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Companies Can Submit Draft Registration Review Statements for IPOs

The Securities and Exchange Commission (“SEC”) has announced that effective July 10, its Division of Corporation Finance (“Corp Fin”) will allow companies to present draft registration statements regarding their initial public offerings (“IPOs”) for non-public review. This includes IPOs and most offerings made during the first year after an organization enters the public reporting system. Corp Fin’s decision gives companies additional flexibility to design their offering. The non-public review following the IPO decreases its likelihood of being exposed to market fluctuations, which could negatively impact the offering process and public shareholders. Requiring a public filing period before the marketing launches. Read More.

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SEC’s Corp Fin Revises Crowdfunding Guidance

The Securities and Exchange Commission’s (“SEC”) Division of Corporation Finance (“Corp Fin”) has revised its Compliance and Disclosure Interpretation, Crowdfunding (new Questions 201.02 and 202.01). The update includes new guidance on related party transaction disclosures and calculating the holders of record for determining eligibility to end the responsibility to file ongoing reports.

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SEC Called Out for Lack of Staff Oversight

A report by the Government Accountability Office (“GAO”) says the Securities and Exchange Commission (“SEC”) has made limited progress on improving oversight of the agency’s staff. Published on December 29, the report notes that the SEC continues to provide insufficient management of staff members and has yet to develop procedures for reviewing performance, improving collaboration efforts, and regularly assessing progress made. The SEC’s Division of Corporation Finance received some of the blame for not giving supervisors expectations in how to resolve workplace problems and train employees.

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SEC Improves Internal Controls

According to a recent Government Accountability Office (“GAO”) report, the Securities and Exchange Commission’s (“SEC”) internal controls are improving. In fiscal 2015, only six of the SEC’s 58 internal supervisory controls tested had deficiencies. Comparative to the GAO’s 2013 review, the six deficiencies mark a significant reduction from the 27 flaws identified in fiscal 2011. The GAO noted that none of the flaws are likely to inhibit the SEC from ensuring their divisions and offices carry out actions accordingly. Specifically, the watchdog agency found two flaws without clear control activities, three that showed a major element did not align with. Read More.

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SEC Concerned over Companies Using Non-GAAP Earnings Measures

Public companies’ growing use of non-GAAP earnings measures has caught the attention of Securities and Exchange Commission (“SEC”) Chair Mary Jo White. At a November 17th conference in Washington, D.C., White said the SEC’s Division of Corporation Finance want to make sure that companies’ reliance on non-GAAP measures for presenting better-looking financial results does not mislead investors. In particular, SEC officials want to determine if companies are adequately disclosing why non-GAAP measures provide valuable information regarding their financial conditions and results of operations. White cited the lack of consensus on how companies define certain non-GAAP measured decreases comparability between companies. In. Read More.

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