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SEC Staff Views & Speeches - Page 6

Articles On This Page

SEC Staff Speech, Division of Corporation Finance - CF Disclosure Guidance Official Text NEW!

SEC Staff Speech, AICPA National Conference on Current SEC and PCAOB Developments - 2020 NEW!

SEC Staff Speech, Statement on Developments Related to the LIBOR Transition by Chairman Jay Clayton NEW!

SEC Staff Speech, Topic No. 10: Disclosure Considerations for China-Based IssuersNEW!

SEC Staff Speech, The Regulation of Corporation Finance – A Principles-Based Approach by William Hinman Director, Division of Corporation Finance NEW!

SEC Staff Speech, Transitional FAQs Regarding Amended Regulation S-K Items 101, 103 and 105NEW!

SEC Staff Speech, Modernization of Regulation S-K Items 101, 103, and 105 a Small Entity Compliance GuideNEW!

SEC Staff Speech, When the Nail Fails – Remarks before the National Society of Compliance Professionals by Commissioner Hester M. Peirce 

SEC Staff Speech, Volume, Value, and Impact: Remarks by the SEC Ombudsman Tracey L. McNeil 

SEC Staff Speech, Remarks At SEC Speaks 2020 by Commissioner Elad L. Roisman 

SEC Staff Speech, An Update on FY 2020 Results - Remarks at SEC Speaks by Chairman Jay Clayton 

SEC Staff Speech, The Car Talk of Capital Raising by Martha Miller, Advocate for Small Business Capital Formation 

SEC Staff Speech, Intellectual Siren Song by Commissioner Hester M. Peirce 

SEC Staff Speech, Diversity Matters, Disclosure Works, and the SEC Can Do More: Remarks at the Council of Institutional Investors Fall 2020 Conference by Commissioner Allison Herren Lee 

SEC Staff Speech, CAQ SEC International Practices Task Force 

SEC Staff Speech, Keynote Address - Regulating with our Eyes on the Future by Dalia Blass Director, Division of Investment Management 

SEC Staff Speech, Remarks at U.S. Treasury Market Conference by Commissioner Elad L. Roisman 

SEC Staff Speech, Cybersecurity - Safeguarding Client Accounts Against Credential Compromise 

SEC Staff Speech, CF Disclosure Guidance Topic: Topic No.7: Confidential Treatment Applications Submitted Pursuant to Rules 406 and 24b 2 

SEC Staff Speech, Statement on SEC Response to the Report of the President’s Working Group on Financial Markets by Chairman Jay Clayton 

SEC Enforcement – SEC Commissioner Peirce Discusses Views on Recent SEC Enforcement Case 

ESG – SEC Commissioner Roisman Discusses Environmental, Social and Governance Factors 

Financial Reporting – SEC Chief Accountant Emphasizes the Continued Need for High Quality Financial Reporting 

SEC Staff Speech, Emerging Market Investments Entail Significant Disclosure, Financial Reporting and Other Risks; Remedies are Limited by Chairman Jay Clayton 

Emerging Market Investments – SEC Chairman and Others Caution of Risks Associated with Emerging Market Investments 

Audit Firms – SEC Publishes Statement on Continued Dialogue with Audit Firm Representatives on Audit Quality in China and Other Emerging Markets 

SEC Staff Speech, Running on Empty: A Proposal to Fill the Gap Between Regulation and Decentralization by Commissioner Hester M. Peirce 

SEC Staff Speech, Staff Legal Bulletin No. 21 

SEC Staff Speech, Myths and Realities: Modernizing the Proxy Rules by Commissioner Elad L. Roisman 

SEC Staff Speech, Learning from Miami’s Emprendimientos by Martha Miller, Advocate for Small Business Capital Formation 

SEC Staff Q&A: Frequently Asked Questions on Regulation Best Interest 

SEC Staff Speech, Mochas, Mariners, and Morality - Remarks before the National Economists Club by Commissioner Hester M. Peirce 

