Certified Public Accounting Firm

SEC Releases - 3

Articles on the Page

Release No. 34-95607: Pay Versus Performance

Release No. 34-95267: Substantial Implementation, Duplication, and Resubmission of Shareholder Proposals Under Exchange Act Rule 14a-8

Release No. 34-95266: Proxy Voting Advice

Release No. 33-11061: The Enhancement and Standardization of Climate - Related Disclosures for Investors

Release No.33-11070: Updating EDGAR Filing Requirements and Form 144 Filings

Release No. 33-11042: The Enhancement and Standardization of Climate-Related Disclosures for Investors

Release No. 34-94212: The Commission’s Whistleblower Program Rules

Release No. 34-94196: Shortening the Securities Transaction Settlement Cycle

Release No. 33-11030: Modernization of Beneficial Ownership Reporting

Release No. 34-94313 : Short Position and Short Activity Reporting by Institutional Investment Managers

Release No. 34-93784: Prohibition Against Fraud, Manipulation, or Deception in Connection with Security-Based Swaps; Prohibition against Undue Influence over Chief Compliance Officers; Position Reporting of Large Security-Based Swap Positions

Release No. IC-34441: Money Market Fund Reforms Modernization Release No. 34-93783: Share Repurchase Disclosure Modernization

Release No. 33-11013: Rule 10b5-1 and Insider Trading

Release No. 34-93614: Electronic Recordkeeping Requirements for Broker-Dealers, Security-Based Swap Dealers, and Major Security-Based Swap Participants

Release No. 34-93613: Reporting of Securities Loans

Release No. 34-93595: Proxy Voting Advice

Release No. 33-11005: Updating EDGAR Filing Requirements

Release No. 33-11016: Adoption of Updated EDGAR Filer Manual

Release No. 34-93701: Holding Foreign Companies Accountable Act Disclosure

Release No. 34-93596: Universal Proxy 

Release No. IA-5904: Performance-Based Investment Advisory Fees

Release No. 33-10997: Filing Fee Disclosure and Payment Methods Modernization 

Release No. 34-93169: Enhanced Reporting of Proxy Votes by Registered Management Investment Companies; Reporting of Executive Compensation Votes by Institutional Investment Managers 

Release No. 34-92727: Freedom of Information Act Regulations 

Release No. 34-91603: Reopening of Comment Period for Universal Proxy 

Release No. 34-90610: Market Data Infrastructure

Release No. IC-34188: Request for Comment on Potential Money Market Fund Reform Measures in President’s Working Group Report

Release No. 33-10902: Adoption of Updated EDGAR Filer Manual, Proposed Collection and Comment Request

Release No. 33-10901: Administration of the Electronic Data Gathering, Analysis, and Retrieval System

Release No. 33-10890: Management’s Discussion and Analysis, Selected Financial Data, and Supplementary Financial Information

Release No. 34-90442: Amendments to the Commission’s Rules of Practice

Release No.33-10889: Electronic Signatures in Regulation S-T Rule 302

Release No. 34-90680: Order Recognizing the Resource Extraction Payment Disclosure Requirements of the European Union, the United Kingdom, Norway, and Canada as Alternative Reporting Regimes that Satisfy the Transparency Objectives of Section 13(q) under the Securities Exchange Act of 1934

Release No. 33-10911: Rule 144 Holding Period and Form 144 Filings

Release No. 34-90788: Custody of Digital Asset Securities by Special Purpose Broker-Dealers

Release No: 33-10891: Modernization of Rules and Forms for Compensatory Securities Offerings and Sales 

Release No. 33-10884: Facilitating Capital Formation and Expanding Investment Opportunities by Improving Access to Capital in Private Markets 

Release No. 34-90244: Customer Margin Rules Relating to Security Futures 

Release No. 33-10876: Qualifications of Accountants 

Release No. 34-89963: Whistleblower Program Rules 

Release No. 33-10845: Adoption of Updated EDGAR Filer Manual 

Release No. 34-89964: Procedural Requirements and Resubmission Thresholds under Exchange Act Rule 14a-8 

Release No. 33-10835: Update of Statistical Disclosures for Bank and Savings and Loan Registrants 

Release No. 33-10829: Temporary Amendments to Regulation Crowdfunding; Extension 

Release No. 33-10825: Modernization of Regulation S-K Items 101, 103, and 105 

Release No. 33-10824: Amending the “Accredited Investor” Definition 

Release No. 34-89618: Rescission of Effective-Upon-Filing Procedure for NMS Plan Fee Amendments and Modified Procedures for Proposed NMS Plans and Plan Amendments 

Release No. 34-89394: Covered Broker-Dealer Provisions under Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act 

Release No. 34-89372: Exemptions from the Proxy Rules for Proxy Voting Advice 

Release No. 33-10765A: Updated Disclosure Requirements and Summary Prospectus for Variable Annuity and Variable Life Insurance Contracts; Correction

Release No. BHCA-9: Prohibitions and Restrictions on Proprietary Trading and Certain Interests in, and Relationships With, Hedge Funds and Private Equity Funds

Release No. 33-10781: Temporary Amendments to Regulation Crowdfunding 

Articles

Release No. 34-95607: Pay Versus Performance

Summary - The SEC adopted amendments to its rules to require registrants to disclose information reflecting the relationship between executive compensation actually paid by a registrant and the registrant’s financial performance. The rules implement a requirement mandated by the Dodd–Frank Wall Street Reform and Consumer Protection Act. The SEC proposed pay versus performance disclosure rules in 2015 and reopened the comment period on the proposal in January 2022.

The SEC indicates that the “amendments require registrants to provide a table disclosing specified executive compensation and financial performance measures for their five most recently completed fiscal years. With respect to the measures of performance, a registrant will be required to report its total shareholder return (TSR), the TSR of companies in the registrant's peer group, its net income, and a financial performance measure chosen by the registrant.” Registrants will be required to describe the relationships between the executive compensation actually paid and each of the performance measures, as well as the relationship between the registrant’s TSR and the TSR of its selected peer group. A registrant will also be required to provide a list of three to seven financial performance measures that it determines are its most important performance measures for linking executive compensation actually paid to company performance. Smaller reporting companies will be subject to scaled disclosure requirements under the rules.

