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SEC Staff Views & Speeches - Page 1

Articles On This Page

SEC Staff Views: Intrastate Offering Exemptions - A Small Entity Compliance Guide for Issuers

SEC Staff Speech, Remarks Before the 27th International Institute for Securities Market Growth and Development by Acting Chairman Michael S. Piwowar 

SEC Issues Staff Speech, Remarks Before the University of Tennessee's C. Warren Neel Corporate Governance Center: "Advancing the Role and Effectiveness of Audit Committees" by Wesley R. Bricker, Chief Accountant, Office of the Chief Accountant 

SEC Issues Staff View, Reconsideration of Pay Ratio Rule Implementation by Acting SEC Chairman, Michael S. Piwowar

Staff Speech, The SEC after the Financial Crisis: Protecting Investors, Preserving Markets by Mary Jo White, SEC Chair

Staff Speech, Moving Forward with the Commission's Disclosure Effectiveness Initiative by Rick A. Fleming, Investor Advocate

Staff, Examing the Dodd-Frank Act and the Future of Financial Regulation by Rick A. Fleming, Investor Advisor

Staff Speech, The Impact of SEC Enforcement on Public Finance, Andrew Ceresney, Director, Division of Enforcement

Staff Speech, Inside the National Exam Program in 2016 by Marc Wyatt, Director, Office of Compliance Inspections and Examinations

Staff Speech, Improving Disclosure with Smart Data by Rick A. Fleming, Investor Advocate

Has Big Data Made Us Lazy? by Scott W. Bauguess, Deputy Director and Deputy Chief Economist, DERA

Remarks at the National Society of Compliance Professionals 2016 National Conference by Andrew J. Donohue, Chief of Staff

Remarks at 2016 Conference on Auditing and Capital Markets by Commissioner Michael S. Piwowar

Staff Speech, A Vision for Data at the SEC by Kara M. Stein, Commissioner

Staff Speech, Securities Regulation in the Interconnected, Global Marketplace by Mary Jo White, SEC Chair

Staff Speech, "Tandy" Representations No Longer Needed in Filing Reviews

Staff Speech, Equity Market Structure in 2016 and for the Future by Mary Jo White, SEC Chair

Staff Speech, The SEC's Whistleblower Program: The Successful Early Years, Andrew Ceresney, Director, Division of Enforcement

Staff Speech, Remarks before the 35th Annual SEC and Financial Reporting Institute Conference by Wesley R. Bricker, Deputy Chief Accountant

Staff Speech, Keynote Address, International Corporate Governance Network Annual Conference: Focusing the Lens of Disclosure to Set the Path Forward on Board Diversity, Non-GAAP, and Sustainability by Mary Jo White, SEC Chair

Staff Speech, Keynote Address, SEC Regulation Outside the United States "The SEC at Home and Abroad" by Andrew J. Donohue, Chief of Staff

Staff Speech, Remarks at the FINRA Foundation 2015 National Financial Capability Study Release by Mary Jo White, SEC Chair

Staff Speech, Keynote Address at the SEC-Rock Center on Corporate Governance Silicon Valley Initiative by Mary Jo White, SEC White by Mary Jo White, SEC Chair

Staff Speech, Remarks Before the 2016 Baruch College Financial Reporting Conference by Wesley R. Bricker, Deputy Chief Accountant

Staff Speech, Disclosure in the Digital Age: Time for a New Revolution by Commissioner, Kara M. Stein

Staff Speech, New Directions in Corporate Compliance: Keynote Luncheon Speech by Andrew J. Donohue, Chief of Staff

Staff Speech, Remarks Before the SEC Historical Society - "The Continuous Process of Optimizing the Equity Markets" by Mary Jo White, SEC Chair

Board Diversity -- SEC Chair White Indicates SEC Staff Continues Work on Possible Rules Requiring Firms to Reveal Board Diversity

SEC Staff Views, Recently Enacted Transportation Law Includes a Number of Changes to the Federal Securities Laws

SEC Staff Views, Report on the Review of the Definition of "Accredited Investor"

Articles

SEC Staff Views: Intrastate Offering Exemptions - A Small Entity Compliance Guide for Issuers

Summary - The SEC staff has issued a Small Entity Compliance Guide, Intrastate Offering Exemptions. This guide summarizes and explains the SEC's final rules issued to modernize how issuers can raise money to fund their businesses through intrastate offerings while maintaining investor protections.

The final rules were issued in October 2016 and amended Securities Act Rule 147 to modernize the safe harbor under Section 3(a)(11) 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 established a new intrastate offering exemption, Securities Act Rule 147A, that further facilitates intrastate offerings by allowing offers to be accessible to out-of-state residents and making the exemption available to issuers that are incorporated or organized out-of-state.

For more information, click here.

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

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SEC Staff Speech, Remarks Before the 27th International Institute for Securities Market Growth and Development by Acting Chairman Michael S. Piwowar

Summary - SEC Acting Chairman Michael Piwowar recently discussed the important role international securities regulators play in "protecting investors, maintaining fair and orderly markets, and facilitating capital formation." At the SEC, Mr. Piwowar noted that disclosure is "our most effective tool - it is the sunshine that grows our markets. Perfect disclosure would lead to a perfect allocation of capital to the most efficient industry and services. While we will never achieve perfection, our primary role is to promote the disclosure of material information. Disclosure protects investors and it lowers the cost of capital."

Other topics discussed by Chair Piwowar included:

  • Encouraging the use of financial technology and managing its risks;
  • Appropriate securities enforcement efforts; and
  • International cooperation.

For more information, click here.

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

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SEC Issues Staff Speech, Remarks Before the University of Tennessee's C. Warren Neel Corporate Governance Center: "Advancing the Role and Effectiveness of Audit Committees" by Wesley R. Bricker, Chief Accountant, Office of the Chief Accountant

Summary - SEC Chief Accountant Wesley R. Bricker recently spoke about advancing the role and effectiveness of audit committees in financial reporting, noting that audit committees "play a critical role in contributing to financial statement credibility through their oversight and resulting impact on the integrity of a company's culture and internal control over financial reporting ("ICFR"), the quality of financial reporting, and the quality of audits performed on behalf of investors. The importance of the audit committees' work cannot be overstated."