SEC Staff Speech, What You Don’t Know Can Hurt You by Stephanie Avakian, Co-Director, Division of Enforcement 

SEC Staff Views, Division of Trading and Markets - Background Paper on the Market Structure for Thinly Traded Securities 

SEC Staff Speech, Start Off by Making Your Bed: Translating Military Lessons to Entrepreneurship by Martha Miller, Advocate for Small Business Capital Formation 

SEC Staff Speech, Dual-Class Shares: A Recipe for Disaster by Rick Fleming, Investor Advocate 

SEC Staff Views, Staff Legal Bulletin No. 14K 

Articles

SEC Staff Speech, Division of Corporation Finance - CF Disclosure Guidance Official Text

Summary - The staff in the SEC’s Division of Corporation Finance (Corp Fin) has published CF Disclosure Topic No. 11, Special Purpose Acquisition Companies. This guidance provides Corp Fin’s views about certain disclosure considerations for special purpose acquisition companies, commonly referred to as SPACs, in connection with their initial public offerings and subsequent business combination transactions. Topics discussed in this guidance include disclosure considerations for a SPAC involving an Initial Public Offering and a business combination transaction.

For more information, click here.

© 2021 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

SEC Staff Speech, AICPA National Conference on Current SEC and PCAOB Developments - 2020

Summary - On December 7-9, 2020, representatives of the SEC, FASB, PCAOB, IASB, and AICPA spoke at the annual AICPA Conference on Current SEC and PCAOB Developments. This years’ conference was held virtually. Topics discussed during the 2020 conference covered a number of important financial reporting and auditing issues. Principal themes of the conference included:
The importance of transparency and integrity on financial reporting, including the role of the auditor in providing assurance and trust in the financial reports of entities;

  • Accounting, financial reporting, and auditing responses to the COVID-19 global pandemic;
  • Disclosures on economic, social, or governance matters (integrated or sustainability reporting);
  • The importance of internal control over financial reporting (ICFR), including the designing and implementation of controls, and the important role of auditors have in testing the effectiveness of ICFR;
  • PCAOB standard-setting, inspection, and enforcement; and
  • Implementation of important new accounting and audit requirements, including accounting standards on leases, credit losses, and LIBOR, and the PCAOB’s Critical Audit Matters requirements.

For more information, click here.

© 2021 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

SEC Staff Speech, Statement on Developments Related to the LIBOR Transition by Chairman Jay Clayton

Summary - SEC Chairman Jay Clayton released a brief statement on developments related to LIBOR transition. Specifically, the U.S. Federal Reserve and U.K regulators announced that it is urging banks to wrap up contracts using LIBOR. In response, Clayton indicates that the “announcements establish a pragmatic, market-oriented path for managing the transition away from LIBOR. We encourage registrants to proactively transition to market-based reference rates and stand ready to assist market participants.”

For more information, click here.

© 2021 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

SEC Staff Speech, Topic No. 10: Disclosure Considerations for China-Based Issuers

Summary - The staff in the SEC’s Division of Corporation Finance (Corp Fin) has published CF Disclosure Topic No. 10, Disclosure Considerations for China-Based Issuers. This guidance provides Corp Fin’s views regarding certain disclosure considerations for companies based in or with the majority of their operations in the People’s Republic of China (“PRC” or “China”). Topics discussed in this guidance include:

  • Risks Associated with China-based Issuers;
  • Differences in Shareholder Rights and Recourse, Governance, and Reporting Associated with China-based Issuers; and
  • Disclosure Considerations for China-based Issuers.

For more information, click here.

© 2021 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

SEC Staff Speech, The Regulation of Corporation Finance – A Principles-Based Approach by William Hinman Director, Division of Corporation Finance

Summary - William Hinman, SEC Director of Corp Fin, recently discussed rulemaking around new digital assets or other areas of financial reporting. Hinman indicated that “the Commission’s principles-based approach to disclosure can be applied to new, complex and evolving situations. Significant examples include Brexit, the upcoming LIBOR transition, cybersecurity developments, climate change, and most recently, the global coronavirus (COVID-19) pandemic we are battling today.”
Hinman’s remarks focused on:

  • Digital assets;
  • Principles-based disclosure and rulemaking; and
  • Corporate hygiene and what should be disclosed.