The final rules will become effective 30 days following publication of the release in the Federal Register. Registrants must begin to comply with the new disclosure requirements in proxy and information statements that are required to include Item 402 executive compensation disclosure for fiscal years ending on or after December 16, 2022.

For more information, click here.

© 2022 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Release No. 34-95267: Substantial Implementation, Duplication, and Resubmission of Shareholder Proposals Under Exchange Act Rule 14a-8

Summary - The SEC has proposed for public comment amendments to the rule that governs the process for including shareholder proposals in a company’s proxy statement. The SEC indicates that under Rule 14a-8, “companies generally must include shareholder proposals in their proxy statements. The rule, however, provides several bases for exclusion, including several substantive requirements that proposals must comply with to avoid exclusion. The proposed amendments would revise three of the bases for exclusion to promote more consistency and predictability in application.”

The proposed amendments to Rule 14a-8 would revise the following bases for exclusion:

Substantial Implementation. The proposed amendments would specify that a proposal may be excluded under this provision if the company has already implemented the “essential elements” of the proposal.
Duplication. The proposed amendments would specify that a proposal “substantially duplicates” another proposal previously submitted for the same shareholder meeting if it addresses the same subject matter and seeks the same objective by the same means.
Resubmission. The proposed amendments would provide that a proposal constitutes a resubmission if it substantially duplicates another proposal that was previously submitted for the same company’s prior shareholder meetings.

The public comment period will remain open for 60 days following publication of the proposing release on the SEC’s website or 30 days following publication of the proposing release in the Federal Register, whichever period is longer.

For more information, click here.

© 2022 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Release No. 34-95266: Proxy Voting Advice

Summary - The SEC adopted amendments to its rules governing proxy voting advice that aims “to avoid burdens on proxy voting advice businesses that may impair the timeliness and independence of their advice. The amendments also address misperceptions about liability standards applicable to proxy voting advice while also preserving investors’ confidence in the integrity of such advice.”

The final amendments rescind two rules applicable to proxy voting advice businesses that the SEC adopted in 2020. Specifically, the final amendments rescind conditions to the availability of two exemptions from the proxy rules’ information and filing requirements on which proxy voting advice businesses often rely.

Those conditions require that:

Registrants that are the subject of proxy voting advice have such advice made available to them in a timely manner; and
Clients of proxy voting advice businesses are provided with a means of becoming aware of any written responses by registrants to proxy voting advice.

The SEC indicates that institutional investors and other clients of proxy voting advice businesses have continued to express concerns that these conditions could impose increased compliance costs on proxy voting advice businesses and impair the independence and timeliness of their proxy voting advice.

The final amendments also delete the 2020 changes made to the proxy rules’ liability provision. Although the 2020 changes were intended to clarify the application of this liability provision to proxy voting advice, they instead created a risk of confusion regarding the application of this provision to proxy voting advice, undermining the goal of the 2020 changes. The final amendments address the confusion while affirming that proxy voting advice generally is subject to liability under the proxy rules.

Finally, the adopting release rescinds guidance that the SEC issued in 2020 to investment advisers regarding their proxy voting obligations.

The final amendments and rescission of the guidance will become effective 60 days after publication in the Federal Register.

For more information, click here.

© 2022 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Release No. 33-11061: The Enhancement and Standardization of Climate - Related Disclosures for Investors

Summary - The SEC announced that it has extended the public comment period on the proposed rulemaking to enhance and standardize climate-related disclosures for investors from May 20, 2022 until June 17, 2022. In March 2022, the SEC proposed for public comment rule changes that would require companies to include certain climate-related disclosures in their registration statements and periodic reports, including “information about climate-related risks that are reasonably likely to have a material impact on their business, results of operations, or financial condition, and certain climate-related financial statement metrics in a note to their audited financial statements.” The required information about climate-related risks also would include disclosure of a company’s greenhouse gas emissions, which have become a commonly used metric to assess a company’s exposure to such risks.

For more information, click here.

© 2022 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Release No.33-11070: Updating EDGAR Filing Requirements and Form 144 Filings

Summary - The SEC has adopted amendments to require certain forms that currently are permitted to be filed or submitted in paper format to be filed or submitted electronically. The amendments also amend certain forms to require structured data reporting and remove outdated references. The SEC indicates that the “amendments are intended to promote efficiency, transparency, and operational resiliency by modernizing how information is filed or submitted to the Commission and disclosed to the public. Furthermore, to benefit investors and the public, electronic filings will be more readily accessible to the public and available on the SEC website in easily searchable formats.”

Amendments

The amended rules apply to various issuers, affiliates, and national securities exchanges that file or submit reports to the SEC and will require the electronic filing or submission of:

  • Documents that currently are permitted to be submitted electronically under Rule 101(b) of Regulation S-T, including notices of exempt solicitations and exempt preliminary roll-up communications, the “glossy” annual report to security holders, Form 144 for sales of securities of issuers subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act, filings on Form 6-K, and filings made by multilateral development banks.
  • Certifications made pursuant to Section 12(d) of the Exchange Act and Exchange Act Rule 12d1-3 that a security has been approved by an exchange for listing and registration.
    Certain foreign language documents.

The amended rules also will require the use of Inline XBRL for the filing of the financial statements and accompanying notes to the financial statements required by Form 11-K and make technical updates to Form F-10, Form F-X, and Form CB to remove outdated references.

Effective Transition Periods

The amendments are effective 30 days after publication in the Federal Register. The SEC is providing the following transition periods to provide filers with adequate time to prepare to submit these documents electronically in accordance with the EDGAR Filer Manual, including applying for the necessary filer codes on EDGAR:

  • Six months after the effective date of the amendments for filers to submit their “glossy” annual reports to security holders electronically in accordance with the EDGAR Filer Manual and, other than for Form 144, for paper filers who would be first-time electronic filers;
  • Six months after the date of publication in the Federal Register of the SEC release that adopts the version of the EDGAR Filer Manual addressing updates to Form 144 for filing Form 144 electronically on EDGAR; and
  • Three years after the effective date of the amendments for filers to submit the financial statements and accompanying schedules to the financial statements required by Form 11-K in the Inline XBRL structured data language.