Highlights of Mr. Bricker's remarks included:

  • Fulfilling its oversight responsibilities places the audit committee at the center of the relationship between management of a public company and its independent auditor. Investors look to audit committees with high expectations to establish and maintain the appropriate tone, capacity, and competence to oversee the quality of the financial reporting system.
  • Audit committees should understand the businesses they serve and the impact of the operating environment on corporate strategies. This understanding establishes a frame of reference in which the audit committee considers the scope of its charter, its agendas, education needs, advisory needs, and ultimately the exercise of its business judgment in assessing the information about the accounting and financial reporting.
  • One size doesn't fit all when it comes to audit committees. Within broad parameters, each audit committee develops its charter and agenda. The committee's job is one of oversight and monitoring, and in carrying out this job, it acts in reliance on senior management, the external auditor, and any advisors that the committee might engage.
  • Periodic examination of the audit committee's capacity, which supports any committee's ability to perform its responsibilities effectively, is necessary. While audit committees may be equipped to play a role in overseeing risks that extend beyond financial reporting, such as cybersecurity and portions of enterprise risk management, I believe it is important for audit committees to not lose focus on their core roles and responsibilities.
  • The control environment influences the control consciousness of its people. It is the foundation for effective ICFR, providing discipline and structure. A company's control consciousness is significantly influenced by those on the board and audit committee.
  • A strong control environment is especially critical for company management and personnel as accounting judgments are increasingly required to be formed by many levels of individuals in the organization and disclosed in the financial statements to meet the objectives of the new GAAP standards. A strong control environment also supports the audit committee's work.
  • It is important for both audit committees and management to perform assessments on the adequacy of the control environment, including tone at the top. One way audit committees can focus on tone and culture is by working with management to obtain a clear and common understanding of what tone means, why tone is important, and what mechanisms are in place to assess the adequacy of control environment, including across any relevant divisions and geographies.
  • Over the next several years, updating and maintaining ICFR will be particularly important as companies work through the implementation of the significant new accounting standards.
  • Audit committees are well positioned to exercise healthy oversight by understanding management's process and controls to calculate the non-GAAP and other key operational measures. As part of considering management's disclosure controls and procedures it is important for audit committees to understand corporate policies in this area and if such a policy does not exist to understand the reasons why. It can also be useful to understand who is responsible for administering the policy - how many times have they approved changes in reporting, why, and should the change be communicated to investors through disclosure.
  • Audit committees should not underestimate the importance of their role overseeing the external auditor. Auditors are accountable to the company's shareholders, through the board of directors and its audit committee, not to management.
  • While strides are being made by audit committees to help investors better understand and evaluate audit committee performance, I encourage audit committee members of listed companies to continue to consider reviewing their audit committee disclosures and consider whether providing additional insight into how the audit committee executes its responsibilities would make the disclosures more effective in communicating with investors.

For more information, click here.

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

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SEC Issues Staff View, Reconsideration of Pay Retio Rule Implementation by Acting SEC Chairman, Michael S. Piwowar

Summary - SEC Acting Chair Michael S. Piwowar issued a statement seeking public comment on any unexpected challenges that issuers have experienced as they prepare for compliance with the SEC’s pay ratio disclosure rule and whether relief is needed. The SEC adopted the pay ratio disclosure rule in August 2015 to implement Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act. The rule requires a public company to disclose the ratio of the median of the annual total compensation of all employees to the annual total compensation of the chief executive officer.

In addition, Mr. Piwowar directed the SEC staff to reconsider the implementation of the pay ratio disclosure rule based on any public comments that are submitted and to determine as promptly as possible whether additional guidance or relief may be appropriate.

For more information, click here.

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

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Staff Speech, The SEC after the Financial Crisis: Protecting Investors, Preserving Markets by Mary Jo White, SEC Chair

Summary - SEC Chair Mary Jo White recently spoke at the Economic Club of New York. Chair White discussed the importance of regulatory independence at the SEC in protecting investors and financial markets. Ms. White indicated “as we move beyond the regulatory response to the financial crisis, the SEC should continue to optimally protect investors and preserve our capital markets as fair, orderly, and efficient engines of economic growth.” Highlights of Ms. White’s remarks include:

  • The SEC’s independence is vital to serving in that leadership role and doing our job optimally. The Commission has always guarded its independence fiercely, a proud history that I have defended from my very first days as Chair.
  • Like many Chairs and Commissioners before her, Chair White strongly believes that the agency’s independence has been critical in allowing it to use its expert judgment to do what is best for investors and the markets – a task that could otherwise be rendered impossible by the whims of political pressure or the public mood.
  • The extraordinary vitality of the American capital markets testifies to how well the Commission’s independence has served investors and the economy over the years. The choices ahead for the agency will not be easy.
  • Chair White’s tenure has certainly been marked by hard decisions that have attracted criticism from both political parties. The SEC has been accused of both gutting regulation and suffocating the market with too much of it. Ms. White believes recent trends have even raised the question of whether or not the independence of the SEC can be preserved at all.
  • Another current trend pushing against the independence of the Commission are the legislative proposals from Congress seeking to remake its rulemaking process. The House passed a bill just last week that would impose conflicting, burdensome, and needlessly detailed requirements regarding economic matters in Commission rulemaking that would provide no benefit to investors beyond the exhaustive economic analysis we already undertake.

It will also be up to others, including Congress, to offer an unwavering defense, not of the SEC’s actions, but of the agency’s independence and the right of the Commission to exercise it to further our critical mission.

For more information, click here.

