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SEC Staff Views & Speeches - Page 5

Articles On This Page

SEC Staff Speech, Braided Bread and Boiled Beer: Remarks before the Eurofi Financial Forum 2019 by Commissioner Hester M. Peirce NEW!

SEC Staff Speech, Remarks at the U.S. Treasury Market Conference by Commissioner Elad L. Roisman NEW!

SEC Staff Speech, Remarks at the SIFMA Equity Market Structure Conference: The Dynamics of our Markets and the Changing Structure on which they are Built by Commissioner Elad L. Roisman NEW!

Regulatory Reform – SEC Commissioner Hester M. Peirce Discusses Regulatory Reform 

SEC Staff Speech, Cleveland, Kondo, and Capital - Remarks before the American Chamber of Commerce by Commissioner Hester M. Peirce 

SEC Staff Q&A, Responses to Frequently Asked Questions Concerning Rule 606 of Regulation NMS 

SEC Staff Speech, Remarks before the AICPA National Conference on Banks & Savings Institutions by Sagar Teotia, Chief Accountant 

SEC Staff Speech, Remarks to the Economic Club of New York by Chairman Jay Clayton 

SEC Staff Speech, Statement at the SEC Staff Roundtable on Short-Term / Long-Term Management of Public Companies, Our Periodic Reporting System and Regulatory Requirements by Chairman Jay Clayton 

SEC Staff Speech, Statement on Opportunity Zones by Chairman Jay Clayton 

SEC Staff Views - Staff Statement on LIBOR Transition 

SEC Staff Speech - Regulation Best Interest and the Investment Adviser Fiduciary Duty: Two Strong Standards that Protect and RPovide Choice for Main Street Investors by Chairman Jay Clayton 

SEC Staff Views - Division of Corporate Finance - Financial Reporting Manual 

SEC Staff Speech - Baby on Board: Remarks before the Society for Corporate Governance National Conference by Commissioner Hester M. Peirce 

SEC Staff Speech - Reasonableness Pants by Commissioner Hester M. Peirce 

SEC Staff Views - Voluntary Compliance with the New Mining Property Disclosure Rules Prior to Completion of EDGAR Reprogramming 

SEC Staff Speech - How We Protect Retail Investors by Peter Driscoll, Director, Office of Compliance Inspections and Examinations 

SEC Staff Speech - Remarks before the 2019 Baruch College Financial Reporting Conference: Aiming toward the Future by Wesley Bricker, Chief Accountant 

SEC Staff Speech - How We Howey by Commissioner Hester M. Peirce 

SEC Staff Speech - Alligators in Nirvana: Smart Regulation and the Future of Financial Services - Public Policy Conference by Commissioner Hester M. Peirce 

Encouraging Smaller Entrants to Our Capital Markets - Remarks at SEC Speaks by Commissioner Elad L. Roisman 

Secret Garden - Remarsk at SEC Speaks by Commissioner Hester M. Peirce 

Management's Discussion and Analysis of the SEC - Remarks at the "SEC Speaks" Conference by Chairman Jay Clayton 

Important Issues for Investors in 2019 by Rick Fleming, Investor Advocate 

SEC Staff Speeches, Equity Market Structure 2019: Looking Back & Moving Forward by Chairman Jay Clayton Brett Redfearn, Director, Division of Trading and Markets 

SEC Staff Speeches, Applying a Principles-Based Approach to Disclosing Complex, Uncertain and Evolving Risks by William Hinman Director, Division of Corporation Finance 

SEC Staff Speeches, A Start-Up Within the Government - Introducing the SEC’s Office of the Advocate for Small Business Capital Formation by Martha Miller Advocate for Small Business Capital Formation 

SEC Staff Speeches, Festivus, Fortnite, and Focus: Remarks before the Council of Institutional Investors Spring Conference by Commissioner Hester M. Peirce 

SEC Staff Speeches, Statement on Shareholder Proposals Seeking to Require Mandatory Arbitration Bylaw Provisions by Chairman Jay Clayton 

Statement on Digital Asset Securities Issuance and Trading – SEC Staff Views 

Competition: The Forgotten Fourth Pillar of the SEC’s Mission by Commissioner Robert J. Jackson Jr. – SEC Staff Speeches 

Improving Information for Investors in the Digital Age by Commissioner Kara M. Stein – SEC Staff Speeches 

The New American Dream: Retirement Security by Commissioner Kara M. Stein – SEC Staff Speeches 

Cross-Border Exemptions – SEC Staff Views 

Articles

SEC Staff Speech, Remarks at the SIFMA Equity Market Structure Conference: The Dynamics of our Markets and the Changing Structure on which they are Built by Commissioner Elad L. Roisman

Summary - SEC Commissioner Elad L. Roisman recently spoke about equity market structure and related regulation. Topics discussed by Roisman included:
Broker-dealer best execution obligations;
Order protection rule; and
Order management systems

For more information, click here.

