Certified Public Accounting Firm

SEC - General - Page 1

Articles On This Page

FAST Act Modernization and Simplification of Regulation S-K

SEC Staff Updates Non-GAAP Guidance

SEC Staff Publishes Report on Access to Capital and Market Liquidity

Covered Securities Pursuant to Section 18 of the Securities Act of 1933

SEC Issues Voluntary Submission of Draft Registration Statements - FAQs

Amendment to Securities Transaction Settlement Cycle 

Proposed Amendments to Exchange Act Rule 15c2-12

Exhibit Hyperlinks and HTML Format

Universal Proxy

Exemptions to Facilitate Intrastate and Regional Securities Offerings

Amendment to Securities Transaction Settlement Cycle

Definition of "Covered Clearing Agency"

Standards for Covered Clearing Agencies

Exhibit Hyperlinks and HTML Format

Amendments to Smaller Reporting Company Definition

Order Granting Limited and Conditional Exemption Under Section 36(a) of the Securities Exchange Act of 1934 from Compliance with Interactive Data File Exhibit Requirement in Forms 6-K, 8-K, 10-Q, 10-K, 20-F and 40-F to Facilitate Inline Filing of Tagged Financial Data 

Form 10-K Summary

SEC Proposes Amendments to Smaller Reporting Company Definition

Securities Act Rules -- SEC Staff Updates Securities Act Rules Interpretation 

Articles

FAST Act Modernization and Simplification of Regulation S-K

Summary - The SEC has proposed for public comment to modernize and simplify certain disclosure requirements in Regulation S-K and related rules and forms. Regulation S-K governs non-financial reporting requirements for SEC filings, including Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, and proxy statements. The amendments are based on the recommendations in the SEC staff's Report on Modernization and Simplification of Regulation S-K, issued in November 2016 as required by the Fixing America's Surface Transportation Act.
 
The proposal includes a number of amendments to Regulation S-K to modernize and streamline disclosure requirements, including the following:
  • Management's Discussion and Analysis (MD&A). Companies would be permitted to forgo discussion within MD&A of the oldest period included in a filing if it was included and discussed in a previously report and is no longer material. Companies that include 3 years of financial statements within a filing would not need to discuss, within MD&A, the oldest period if it is not material to the understanding of the company's financial condition and a discussion of this period was included in the company's Form 10-K for the previous year. The SEC believes this will reduce the regulatory burden on companies and improve the readability of filings for investors who would no longer sift through redundant financial information previously disclosed.
  • Confidential Treatment. The amendments would provide efficiencies for companies seeking confidential treatment for exhibits within a filing. A company would be permitted to omit information in exhibits that is not material and would be competitively harmful without having to first seek confidential treatment from the SEC staff. Companies would also be permitted to omit personally identifiable information without first requesting confidential treatment. Companies would have to mark their filings to indicate omitted items and may be asked for supplemental information on the omitted information in exhibits if specifically requested by the SEC staff.
  • Description of Property. The amendments would make clear that disclosure of physical properties is only required if these facilities are material to the issuer. Certain industries in which all facilities are deemed material, including oil and gas companies, would continue to report under the current Regulation S-K requirements.
  • Material Contracts. Item 601 of Regulation S-K requires registrants to file every contract not made in the ordinary course of business if the contract is material to the registrant and is to be performed at or after the filing of the registration statement or report or was entered into not more than two years before such filing. The proposal would limit the two-year look back requirement to newly reporting registrants, not all registrants.
  • Hyperlinks. Companies would include hyperlinks for references in current filings to previous filed documents on the SEC's EDGAR filing system.
  • Legal Entity Identifiers. Item 601 of Regulation S-K requires a registrant to list all of its subsidiaries, the state or other jurisdiction of incorporation or organization of each, and the names under which such subsidiaries do business. A Legal Entity Identifier (LEI) is a 20-character, alpha-numeric code that connects to key reference information that allows for unique identification of entities engaged in financial transactions. The proposal would require registrants to include the LEI of the registrant and each subsidiary included on the list, to the extent that each entity has an LEI.
For more information, click here.
 
© 2017 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

SEC Staff Updates Non-GAAP Guidance

Summary - The staff in the SEC's Division of Corporation Finance (Corp Fin) has updated its Compliance and Disclosure Interpretation (C&DI), Non-GAAP Financial Measures. This C&DI provides Corp Fin's interpretations of the rules and regulations on the use of non-GAAP financial measures.
 