For more information, click here.

© 2022 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Release No. 33-11042: The Enhancement and Standardization of Climate-Related Disclosures for Investors

Summary - The SEC has proposed for public comment rule changes that would require companies to include certain climate-related disclosures in their registration statements and periodic reports, including “information about climate-related risks that are reasonably likely to have a material impact on their business, results of operations, or financial condition, and certain climate-related financial statement metrics in a note to their audited financial statements.” The required information about climate-related risks also would include disclosure of a company’s greenhouse gas emissions, which have become a commonly used metric to assess a company’s exposure to such risks.

The proposed rule changes would require disclosure of information about:

  • The company’s governance of climate-related risks and relevant risk management processes;
  • How any climate-related risks identified by the company have had or are likely to have a material impact on its business and consolidated financial statements;
  • How any identified climate-related risks have affected or are likely to affect the company’s strategy, business model, and outlook; and
  • The impact of climate-related events (severe weather events and other natural conditions) and transition activities on the line items of a company’s consolidated financial statements, as well as on the financial estimates and assumptions used in the financial statements.

The proposed rules also would require a company to disclose information about its direct greenhouse gas (GHG) emissions (Scope 1) and indirect emissions from purchased electricity or other forms of energy (Scope 2). In addition, a company would be required to disclose GHG emissions from upstream and downstream activities in its value chain (Scope 3), if material or if the company has set a GHG emissions target or goal that includes Scope 3 emissions. The SEC indicates that these proposals for GHG emissions disclosures would provide investors with decision-useful information to assess a company’s “exposure to, and management of, climate-related risks, and in particular transition risks. The proposed rules would provide a safe harbor for liability from Scope 3 emissions disclosure and an exemption from the Scope 3 emissions disclosure requirement for smaller reporting companies.” The proposed disclosures are similar to those that many companies already provide based on broadly accepted disclosure frameworks, such as the Task Force on Climate-Related Financial Disclosures and the Greenhouse Gas Protocol.

Under the proposed rule changes, accelerated filers and large accelerated filers would be required to include an attestation report from an independent attestation service provider covering Scopes 1 and 2 emissions disclosures, with a phase-in over time, to promote the reliability of GHG emissions disclosures for investors.

The proposed rules would include a phase-in period for all companies, with the compliance date dependent on the company’s filer status, and an additional phase-in period for Scope 3 emissions disclosure.

The comment period will remain open for 30 days after publication in the Federal Register, or 60 days after the date of issuance and publication on sec.gov, whichever period is longer.

For more information, click here.

© 2022 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Release No. 34-94212: The Commission’s Whistleblower Program Rules

Summary - The SEC has proposed for public comment two amendments to the rules governing its whistleblower program. The first proposed amendment concerns award claims for related actions that would be otherwise covered by an alternative whistleblower program. The second affirms the SEC's authority to consider the dollar amount of a potential award for the limited purpose of increasing an award but not to lower an award.

Specifically, the SEC indicates that the proposed amendment to Rule 21F-3 would allow the SEC to pay whistleblower awards for certain actions brought by other entities, including designated federal agencies, in cases where those awards might otherwise be paid under the other entity's whistleblower program. The proposed amendments also would affirm the SEC's authority under Rule 21F-6 to consider the dollar amount of a potential award for the limited purpose of increasing the award amount, and it would eliminate the agency’s authority to consider the dollar amount of a potential award for the purpose of decreasing an award.

The public comment period will remain open for 60 days following publication of the proposed release on the SEC's website or 30 days following publication of the proposed release in the Federal Register, whichever period is longer.

For more information, click here.

© 2022 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Release No. 34-94196: Shortening the Securities Transaction Settlement Cycle

Summary - The SEC has issued for public comment proposed rule changes to reduce risks in the clearance and settlement of securities, including by shortening the standard settlement cycle for most broker-dealer transactions in securities from two business days after the trade date (T+2) to one business day after the trade date (T+1). The proposed changes are designed to reduce the credit, market, and liquidity risks in securities transactions faced by market participants and U.S. investors.

In addition to shortening the standard settlement cycle, the proposal includes rules directed at broker-dealers and registered investment advisers to shorten the process of confirming and affirming the trade information necessary to prepare a transaction for settlement so that it can be completed by the end of the trade date. Further, the proposal includes a new requirement to facilitate straight-through processing, which would apply to certain types of clearing agencies that provide central matching services. Central matching service providers help facilitate the processing of institutional trades between broker-dealers and their institutional customers. The proposed rule would require new policies and procedures directed to straight-through processing and require an annual report on progress with the process.

With the goal of shortening the settlement cycle further, the proposal solicits comments on challenges associated with and potential paths to achieving a same-day settlement cycle.

The public comment period will remain open for 60 days following publication of the proposing release on the SEC’s website or 30 days following publication of the proposing release in the Federal Register, whichever period is longer.

For more information, click here.

© 2022 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Release No. 33-11030: Modernization of Beneficial Ownership Reporting

Summary - The SEC has issued for public comment rule amendments governing beneficial ownership reporting under Exchange Act Sections 13(d) and 13(g). The proposed amendments would update those rules to provide more timely information to meet the needs of today's financial markets. The proposed amendments to Regulation 13D-G would:
Accelerate the filing deadlines for Schedules 13D beneficial ownership reports from 10 days to five days and require that amendments be filed within one business day; generally accelerate the filing deadlines for Schedule 13G beneficial ownership reports (which differ based on the type of filer);
Expand the application of Regulation 13D-G to certain derivative securities;
Clarify the circumstances under which two or more persons have formed a "group" that would be subject to beneficial ownership reporting obligations;
Provide new exemptions to permit certain persons to communicate and consult with one another, jointly engage issuers, and execute certain transactions without being subject to regulation as a "group;" and;
Require that Schedules 13D and 13G be filed using a structured, machine-readable data language.

The public comment period will remain open for 60 days following publication of the proposing release on the SEC's website or 30 days following publication of the proposing release in the Federal Register, whichever period is longer.

For more information, click here.