© 2019 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

SEC Staff Speech, Remarks at the U.S. Treasury Market Conference by Commissioner Elad L. Roisman

Summary - SEC Commissioner Elad L. Roisman recently spoke at a US Treasury market conference. Roisman considered whether “the U.S. Treasury market may benefit from certain elements of SEC oversight that are comparable to the agency’s existing oversight of the equity markets.” Topics discussed by Roisman included:

Alternative trading systems requirements; and
Regulation Systems Compliance.

For more information, click here.

© 2019 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

SEC Staff Speech, Braided Bread and Boiled Beer: Remarks before the Eurofi Financial Forum 2019 by Commissioner Hester M. Peirce

Summary - SEC Commissioner Hester M. Peirce recently discussed international derivatives markets and the need for a level of unity around the globe on regulating these markets. Peirce indicated that the shared concern “for global derivatives markets serves not only to help those markets function well, but to deepen cross-border relationships. I know that we will learn much from each other in the process and expect that the end result will be a system in which we all work together—each within our own jurisdiction—to achieve the goal of a shared financial market that is robust and focused on facilitating, not undermining, the broader economy.”

For more information, click here.

© 2019 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Regulatory Reform – SEC Commissioner Hester M. Peirce Discusses Regulatory Reform

Summary - SEC Commissioner Hester M. Peirce recently discussed SEC regulatory reform efforts. Peirce indicated that the “regulation of public companies is a part of our jurisdiction that is crying out for reform. We have seen the trend of companies waiting longer to go public and have been asking ourselves what we can do to encourage companies to go public earlier and to remain public. We want to ensure that retail investors can participate in the growth of these companies.”

For more information, click here.

© 2019 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

SEC Staff Speech, Cleveland, Kondo, and Capital - Remarks before the American Chamber of Commerce by Commissioner Hester M. Peirce

Summary - SEC Commissioner Hester M. Peirce recently discussed SEC regulatory reform efforts. Peirce indicated that the “regulation of public companies is a part of our jurisdiction that is crying out for reform. We have seen the trend of companies waiting longer to go public and have been asking ourselves what we can do to encourage companies to go public earlier and to remain public. We want to ensure that retail investors can participate in the growth of these companies.”

For more information, click here.

© 2019 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

SEC Staff Q&A, Responses to Frequently Asked Questions Concerning Rule 606 of Regulation NMS

Summary - The staff in the SEC’s Division of Trading and Markets has issued a Q&A document on Rule 606 of Regulation NMS. In November 2018, the SEC adopted amendments to Rule 606 of Regulation NMS to require broker-dealers to provide enhanced disclosure of information regarding the handling of their customers’ orders. Rule 606, as amended, requires more meaningful disclosures relevant to today’s marketplace that encourage broker-dealers to provide more effective and competitive order handling and routing services and that also improve the ability of their customers to determine the quality of such broker-dealer services.

For more information, click here.

© 2019 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

SEC Staff Speech, Remarks before the AICPA National Conference on Banks & Savings Institutions by Sagar Teotia, Chief Accountant

Summary - SEC Chief Accountant Sagar Teotia recently spoke at the AICPA’s National Conference on Banks & Savings Institutions. Teotia indicated that because of “the importance of accounting and auditing (both domestically and internationally), all stakeholders involved in the financial reporting system must contribute towards the collective goal of delivering high quality information to investors.” Teotia went on to discuss the role the SEC and its Office of the Chief Accountant (OCA) play in this system, including its efforts in overseeing standards setters, implementing new accounting standards or SEC rules, and implementing PCAOB standards.
Topics covered by Teotia included implementation efforts by OCA on new standards or rules covering:

  • Revenue recognition;
  • Leases;
  • Credit losses; and

The Auditor’s Report (Critical Audit Matters).

Teotia also discussed changes he expects in the financial reporting system that OCA will be active in, including the transition from LIBOR, the FASB’s project on distinguishing liabilities from equity, and audits of broker-dealers.

For more information, click here.

© 2019 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

SEC Staff Speech, Remarks to the Economic Club of New York by Chairman Jay Clayton

Summary - SEC Chairman Jay Clayton recently spoke to the New York Economic Club. Clayton covered three topics:
Recent SEC issues;
Observations on the SEC’s efforts to combat offshore corruption; and
Current market issues.

Regarding current market issues, Clayton briefly discussed the transition from LIBOR and Brexit. On the transition away from LIBOR, Clayton indicated “market participants should assess their exposure to LIBOR and decide how to actively manage that risk, and they should ensure that any contracts that extend beyond 2021 either (i) reference LIBOR and have effective fallback language or (ii) do not reference LIBOR.”