Regarding corporate disclosures, Hinman indicated that “thoughtful and proactive compliance with the federal securities laws, particularly our laws and rules around trading in company securities and corporate disclosure, is not a bad first step as companies set out on the path of defining their proper purpose as corporate citizens. The importance of good disclosure to the broader markets and the public cannot be overstated. Disclosure that is specific and tailored to a company’s circumstances, that is well-vetted by accounting, legal and financial gatekeepers, provides everyone with information that can be trusted and acted on with confidence. The disclosure that companies make in their Commission filings is special in no small part because it is vetted by gatekeepers, subject to potential staff review and, of course, subject to the liability standards of the federal securities laws. These processes and rigor add credibility and weight to statements made in a report or document filed with the Commission.”

For more information, click here.

© 2021 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

SEC Staff Speech, Transitional FAQs Regarding Amended Regulation S-K Items 101, 103 and 105

Summary - The staff in the SEC’s Division of Corporation Finance (Corp Fin) has published Transitional FAQs Regarding Amended Regulation S-K Items 101, 103 and 105. This document provides guidance on the disclosure requirements and related rules adopted in the Modernization of Regulation S-K Items 101, 103, and 105 rulemaking (Securities Act Release No. 33-10825). These previously adopted amendments modernize the description of business (Item 101), legal proceedings (Item 103), and risk factor disclosures (Item 105) that registrants are required to make pursuant to Regulation S-K. Corp Fin’s guidance provides views on transition to these new rules which are effective on November 9, 2020.

For more information, click here.

© 2021 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

SEC Staff Speech, Modernization of Regulation S-K Items 101, 103, and 105 a Small Entity Compliance Guide

Summary - The SEC staff has published Modernization of Regulation S-K Items 101, 103, and 105 A Small Entity Compliance Guide. This guide provides guidance on the SEC’s amendments to modernize the description of business (Item 101), legal proceedings (Item 103), and risk factor disclosures (Item 105) that registrants are required to make pursuant to Regulation S-K. The amendments the SEC adopted update these items to reflect the many changes in our capital markets and the domestic and global economy in recent decades. The amendments to Regulation S-K Items 101, 103, and 105 are intended to elicit improved disclosures for investors and add efficiencies to the compliance efforts of registrants.

The amendments are also intended to improve the readability of disclosure documents, as well as discourage repetition and reduce the disclosure of unnecessary information.


This guide covers the following areas:

  • Who is affected by the amendments;
  • What are the changes under the amendments;
  • Compliance dates; and
  • Other resources.

For more information, click here.

© 2021 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

SEC Staff Speech, When the Nail Fails – Remarks before the National Society of Compliance Professionals by Commissioner Hester M. Peirce

Summary - SEC Commissioner Hester M. Peirce recently discussed her thoughts on the increasing personal liability for compliance officers and the risk that this could cause talented individuals to forgo a career in compliance, among other negative effects. Peirce indicated that compliance officers’ “responsibilities are growing, but the nature of the liability they face in executing those responsibilities remains unclear. Indeed, this past February, the New York City Bar published a report that distilled many of the concerns, and offered a number of recommendations.”

For more information, click here.

© 2020 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

SEC Staff Speech, Volume, Value, and Impact: Remarks by the SEC Ombudsman Tracey L. McNeil

Summary - SEC Ombudsman Tracey L. McNeil recently discussed the SEC’s Office of the Investor Advocate which appointed her. McNeil highlighted her efforts indicating that she recognizes “the importance of the quality of service we provide. I have no real control over the volume or substance of matters that come in, and I never wanted to equate the volume of matters received to the value of the role. Assisting just one investor with one issue can make a significant difference to that investor, to their family, and at times, to the way I approach my work and to the agency and the industry. That is where the real value lies.”