© 2022 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Release No. 34-94313 : Short Position and Short Activity Reporting by Institutional Investment Managers

Summary - The SEC has proposed changes that would provide greater transparency to investors and regulators by increasing the public availability of short sale related data. New Exchange Act Rule 13f-2 and the corresponding Form SHO would “require certain institutional investment managers to report short sale related information to the SEC on a monthly basis. The Commission then would make aggregate data about large short positions, including daily short sale activity data, available to the public for each individual security.”

Specifically, Rule 13f-2 would require institutional investment managers exercising investment discretion over short positions meeting specified thresholds to report on the Proposed Form SHO information relating to end-of-the-month short positions and certain daily activity affecting such short positions. The SEC would aggregate the resulting data by security, thereby maintaining the confidentiality of the reporting managers, and publicly disseminate the data to all investors. This new data would supplement the short sale data that is currently publicly available from FINRA and stock exchanges.

The SEC has also proposed a new provision of Regulation SHO, Rule 205, which would establish a new “buy to cover” order marking requirement for broker-dealers. Regulation SHO, which is the SEC’s primary short selling regulation, requires broker-dealers to identify each sale order that it effects as either “long,” “short,” or “short-exempt,” but it does not currently have a corresponding requirement for purchase orders. Proposed Rule 205 would require a broker-dealer to mark a purchase order as “buy to cover” if the purchaser has any short position in the same security at the time the purchase order is entered. This information will be especially useful to the Commission in reconstructing significant market events and identifying potentially abusive trading practices including short squeezes.

Relatedly, the SEC proposed to amend the national market system plan governing the consolidated audit trail (CAT). The amendment would require CAT reporting firms to report “buy to cover” information to CAT. The proposed amendments also include a provision that would require each CAT reporting firm to indicate where it is asserting use of the bona fide market making exception under Regulation SHO.

In light of Proposed Rule 13f-2, the SEC voted to reopen the comment period for Proposed Exchange Act Rule 10c-1. Rule 10c-1 was proposed by the SEC on November 18, 2021, to increase the transparency and efficiency of the securities lending market by requiring any person that loans a security on behalf of itself or another person to report the material terms of those securities lending transactions and related information to a registered national securities association. The initial comment period for proposed Rule 10c-1 ended on January 7, 2022.

For more information, click here.

© 2022 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Release No. 34-93784: Prohibition Against Fraud, Manipulation, or Deception in Connection with Security-Based Swaps; Prohibition against Undue Influence over Chief Compliance Officers; Position Reporting of Large Security-Based Swap Positions

Summary - The SEC has issued for public comment a proposed rule, Prohibition Against Fraud, Manipulation, or Deception in Connection with Security-Based Swaps; Prohibition against Undue Influence over Chief Compliance Officers; Position Reporting of Large Security-Based Swap Positions. The proposed rule is aimed at preventing fraud, manipulation and deception in connection with security-based swaps, to prevent undue influence over the chief compliance officer (CCO) of security-based swap dealers and major security-based swap participants (SBS Entities), and to require any person with a large security-based swap position to publicly report certain information related to the position. The proposal includes the following new rules:

  • Rule 9j-1, which would prohibit fraudulent, deceptive, or manipulative conduct in connection with all transactions in security-based swaps, including misconduct in connection with the exercise of any right or performance of any obligation under a security-based swap.
  • Rule 15Fh-4(c), which would prohibit personnel of an SBS Entity from taking any action to coerce, mislead or otherwise interfere with the SBS Entity’s CCO.
  • Rule 10B-1, which would require any person, or group of persons, who owns a security-based swap position that exceeds the threshold amount set by the rule to promptly file with the SEC a statement containing the information required by Schedule 10B on the SEC’s EDGAR filing system. The filings will be publicly available.

The comment period will remain open for 45 days after publication in the Federal Register.

For more information, click here.

© 2022 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Release No. IC-34441: Money Market Fund Reforms Modernization

Summary - The SEC has issued for public comment a proposed rule, Money Market Fund Reforms. This proposal includes amendments to certain rules that govern money market funds under the Investment Company Act of 1940. The SEC indicates that in March 2020, growing economic concerns about the impact of the COVID-19 pandemic led investors to reallocate their assets into cash and short-term government securities. Prime and tax-exempt money market funds, particularly institutional funds, experienced large outflows, which contributed to stress on short-term funding markets. The SEC’s proposed amendments are designed, in part, to address concerns about prime and tax-exempt money market funds highlighted by these events.

The proposed amendments would “increase liquidity requirements for money market funds to provide a more substantial liquidity buffer in the event of rapid redemptions. The proposed amendments also would remove provisions in the current rule permitting or requiring a money market fund to impose liquidity fees or to suspend redemptions through a gate when a fund’s liquidity drops below an identified threshold. These provisions appeared to contribute to investors’ incentives to redeem in March 2020 as some funds’ reported liquidity levels declined.”

To address concerns about redemption costs and liquidity, the proposal would require institutional prime and institutional tax-exempt money market funds to implement swing pricing policies and procedures that would require redeeming investors, under certain circumstances, to bear the liquidity costs of their redemptions.

Further, the proposal would amend certain reporting requirements to improve the availability of information about money market funds and enhance the SEC’s monitoring and analysis of these funds.

The comment period will remain open for 60 days after publication in the Federal Register.

For more information, click here.

© 2022 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Release No. 34-93783: Share Repurchase Disclosure Modernization

Summary - The SEC proposed amendments to its rules regarding disclosure about an issuer’s repurchases of its equity securities, often referred to as share buybacks. The SEC indicates that the proposed rules would require an issuer to provide a new Form SR before the end of the first business day following the day the issuer executes a share repurchase. Form SR would require disclosure identifying the:

  • Class of securities purchased;
  • Total amount purchased; and
  • Average price paid.

Issuers would also have to disclose on Form SR the aggregate total amount purchased on the open market in reliance on the safe harbor in Exchange Act Rule 10b-18 or pursuant to a plan that is intended to satisfy the affirmative defense conditions of Exchange Act Rule 10b5-1(c).