Clayton indicated that the SEC continues to closely monitor the potential effects of Brexit on markets and market participants. Clayton encouraged “issuers, financial services firms and other market participants to fight off the complacency and fatigue that is endemic to situations of this type. I encourage you to continue to prepare for—and reasonably inform your investors of—the potential impacts of Brexit. At the SEC, we continue to work with our domestic and non-U.S. counterparts to identify and plan for potential Brexit-related impacts.”

For more information, click here.

© 2019 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

SEC Staff Speech, Statement at the SEC Staff Roundtable on Short-Term / Long-Term Management of Public Companies, Our Periodic Reporting System and Regulatory Requirements by Chairman Jay Clayton

Summary - SEC Chairman Jay Clayton recently issued a statement in connection with the SEC’s Division of Corporation Finance (Corp Fin) roundtable held on July 18, 2019 to hear from investors, issuers, and other market participants about the impact of short-termism on our capital markets and whether our reporting system, or other aspects of the SEC’s regulations, should be modified to address these concerns.

Two panel discussions were held that focused on:
• Impact of a Short-Term Focus on Our Capital Markets; and
• Our Periodic Reporting System’s Role in Fostering a Long-Term.

For more information, click here.
© 2019 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.
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SEC Staff Speech, Statement on Opportunity Zones by Chairman Jay Clayton

Summary - SEC Chairman Jay Clayton recently released a statement in connection with the SEC’s and the North American Securities Administrators Association’s (NASAA’s) release of a summary that “explains the application of the federal and state securities laws to opportunity zone investments.” The opportunity zone program was established by the Tax Cuts and Jobs Act in December 2017 to provide tax incentives for long-term investing in designated economically distressed communities.

The summary is intended to help participants in the opportunity zone program understand the compliance implications for qualified opportunity funds under federal and state securities laws. Among other things, the summary discusses:
• The opportunity zone program;
• When interests in qualified opportunity funds would be securities under federal and state securities laws; and
• SEC and state requirements relating to qualified opportunity funds and their securities offerings, broker-dealer registration, and considerations for advisers to a qualified opportunity fund.

Formed in 1919, NASAA is the non-profit association of state, provincial, and territorial securities regulators in the United States, Canada and Mexico.

For more information, click here.
© 2019 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.
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SEC Staff Speech - Regulation Best Interest and the Investment Adviser Fiduciary Duty: Two Strong Standards that Protect and RPovide Choice for Main Street Investors by Chairman Jay Clayton

Summary - SEC Chairman Jay Clayton recently discussed Regulation Best Interest and the Investment Adviser Fiduciary Duty, two recent SEC standards aimed at protecting and providing choice for Main Street investors. Clayton indicated that these standards represent “a package of rules and interpretations that will enhance the quality and transparency of retail investors’ relationships with broker dealers and investment advisers. Importantly, they bring the legal requirements and mandated disclosures for broker-dealers and investment advisers in line with reasonable investor expectations. These actions do not attempt to favor one type of service or relationship. Rather, they are designed to increase investor protection while preserving access for Main Street investors—both in terms of choice and cost—to a variety of investment services and products.”

For more information, click here.

© 2019 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

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SEC Staff Views - Staff Statement on LIBOR Transition

Summary - The SEC staff has published a statement that encourages market participants to proactively manage their transition away from LIBOR and outlines several potential areas that may warrant increased attention during that time. It is expected that parties reporting information used to set LIBOR will stop doing so after 2021.

"The transition away from LIBOR is gaining some much needed traction, but, as the staff's statement makes clear, significant work remains," said Chairman Jay Clayton. "The risks the statement highlights deserve careful attention and I draw particular attention to the staff’s observation: 'For many market participants, waiting until all open questions have been answered to begin this important work likely could prove to be too late to accomplish the challenging task required.' The SEC will continue to monitor disclosure and risk management efforts related to the LIBOR transition, and we welcome engagement from market participants on these important matters."

As LIBOR is used extensively in the U.S. and globally as a benchmark rate to set interest rates for various commercial and financial contracts, the SEC staff noted that the “discontinuation of LIBOR could have a significant impact on financial markets and may present a material risk for market participants, including public companies, investment advisers, investment companies, and broker-dealers. These risks will be exacerbated if the work necessary to effect an orderly transition to an alternative reference rate is not completed in a timely manner.”

The SEC staff statement encourages market participants to identify existing contracts that extend past 2021 to determine their exposure to LIBOR and to consider whether contracts entered into in the future should reference an alternative rate to LIBOR or include effective fallback language. The statement also contains specific guidance for how registrants might respond to risks associated with the discontinuation of LIBOR.

For more information, click here.

© 2019 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

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SEC Staff Views - Division of Corporate Finance - Financial Reporting Manual

Summary - The SEC’s Division of Corporation Finance (Corp Fin) has published an updated Financial Reporting Manual (FRM). The FRM represents informal internal guidance from the Corp Fin staff on various accounting topics, financial reporting topics, and SEC rules.