For more information, click here.

© 2020 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

SEC Staff Speech, Remarks At SEC Speaks 2020 by Commissioner Elad L. Roisman

Summary - SEC Commissioner Elad L. Roisman recently discussed SEC enforcement efforts. Roisman indicates that enforcement of the securities laws “is not a partisan matter. The vast majority of the Commission’s votes on enforcement matters are unanimous, bringing together those of us who may have stark disagreements on particular policy issues. Yet, each Commissioner approaches consideration of enforcement cases differently, and we do not always agree on every aspect of every case.”

For more information, click here.

© 2020 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

SEC Staff Speech, An Update on FY 2020 Results - Remarks at SEC Speaks by Chairman Jay Clayton

Summary - SEC Chairman Jay Clayton recently discussed the results from the agency’s fiscal year 2020. Clayton indicated that he is pleased to report regarding the SEC “that while the pandemic significantly impacted how we do our work, it did not negatively impact the work itself. Our planned oversight, examination, rulemaking, and enforcement work continued with vigor, rigor and transparency. At the same time, we added to our work load. We (1) provided targeted regulatory relief to ensure the continued operation of our markets, (2) worked continuously with our domestic and foreign regulatory counterparts to monitor and mitigate the impacts of COVID-19, and (3) increased oversight and engagement in key areas of stress.”

For more information, click here.

© 2020 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

SEC Staff Speech, The Car Talk of Capital Raising by Martha Miller, Advocate for Small Business Capital Formation

Summary - Martha Miller, Advocate for Small Business Capital Formation, recently discussed the SEC’s Office of the Advocate for Small Business Capital Formation efforts to promote small business capital formation. Miller indicates that the “current COVID-19 challenges are testing much of the capital raising ecosystem and are highlighting both its strengths and vulnerabilities. We are continuing to focus not only on longstanding capital raising issues, but also on timely issues presented by 2020’s curveballs.”

For more information, click here.

© 2020 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

SEC Staff Speech, Intellectual Siren Song by Commissioner Hester M. Peirce

Summary - SEC Commissioner Hester M. Peirce recently discussed financial market regulation. Peirce indicates that “regulation is necessary. I think we can all agree with that. But less is very much more when it comes to the government deciding how free citizens may invest their money, plan for their and their families’ futures, and enter into contracts with other free citizens.”

For more information, click here.

© 2020 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

SEC Staff Speech, Diversity Matters, Disclosure Works, and the SEC Can Do More: Remarks at the Council of Institutional Investors Fall 2020 Conference by Commissioner Allison Herren Lee

Summary - SEC commissioner Allison Herren Lee recently discussed diversity and inclusion. Lee indicates that recent events have “triggered an unprecedented national conversation on racial injustice that also highlights the urgency of ensuring diverse perspectives and representation at all levels of decision making in our country. At the SEC, a number of recent rulemakings have also pushed this issue to forefront. Our recent adoption of amendments to Regulation S-K, for example, took a step forward by adding human capital as a broad topic for possible disclosure, but declined to require, among other things, disclosure of diversity data—even data that most companies are already required to keep under Equal Employment Opportunity Commission (EEOC) rules.”

For more information, click here.

© 2020 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

SEC Staff Speech, CAQ SEC International Practices Task Force

Summary - The Center for Audit Quality (CAQ) has published minutes from the November 19, 2020 International Task Force meeting. Topics discussed at this meeting included:

Transition to Foreign Private Issuer status of a foreign public shell immediately upon its reverse merger with a foreign operating company and basis of accounting reported by the operating company in conjunction with the transaction; and
Impact on updating schedules such as Schedule 12-28 (real estate) for the application of IAS 29.

For more information, click here.