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

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Staff Speech, Moving Forward with the Commission's Disclosure Effectiveness Initiative by Rick A. Fleming, Investor Advocate

Summary - Rick A. Fleming, Investor Advocate of the SEC, recently spoke at “NASAA Corporation Finance Training” held in Houston, Texas. Mr. Fleming discussed the SEC’s undertaking of a comprehensive “Disclosure Effectiveness Initiative” to review and modernize public company reporting requirements in Regulation S-K and Regulation S-X. The initiative is, at least in part, responsive to congressional mandates found in the JOBS Act and the FAST Act. Highlights of Mr. Fleming’s remarks included:

  • The project can dispense with some low-hanging fruit with relative ease. No one wants disclosure requirements that are truly duplicative, overlapping, or outdated, and investors are not clamoring for rules that are unnecessarily burdensome, needlessly complex, or that result in distracting clutter. To the extent that the FAST Act addresses these types of issues, it reflects what I think is a fair criticism that the Commission does not do a very good job of updating or streamlining its rules.
  • Investors do want disclosure rules that get companies to produce all the information that is important for investment and voting decisions. With this information, they can make well-informed decisions about allocating their capital. In this way, the disclosure requirements serve as a foundation for businesses to raise capital and our markets to thrive.
  • The project should be judged on its success primarily in terms of the enhanced utility of corporate disclosures for the investing public. As the Initiative moves forward, the SEC should focus, first and foremost, on meeting the informational needs of investors. And, for this project to be successful, we must start by acknowledging that the SEC’s methods for determining the needs of investors are as outdated as some of the disclosure rules.
  • When people think of ways to reduce the burdens on issuers, they often jump to the conclusion that we should just scale the disclosure requirements so that smaller issuers are required to disclose less information. I think this is a dangerous path for both issuers and their investors.
  • In addition to market participants, regulators also need to consider the characteristics and needs of this new generation of investors. For example, the SEC should continue its progress toward modernizing how data is structured and delivered to investors. The SEC should also consider how the informational needs of investors may change over time.

For more information, click here.

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

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Staff, Examing the Dodd-Frank Act and the Future of Financial Regulation by Rick A. Fleming, Investor Advisor

Summary - Rick A. Fleming, SEC Investor Advocate, recently spoke at the University of Maryland’s Robert H. Smith School of Business Center for Financial Policy. Mr. Fleming examined the Dodd-Frank Wall Street Reform and Consumer Protection Act (the Act) and the future of financial regulation. Mr. Fleming discussed rules covering the following areas that were addressed by the Act:

  • Asset-backed securities;
  • Derivatives; and
  • Credit rating agencies.

On the broader subject of financial regulation, Mr. Fleming provided that “the protection of investors must serve as the first principle guiding our financial regulations. We should think of those regulations not as a burden to be repealed or picked apart haphazardly, but as the essential nutrient for flourishing capital markets, for a growing economy, and, yes, for the continued vibrancy of the American Dream.”

For more information, click here.

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

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Staff Speech, The Impact of SEC Enforcement on Public Finance, Andrew Ceresney, Director, Division of Enforcement

Summary - Andrew J. Ceresney, Director, Division of Enforcement, recently gave the keynote address at "Securities Enforcement Forum 2016." Mr. Ceresney discussed the SEC's enforcement efforts in the area of public finance. Mr. Ceresney noted that public finance "and the municipal securities market in particular, is a critically important area, and one on which the Enforcement Division needs to be, and has been, focused over the last few years. Our numerous recent enforcement actions have resulted in significant changes in the public finance market, where the Commission has brought many first-of-their-kind actions and used a range of legal theories and remedies."
 
Topics covered in this Mr. Ceresney's remarks included:
  • Background on the public finance marketplace;
  • A specialized approach to securities enforcement in public finance;
  • Increased enforcement activity in public finance;
  • Using sweeps to reveal and address widespread misconduct;
  • Recent public finance matters; and
  • Additional theories and remedies used in recent public finance matters
For more information, click here.
 
© 2016 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Staff Speech, Inside the National Exam Program in 2016 by Marc Wyatt, Director, Office of Compliance Inspections and Examinations

Summary - Marc Wyatt, Director, Office of Compliance Inspections and Examinations (OCIE), recently spoke at the "National Society of Compliance Professionals 2016 National Conference" held in Washington, D.C. Mr. Wyatt provided his perspective on the National Exam Program and his thoughts about measuring the OCIE's impact. Specific topics discussed by Mr. Wyatt included:
  • OCIE and it risk portfolio;
  • OCIE evolving as a risk-focused organization;
  • OCIE making an impact;
  • Improving compliance.
For more information, click here.
 
© 2016 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Staff Speech, Improving Disclosure with Smart Data by Rick A. Fleming, Investor Advocate

Summary - Rick A. Fleming, SEC Investor Advocate, recently spoke at the "XBRL US Investor Forum 2016: Finding Value with Smart Data Conference" held in New York. Mr. Fleming discussed the SEC's strides to make better use of technology. Mr. Fleming also indicated that there is more that can be done by the SEC to incorporate smart data and technology, including that he would like to see the SEC:
  • Embrace the Legal Entity Identifier with the goal of making public company disclosure to the SEC interoperable with disclosure to other reporting regimes, as recommended by the Data Coalition and XBRL US;
  • To require block-tagging of narrative text disclosures; and
  • To require detail-tagging within narrative text disclosures.
For more information, click here.
 
© 2016 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.


SEC6Has Big Data Made Us Lazy? by Scott W. Bauguess, Deputy Director and Deputy Chief Economist, DERA

Summary - Scott W. Bauguess, Deputy Director and Deputy Chief Economist of the SEC, recently gave a speech in which he provided his views on the role of human interaction with analytical processes that have developed as a consequence of the proliferation of big data.
 
For more information, click here.
 
© 2016 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.


SEC5Remarks at the National Society of Compliance Professionals 2016 National Conference by Andrew J. Donohue, Chief of Staff

Summary - Andrew J. Donohue, Chief of Staff of the SEC, recently spoke at a national conference for compliance professionals. Mr. Donohue spent time summarizing some of his previous remarks on the subject of compliance and then shared his thoughts on the future challenges compliance professionals may face in performing your difficult, but absolutely critical, task.
 
For more information, click here.
 
© 2016 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.