Sections of the FRM have been updated as of July 1, 2019. These sections have been marked with the date tag, “Last updated: 7/1/2019,” to identify the changes. Previous updates are marked using the same convention and represent the last revision to that section. Changes included in this update are:

  • Section 1610: Removed guidance related to the impact of adopting new accounting standards on selected financial data.
  • Topic 2, 2020.1: Updated to clarify application of Rule 3-13 and Note 5 to Rule 8-01 of Regulation S-X.
  • Sections 2030.1, 2030.3: Has been removed. Requests to omit financial statements should be submitted through Rule 3-13 waiver process.
  • Section 5240: Consolidated information with Note to Topic 2.
  • Section 10110: Updated revenue threshold for Emerging Growth Companies pursuant to SEC Release 33-10332.
  • Sections 11100, 11200: Technical amendment to replace references to FASB Accounting Standards Nos. 2014-09 (Revenue from Contracts with Customers (Topic 606)) and 2016-02 (Leases (Topic 842)) with ASC Topics.
For more information, click here.

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SEC Staff Speech - Baby on Board: Remarks before the Society for Corporate Governance National Conference by Commissioner Hester M. Peirce

Summary - SEC Commissioner Hester M. Peirce recently discussed the roles women play on corporate Board of Directors. Peirce indicated that the “presence or absence of women on corporate boards has drawn a lot of public and private sector attention recently. This morning, I would like to talk about why all the attention on this issue gives me both concern and hope for the future.”

For more information, click here.

© 2019 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

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SEC Staff Speech - Reasonableness Pants by Commissioner Hester M. Peirce

Summary - As reported in its “Summary of Board Decisions” publication, the FASB met on May 8, 2019 and discussed the results of staff research on six potential projects related to eight recent agenda requests and a technical inquiry.The Board decided to add the following projects to the EITF agenda:

  • Financial Instruments—Clarifying the Interactions between Topic 321, Investments—Equity Securities, and Topic 323, Investments—Equity Method and Joint Ventures.
  • Revenue Recognition—Contract Modifications of Licenses of Intellectual Property.
The FASB also decided to expand the scope of its project, Improving the Accounting for Asset Acquisitions and Business Combinations, to include the accounting for in-process research and development and contingent consideration obligations recognized upon the initial consolidation of a variable interest entity that is not a business.The FASB decided not to add the following potential projects to its agenda:

  • Collective Defined Contribution Plans and the Definition of a Defined Contribution Plan;
  • Share Repurchase Disclosures—Price and Earnings Per Share Effects; or
  • Accounting for Emissions Trading and Other Environmental Market Transactions.
The FASB also decided to remove the project, Measurement Alternative and Observable Transactions Identified after the Reporting Date, from its research agenda. 

For more information, click here.

© 2019 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

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SEC Staff Views - Voluntary Compliance with the New Mining Property Disclosure Rules Prior to Completion of EDGAR Reprogramming

Summary - The SEC’s Division of Corporation Finance (Corp Fin) issued a statement, Voluntary Compliance with the New Mining Property Disclosure Rules Prior to Completion of EDGAR Reprogramming. This statement provides guidance to registrants electing to voluntarily comply with the mining property disclosure rules prior to completion of EDGAR reprogramming. Specifically, the statement indicates that “a registrant may immediately elect to voluntarily comply with the new mining property disclosure rules as long as it satisfies all of Subpart 1300’s provisions and existing EDGAR requirements.”

When the SEC adopted new rules to modernize the property disclosure requirements for mining registrants in October 2018, it adopted a two-year transition period to provide adequate time for registrants to prepare to comply with the updated mining disclosure requirements codified in new Subpart 1300 of Regulation S-K. A mining registrant is not required to comply with the new rules until its first fiscal year beginning on or after January 1, 2021. The SEC previously indicated that a registrant could elect to comply early with the new mining property disclosure rules on a voluntary basis, subject to the SEC’s completion of the necessary EDGAR reprogramming changes, and so long as a registrant abides by all of subpart 1300’s requirements.

Corp Fin indicates that although EDGAR reprogramming changes are still being completed, a registrant may immediately elect to voluntarily comply with the new mining property disclosure rules as long as it satisfies all of Subpart 1300’s provisions and existing EDGAR requirements. If required to file a technical report summary, the registrant should file it as an additional exhibit under Item 601(b)(99) of Regulation S-K or Exhibit No. 15 of Form 20-F. Any maps, diagrams or other graphic material included in the technical report summary must meet EDGAR’s technical specification requirements.

Once the SEC has finalized the EDGAR reprogramming made necessary by the new rules, CCH will publish another notice. At that time, registrants electing early compliance with the new rules will be able to file the technical report summary as an exhibit under Item 601(b)(96) of Regulation S-K, as designated in those rules.

Registrants not electing early compliance should continue looking to Guide 7 for their mining property disclosures until they are required to comply with the rules in Subpart 1300.