© 2020 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

SEC Staff Speech, Keynote Address - Regulating with our Eyes on the Future by Dalia Blass Director, Division of Investment Management

Summary - SEC Director of Investment Management, Dalia Blass, recently discussed the need to regulate with an eye to the future. Dalia indicated that “the Division’s philosophy in recommending changes to the asset management regulatory framework has been to seek forward-looking solutions. We do not recommend that the Commission consider reforms just to address issues that have already happened. Instead we focus on regulations that will balance flexibility to accommodate future changes with promoting resiliency to future crises.”

For more information, click here.

© 2020 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

SEC Staff Speech, Remarks at U.S. Treasury Market Conference by Commissioner Elad L. Roisman

Summary - SEC Commissioner Elad L. Roisman recently discussed his ideas for improving the market for U.S. Treasuries. Among his ideas were:

  • Ensuring that regulators have full view of secondary market trading;
  • Improving SEC understanding and, to the extent insufficient, oversight of key treasury market participants; and
  • Broadening access to central clearing in the cash market.

Roisman believes that prioritizing these three improvements would help optimize regulators‟ oversight capabilities and support the market’s efficient functioning.

For more information, click here.

© 2020 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

SEC Staff Speech, Cybersecurity - Safeguarding Client Accounts Against Credential Compromise

Summary - The staff in the SEC’s Office of Compliance Inspections and Examinations (OCIE) has issued a Risk Alert, Cybersecurity: Safeguarding Client Accounts against Credential Compromise. This risk alert highlights “credential stuffing,” which is a method of cyber-attack to client accounts that uses compromised client login credentials, resulting in the possible loss of customer assets and unauthorized disclosure of sensitive personal information.

OCIE indicates that it has observed in recent examinations an increase in the number of cyber-attacks against SEC-registered investment advisers and brokers and dealers using credential stuffing. Credential stuffing is “an automated attack on web-based user accounts as well as direct network login account credentials. Cyber attackers obtain lists of usernames, email addresses, and corresponding passwords from the dark web and then use automated scripts to try the compromised user names and passwords on other websites, such as a registrant’s website, in an attempt to log in and gain unauthorized access to customer accounts.”

OCIE cautions that credential stuffing is emerging as a more effective way for attackers to gain unauthorized access to customer accounts and/or firm systems than traditional brute force password attacks. When a credential stuffing attack is successful, “bad actors can use the access to the customer accounts to gain access to firms’ systems, where they are able to steal assets from customer accounts, access confidential customer information, obtain login credential/website information that they can sell to other bad actors on the dark web, gain access to network and system resources, or monitor and/or take over a customer’s or staff member’s account for other purposes.”

This guidance provides a summary of credential stuffing, highlights practices firms have implemented in response to help protect client accounts, and discusses other considerations for firms preparing for credential stuffing.

For more information, click here.

© 2020 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

SEC Staff Speech, CF Disclosure Guidance Topic: Topic No.7: Confidential Treatment Applications Submitted Pursuant to Rules 406 and 24b 2

Summary - The staff in the SEC’s Division of Corporation Finance (Corp Fin) has updated its guidance in CF Disclosure Topic No. 7, Confidential Treatment Applications Submitted Pursuant to Rules 406 and 24b-2. This guidance addresses how and what to submit when filing an application objecting to public release of information otherwise required to be filed under the Securities Act and the Securities Exchange Act. Corp Fin indicates that this guidance replaces and supersedes the guidance provided in Staff Legal Bulletins No. 1 and No. 1A.

Corp Fin updated the guidance relating to options available to companies whose confidential treatment orders are about to expire. Companies that previously have obtained a confidential treatment order have three choices of what to do when the order is about to expire:

Refile the unredacted exhibit;

  • Extend the confidential period pursuant to Rules 406 or 24b-2; or
  • Transition to the rules governing the filing of redacted exhibits under Regulation S-K Item 601(b)(10)(iv)[11] and parallel rules.

For more information, click here.