The proposed amendments also would “enhance existing periodic disclosure requirements regarding repurchases of an issuer’s equity securities. Specifically, the proposed amendments would require an issuer to disclose: the objective or rationale for the share repurchases and the process or criteria used to determine the repurchase amounts; any policies and procedures relating to purchases and sales of the issuer’s securities by its officers and directors during a repurchase program, including any restriction on such transactions; and whether the issuer is making its repurchases pursuant to a plan that it intends to satisfy the affirmative defense conditions of Exchange Act Rule 10b5-1(c) and/or the conditions of the Exchange Act Rule 10b-18 non-exclusive safe harbor.”

The proposed rules apply to issuers that repurchase securities registered under Section 12 of the Securities Exchange Act of 1934, including foreign private issuers and certain registered closed-end funds.

The comment period will remain open for 45 days after publication in the Federal Register.

For more information, click here.

© 2022 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Release No. 33-11013: Rule 10b5-1 and Insider Trading

Summary - The SEC has issued for public comment a proposal, Rule 10b5-1 and Insider Trading. This proposal includes amendments to Rule 10b5-1 under the Securities Exchange Act of 1934 to enhance disclosure requirements and investor protections against insider trading. The proposal includes updates to Rule 10b5-1(c), which provides an affirmative defense to insider trading for parties that frequently have access to material nonpublic information, including corporate officers, directors and issuers.

The proposed amendments to Rule 10b5-1 would update the requirements for the affirmative defense, including:

  • Imposing a cooling off period before trading could commence under a plan;
  • Prohibiting overlapping trading plans; and
  • Limiting single-trade plans to one trading plan per twelve month period.

In addition, the proposal would require directors and officers to furnish written certifications that they are not aware of any material nonpublic information when they enter into the plans and expand the existing good faith requirement for trading under Rule 10b5-1 plans. This proposal aims to address critical gaps in the SEC’s insider trading regime and to help shareholders understand when and how insiders are trading in securities for which they may at times have material nonpublic information.

According to the SEC, the amendments would also elicit “more comprehensive disclosure about issuers’ policies and procedures related to insider trading and their practices around the timing of options grants and the release of material nonpublic information. A new table would report any options granted within 14 days of the release of material nonpublic information and the market price of the underlying securities the trading day before and the trading day after the disclosure of the material non-public information. Insiders that report on Forms 4 or 5 would have to indicate via a new checkbox whether the reported transactions were made pursuant to a Rule 10b5-1(c) or other trading plan. Finally, gifts of securities that were previously permitted to be reported on Form 5 would be required to be reported on Form 4.”

The comment period will remain open for 45 days after publication in the Federal Register.

For more information, click here.

© 2022 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Release No. 34-93614: Electronic Recordkeeping Requirements for Broker-Dealers, Security-Based Swap Dealers, and Major Security-Based Swap Participants

Summary - The SEC has issued for public comment a proposed rule, Electronic Recordkeeping Requirements for Broker-Dealers, Security-Based Swap Dealers, and Major Security-Based Swap Participants. This proposal includes amendments to the electronic recordkeeping and prompt production of records requirements applicable to broker-dealers, security-based swap dealers (SBSDs), and major security-based swap participants (MSBSPs).

The SEC’s broker-dealer electronic recordkeeping rule requires firms to preserve electronic records exclusively in a non-rewriteable, non-erasable format (otherwise known as write once, read many). The SEC indicates that the proposed amendments “would add an audit-trail alternative. Under this alternative, electronic records could be preserved in a manner that permits the recreation of an original record if it is altered, over-written, or erased. The audit-trail alternative is designed to provide broker-dealers with greater flexibility in configuring their electronic recordkeeping systems so they more closely align with current technologies and practices while also protecting the authenticity and reliability of original records.”

The proposed amendments would require nonbank SBSDs and MSBSPs to preserve electronic records using either of the above alternatives that would be available to broker-dealers. The amendments also would require broker-dealers and all types of SBSDs and MSBSPs to produce electronic records to securities regulators in a reasonably usable electronic format. This proposal is designed to facilitate examinations and make them more efficient.

Comments should be received on or before January 3, 2022.

For more information, click here.

© 2022 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Release No. 34-93613: Reporting of Securities Loans

Summary - The SEC has issued for public comment a proposed rule, Reporting of Securities Loans. This proposal is intended to increase the transparency and efficiency of the securities lending market by requiring any person that loans a security on behalf of itself or another person to report the material terms of those securities lending transactions and related information regarding the securities the person has on loan and available to loan to a registered national securities association (RNSA).

The proposed rule would also require that the RNSA make available to the public certain information concerning each transaction and aggregate information on securities on loan and available to loan.

Comments on the proposal are due 30 days from publication in the Federal Register.

For more information, click here.

© 2022 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Release No. 34-93595: Proxy Voting Advice

Summary - The SEC published for public comment proposed amendments to its rules governing proxy voting advice. The proposed amendments “aim to address concerns expressed by investors and others that the current rules may impede and impair the timeliness and independence of proxy voting advice and subject proxy voting advice businesses to undue litigation risks and compliance costs.”

The proposed amendments would rescind two rules applicable to proxy voting advice businesses that the Commission adopted in 2020. Specifically, the SEC is proposing to rescind conditions to the availability of two exemptions from the proxy rules’ informational and filing requirements on which proxy voting advice businesses often rely. Those conditions require that:

  • Registrants that are the subject of proxy voting advice have such advice made available to them in a timely manner; and
  • Clients of proxy voting advice businesses are provided with a means of becoming aware of any written responses by registrants to proxy voting advice.

The SEC indicates that investors and others have expressed concerns that these conditions will impose increased compliance costs on proxy voting advice businesses and impair the independence and timeliness of their proxy voting advice.

The proposed amendments would also rescind the 2020 changes made to the proxy rules’ liability provision. Although the changes were intended to make clear that proxy voting advice is subject to liability under the proxy rules, investors and others have expressed concerns that the 2020 changes have created confusion, increased proxy voting advice businesses’ litigation risks, and potentially impair the independence and quality of the proxy voting advice.

The proposal will have a 30-day public comment period following its publication in the Federal Register.

For more information, click here.

© 2022 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Release No. 33-11005: Updating EDGAR Filing Requirements

Summary - The SEC published proposed amendments to update electronic filing requirements. According to the SEC, the agency currently permits and sometimes requires certain forms to be filed or submitted in paper format. The proposed rule and form amendments would require certain forms to be filed or submitted electronically. The proposed amendments also would make technical amendments to certain forms to require structured data reporting and remove outdated references. The amendments are intended to promote efficiency, transparency, and operational resiliency by modernizing the manner in which information is submitted to the SEC and disclosed.