For more information, click here.

© 2019 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.


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SEC Staff Speech - How We Protect Retail Investors by Peter Driscoll, Director, Office of Compliance Inspections and Examinations

Summary - Peter Driscoll, SEC Director of Compliance Inspections and Examinations, recently discussed the 2019 priorities for the office. Top priorities include:

  • Anti-money laundering;
  • Microcap securities; and
  • Protection of customer funds.
For more information, click here.

© 2019 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

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SEC Staff Speech - Remarks before the 2019 Baruch College Financial Reporting Conference: Aiming toward the Future by Wesley Bricker, Chief Accountant

Summary - SEC Chief Accountant Wesley Bricker recently provided his thoughts on the future of financial reporting. Bricker indicated that while he remains “optimistic about the long-term role of financial reporting in the United States and the world, the backdrop is complex. In my view, we face a long term trend of less overall trust and confidence in virtually all institutions, from corporations to audit firms. This trend must be reversed, and we must all work to do so. The future must be met with all of us involved in financial reporting being clear-minded, evidence-based, courageous, and frank regarding the objectives, responsibilities, and sensible expectations for each involved in financial reporting. Confusion or lack of action in this regard undermines purpose, trust, quality, confidence, and ultimately increases costs borne by shareholders.”

Highlights of Bricker’s remarks included:

  • Confidence in financial reporting is essential to a healthy economy, including in the capital markets. However, financial reporting is a means to an end and not the end.
  • A company's control environment is a pervasive and vital aspect of getting reporting done right, acknowledging the inherent limitations of any financial reporting process. Ultimately, it is self-defeating for management to issue materially misstated financial statements, or an auditor to certify those financial statements. The costs of financial reporting failure can be substantial.
  • Perhaps the biggest challenge and focus area facing the auditing profession, and to some extent accounting more generally, is an apparent decline in the attractiveness of auditing, particularly to students.
  • Non-GAAP is a form of voluntary reporting, designed to supplement (and must be reconciled to, though not supplant, with presentation not more prominent than,) the comparable GAAP numbers. When done properly, the reporting can add critical insight for investors to the company's performance from management's perspective. Integrity and consistency in the non-GAAP and key operational figures are essential characteristics.
  • Internal control over financial reporting (ICFR) fosters reliability in the financial reporting process and has benefited from time and attention. The SEC, its staff, and the PCAOB, have issued a range of resources in the past to assist companies, audit committees, and management in strengthening ICFR. Bricker cautioned that the disclosure of material weaknesses in ICFR does not obviate the need to remediate those weaknesses in a reasonable period of time.
  • Auditor independence is fundamental to the credibility of audit reports and investor confidence in them. The judgments auditors make in the course of their audit work must be objective and impartial. Auditors are being asked with some frequency in the fund industry to consider providing permissible tax services to the fund, subject to pre-approval. Auditors and independent audit committees, of course, must take care to adhere to the law in both the process and conclusions. In doing so, attention should be given to avoiding scope creep into prohibited services, such as bookkeeping or other services related to the accounting records or financial statements.
  • Audit committees work in the interest of shareholders, and they have a clear information advantage over outside shareholders. As such, Bricker encourages voluntary audit committee-related disclosures, which he believes are becoming more prominent in filings. Bricker is encouraged by this momentum in audit committee disclosures over the past several years, recognizing there is always more that could be done.
Bricker discussed several focus areas for the future of financial reporting, including:

Evolution of technology. Technology is a prominent force that has been a catalyst of profound changes to business models, business process, accounting, and auditing. The opportunities and benefits of technology provide also come with risks and complexities. For example, data security and privacy concerns are immensely important. How we respond to these challenges will have a profound effect on our capital markets. As such, collectively we need to understand these changes through the lens of our capital markets, particularly in their impact on financial reporting. Adequately preparing the next generation of the accounting profession for such challenges will be critical to that understanding.

Small business. Auditors serve a vital role in providing candid feedback to the small businesses they audit, in either a financial statement only audit or an integrated audit. Bricker believes auditors can effectively serve this role within the boundaries of the independence rules. It is essential for auditors to have processes and controls to help mitigate the occurrence of a violation of the independence rules.

Audit firms can provide both audit and permissible other services to the same public audit client and serve the public and shareholder interests of strengthening companies and their financial reporting, while also in many cases benefitting audit quality. Mandates for disclosures always come at a cost, and such cost could be disproportionately burdensome on small businesses. Bricker indicated that the graduated disclosures or phased implementation has been positive.

International trends. It is crucial to identify similarities and differences in financial reporting and auditing standards across countries and reconcile them where possible. Differences in these standards and their applications contribute to uneven financial reporting quality and audit quality. This in turn manifests in additional costs that investors bear in acquiring and processing information about foreign companies relative to domestic companies and imposes significant costs on foreign companies seeking cross-listing.