© 2020 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

SEC Staff Speech, Statement on SEC Response to the Report of the President’s Working Group on Financial Markets by Chairman Jay Clayton

Summary - SEC Chairman Jay Clayton and several other high-level SEC staff members issued a public statement, SEC Response to the Report of the President’s Working Group on Financial Markets. This statement addresses the SEC’s response to the release by the President’s Working Group on Financial Markets of its Report on Protecting United States Investors from Significant Risks from Chinese Companies (PWG Report).

The SEC indicates that the PWG Report includes five recommendations for the agency that are centered on strengthening protections for investors and promoting the integrity of capital markets by:
Leveling the playing field for all companies listed on U.S exchanges; and
Improving disclosure regarding, and consideration by fiduciaries and other market professionals of, the risks of investing in emerging markets, including China.

The statement indicates that SEC Chairman Clayton has “directed the SEC staff to prepare proposals in response to the report’s recommendations for consideration by the Commission and to provide assistance and guidance to investors and other market participants as may be necessary or appropriate. The SEC staff also stands ready to assist Congress with technical assistance in connection with any potential legislation regarding these matters.”

For more information, click here.

© 2020 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

SEC Enforcement – SEC Commissioner Peirce Discusses Views on Recent SEC Enforcement Case

SEC Commissioner Hester M. Peirce recently discussed an SEC Enforcement case that involved digital assets. Peirce indicated that innovation in the digital asset industry “has and will continue to challenge us as securities regulators. I would prefer that we not only hold accountable the reckless innovators who skate among mirrors while playing the violin, but also attempt to provide the more cautious innovators some guidance on how to avoid the hall of mirrors and on what we consider to be adequate braking technology. I look forward to working with my colleagues to ensure that we do so in a consistent and transparent manner.”

For more information, click here.

© 2020 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

ESG – SEC Commissioner Roisman Discusses Environmental, Social and Governance Factors

Summary - SEC Commissioner Elad L. Roisman recently provided his thoughts on aspects of Environmental, Social and Governance (ESG) factors.

Specifically, Roisman discussed:

  • Calls for mandated ESG disclosure for public companies; and
  • ESG disclosure by asset managers.

Roisman indicated that an “obvious problem with mandating ESG disclosure is that the issues under this enormous umbrella of a term are usually subjective and constantly evolving based on current events. Because of this evolution, requiring prescriptive disclosure would be difficult.”

For more information, click here.

© 2020 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Financial Reporting – SEC Chief Accountant Emphasizes the Continued Need for High Quality Financial Reporting

Summary - SEC Chief Accountant Sagar Teotia has published a statement emphasizing the continued importance of high-quality financial reporting for investors in light of COVID-19. Teotia indicates that as “many public companies now prepare for their next reporting cycle (e.g., second quarter financial reporting), we emphasize that the participants in the financial reporting system continue to play an important role in the functioning of our markets and in our collective national effort to mitigate the COVID-19 pandemic. We look forward to our financial reporting system continuing to provide a steady flow of timely, decision-useful information to investors and our public capital markets.”

Topics discussed by Teotia include:

  • OCA’s Engagement and Work Related to High-Quality Financial Reporting;
  • Engagement with the FASB and the PCAOB;
  • Engagement with International Standard Setters and Other Regulators; and
  • Engagement with and the Vital Role of Audit Committees.

For more information, click here.

© 2020 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

 

SEC Staff Speech, Emerging Market Investments Entail Significant Disclosure, Financial Reporting and Other Risks; Remedies are Limited by Chairman Jay Clayton

Summary - SEC Chairman Jay Clayton issued a statement along with the head of the PCAOB and other SEC staff members discussing the regulatory risks associated with emerging market investments. Clayton and the others cautioned that their “ability to promote and enforce these standards in emerging markets is limited and is significantly dependent on the actions of local authorities which, in turn, are constrained by national policy considerations in those countries. As a result, in many emerging markets, including China, there is substantially greater risk that disclosures will be incomplete or misleading and, in the event of investor harm, substantially less access to recourse, in comparison to U.S. domestic companies.”

