Simpler SEC Disclosure Rules?

Recently, the SEC voted to propose amendments to the regulation that defines the details of information required to be included in SEC filings by public companies, advisers and investment companies. Needless to say, Regulation SK has grown over time to be very granular, confusing to the uninitiated, and a perceived element of an over-extended regulatory scheme. As befits the arcane architecture of our government, this SEC initiative drives off provisions of the 2012 JOBs Act and of the 2015 Fixing America’s Surface Transportation (FAST) Act, and may be reflective of the thinking of the administration but (given the timing of these statutes) not directly attributable to the President’s pressures in this direction.

Final promulgation of amendments, which are now open to further public comment, follows several prior interim releases by the SEC which suggested many different approaches.

High points of the current proposal: expanding the definition of a “smaller reporting company” to afford lesser disclosure regimes to promote capital formation (floats below $250M or combination of zero float and revenues below $100M would qualify); relieving companies from description of realty if realty is not material to the business; reducing MD&A requirements; hyperlinking to other documents in lieu of long descriptions in text; shortening disclosures about executive officers in proxy statements; reducing SEC legend requirements on prospectuses for pending offerings; cleaning up text relating to underwriting arrangements; reducing requirements concerning disclosure of contracts.

This is progress although frankly not enough. But at least we have this effort, subject now to final public comment.

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