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SEC Staff Views & Speeches - Page 6

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

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

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.”

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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

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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.

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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.

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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.”

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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.

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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.”

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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.

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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.

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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.”

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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.”

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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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