For more information, click here.

© 2020 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Emerging Market Investments – SEC Chairman and Others Caution of Risks Associated with Emerging Market Investments

Summary - SEC Chairman Jay Clayton issued a statement along with the head of the PCAOB and other SEC staff members discussing the regulatory risks associated with emerging market investments. Clayton and the others cautioned that their “ability to promote and enforce these standards in emerging markets is limited and is significantly dependent on the actions of local authorities which, in turn, are constrained by national policy considerations in those countries. As a result, in many emerging markets, including China, there is substantially greater risk that disclosures will be incomplete or misleading and, in the event of investor harm, substantially less access to recourse, in comparison to U.S. domestic companies.”

For more information, click here.

© 2020 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Audit Firms – SEC Publishes Statement on Continued Dialogue with Audit Firm Representatives on Audit Quality in China and Other Emerging Markets

Summary - The SEC has published a statement on the agencies continued dialogue with audit firm representatives on audit quality in China and other emerging markets. The statement indicates that the SEC expects to hold further meetings with other U.S. audit firms that, through use of their own networks or otherwise, audit U.S.-listed companies with significant operations in emerging markets, including China.

The statement also discusses guidance on financial reporting considerations related to the Coronavirus. The SEC indicated it has had recent dialogue with the senior leaders of the largest U.S. audit firms and discussed the “potential exposure of companies to the effects of the coronavirus and the impact that exposure could have on financial disclosures and audit quality, including, for example, audit firm access to information and company personnel. This remains a dynamic situation where the effects on any particular company may be difficult to assess or predict, because actual effects may depend on factors beyond the control and knowledge of issuers.”

For more information, click here.

© 2020 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

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SEC Staff Speech, Running on Empty: A Proposal to Fill the Gap Between Regulation and Decentralization by Commissioner Hester M. Peirce

Summary - SEC Commissioner Hester Peirce recently discussed a possible centralized regulatory framework for oversight of tokens. Peirce indicated that many “crypto entrepreneurs are seeking to build decentralized networks in which a token serves as a means of exchange on, or provides access to a function of the network. In the course of building out the network, they need to get the tokens into the hands of other people. But these efforts can be stymied by concerns that such efforts may fall within the ambit of federal securities laws. The fear of running afoul of the securities

For more information, click here.

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SEC Staff Speech, Staff Legal Bulletin No. 21

Summary - The staff in the SEC’s Office of Municipal Securities has issued Staff Legal Bulletin No. 21, Application of Antifraud Provisions to Public Statements of Issuers and Obligated Persons of Municipal Securities in the Secondary Market. This bulletin provides the views of the staff regarding the application of the antifraud provisions of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5[2] to public statements made by issuers of municipal securities and obligated persons in the secondary market. The antifraud provisions apply to any statement of a municipal issuer that is reasonably expected to reach investors and the trading markets.

For more information, click here.

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SEC Staff Speech, Myths and Realities: Modernizing the Proxy Rules by Commissioner Elad L. Roisman

Summary - SEC Commissioner Elad L. Roisman recently discussed common myths associated with the SEC’s efforts to modernize its proxy rules. Regarding the SEC’s proxy rules, Roisman indicated that “the SEC’s proposals to modernize these rules were not only necessary, but long overdue. Yet the reaction from the loudest voices came swiftly and furiously. Even before the Commission voted on these proposals, the agency was accused of serving as a shill for corporate interests, suppressing shareholder votes, and sheltering CEOs of big corporations from accountability.” Roisman urged interested parties to provide feedback to the SEC on its proxy rule proposals.

For more information, click here.

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SEC Staff Speech, Learning from Miami’s Emprendimientos by Martha Miller, Advocate for Small Business Capital Formation

Summary - SEC Advocate for Small Business Capital Formation Martha Miller recently discussed efforts by the office to enhance capital raising. Miller indicated that her office wants “to create new resources to empower entrepreneurs to raise the capital you need.”

