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.
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.
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.
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.
Topics: Division of Corporation Finance "Corp Fin", Division of Enforcement, Dodd-Frank Act, GAO Report, Government Accountability Office "GAO", Internal Controls, Office of Compliance Inspections and Examinations, Securities and Exchange Commission "SEC"
New C&DIs Address Pay Ratio Disclosure Rule
Clarifying guidance for pay ratio disclosures, the Securities and Exchange Commission’s Division of Corporate Finance has updated its Compliance and Disclosure Interpretations (“C&DI”): Regulation S-K. The new C&DIs address Release No. 33-9877, Pay Ratio Disclosure, which calls for public companies to disclose the ratio comparing the chief executive officer’s salary with the median pay of a company’s employees. Questions answered in the C&DIs concern the calculation of the median employee compensation, as well as how companies should handle furloughed employees and independent contractors. Public companies will be required to comply with the new pay ratio disclosure requirements in 2018. More. Read More.
Staff Report on Accredited Investor Definition Issued
The Securities and Exchange Commission (“SEC”) is seeking public comments on its staff report regarding the definition of an “accredited investor.” Prepared by members from the SEC’s Divisions of Corporation Finance and Economic and Risk Analysis, the report discusses the history behind the accredited investor definition and includes the following: Feedback on the definition from public commenters and various committees; Alternative ways to define an accredited investor; Staff recommendations for possible revisions to the current definition; and Analysis of the effect the potential approaches could have on accredited investors. More on the staff report is available in the SEC’s December 18th press release .