Furthermore, publicly filed electronic submissions would be more readily accessible to the public and would be available on our website in easily searchable formats, which benefits both investors and the broader public. The SEC indicates, that the “electronic filing capabilities have been an effective measure in addressing logistical and operational issues raised by the spread of coronavirus disease (COVID-19). Electronic submissions would allow the Commission, and those filing submissions, to effectively navigate any future disruptive events that make the paper submission process unnecessarily burdensome, impractical, or unavailable.”

For more information, click here.

© 2022 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Release No. 33-11016: Adoption of Updated EDGAR Filer Manual

Summary - The SEC has updated Volume II of the EDGAR Filer Manual. This volume has been updated to reflect new EDGAR filing requirements, including those relating to Rule 15Fk-1(c) under the Securities Exchange Act of 1934, which requires security-based swap dealers and security-based swap participants (“SBS Entities”) to submit an annual report to the SEC.

The EDGAR system was updated for these changes December 20, 2021.

For more information, click here.

© 2022 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Release No. 34-93701: Holding Foreign Companies Accountable Act Disclosure

Summary - The SEC has adopted amendments to finalize rules implementing the submission and disclosure requirements in the Holding Foreign Companies Accountable Act (HFCAA). The Final Rule, Release No. 34-93701, Holding Foreign Companies Accountable Act Disclosure, applies to registrants the SEC identifies as having filed an annual report with an audit report issued by a registered public accounting firm that is located in a foreign jurisdiction and that the Public Company Accounting Oversight Board (PCAOB) is unable to inspect or investigate (Commission-Identified Issuers).

"We have a basic bargain in our securities regime, which came out of Congress on a bipartisan basis under the Sarbanes-Oxley Act of 2002. If you want to issue public securities in the U.S., the firms that audit your books have to be subject to inspection by the PCAOB," said SEC Chair Gary Gensler. "This final rule furthers the mandate that Congress laid out and gets to the heart of the SEC's mission to protect investors. The Commission and the PCAOB will continue to work together to ensure that the auditors of foreign companies accessing U.S. capital markets play by our rules. We hope foreign governments will, working with the PCAOB, take action to make that possible."

The final amendments require Commission-Identified Issuers to submit documentation to the SEC establishing that, if true, it is not owned or controlled by a governmental entity in the public accounting firm’s foreign jurisdiction. The amendments also require that a Commission-Identified Issuer that is a "foreign issuer," as defined in Exchange Act Rule 3b-4, provide certain additional disclosures in its annual report for itself and any of its consolidated foreign operating entities. Further, the release provides notice regarding the procedures the SEC has established to identify issuers and to impose trading prohibitions on the securities of certain Commission-Identified Issuers, as required by the HFCAA.

The SEC will identify Commission-Identified Issuers for fiscal years beginning after December 18, 2020. A Commission-Identified Issuer will be required to comply with the submission and disclosure requirements in the annual report for each year in which it was identified. If a registrant is identified as a Commission-Identified Issuer based on its annual report for the fiscal year ended December 31, 2021, the registrant will be required to comply with the submission or disclosure requirements in its annual report filing covering the fiscal year ended December 31, 2022.

The amendments are effective 30 days after publication in the Federal Register. The new addition to §232.405, Interactive Data File submissions, is effective from 30 days after publication in the Federal Register through July 1, 2023.

For more information, click here.

© 2022 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Release No. 34-93596: Universal Proxy

Summary - The SEC adopted final rules requiring parties in a contested election to use universal proxy cards that include all director nominees presented for election at a shareholder meeting. The SEC indicates that the rule changes will give shareholders the ability to vote by proxy for their preferred combination of board candidates, similar to voting in person.

The final rules will require dissident shareholders and registrants to provide shareholders with a proxy card that includes the names of all registrant and dissident nominees. The rules will apply to all non-exempt solicitations for contested elections other than those involving registered investment companies and business development companies. The rules will require registrants and dissidents to provide each other with notice of the names of their nominees, establish a filing deadline and a minimum solicitation requirement for dissidents, and prescribe presentation and formatting requirements for universal proxy cards.

To further facilitate shareholder voting in director elections, the SEC also adopted amendments to the proxy rules to ensure that proxy cards clearly specify the applicable shareholder voting options in all director elections and to require proxy statements to disclose the effect of a shareholder’s election to withhold its vote.

To facilitate transition to the new rules, compliance with the rules related to universal proxy cards will be required for any shareholder meeting involving contested director election held after August 31, 2022.

For more information, click here.

© 2022 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Release No. IA-5904: Performance-Based Investment Advisory Fees

Summary - The SEC has adopted amendments to the rule under the Investment Advisers Act of 1940 (“Advisers Act”) that permits investment advisers to charge performance-based compensation to “qualified clients.” The rule defines “qualified client” with reference to specific dollar amount thresholds, which are required to be adjusted every five years to account for the effects of inflation. These amendments replace specific dollar amount thresholds in the rule’s “qualified client” definition with references to the SEC’s “most recent order,” as defined by the amended rule, containing the specific dollar amount thresholds adjusted for inflation.
The amendments are effective upon publication in the Federal Register.

For more information, click here.

© 2022 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Release No. 33-10997: Filing Fee Disclosure and Payment Methods Modernization

Summary - The SEC adopted amendments to modernize filing fee disclosure and payment methods. Operating companies and investment companies (funds) pay filing fees when engaging in certain transactions, including registered securities offerings, tender offers, and mergers and acquisitions.

According to the SEC, the amendments revise “most fee-bearing forms, schedules, and related rules to require companies and funds to include all required information for filing fee calculation in a structured format. The amendments also add new options for Automated Clearing House (ACH) and debit and credit card payment of filing fees and eliminate infrequently used options for filing fee payment via paper checks and money orders. The amendments are intended to improve filing fee preparation and payment processing by facilitating both enhanced validation through filing fee structuring and lower-cost, easily routable payments through the ACH payment option.”