SEC4Remarks at 2016 Conference on Auditing and Capital Markets by Commissioner Michael S. Piwowar

Summary - SEC Commissioner Michael S. Piwowar recently spoke about auditing and the capital markets. Mr. Piwowar made his case for why high-quality economic analysis is an essential part of regulatory processes and also discussed some of the common myths and misconceptions about the process.
 
For more information, click  here.
 
© 2016 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.


Staff Speech, A Vision for Data at the SEC by Kara M. Stein, Commissioner

Summary - SEC Commissioner Kara M. Stein recently gave the keynote address at the "Big Data in Finance Conference" held at the University of Michigan. Ms. Stein discussed the role of data on the SEC and U.S. capital markets. Specifically, Commissioner Stein discussed the following broad themes:
  • The new opportunity data provides;
  • Why the SEC must keep up with data's growing role in the markets;
  • Some of the challenges to keeping up; and
  • Some ideas for overcoming these challenges.
Regarding the current revolution in data, Ms. Stein indicated that it "allows us to make novel connections. However, instead of connecting physical locations, we're connecting data points to uncover new insights. The result may be another leap forward in how knowledge develops and spreads."

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

Staff Speech, Securities Regulation in the Interconnected, Global Marketplace by Mary Jo White, SEC Chair

Summary - SEC Chair Mary Jo White recently spoke before the Legal Practice Division Luncheon at the International Bar Association's Annual Conference. Chair White discussed securities regulation in the global marketplace, including the importance of international issues to securities regulation and the SEC. Ms. White noted that all securities regulators "need to be very cognizant of our global, as well as domestic, responsibilities, whether we are implementing standards for the global over-the-counter derivatives markets; detecting and protecting against new systemic risks in our financial systems; helping each other enforce our respective laws by gathering evidence from across the globe; examining our registrants, wherever they may be located, to ensure that they are abiding by the rules; or raising the bar on world-wide enforcement efforts to combat corrupt corporate payments, through our Foreign Corrupt Practices Act (FCPA) or similar regimes in other jurisdictions."
 
Topics discussed by Chair White included:
  • Regulation of the asset management industry;
  • Supervising financial firms in a global marketplace: data protection and the regulators' need for access to data; and
  • Strong enforcement against foreign corrupt payments.
For more information, click here.
 
© 2016 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Staff Speech, "Tandy" Representations No Longer Needed in Filing Reviews

Summary - The SEC has issued an announcement indicating that "Tandy" representations are no longer needed in filing reviews. Beginning in the mid-1970s, the SEC staff began to include in filing review comment letters what became known as "Tandy" language. Tandy letters required a company to acknowledge in writing that the disclosure in the document was its responsibility and to affirmatively state that it would not raise the SEC review process and acceleration of effectiveness as a defense in any legal proceeding.
 
While it remains true that companies are responsible for the accuracy and adequacy of the disclosure in their filings, the SEC staff does not believe that it is necessary for them to make the affirmative representations in their filing review correspondence. Going forward, the SEC staff will no longer request those representations, but instead will include the following statement in their comment letters: "We remind you that the company and its management are responsible for the accuracy and adequacy of their disclosures, notwithstanding any review, comments, action or absence of action by the staff."
For more information, click here.
 
© 2016 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Staff Speech, Equity Market Structure in 2016 and for the Future by Mary Jo White, SEC Chair 

Summary - SEC Chair Mary Jo White recently spoke at Security Traders Association's "83rd Annual Market Structure Conference" held in Washington, D.C. Chair White reported on some of the SEC's progress on both targeted enhancements to tackle issues with the operational integrity of U.S. markets, and the SEC's consideration of more fundamental market structure questions. Specific topics discussed by Ms. White included:
  • Regulation SCI;
  • Improvements to critical market infrastructure;
  • Enhancements to volatility moderators;
  • Further strengthening of market operations;
  • Enhancing transparency in trading venues;
  • The consolidated audit trail; and
  • Addressing fairness and efficiency in algorithmic trading.
For more information, click here.
 
© 2016 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.


Staff Speech, The SEC's Whistleblower Program: The Successful Early Years, Andrew Ceresney, Director, Division of Enforcement

Summary - Andrew Ceresney, Director of the SEC's Division of Enforcement, recently spoke at the "Sixteenth Annual Taxpayers Against Fraud Conference" held in Washington, D.C. Mr. Ceresney discussed the success of the SEC's whistleblower program noting the "success of the program can be seen, in part, in the over $107 million we have paid to 33 whistleblowers for their valuable assistance, in cases with more than $500 million ordered in sanctions. But it can also be seen in my daily interactions with enforcement teams who when I ask the question of how an investigation began, often respond by pointing to a whistleblower."
 
Highlights of Mr. Ceresney's remarks included:
  • The SEC has taken significant actions to ensure that employees feel secure in reporting wrongdoing. The SEC has brought its first settled action under the anti-retaliation provisions of the Dodd-Frank Act, and four settled actions against companies for violating Rule 21F-17, which prohibits anyone from taking any action to impede communications with the SEC about possible securities law violations.
  • The bottom line is that in its short history, the SEC's whistleblower program has had tremendous impact and, as imitation is the sincerest form of flattery, other domestic and foreign regulators have sought to replicate the successes of its program.
  • Issuer reporting and disclosure cases are one category of cases where whistleblower assistance is extremely helpful. Last fiscal year, about 18% of all whistleblower complaints we received involved issuer reporting and disclosures and, since the first full fiscal year of the whistleblower program's operation, the Enforcement Division has seen tips in this area increase approximately 25%. This continues to be the most common type of tip.
  • The SEC has made significant awards to whistleblowers recognizing that they provide critical information at all phases of its investigatory processes. Whistleblowers should not shy away from providing us information, even if the SEC has an investigation ongoing.
  • While whistleblowers can engage with the SEC without the assistance of counsel, counsel experienced in whistleblower representations can help with up-front triage of tips to identify those that have a nexus with the federal securities laws and that may have merit. And they can work with whistleblowers going forward to identify information that will be important to us and that will allow us to advance our investigations.
For more information, click here.
 
© 2016 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.