An effective and efficient global capital market depends on high-quality financial information that is reliable and comparable, regardless of country of origin. Continually advancing the goal of disclosure of information across borders requires the cooperative efforts of all participants in the capital raising and financial reporting processes, including national governments, regulators, the international business community, international financial institutions, accounting and audit standard setters, and audit firms. I am concerned about national approaches that structurally intertwine private sector and public-sector responsibilities and blur the lines of responsibilities and accountabilities of each and adding additional undefined, and multilayered, incentives. Bricker cautioned that a regulatory process that lacks transparency and consistency can risk placing other interest well ahead of investors' interests and that it is our collective obligation to put investors' interests, notably their long-term interests, first.

For more information, click here.

© 2019 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

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SEC Staff Speech - How We Howey by Commissioner Hester M. Peirce

Summary - SEC Commissioner Hester M. Peirce recently discussed the definition of securities given new investment vehicles and the need for the SEC to continue to provide guidance on this issue. Peirce cautioned that “securities laws do not cease to operate as a new industry develops. Consequently, individuals and companies in the industry must comply with our securities laws or risk becoming the subject of an enforcement action. It is therefore our duty as a regulator to provide the public with clear guidance as to how people can comply with our law. We have not yet fulfilled this duty.”

For more information, click here.

© 2019 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.


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SEC Staff Speech - Alligators in Nirvana: Smart Regulation and the Future of Financial Services - Public Policy Conference by Commissioner Hester M. Peirce

Summary - SEC Commissioner Hester M. Peirce recently discussed her views on considering the level of SEC regulation and the future of financial services. Peirce indicated that sometimes “the best choice will be to leave a problem to the market to solve. In other instances, the best choice will be a government solution that draws on market forces and takes into account government incentives and human tendencies.”

For more information, click here.

© 2019 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

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Encouraging Smaller Entrants to Our Capital Markets - Remarks at SEC Speaks by Commissioner Elad L. Roisman

Summary - SEC Commissioner Elad L. Roisman recently discussed capital formation and smaller entrants into the US capital markets. Topics discussed by Roisman included:

  • Road blocks for small public companies;
  • The SEC’s role in capital formation; and
  • Proposed SEC actions.

For more information, click here.

© 2019 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

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Secret Garden - Remarsk at SEC Speaks by Commissioner Hester M. Peirce

Summary - SEC Commissioner Hester Peirce recently discussed the securities regulation landscape. Peirce indicated that the “complexity of the federal securities laws is no secret. Indeed, this complexity is likely a big reason most of us are in the room today. We are drawn to this body of law because it promises a lifetime of interesting problems to solve. We will never get bored; there is always something new and unexpected to be discovered. We constantly challenge one another with legal questions the answers to which reside in a tangled statutory and regulatory web.”

For more information, click here.

© 2019 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

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Management's Discussion and Analysis of the SEC - Remarks at the "SEC Speaks" Conference by Chairman Jay Clayton

Summary - SEC Chairman Jay Clayton recently discussed the current state of the SEC with an emphasis on current staff resources. Clayton discussed:

  • Factors and trends affecting SEC operations;
  • Fiscal results and expenditures;
  • Rulemaking agenda; and
  • Economic analysis and retrospective review of commission rules.

For more information, click here.

© 2019 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

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Important Issues for Investors in 2019 by Rick Fleming, Investor Advocate

Summary - SEC Investor Advocate Rick Fleming recently discussed important investor issues for 2019. Important issues for 2019 include:

  • Transaction fee and pilot program;
  • Amendments to Rule 15c2-11 to defer fraud against retail investors;
  • Improvements to equity market structure; and
  • Regulation of proxy advisors.

For more information, click here.

© 2019 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

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SEC Staff Speeches, Equity Market Structure 2019: Looking Back & Moving Forward by Chairman Jay Clayton Brett Redfearn, Director, Division of Trading and Markets

Summary - SEC Chairman Jay Clayton and Brett Redfearn, Director of the SEC’s Division of Trading and Markets, recently spoke on the SEC’s efforts regarding equity market structure, including areas of focus in 2019. Specifically, Clayton and Redfearn discussed the efforts by the SEC on:

  • Transaction fee pilot;
  • Greater transparency of broker order routing practices; and
  • Operational transparency of alternative trading systems.

For 2019, Clayton and Redfearn indicated that the following areas would be a focus for 2019:

  • Regulation NMS;
  • Thinly traded securities;
  • Combating retail fraud; and
  • Market data and access.

For more information, click here.

© 2019 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

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SEC Staff Speeches, Applying a Principles-Based Approach to Disclosing Complex, Uncertain and Evolving Risks by William Hinman Director, Division of Corporation Finance

Summary - William Hinman, SEC Director of the Division of Corporation Finance (Corp Fin), recently spoke about how the U.S. securities disclosure requirements, which are largely principles-based, apply in areas where the disclosure topics may be complex, associated with uncertain risks and rapidly evolving.