The amendments are generally effective on January 31, 2022. The amendments that will add the options for filing fee payment via ACH and debit and credit cards and eliminate the option for filing fee payment via paper checks and money orders will be effective on May 31, 2022. The SEC is providing an extended transition period to give filers additional time to comply with the Inline XBRL structuring requirements for filing fee information.

For more information, click here.

© 2021 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Release No. 34-93169: Enhanced Reporting of Proxy Votes by Registered Management Investment Companies; Reporting of Executive Compensation Votes by Institutional Investment Managers

Summary - The Securities and Exchange Commission has proposed amendments to Form N-PX to enhance the information mutual funds, exchange-traded funds, and certain other funds report about their proxy votes. The proposed rulemaking would require funds to tie the description of each voting matter to the issuer’s form of proxy and to categorize each matter by type to help investors identify votes of interest and compare voting records. The proposal also would prescribe how funds organize their reports and require them to use a structured data language to make the filings easier to analyze. Funds would also be required to disclose how their securities lending activity impacted their voting.

Further, the rulemaking would require institutional investment managers to disclose how they voted on executive compensation, or so-called “say-on-pay” matters, which would fulfill one of the remaining rulemaking mandates under the Dodd-Frank Wall Street Reform and Consumer Protection Act. Managers generally would be subject to the same Form N-PX reporting requirements as funds with respect to their say-on-pay votes.

Since 2003, funds have been required to file Form N-PX reports disclosing how they voted on proxy proposals relating to investments they hold, but investors may face difficulties analyzing these reports. For example, funds may report their votes in an inconsistent manner or in a format that is not machine readable. This can make it more difficult for investors to analyze the reported data. The proposal would make funds’ proxy voting records more usable and easier to analyze, improving investors’ ability to monitor how their funds vote and compare different funds’ voting records.

The proposal will be published on SEC.gov and in the Federal Register. The public comment period will remain open for 60 days after publication in the Federal Register.

For more information, click here.

© 2021 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Release No. 34-92727: Freedom of Information Act Regulations

Summary - The SEC has issued Final Rule, Freedom of Information Act Regulations. This final rule makes an amendment to the SEC’s Freedom of Information Act (FOIA) regulations to remove a provision stating that records that the FOIA requires to be made available for public inspection in an electronic format will be available to persons who do not have access to the internet in the SEC’s Public Reference Room. The SEC’s FOIA regulations will continue to provide that persons who do not have access to the internet can obtain the documents required to be made available for public inspection by telephone or email request to the Office of FOIA Services.

This final rule is effective upon publication in the Federal Register.

For more information, click here.

© 2021 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Release No. 34-91603: Reopening of Comment Period for Universal Proxy

Summary - The SEC is reopening the comment period for its proposal to require the use of universal proxy cards in all nonexempt solicitations in connection with contested elections of directors. The proposed rules were set forth in a release published in the Federal Register on November 10, 2016 (Release No. 34-79164), and the related comment period ended on January 9, 2017.

The reopening of this comment period is intended to allow interested persons further opportunity to analyze and comment upon the proposed rules in light of developments since their publication, including developments in corporate governance matters affecting funds.

Comments are requested within 30 days from publication of the reopening of comment period notice in the Federal Register.

For more information, click here.

© 2021 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

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Release No. 34-90610: Market Data Infrastructure

Summary - The SEC adopted rules to modernize the infrastructure for the collection, consolidation, and dissemination of market data for exchange-listed national market system stocks (NMS market data). The SEC indicates that this “infrastructure has not been significantly updated since its initial implementation in the late 1970s. The adopted rules update and significantly expand the content of NMS market data to better meet the diverse needs of investors in today’s equity markets. The adopted rules also update the method by which NMS market data is consolidated and disseminated, by fostering a competitive environment and providing for a new decentralized model that promises reduced latency and other new efficiencies.

The content of NMS market data and the model for collecting, consolidating, and disseminating NMS market data have not kept pace with the needs of market participants. The rules adopted seek to address this concern in two fundamental ways:

  • The rules update and expand the content of NMS market data; and
  • The rules establish a decentralized consolidation model in which competing consolidators, rather than the exclusive SIPs, will be responsible for collecting, consolidating, and disseminating consolidated market data to the public.

The adopted rules will be effective 60 days after publication in the Federal Register but in order to facilitate an orderly transition, the SEC has developed a phased transition plan that will begin in 2021.

For more information, click here.

© 2021 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Release No. IC-34188: Request for Comment on Potential Money Market Fund Reform Measures in President’s Working Group Report

Summary - The SEC has published a Request for Comment on Potential Money Market Fund Reform Measures in President’s Working Group Report. This document seeks comment on potential reform measures for money market funds, as highlighted in a recent report of the President’s Working Group on Financial Markets. Public comments on the potential policy measures will help inform consideration of reforms to improve the resilience of money market funds and broader short-term funding markets.

Comments are requested 60 days from publication in the Federal Register.

For more information, click here.

© 2021 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Release No. 33-10902: Adoption of Updated EDGAR Filer Manual, Proposed Collection and Comment Request

Summary - The SEC adopted revisions to Volumes I and II of the EDGAR Filer Manual and related rules. The revisions substantially reduce the length of Volume I, and amend Volume I and related rules under Regulation S-T, including provisions regarding electronic notarizations and remote online notarizations, which include electronic signatures. The revisions to Volume II reflect changes made to EDGAR on December 14, 2020. The SEC is also providing notice and soliciting comments on the Form ID collection of information pursuant to the Paperwork Reduction Act of 1995.

For more information, click here.

© 2021 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Release No. 33-10901: Administration of the Electronic Data Gathering, Analysis, and Retrieval System

Summary - The SEC adopted a new rule that specifies several actions that the agency, in its administration of the Electronic Data Gathering, Analysis, and Retrieval system (EDGAR), may take to promote the reliability and integrity of EDGAR submissions. The new rule establishes a process for the SEC to notify filers and other relevant persons of its actions under the rule as soon as reasonably practicable.

In addition, the SEC adopted amendments to delegate authority to the Director of the Commission’s EDGAR Business Office to take actions pursuant to the new rule and two current rules relating to filing date adjustments and the continuing hardship exemption.