Corp Fin has added new questions 101.01 and 101.02, which provide guidance on business combination transactions. These two questions provide guidance on the following two questions:
  • Are financial measures included in forecasts provided to a financial advisor and used in connection with a business combination transaction non-GAAP financial measures?
  • Does the exemption from Regulation G and Item 10(e) of Regulation S-K for non-GAAP financial measures disclosed in communications relating to a business combination transaction extend to the same non-GAAP financial measures disclosed in registration statements, proxy statements and tender offer statements? 
For more information, click here.
 
© 2017 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

SEC Staff Publishes Report on Access to Capital and Market Liquidity

Summary - The SEC Division of Economic and Risk Analysis (DERA) has published the report, Access to Capital and Market Liquidity (Report). The Report evaluates the availability of capital and trends in both primary securities issuance and secondary market liquidity. It also assesses the relationship between those trends and post-financial crisis regulatory reforms.
 
The SEC Staff prepared the report in accordance with a request by Congress as part of the FY2016 appropriations process. Congress requested information on the impacts of the Dodd-Frank Act, particularly the Volcker Rule, and Basel III, in particular, on: (a) access to capital for consumers, investors, and businesses; and (b) market liquidity, including U.S. Treasury and corporate debt markets.
 
The Report includes a survey and analysis of recent academic literature, as well as original analyses drawn from publicly available databases and non-public regulatory filings. DERA examined data related to issuance of debt, equity, and asset-backed securities as well as activity and liquidity in U.S. Treasuries, corporate bonds, single-name credit default swaps, and bond funds.
 
The Report identifies trends for unregistered offerings, such as those under Regulation D and Regulation Crowdfunding, as well as fixed income transactions, fixed income quotations, and broker-dealer financial positions.
 
The Report provides detailed analyses of and data on the items DERA investigated. Overall, in its results, the Report notes that "We do not find that total primary market security issuance is lower after the enactment of the Dodd-Frank Act (including during the implementation of the Volcker Rule) and during the implementation of Basel III, and it may have increased around the implementation of the JOBS Act."
 
However, regarding market liquidity, the Report indicates that the evidence "for the impact of regulatory reforms on market liquidity is mixed, with different measures of market liquidity showing different trends," and "many of the observed changes in these measures are consistent with the combined impacts of several factors besides new rules and regulations, including, among others, electronification of markets, changes in macroeconomic conditions, and post-crisis changes in dealer risk preferences that pre-date the passage of either the Dodd-Frank Act or Basel III."
For more information, click here.
 
© 2017 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Covered Securities Pursuant to Section 18 of the Securities Act of 1933

Summary - The SEC has issued for public comment a Proposed Rule, Covered Securities Pursuant to Section 18 of the Securities Act of 1933. This proposal would amend Rule 146 under Section 18 of the Securities Act of 1933 ("Securities Act"), as amended, to designate certain securities on Investors Exchange LLC (IEX) as covered securities for purposes of Section 18(b) of the Securities Act. Rule 146(b) lists those national securities exchanges, or segments or tiers thereof, that the SEC has determined to have listing standards that are "substantially similar" to those of the Named Markets and thus securities listed on such exchanges are deemed "Covered Securities."  Covered securities under Section 18(b) of the Securities Act are exempt from state law registration requirements.

Comments on the proposal were due August 21, 2017.

For more information, click here.

© 2017 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Back to Top

SEC Issues Voluntary Submission of Draft Registration Statements - FAQs

Summary - The SEC recently announced that the Division of Corporation Finance (Corp Fin) will permit all companies to submit draft registration statements relating to initial public offerings for review on a non-public basis. This process will be available for IPOs as well as most offerings made in the first year after a company has entered the public reporting system. It took effect on July 10, 2017. The SEC staff has issued Frequently Asked Questions about this new policy.

Permitting all companies to submit registration statements for non-public review, similar to the benefit used by emerging growth companies (EGC) under the JOBS Act, will provide companies with more flexibility to plan their offering. The non-public review process after the IPO reduces the potential for lengthy exposure to market fluctuations that can adversely affect the offering process and harm existing public shareholders. By requiring a public filing period prior to the launch of marketing, the process incorporates a feature of the EGC review process that provides an opportunity for the public to evaluate those offerings.

For more information, click here.

© 2017 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Back to Top

Amendment to Securities Transaction Settlement Cycle 

Summary - The SEC adopted an amendment to shorten by one business day the standard settlement cycle for most broker-dealer securities transactions. Currently, the standard settlement cycle for these transactions is three business days, known as T+3. The amended rule shortens the settlement cycle to two business days, T+2.

The amended rule is designed to enhance efficiency, reduce risk, and ensure a coordinated and expeditious transition by market participants to a shortened standard settlement cycle.