Hinman discussed Brexit disclosures and noted that Corp Fin sees a “wide range of disclosures, even within the same industry. Some companies provided generic disclosure, merely stating that Brexit presents a risk, that the outcome is uncertain and that it could materially and adversely impact the business and its operations. In my opinion, this type of disclosure does little to explain to investors the potential specific impact of Brexit on a company’s business and operations and is insufficient to guide investors in a meaningful manner.”

While Brexit disclosures will be specific to each company, Hinman recommended companies consider the following when drafting them:
• Is the business exposed to new regulatory risk given the uncertainty of which set of laws and regulations will apply and whether transition agreements will be in place?
• Are there significant supply chain risks due to the potential disruption to the U.K.’s access to free trade agreements with other nations and any resulting changes in tariffs on exports and imports?
• Does the company face a material risk of losing customers, a decrease in sales or revenues or an increase in costs due to tariffs or other factors?
• Does the company have exposure to currency devaluation, foreign currency exchange rate risk or other market risk?
• What is the company’s exposure to contractual risk in the face of Brexit?

Hinman also commented on sustainability disclosures noting that “the market is still evaluating what, if any, additional disclosure on these topics would provide consistently material and useful information. The marketplace evolution of sustainability disclosures is ongoing – companies certainly provide more sustainability information than they did ten years ago – and allowing this evolution to continue should provide market participants with a continued opportunity to sort out the types of information they find useful.”

As the SEC approaches sustainability disclosures or other disclosure topics, Hinman is cognizant that “imposing specific bright-line requirements can increase the costs associated with being a public company and yet not deliver the relevant and material information that market participants are seeking. Adding requirements to the disclosure regime that do not deliver benefits that justify their costs decreases the attractiveness of our public markets, which in turn can reduce the number of public investment options available to all investors.”

For more information, click here.

© 2019 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

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SEC Staff Speeches, A Start-Up Within the Government - Introducing the SEC’s Office of the Advocate for Small Business Capital Formation by Martha Miller Advocate for Small Business Capital Formation

Summary - Martha Miller, Advocate for Small Business Capital Formation, recently spoke about the newest office within the SEC, the Office of the Advocate for Small Business Capital Formation.
Miller indicated that the new office “was created to give an independent voice to small businesses in D.C., and I am keenly aware that most of them do not have paid lobbyists and advisors championing their causes within the beltway. Our mission is to advocate for small businesses and their investors, and to help these companies access capital markets, strengthening their voice within the SEC and the broader regulatory landscape.”
Areas of focus of the office include:
• Working with small businesses to understand their capital formation issues through education and outreach;
• Helping small businesses resolve issues with the SEC and self-regulatory organizations, including by recommending policy changes; and
• Analyzing the potential impact of proposed rules and regulations likely to significantly affect small businesses.

For more information, click here.

© 2019 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

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SEC Staff Speeches, Festivus, Fortnite, and Focus: Remarks before the Council of Institutional Investors Spring Conference by Commissioner Hester M. Peirce

Summary - SEC Commissioner Hester M. Peirce recently spoke about the SEC’s current disclosure requirements and the agencies efforts to improve it. Peirce indicated that with the engagement of investors of all sizes and types, the SEC “is thinking about ways that we can refine our offering and disclosure regime. Just last month, for example, we proposed extending the popular “testing the waters” provision to all issuers, a change we hope will facilitate a more efficient and easily navigable public offering process. Other recent initiatives include extending the Regulation A exemption to all issuers, including reporting companies; expanding the definition of smaller reporting company; and conducting a broad sweep of existing disclosure requirements to weed out those that have become redundant or outdated. While these regulatory efforts, we hope, will help smooth the path for registrants, we expect investors also to reap considerable benefits from reductions in the regulatory costs that issuers pass on to investors and from expanded investment opportunities.”

For more information, click here.

© 2019 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

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SEC Staff Speeches, Statement on Shareholder Proposals Seeking to Require Mandatory Arbitration Bylaw Provisions by Chairman Jay Clayton

Summary - SEC Chairman Jay Clayton issued a statement on shareholder proposals seeking to require mandatory arbitration bylaw provisions. Clayton indicated that the issue of mandatory arbitration provisions in the bylaws of U.S. publicly-listed companies has generated a great deal of attention. Clayton cited previous informal inquiries about whether the staff in the SEC’s Division of Corporation Finance (Corp Fin) would declare effective the registration statement of a domestic company seeking to include mandatory arbitration provisions in its governing documents at the time of its initial public offering. In general, Clayton indicated that if the issue were to arise in an actual initial public offering of a domestic company, it would not be appropriate for resolution at the staff level but would rather be best addressed in a measured and deliberative manner by the SEC.