Staff Speech, Remarks before the 35th Annual SEC and Financial Reporting Institute Conference by Wesley R. Bricker, Deputy Chief Accountant

Summary - Wesley R. Bricker, SEC Deputy Chief Accountant, recently spoke at the "35th Annual SEC and Financial Reporting Institute Conference" held in Los Angeles, CA. Mr. Bricker discussed a number of financial reporting matters, including:
  • Implementation activities related to the recently issued standards on revenue recognition and leasing;
  • The continued focus on internal control over financial reporting (ICFR);
  • Opportunities to provide input to the PCAOB regarding its important standard setting activities; and
  • Continued vigilance on the responsibilities for maintaining auditor independence.
Highlights of Mr. Bricker's remarks regarding the implementation of the new accounting standards on revenue recognition and leases include:
  • Given the pervasiveness of the new accounting standards on revenue recognition and leases, now is a good time for companies to focus on audit committee and investor outreach and education regarding the effect of the new standards on companies' financial reporting. It is also a good time for companies, their audit committees, and their auditors to assess the quality and status of implementation plans so that the implementation of the standards achieves the financial reporting objectives intended by the standard setters.
  • The SEC staff has continues to actively monitor the profession's transition efforts including the FASB's Revenue Transition Resource Group ("TRG") and the AICPA's Financial Reporting Executive Committee, among others, to identify the nature and volume of implementation questions and views on those questions. Mr. Bricker indicated his concern that other application questions have not yet been fully resolved by the AICPA industry groups or, if needed, presented to the TRG for resolution. Mr. Bricker cautioned that "to the extent that preparers, industry groups, or other constituents have identified questions but have chosen not to raise them in hopes of preserving their current accounting, let me caution you that auditors, regulators, and others will look to understand those revenue policies and how they are consistent with the principles in the new revenue recognition standard. It's just a matter of timing as to when we gain that understanding, whether before or after companies implement the standard."
  • The SEC staff has received consultations from registrants on their particular accounting policies for revenue recognition under the new standard. In forming its views, the SEC staff considers first the nature, design, and economic substance of the transaction, then the: (a) language in the standard and the related basis for the standard setters' conclusions; (b) implementation discussions, such as those at the TRG; and (c) objectives expressed in the standard for consistency and comparability. Mr. Bricker also discussed specific issues recently consulted on by OCA, including the definition of a contract within Topic 606 and revenue recognition associated with certain royalties.
  • The SEC staff has long advised that a registrant should provide transition disclosures to investors of the impact that a recently issued accounting standard will have on its financial statements when that standard is adopted in a future period. The preparation of the transition disclosures should be subject to effective ICFR and disclosure controls and procedures. As management completes portions of its implementation plan related to revenue recognition and develops an assessment of the anticipated impact the standard will have on the company's financial statements, internal and disclosure controls should be designed and implemented to timely identify relevant disclosure content from the implementation assessments and to ensure, where necessary, that appropriately informative disclosure is made. Investors should expect the level of transition disclosures to increase as a company progresses in its implementation plans and, when necessary, engage with company management to understand these disclosures
  • As with revenue recognition, Mr. Bricker encourages companies to assess the quality and status of implementation plans to achieve the financial reporting objectives intended by the standard setters, while also providing timely investor education on the anticipated effect of the lease standard prior to adoption. 

For more information, click here.

© 2016 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

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Staff Speech, Keynote Address, International Corporate Governance Network Annual Conference: Focusing the Lens of Disclosure to Set the Path Forward on Board Diversity, Non-GAAP, and Sustainability by Mary Jo White, SEC Chair

Summary - SEC Chair Mary Jo White recently spoke at an International Corporate Governance Network conference. In her remarks, Ms. White indicated that the SEC staff is preparing a recommendation to the SEC to propose amending the rule to require companies to include in their proxy statements more meaningful board diversity disclosures on their board members and nominees where that information is voluntarily self-reported by directors. Chair White indicated that some "may oppose even minimally more prescriptive diversity disclosure requirements. My view is that the SEC has a responsibility to ensure that our disclosure rules are serving their intended purpose of meaningfully informing investors. This rule does not and it should be changed. Our lens of board diversity disclosure needs to be re-focused in order to better serve and inform investors."
Chair White also discussed the role of the SEC in corporate governance, the use of non-GAAP financial measures, and sustainability disclosures. Highlights of Ms. White's remarks on these issues included:
  • The SEC has an impact on corporate governance through its disclosure powers, requiring public companies to provide investors with the information they need to make informed investment and voting decisions. The SEC thus does not decide who may sit on a corporate board, but its rules do require disclosure about those who serve or are nominated to serve as directors and, importantly, why they were selected to serve.
  • In connection with the SEC staff's ongoing disclosure effectiveness review, the SEC recently issued a broad-based concept release seeking input from investors, issuers and other affected market participants on its business and financial disclosure requirements. The SEC's overall challenge is to re-focus the lens of disclosure to better serve today's investors. The challenge for investors is even greater- to use your voices not only to inform us about the disclosures you need to make informed decisions, but also to influence corporate behavior to better protect and generate sustainable corporate value.
  • Ms. White generally thinks it is a good idea to provide companies with flexibility to use non-GAAP measures that are not misleading and the SEC does hear that investors want such information. But recently Chair White has had significant concerns about companies taking this flexibility too far and beyond what is intended and allowed by its rules. In too many cases, the non-GAAP information, which is meant to supplement the GAAP information, has become the key message to investors, crowding out and effectively supplanting the GAAP presentation. Ms. White strongly urged companies to carefully consider recent guidance on non-GAAP measures issued by the SEC staff and to revisit their approach to non-GAAP disclosures.
  • On the use of non-GAAP measures, Chair White indicated that the SEC is watching this space very closely and are poised to act through the filing review process, enforcement and further rulemaking if necessary to achieve the optimal disclosures for investors and the markets.
  • SEC rules and guidance are clear that, to the extent issues about sustainability are material to a company's financial condition or results of operations, they must be disclosed. But deciding whether such disclosures are triggered in a particular context is often easier said than done when trying to calibrate materiality to phenomena that have a longer term horizon than most other financial metrics do.
  • At this juncture, the path forward on enhancing sustainability reporting is clearly still developing. Unlike financial disclosures, established and agreed upon sustainability metrics for reporting do not yet exist. In many countries outside of Europe and South Africa, sustainability reporting is still largely voluntary. There is much debate about climate change and how to address it.
  • Although the SEC is seeing increased disclosure and engagement on sustainability matters, it is taking a more focused look at such disclosures, particularly related to climate change, in annual filing reviews. There is, in short, more work and thinking to be done on sustainability reporting at the SEC, and by companies and investors, including on whether, when, where, and how to provide disclosure and what precisely should be provided. The issue has the SEC's attention, but disclosure alone will not achieve the ultimate results many investors and other constituents are seeking.