For more information, click here.

© 2017 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Back to Top

Proposed Amendments to Exchange Act Rule 15c2-12

Summary - The SEC has issued for public comment a proposal to require the use of the Inline XBRL format for the submission of operating company financial statement information and mutual fund risk/return summaries. The proposed amendments are intended to improve the data's quality, benefiting investors, other market participants, and other data users, and to decrease, over time, the cost of preparing the data for submission to the SEC. The proposed amendments would also eliminate the requirement for filers to post Interactive Data Files on their websites and terminate the Commission's voluntary program for the submission of financial statement information interactive data that is currently available only to investment companies and certain other entities.
 
Comments on the proposal are due 60 days from publication in the Federal Register.
For more information, click here.
© 2017 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Exhibit Hyperlinks and HTML Format

Summary - The SEC has issued a final rule that will require registrants that file registration statements and reports subject to the exhibit requirements under Item 601 of Regulation S-K, or that file Forms F-10 or 20-F, to include a hyperlink to each exhibit listed in the exhibit index of these filings. To enable the inclusion of such hyperlinks, the amendments also require that registrants submit all such filings in HyperText Markup Language ("HTML") format.
 
The final rule is effective September 1, 2017. Registrants must comply with the final rules for filings submitted on or after September 1, 2017. A registrant that is a "smaller reporting company," as defined in Securities Act Rule 405 and Exchange Act Rule 12b-2, or that is neither a "large accelerated filer" nor an "accelerated filer," as defined in Exchange Act Rule 12b-2, and that submits filings in ASCII need not comply with the final rules until September 1, 2018, one year after the effective date.
 
The compliance date with respect to any Form 10-D that will require hyperlinks to any exhibits filed with Form ABS-EE is delayed until SEC staff has completed technical programming changes to allow issuers to include such forms in a single submission. Once these programming changes are complete, the Commission will publish in the Federal Register a document notifying the public of the compliance date for Form 10-D.
For more information, click here.
© 2017 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.
Back to Top

Universal Proxy

Summary  - The SEC proposed amendments to the proxy rules to require parties in a contested election to use universal proxy cards that would include the names of all board of director nominees. According to the SEC, the proposal gives shareholders the ability to vote by proxy for their preferred combination of board candidates, similar to voting in person.
 
The proposed rules would require proxy contestants to provide shareholders with a proxy card that includes the names of both management and dissident director nominees. The rules would apply to all non-exempt solicitations for contested elections other than those involving registered investment companies and business development companies. In addition, the proposed rules would require management and dissidents to provide each other with notice of the names of their nominees, establish a filing deadline and a minimum solicitation requirement for dissidents, and prescribe presentation and formatting requirements for universal proxy cards.
 
To further facilitate shareholder voting in director elections, the Commission also voted to propose amendments to the proxy rules to ensure that proxy cards specify the applicable shareholder voting options in all director elections and require that proxy statements disclose the effect of a shareholder's election to withhold its vote.
For more information, click here.
 
© 2016 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Exemptions to Facilitate Intrastate and Regional Securities Offerings

Summary - The SEC adopted final rules that modernize how companies can raise money to fund their businesses through intrastate and small offerings while maintaining investor protections. The final rules amend Securities Act Rule 147 to modernize the safe harbor under Section 3(a)(11) of the Securities Act, so issuers may continue to use state law exemptions that are conditioned upon compliance with both Section 3(a)(11) and Rule 147. The final rules also establish a new intrastate offering exemption, Securities Act Rule 147A, that further accommodates offers accessible to out-of-state residents and companies that are incorporated or organized out-of-state.
 
To facilitate capital formation through regional offerings, the final rules amend Rule 504 of Regulation D under the Securities Act to increase the aggregate amount of securities that may be offered and sold from $1 million to $5 million. The rules also apply bad actor disqualifications to Rule 504 offerings to provide additional investor protection, consistent with other rules in Regulation D. In light of the changes to Rule 504, the final rules repeal Rule 505 of Regulation D.
 
Amended Rule 147 and new Rule 147A will be effective 150 days after publication in the Federal Register. Amended Rule 504 will be effective 60 days after publication in the Federal Register. The repeal of Rule 505 will be effective 180 days after publication in the Federal Register.

For more information, click here.
 
© 2016 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Amendment to Securities Transaction Settlement Cycle

Summary  - The SEC voted to propose a rule amendment to shorten the standard settlement cycle for most broker-dealer securities transactions from three business days after the trade date (T+3) to two business days after the trade date (T+2). The proposed amendment is designed to reduce the risks that arise from the value and number of unsettled securities transactions prior to the completion of settlement, including credit, market, and liquidity risk directly faced by U.S. market participants.The public comment period will remain open for 60 days following publication of the proposing release in the Federal Register.
 