For more information, click here.

© 2020 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

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SEC Staff Q&A: Frequently Asked Questions on Regulation Best Interest

Summary - The staff in the SEC’s Division of Trading and Markets has published Frequently Asked Questions on Regulation Best Interest. This document provides responses to questions about Regulation Best Interest and is expected to be updated from time to time with the SEC’s responses to additional questions. These responses represent the views of the staff of the Division of Trading and Markets. Topics covered in the FAQ document include:

  • Recommendation;
  • Disclosure obligation;
  • Care obligation; and
  • Conflict of interest obligation.

For more information, click here.

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SEC Staff Speech, Mochas, Mariners, and Morality - Remarks before the National Economists Club by Commissioner Hester M. Peirce

Summary - SEC Commissioner Hester M. Peirce recently spoke to economists on data and the trend towards sustainability investing. Regarding sustainability, Peirce indicated that the “motivating force behind this trend seems to be that finance has been too focused on raw dollars, and insufficiently focused on building a financial system that fosters a better, more sustainable society. Regulators are thinking about how they can force financial firms to take into account environmental and social considerations as they allocate capital.”

For more information, click here.

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SEC Staff Speech, What You Don’t Know Can Hurt You by Stephanie Avakian, Co-Director, Division of Enforcement

Summary - SEC Co-Director Stephanie Avakian recently discussed enforcement actions taken by the SEC Enforcement Division. Avakian indicated that the division is “spending a lot of time on is identifying material financial conflicts of interest, particularly those conflicts that are harmful to investors.” Avakian discussed the Share Class Selection Disclosure self-reporting initiative that the Enforcement Division undertook last year. The Initiative was designed to identify and address harm resulting from undisclosed conflicts of interest in the sale of mutual fund shares by investment advisers.

For more information, click here.

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SEC Staff Views, Division of Trading and Markets - Background Paper on the Market Structure for Thinly Traded Securities

Summary - As discussed above, the SEC issued a statement on "thinly traded securities." In conjunction with issuing the statement, the staff in the SEC’s Division of Trading and Markets issued a Background Paper on the Market Structure for Thinly Traded Securities. This background paper:

Summarizes a variety of materials regarding secondary market trading of thinly traded securities;
Discusses the SEC staff Roundtable on Market Structure for Thinly-Traded Securities, which was held in April 2018; and
Discusses the current regulatory framework for thinly traded securities.

For more information, click here.

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SEC Staff Speech, Start Off by Making Your Bed: Translating Military Lessons to Entrepreneurship by Martha Miller, Advocate for Small Business Capital Formation

Summary - SEC Advocate for Small Business Capital Formation Martha Miller recently discussed entrepreneurship at a conference for military veteran business owners. Miller indicated that “small businesses and their investors are looking for the most efficient way to raise the capital they need. We also understand one size does not fit all.”

For more information, click here.

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SEC Staff Speech, Dual-Class Shares: A Recipe for Disaster by Rick Fleming, Investor Advocate

Summary - SEC Investor Advocate Rick Fleming recently expressed his concerns with the increased use of dual-class shares by companies that seek to go public. Fleming cautioned that “companies with dual-class structures tend to underperform companies with dispersed voting power.”

For more information, click here.

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SEC Staff Views, Staff Legal Bulletin No. 14K

Summary - The SEC staff has published Staff Legal Bulletin No. 14K. This bulletin provides information for companies and shareholders regarding Rule 14a-8 under the Securities Exchange Act of 1934 (Exchange Act). This bulletin is part of a continuing effort by the SEC staff to provide guidance on important issues arising under Exchange Act Rule 14a-8. Specifically, this bulletin contains information regarding:

The analytical framework of Rule 14a-8(i)(7);
Board analyses provided in no-action requests to demonstrate that the policy issue raised by the proposal is not significant to the company;
The scope and application of micromanagement as a basis to exclude a proposal under Rule 14a-8(i)(7); and
Proof of ownership letters.

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