For more information, click here.

© 2016 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

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Staff Speech, Keynote Address, SEC Regulation Outside the United States "The SEC at Home and Abroad" by Andrew J. Donohue, Chief of Staff

Summary -  SEC Chief of Staff, Andrew J. Donohue, recently gave the keynote speech at the "InvestoRegulation Conference," held in London, UK. Mr. Donohue discussed the SEC's work related to securities regulation outside the U.S. Mr. Donohue noted that throughout his career "whether at the SEC or in the private sector, I have witnessed the expanding intersection between U.S. securities regulation and the global securities community. This can be seen in the number of SEC-regulated parties that reside abroad, the amount of cross border holdings, and the ever-growing level of cooperation among international regulators."
 
Mr. Donohue's comments focused on the following three developments:
  • The SEC's global reach within the securities industry;
  • The importance of international cooperation on the major issues facing today's markets; and
  • Highlights of the great work of the SEC and its staff during Chair Mary Jo White's tenure.
For more information, click here.
© 2016 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.
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Staff Speech, Remarks at the FINRA Foundation 2015 National Financial Capability Study Release by Mary Jo White, SEC Chair

Summary - SEC Chair Mary Jo White recently spoke at the release of the FINRA Foundation's "2015 National Financial Capability Study." FINRA has been performing the study since 2009 with the overarching research objectives to benchmark key indicators of financial capability and evaluate how these indicators vary with underlying demographic, behavioral, attitudinal and financial literacy characteristics. Chair White noted that the 2015 study "provides some very illuminating data and insights on the financial well-being of Americans, and on their knowledge, attitudes, and behaviors. It describes the financial habits and thinking of Americans with data we might not otherwise have. For financial regulators, this is invaluable feedback that helps us assess the impact of what we are doing and how we may need to adjust our focus and increase and change our outreach."
For more information, click here.
© 2016 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.
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Staff Speech, Keynote Address at the SEC-Rock Center on Corporate Governance Silicon Valley Initiative by Mary Jo White, SEC White by Mary Jo White, SEC Chair

Summary - SEC Chair Mary Jo White recently delivered the keynote address at the "SEC-Rock Center on Corporate Governance Silicon Valley Initiative" conference. Ms. White discussed some of the opportunities, challenges, and risks in these rapidly changing markets.
Chair White noted in her remarks that as "technology has evolved, so too have the financial markets that support it. New models for how these companies are funded and how investors unlock their value are changing the landscape of private start-up financing and the IPO market. SEC rulemakings have also opened new ways to raise start-up capital with general solicitation allowed in private offerings, securities-based crowdfunding campaigns coming soon, and an updated and expanded Reg A (known as Regulation A+)." However, Ms. White also cautioned that all "of these factors are contributing to the decision made by more and more companies to stay private longer."
Topics discussed by Ms. White included:
  • The challenges of pre-IPO financing and information;
  • The challenges of new models of capital formation and markets;
  • Financial controls and corporate governance roles and challenges; and
  • Digital finance developments.
For more information, click here.
© 2016 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Staff Speech, Remarks Before the 2016 Baruch College Financial Reporting Conference by Wesley R. Bricker, Deputy Chief Accountant

Summary  - Wesley R. Bricker, Deputy Chief Accountant at the SEC, recently spoke at the "2016 Baruch College Financial Reporting Conference," held in New York. Mr. Bricker provided observations on the ongoing transition period activities for the new standards on revenue recognition and leases as well as the FASB's financial instruments' credit impairment proposal. Mr. Bricker also addressed certain non-GAAP reporting practices and discussed the role of the PCAOB in promoting auditor attention on current and emerging financial reporting risks through its standard-setting, inspection, and other important programs.
Highlights of Mr. Bricker's remarks include:
  • Given the pervasiveness of the changes within the new revenue recognition and lease accounting standards, now is a good time for companies to focus on investor outreach and education so that investors can sufficiently understand the effect of the new standards on companies' financial reporting. Disclosure from management regarding what is changing, why it is changing, and how should be useful to investors.
  • While all industries and business models will likely be impacted to some degree by the new guidance, investors should pay particular attention to those companies with complex business models. Under the new five-step model, revenue is recognized when control of the good or service transfers from the seller to a customer. This model represents a shift from the current revenue recognition guidance which emphasizes the transfer of "risks and rewards," rather than control, as a criterion for recognition. For some companies, such as those with construction and production-type contracts, this control based model may impact the timing of revenue recognition as compared to current GAAP.
  • The SEC staff has long advised that a registrant should provide disclosures to investors of the impact that a recently issued accounting standard will have on its financial statements when that standard is adopted in a future period (so-called "transition disclosures"). Without adequate transition disclosures, investors may not be prepared to fully understand changes in the company's financial performance from one period to the next and the impact of adopting a new accounting standard. These transition disclosures are essential for new accounting standards, including the new revenue recognition and leasing standards.
  • Application of the new revenue recognition standard requires preparers to make judgments in financial reporting that will later be evaluated by auditors, regulators, and investors. The SEC staff will continue to respect well-reasoned, practical judgments when those judgments are grounded in the principles of the standard and considered the utility of the resulting information to investors. Conversely, aggressive interpretations that appear to be taken to achieve a specific outcome, such as preserving existing reporting, will not be well received, particularly when that outcome is inconsistent with the principles of the new standard.
  • Recent examples of company practices related to non-GAAP measures have caused concern, including the use of individually-tailored accounting principles to calculate non-GAAP earnings; providing per share data for non-GAAP performance measures that look like liquidity measures; and non-GAAP tax expense. Recent examples of company practices related to operating metrics have also caused concern for the SEC staff.
  • Revenue adjustments in non-GAAP measures do more than just adjust from GAAP: they change the very starting point from which other performance analyses flow. As the SEC staff monitors current practices and implementation of the new revenue standard, it will be looking to see if the reporting concepts within those standards are supplanted by any number of company-specific non-GAAP alternatives. For all of these reasons, if you present adjusted revenue, you will likely get a comment from the SEC staff. Registrants can expect the SEC staff to look closely, and skeptically, at the explanation as to why revenue adjustments are appropriate.
  • The PCAOB has been focused over the last year on improving its standard setting process to be more effective and efficient. The PCAOB has acknowledged that it is already working on integrating some new tools from this review into its active standard-setting agenda. And indeed, the SEC staff has already seen encouraging results from some of the initial changes.
  • Another area of importance for the PCAOB's focus is understanding and addressing, on a timely basis, the implications to audit quality of new and emerging risks. Such risks are inherent in the dynamic environment in which today's public companies operate and include the impact of changes in technology and the growing use of big data on the manner in which audits are conducted.
  • In order to preserve and, where necessary, strengthen the quality of independent audits in the years to come, it is essential to ensure that auditing standards are appropriately responsive to these developments. Similarly, it will be important to keep the PCAOB's inspection program focused on those new and emerging risks..
For more information, click here.

