPs with respect to non-cleared security-based swaps.
  • Creation of a process for non-US SBSDs and MSBSPs to request substituted compliance with respect to the capital and margin requirements.
  • A requirement that nonbank SBSDs establish internal risk management controls compliant with Rule 15c3-4.

Continue Reading SEC Adopts Additional Rules for Security-Based Swaps

On May 9, the Securities and Exchange Commission proposed amendments to the accelerated filer and large accelerated filer definitions in Securities Exchange Act of 1934 Rule 12b-2. The proposed amendments would exclude certain lower-revenues companies from being classified as accelerated or large accelerated filers, which would reduce costs for those companies.
Continue Reading SEC Proposes Amendments to Update the Accelerated and Large Accelerated Filer Definitions

As a result of the Securities and Exchange Commission’s 2015 request for comments on Regulation S-X, the SEC recently proposed amendments (the Proposal) to improve the financial disclosures provided to investors concerning an acquisition or disposition of a business. The Proposal is designed to reduce complexity and compliance costs and facilitate more timely access to capital for those complying with such rules.
Continue Reading SEC-Proposed Amendments to Financial Disclosures for Acquisitions and Dispositions of Businesses

The Securities and Exchange Commission recently adopted final rules to modernize and simplify the disclosure requirements for public companies under Regulation S-K. This rulemaking was mandated by the Fixing America’s Surface Transportation Act (FAST Act), and the final rules are substantially in the forms originally proposed by the SEC in October 2017 (as discussed in the October 20, 2017 edition of the Corporate and Financial Weekly Digest).

The final rules make several significant changes to Regulation S-K and related rules and forms. The following are some highlights:
Continue Reading SEC Adopts Rules to Modernize and Simplify Disclosure

On March 29, the UK Financial Conduct Authority (FCA) issued a press release announcing that it has signed two updated memoranda of understanding (MOUs) with the Securities and Exchange Commission. Both MOUs aim to ensure the continued ability of the United Kingdom and the United States to cooperate and consult with each other regarding the effective and efficient oversight of regulated entities across national borders.
Continue Reading FCA and SEC Sign Updated Memoranda of Understanding

On February 19, the Securities and Exchange Commission proposed Rule 163B under the Securities Act of 1933, which would permit any issuer, and any underwriter or other person acting on an issuer’s behalf, to communicate with qualified institutional buyers (QIBs) and institutional accredited investors (IAIs) regarding a potential public offering prior to or following the filing of a registration statement for the offering. These so-called “test-the-waters” communications are intended to help issuers gauge interest in possible public offerings before issuers incur the costs of filing a registration statement with the SEC.

Continue Reading SEC Proposes To Expand “Test-the-Waters” Reforms to All Issuers