For more information, click here.
 
© 2016 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Definition of "Covered Clearing Agency"

Summary  - As discussed above, the SEC adopted new rules to establish enhanced standards for the operation and governance of securities clearing agencies that are deemed systemically important or that are involved in complex transactions, such as security-based swaps. The SEC also voted to propose to apply the enhanced standards established by the new rules to other categories of securities clearing agencies, including all SEC-registered central counterparties.
 
The SEC's proposal would apply the newly-adopted rules to other categories of securities clearing agencies, including all SEC-registered securities clearing agencies that are central counterparties, central securities depositories, or securities settlement systems. The public will have 60 days to comment after publication in the Federal Register.
 
The public comment period will remain open for 60 days following publication of the proposing release in the Federal Register.
 
For more information, click  here.
 
© 2016 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Standards for Covered Clearing Agencies

Summary - The SEC voted to adopt new rules to establish enhanced standards for the operation and governance of securities clearing agencies that are deemed systemically important or that are involved in complex transactions, such as security-based swaps.
 
The Dodd-Frank Wall Street Reform and Consumer Protection Act called for an enhanced regulatory framework for certain securities clearing agencies, which perform a range of services critical to the effective operation of the securities markets, including acting as intermediaries between the parties to a securities transaction, ensuring that funds and securities are correctly transferred between parties and, in some cases, assuming the risks of a party defaulting on a transaction by acting as a central counterparty.
 
The rules adopted today apply to SEC-registered securities clearing agencies that have been designated as systemically important by the Financial Stability Oversight Council or that are involved in more complex transactions. Securities clearing agencies covered by the new rules will be subject to new requirements regarding, among other things, their financial risk management, governance, recovery planning, operations, and disclosures to market participants and the public.
 
The adopted rules will become effective 60 days after publication in the Federal Register. Affected securities clearing agencies must comply with the requirements 120 days after the effective date.
For more information, click here.
 
© 2016 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Exhibit Hyperlinks and HTML Format

Summary  - The SEC has issued for public comment a proposed rule and form amendments that would require registrants to include a hyperlink to exhibits in their filings. The proposed amendments would require registrants that file registration statements and periodic and current reports that are subject to the exhibit requirements under Item 601 of Regulation S-K, or that file on Forms F-10 or 20-F, to include a hyperlink to each exhibit listed in the exhibit index of the filings. The amendments would also require that registrants submit all of these filings in HyperText Markup Language format.
 
Comments on the proposal are due 45 days following publication in the Federal Register.
 
For more information, click here.
 
© 2016 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Amendments to Smaller Reporting Company Definition

Summary - The SEC proposed amendments that would increase the financial thresholds in the "smaller reporting company" definition. The proposal to update the definition would expand the number of companies that qualify as smaller reporting companies, thus qualifying for certain existing scaled disclosures provided in Regulation S-K and Regulation S-X. Smaller reporting companies may provide scaled disclosures under the Commission's rules and regulations. The proposed rules would enable a company with less than $250 million of public float to provide scaled disclosures as a smaller reporting company, as compared to the $75 million threshold under the current definition. In addition, if a company does not have a public float, it would be permitted to provide scaled disclosures if its annual revenues are less than $100 million, as compared to the current threshold of less than $50 million in annual revenues.
 
In addition, as in the current rules, once a company exceeds either of the thresholds, it will not qualify as a smaller reporting company again until public float or revenues decrease below a lower threshold. Under the proposal, a company would qualify only if its public float is less than $200 million or, if it has no public float, its annual revenues are less than $80 million.
 
The SEC is not proposing to increase the $75 million threshold in the "accelerated filer" definition. As a result, companies with $75 million or more of public float that would qualify as smaller reporting companies would be subject to the requirements that apply currently to accelerated filers, including the timing of the filing of periodic reports and the requirement that accelerated filers provide the auditor's attestation of management's assessment of internal controls over reporting required by Section 404(b) of the Sarbanes-Oxley Act of 2002.
For more information, click here.
© 2016 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Order Granting Limited and Conditional Exemption Under Section 36(a) of the Securities Exchange Act of 1934 from Compliance with Interactive Data File Exhibit Requirement in Forms 6-K, 8-K, 10-Q, 10-K, 20-F and 40-F to Facilitate Inline Filing of Tagged Financial Data 