© 2016 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Staff Speech, Disclosure in the Digital Age: Time for a New Revolution by Commissioner, Kara M. Stein

Summary -  SEC Commissioner Kara M Stein recently gave a speech entitled, "Disclosure in the Digital Age: Time for a New Revolution." Ms. Stein spoke at the "48th Annual Rocky Mountain Securities Conference" held in Denver, Colorado. Commissioner Stein discussed how to breathe new life into the critical matchmaking process between companies and investors, including her thoughts on developing a new way of communicating via disclosure in the Digital Age. Highlights of Ms. Stein's remarks included:
  • Disclosure is how companies present themselves to investors, and how investors, who need to grow their capital, find just the right match for them. It is how workers saving for retirement find the right mutual fund or investment adviser, how institutional investors identify long term investments, and how analysts begin their research.
  • While technology has been evolving, the SEC's EDGAR system has not changed much. EDGAR now serves as the SEC's central data repository. It receives over 700,000 disclosure documents every year from companies, investment companies, and individuals. EDGAR needs a redesign to catch up to the new digital world. However, even the redesign needs to be part of a larger, more holistic effort.
  • Another ongoing initiative to improve communications between companies and investors is the "Disclosure Effectiveness" project. The SEC is seeking input on dozens of issues, asking hundreds of questions, relating to both the form and substance of various disclosures. And yet, it falls short since there are important questions that were not asked. Questions relating to corporate governance disclosures were left out. Also missing were questions about how to best measure corporate performance.
  • Companies must be prepared to offer investors the fair, neutral, and decision-useful information they want in order to part with their hard-earned capital. Materiality evolves. It changes as society changes, and it also changes with the availability of new and better data. To achieve effective disclosure, we must understand what is important to today's investors.
  • Today, investors make their decisions based on an array of information, which goes beyond mere profit and loss. Many believe that the era of sustainability or impact investing has arrived. Sustainability disclosure differentiates companies and may foster investor confidence, trust, and employee loyalty. Studies indicate that today's investors are considering strategies that take into account environmental, social and corporate governance criteria.
  • Structured or machine-readable data allows data to be pulled out of filings and presented according to the needs of the consumer. Structured data can provide big advantages for companies. Companies could provide this information once, and then not have to repeat it over and over again across numerous filings. The beauty of this approach is that it completely separates how the company submits the data from how investors access the data. Investors should be able to effortlessly and electronically get exactly what they need, when they need it, nothing more and nothing less.
For more information, click here.
© 2016 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.
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Staff Speech, New Directions in Corporate Compliance: Keynote Luncheon Speech by Andrew J. Donohue, Chief of Staff

Summary - Andrew J. Donohue, Chief of Staff of the SEC, recently gave a speech at the "Rutgers Law School Center for Corporate Law and Governance Conference" held in Camden, New Jersey. Mr. Donohue shared his thoughts and observations regarding corporate compliance based on his experience being responsible for legal and for corporate compliance at my diverse firms, including domestic and international operations, broker-dealers, investment advisers, and commodity trading advisors. Topics discussed by Mr. Donohue included:
  • Integrity and personal responsibility;
  • The critical role culture plays in corporate compliance;
  • Keep it simple and intuitive;
  • The role of technology; and
  • Complexity of firms, their operations, and their products or services.
For more information, click here.
© 2016 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.
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Staff Speech, Remarks Before the SEC Historical Society - "The Continuous Process of Optimizing the Equity Markets" by Mary Jo White, SEC Chair

Summary - SEC Chair Mary Jo White recently spoke at the SEC Historical Society in Washington, D.C. Ms. White discussed the SEC's historical equity market structure agenda and current efforts in this area. Chair White provided that the SEC "is now in the midst of another significant phase of market structure review, as technology advancements continue to accelerate the pace of change in how orders are generated and executed. While these advancements have generally served retail and institutional investor interests well, as I have remarked before, it is critical that we, as regulators, keep pace with these changes with a keen focus on the fundamentals driving them." Topics briefly discussed by Chair White included:
  • The SEC's proposed national market system plan to create a consolidated audit trail;
  • Regulation ATS, which is a proposal designed to shed light on dark pools and bring greater transparency about how alternative trading systems operate;
  • Regulation Security Compliance and Integrity, which strengthened the technology infrastructure of the market and expanded SEC oversight of that technology; and
  • The SEC's work with securities exchanges to address issues like order types and operations, data feed disclosures, and "single points of failure" within infrastructure systems that have the ability to significantly disrupt trading.
For more information, click here.
© 2016 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.
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Board Diversity -- SEC Chair White Indicates SEC Staff Continues Work on Possible Rules Requiring Firms to Reveal Board Diversity