Clayton cited a more recent request in which a domestic, publicly-listed company has received a shareholder proposal that would require the company to take steps to adopt mandatory arbitration provisions. The company asked Corp Fin for informal guidance on whether the company may exclude the proposal from its proxy statement. In response to the inquiry, Clayton indicated that this “is a complex matter under both federal and state law, and it has been interpreted differently by the company (arguing that such a clause would violate both state and federal law) and the proponent (arguing that such a clause would not violate state or federal law). The staff considered in its analysis the arguments made by the company, the proponent and the Attorney General of New Jersey, the state’s chief law enforcement officer and legal advisor. The staff issued a response stating that it would not recommend enforcement action should the company decide to exclude the proposal on the grounds that it would violate New Jersey state law.” Corp Fin explicitly noted that it was not expressing a view as to whether the proposal, if implemented, would cause the company to violate federal law.

For more information, click here.

© 2019 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

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Statement on Digital Asset Securities Issuance and Trading – SEC Staff Views

Summary - The staff in the SEC’s Division of Corporation Finance, Division of Investment Management, and Division of Trading and Markets, have issued a statement highlighting several recent SEC enforcement actions involving the intersection of long-standing applications of federal securities laws and new technologies. The SEC staff encourages “technological innovations that benefit investors and our capital markets, and we have been consulting with market participants regarding issues presented by new technologies. We wish to emphasize, however, that market participants must still adhere to our well-established and well-functioning federal securities law framework when dealing with technological innovations, regardless of whether the securities are issued in certificated form or using new technologies, such as blockchain.”

Topics covered in the statement include:

  • Offers and Sales of Digital Asset Securities;
  • Investment Vehicles Investing in Digital Asset Securities; and
  • Trading of Digital Asset Securities.

Recent SEC enforcement actions have addressed these and other issues associated with digital assets.

For more information, click here.

© 2018 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

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Competition: The Forgotten Fourth Pillar of the SEC’s Mission by Commissioner Robert J. Jackson Jr. – SEC Staff Speeches

Summary - SEC Commissioner Robert J. Jackson, Jr. recently spoke about his belief that the SEC needs to put more focus on consideration of competition in our capital markets. Jackson cautioned that there "is a striking lack of competition across crucial areas of our capital markets." Topics discussed by Jackson are:

  • A history of competition and the SEC;
  • Costs of neglecting competition in our capital markets; and
  • The path ahead.

For more information, click here.

© 2018 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

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Improving Information for Investors in the Digital Age by Commissioner Kara M. Stein – SEC Staff Speeches

Summary - SEC Commissioner Kara M. Stein recently urged the SEC to improve the disclosures provided to investors given the importance of information in today’s Digital Age.

Commissioner Stein discussed how some companies are using non-GAAP metrics to provide voluntary disclosures to investors on “environmental, social, and governance issues” (ESG disclosures). Stein cautioned that while these voluntary disclosures “increase information to investors and the marketplace, I am concerned that the lack of uniform standards and the lack of comparability may result in presentations that are not fairly balanced or fairly presented. In effect, what non-GAAP metrics measure, or attempt to communicate, more often are in the eye of the preparer rather than the beholder. In fact, one analyst study showed that a popular non-GAAP metric, “core earnings” was on average 30% higher than earnings reported under GAAP. Also, misaligned incentives, such as customized measures linked to executive compensation may fuel this growth.”

Commissioner Stein cautioned that despite the growing integration of ESG disclosure into corporate reporting, there are still competing private groups and competing methodologies, leaving both companies and investors in a state of confusion. And that, in and of itself, is unsustainable. Commissioner Stein urged the SEC to ensure that its disclosure system meets the needs of investors by providing information that is truthful and useful.

For more information, click here.

© 2018 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

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The New American Dream: Retirement Security by Commissioner Kara M. Stein – SEC Staff Speeches

Summary - SEC Commissioner Kara M. Stein recently discussed ideas on how the SEC can play a role in retirement security for investors. Stein discussed retirement investments and believes the SEC "must work to ensure that those investments are protected from fraud." Stein's remarks included discussion of:

  • Education of investors;
  • Enhancing investment advice;
  • Investor incentives; and
  • Protecting investors.

For more information, click here.

© 2018 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

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Cross-Border Exemptions – SEC Staff Views

Summary - The staff in the Division of Corporation Finance (Corp Fin) has issued a new Compliance and Disclosure Interpretation (C&DI), Cross-Border Exemptions. This C&DI provides, in a question and answer format, Corp Fin’s interpretations of the cross-border exemptions. Topics addressed in this C&DI include:

  • Calculation of U.S. ownership;
  • Determination of the subject class for purposes of determining exemption eligibility;
  • Equal treatment in the Tier I and Tier II exemptions;
  • Filing, publication, and dissemination of offer materials; and
  • Withdrawal rights.

For more information, click here.

© 2018 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

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