Summary - The SEC announced that it will allow companies to voluntarily file structured financial statement data in a format known as "Inline XBRL." According to the SEC, this initiative represents "another step in the SEC's continuing efforts to modernize and enhance its requirements to facilitate transparency of, and access to, companies' disclosures."
The SEC's rules require operating companies to structure financial statement data in their filings, including annual and quarterly reports, using eXtensible Business Reporting Language (XBRL), which is a machine-readable format. Companies currently are required to provide this XBRL structured data as an exhibit to these filings. Since these requirements were first adopted, technology has evolved and now enables filers to integrate XBRL structured data within their HTML filings through a format known as Inline XBRL.
The SEC has issued an order under the Securities Exchange Act of 1933 to allow companies to file structured financial statement data required in their annual and quarterly reports that is integrated within their HTML filings through March 2020. The Inline XBRL format has the potential to provide a number of benefits to companies and users of the information. According to the SEC's order, the format could decrease filing preparation costs, improve the quality of structured data, and, by improving data quality, increase the use of XBRL data by investors and other market participants.
The SEC believes that the experience and feedback received from the use of this option could facilitate the development of Inline XBRL preparation and analysis tools, provide investors and companies with opportunities to evaluate its usefulness, and help inform any future SEC rulemaking in this area.
The EDGAR system has been upgraded to facilitate the use of Inline XBRL. An updated EDGAR Filer Manual provides the technical requirements needed for filers to begin using Inline XBRL.
For more information, click here.
© 2016 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.
Back to Top

Form 10-K Summary

Summary - The SEC has approved an Interim Final Rule that allows Form 10-K filers to provide a summary of business and financial information contained in its Annual Report. The rule implements a provision of the Fixing America's Surface Transportation (FAST) Act. The FAST Act was adopted in December 2015 and includes several amendments to the federal securities laws, including provisions related to improving access to capital for emerging growth companies, disclosure modernization and simplification, and small company simple registration requirements.
The Interim Final Rule provides filers with flexibility in preparing the summary and those opting to provide it must include hyperlinks to the related, more detailed disclosure in the Form 10-K. It also requests comment on whether the rule should include specific requirements or guidance for the form and content of the summary and whether the rules should be expanded to include other annual reporting forms.  The SEC recently adopted rules to revise Forms S-1 and F-1 to permit emerging growth companies to omit certain historical financial information from registration statements provided that all required financial information is included at the time of the offering. 
The SEC also adopted rules to reflect statutory changes to the 12(g) thresholds for registration, termination of registration and suspension of reporting for savings and loan holding companies.
The rule will become effective when published in the Federal Register and the public comment period will remain open for 30 days from such date.
For more information, click here.
© 2016 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

SEC Proposes Amendments to Smaller Reporting Company Definition

Summary - The SEC proposed amendments that would increase the financial thresholds in the "smaller reporting company" definition. The proposal to update the definition would expand the number of companies that qualify as smaller reporting companies, thus qualifying for certain existing scaled disclosures provided in Regulation S-K and Regulation S-X. Smaller reporting companies may provide scaled disclosures under the Commission's rules and regulations. The proposed rules would enable a company with less than $250 million of public float to provide scaled disclosures as a smaller reporting company, as compared to the $75 million threshold under the current definition. In addition, if a company does not have a public float, it would be permitted to provide scaled disclosures if its annual revenues are less than $100 million, as compared to the current threshold of less than $50 million in annual revenues. 
In addition, as in the current rules, once a company exceeds either of the thresholds, it will not qualify as a smaller reporting company again until public float or revenues decrease below a lower threshold. Under the proposal, a company would qualify only if its public float is less than $200 million or, if it has no public float, its annual revenues are less than $80 million. 

The SEC is not proposing to increase the $75 million threshold in the "accelerated filer" definition. As a result, companies with $75 million or more of public float that would qualify as smaller reporting companies would be subject to the requirements that apply currently to accelerated filers, including the timing of the filing of periodic reports and the requirement that accelerated filers provide the auditor's attestation of management's assessment of internal controls over reporting required by Section 404(b) of the Sarbanes-Oxley Act of 2002. 

Comments on the proposal are due 60 days after publication in the Federal Register.
For more information, click here.
© 2016 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Securities Act Rules -- SEC Staff Updates Securities Act Rules Interpretation 

Summary - The SEC staff has updated its Compliance and Disclosure Interpretation (C&DI), Securities Act Rules. The SEC staff has added Questions 271.17 thru 271.23, which provide guidance on exemptions for offers and sales of securities pursuant to certain compensatory benefit plans and contracts relating to compensation. 

For more information, click here.
© 2016 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.