Summary - SEC Chair Mary Jo White recently spoke at an International Corporate Governance Network conference. In her remarks, Ms. White indicated that the SEC staff is preparing a recommendation to the SEC to propose amending the rule to require companies to include in their proxy statements more meaningful board diversity disclosures on their board members and nominees where that information is voluntarily self-reported by directors. Chair White indicated that some "may oppose even minimally more prescriptive diversity disclosure requirements. My view is that the SEC has a responsibility to ensure that our disclosure rules are serving their intended purpose of meaningfully informing investors. This rule does not and it should be changed. Our lens of board diversity disclosure needs to be re-focused in order to better serve and inform investors."

Chair White also discussed the role of the SEC in corporate governance, the use of non-GAAP financial measures, and sustainability disclosures. Highlights of Ms. White's remarks on these issues included:

  • The SEC has an impact on corporate governance through its disclosure powers, requiring public companies to provide investors with the information they need to make informed investment and voting decisions. The SEC thus does not decide who may sit on a corporate board, but its rules do require disclosure about those who serve or are nominated to serve as directors and, importantly, why they were selected to serve.
  • In connection with the SEC staff's ongoing disclosure effectiveness review, the SEC recently issued a broad-based concept release seeking input from investors, issuers and other affected market participants on its business and financial disclosure requirements. The SEC's overall challenge is to re-focus the lens of disclosure to better serve today's investors. The challenge for investors is even greater- to use your voices not only to inform us about the disclosures you need to make informed decisions, but also to influence corporate behavior to better protect and generate sustainable corporate value.
  • Ms. White generally thinks it is a good idea to provide companies with flexibility to use non-GAAP measures that are not misleading and the SEC does hear that investors want such information. But recently Chair White has had significant concerns about companies taking this flexibility too far and beyond what is intended and allowed by its rules. In too many cases, the non-GAAP information, which is meant to supplement the GAAP information, has become the key message to investors, crowding out and effectively supplanting the GAAP presentation. Ms. White strongly urged companies to carefully consider recent guidance on non-GAAP measures issued by the SEC staff and to revisit their approach to non-GAAP disclosures.
  • On the use of non-GAAP measures, Chair White indicated that the SEC is watching this space very closely and are poised to act through the filing review process, enforcement and further rulemaking if necessary to achieve the optimal disclosures for investors and the markets.
  • SEC rules and guidance are clear that, to the extent issues about sustainability are material to a company's financial condition or results of operations, they must be disclosed. But deciding whether such disclosures are triggered in a particular context is often easier said than done when trying to calibrate materiality to phenomena that have a longer term horizon than most other financial metrics do.
  • At this juncture, the path forward on enhancing sustainability reporting is clearly still developing. Unlike financial disclosures, established and agreed upon sustainability metrics for reporting do not yet exist. In many countries outside of Europe and South Africa, sustainability reporting is still largely voluntary. There is much debate about climate change and how to address it.
  • Although the SEC is seeing increased disclosure and engagement on sustainability matters, it is taking a more focused look at such disclosures, particularly related to climate change, in annual filing reviews. There is, in short, more work and thinking to be done on sustainability reporting at the SEC, and by companies and investors, including on whether, when, where, and how to provide disclosure and what precisely should be provided. The issue has the SEC's attention, but disclosure alone will not achieve the ultimate results many investors and other constituents are seeking.
For more information, click here.

© 2016 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

SEC Staff Views, Recently Enacted Transportation Law Includes a Number of Changes to the Federal Securities Laws

Summary -  The staff in the Division of Corporation Finance (Corp Fin) of the SEC has issued the following guidance on the recently enacted Fixing America's Surface Transportation (FAST) Act:
  • Compliance and Disclosure Interpretation (C&DI), Fixing America's Surface Transportation (FAST) Act; and
  • SEC Staff Announcement: Recently Enacted Transportation Law Includes a Number of Changes to the Federal Securities Laws.
On December 4, 2015, President Obama signed the FAST Act into law. The new law includes several amendments to the federal securities laws. Some of these provisions must be implemented by SEC rulemaking or study, while others are self-executing. Consistent with its practice following enactment of the JOBS Act, the Division intends to consider providing additional guidance as questions are presented. In addition, Corp Fin has issued an announcement that provides a summary of the FAST Act that includes the specific provisions with the legislation that impacts the securities laws. Provisions impacting the securities laws deal with the following issues:
  • Improving Access to Capital for Emerging Growth Companies;
  • Grace Period for Change of Status of Emerging Growth Companies;
  • Simplified Disclosure Requirements for Emerging Growth Companies;
  • Disclosure Modernization and Simplification;
  • Study on Modernization and Simplification of Regulation S-K; and
  • Summary Page for Form 10-K.
For more information, click here.
© 2016 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

SEC Staff Views, Report on the Review of the Definition of "Accredited Investor"

Summary -  The SEC has issued a staff report on the "accredited investor" definition. The Dodd-Frank Wall Street Reform and Consumer Protection Act directs the Commission to review the accredited investor definition as it relates to natural persons every four years to determine whether the definition should be modified or adjusted. Staff from the Divisions of Corporation Finance and Economic and Risk Analysis prepared the report in connection with the first review of the definition.
The report examines the history of the accredited investor definition and considers comments on the definition received from a variety of sources, including public commenters, the Investor Advisory Committee and the Advisory Committee on Small and Emerging Companies. The report considers alternative approaches to defining "accredited investor," provides staff recommendations for potential updates and modifications to the existing definition and analyzes the impact potential approaches may have on the pool of accredited investors.
The SEC is seeking comments from members of the public on the accredited investor definition, generally, and specifically on the staff recommendations contained in the report.
For more information, click here.
© 2016 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.
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