For more information, click here.

© 2021 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Release No. 33-10890: Management’s Discussion and Analysis, Selected Financial Data, and Supplementary Financial Information

Summary - The SEC has adopted amendments that will modernize, simplify and enhance certain financial disclosure requirements in Regulation S-K. The amendments are intended to enhance the focus of financial disclosures on material information for the benefit of investors, while simplifying compliance efforts for registrants.

The amendments make changes to Items 301 (Selected Financial Data), 302 (Supplementary Financial Information), and 303 (Management’s Discussion and Analysis (MD&A)) of Regulation S-K. The amendments eliminate Item 301 that previously required selected financial data. The amendments also modernize, simplify, and streamline Item 302(a) which provides requirements for supplementary financial information. The amendments revise Item 302(a) to replace the current requirement for quarterly tabular disclosure with a principles-based requirement for material retrospective changes.

The amendments make significant changes to MD&A under Item 303, including:

  • Adds a new Item 303(a), Objective, to state the principal objectives of MD&A;
  • Amends current Item 303(a)(1) and (2) (amended Item 303(b)(1)) to modernize, enhance and clarify disclosure requirements for liquidity and capital resources;
  • Amends current Item 303(a)(3) (amended Item 303(b)(2)) to clarify, modernize and streamline disclosure requirements for results of operations;
  • Adds a new Item 303(b)(3), Critical accounting estimates, to clarify and codify SEC guidance on critical accounting estimates;
  • Replaces current Item 303(a)(4), Off-balance sheet arrangements, with an instruction to discuss such obligations in the broader context of MD&A;
  • Eliminates current Item 303(a)(5), Tabular disclosure of contractual obligations, in light of the amended disclosure requirements for liquidity and capital resources and certain overlap with information required in the financial statements; and
  • Amends current Item 303(b), Interim periods (amended Item 303(c)) to modernize, clarify and streamline the item and allow for flexibility in the comparison of interim periods to help registrants provide a more tailored and meaningful analysis relevant to their business cycles.

In addition, the SEC adopted certain parallel amendments to the financial disclosure requirements applicable to foreign private issuers, including to Forms 20-F and 40-F, as well as other conforming amendments to the SEC's rules and forms, as appropriate.

The amendments will become effective 30 days after they are published in the Federal Register. Registrants are required to comply with the rule beginning with the first fiscal year ending on or after the date that is 210 days after publication in the Federal Register (the "mandatory compliance date"). Registrants will be required to apply the amended rules in a registration statement and prospectus that on its initial filing date is required to contain financial statements for a period on or after the mandatory compliance date.

Although registrants will not be required to apply the amended rules until their mandatory compliance date, they may comply with the final amendments any time after the effective date, so long as they provide disclosure responsive to an amended item in its entirety.

For more information, click here.

© 2021 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Release No. 34-90442: Amendments to the Commission’s Rules of Practice

Summary - The SEC voted to adopt rules and rule amendments that will “provide additional flexibility in connection with documents filed with the Commission by permitting the use of electronic signatures in authentication documents, and facilitate electronic service and filing in the Commission's administrative proceedings.” The SEC indicates that these new rules and amendments are part of a series of initiatives designed to modernize and strengthen the agency's operations.

The SEC adopted rule amendments to require electronic filing and service of documents in administrative proceedings. These rule amendments also require redaction of sensitive personal information from many of these documents before filing with the SEC.

These amendments will become effective 30 days after publication of the adopting release in the Federal Register. However, compliance will not be required until April 12, 2021, and there will be an initial 90-day phase-in period following the compliance date.

For more information, click here.

© 2021 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Release No.33-10889: Electronic Signatures in Regulation S-T Rule 302

Summary - The SEC voted to adopt rules and rule amendments that will “provide additional flexibility in connection with documents filed with the Commission by permitting the use of electronic signatures in authentication documents, and facilitate electronic service and filing in the Commission's administrative proceedings.” The SEC indicates that these new rules and amendments are part of a series of initiatives designed to modernize and strengthen the agency's operations.

The SEC adopted rule amendments to permit the use of electronic signatures when executing authentication documents in connection with many documents filed with the SEC. Rule 302(b) of Regulation S-T currently requires that each signatory to an electronic filing manually sign a signature page or other document ("authentication document") before or at the time of the electronic filing to authenticate the signature that appears in typed form within the electronic filing.

The SEC amendments permit a signatory to an electronic filing who follows certain procedures to sign an authentication document through an electronic signature that meets certain requirements specified in the EDGAR Filer Manual. In addition, the SEC amended certain rules and forms under the Securities Act, Exchange Act, and Investment Company Act to allow the use of electronic signatures in authentication documents in connection with certain other filings when these filings contain typed, rather than manual, signatures. The SEC indicates that these amendments “recognize the widespread use of electronic signatures and technological developments in the authentication and security of electronic signatures, as well as the continuing need to support remote workforces, and follow a rulemaking petition joined by nearly 100 public companies.”

The rule amendments will be effective upon publication of the adopting release in the Federal Register.

For more information, click here.

© 2021 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Release No. 34-90680: Order Recognizing the Resource Extraction Payment Disclosure Requirements of the European Union, the United Kingdom, Norway, and Canada as Alternative Reporting Regimes that Satisfy the Transparency Objectives of Section 13(q) under the Securities Exchange Act of 1934

Summary - The SEC has issued an order in conjunction with issuance of new resource extraction payment rules. The order recognizes the resource extraction payment disclosure requirements of the European Union, the United Kingdom, Norway, and Canada as alternative reporting regimes that satisfy the transparency objectives of section 13(q) under the Securities Exchange Act of 1934.

The SEC adopted final rules that will require resource extraction issuers that are required to file reports under Section 13 or 15(d) of the Securities Exchange Act of 1934 to disclose payments made to the U.S. federal government or foreign governments for the commercial development of oil, natural gas, or minerals.

The final rules will be effective 60 days following publication in the Federal Register.

For more information, click here.

© 2021 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Release No. 33-10911: Rule 144 Holding Period and Form 144 Filings

Summary - The SEC proposed an amendment to Rule 144 under the Securities Act of 1933 to revise the holding period determination for securities acquired upon the conversion or exchange of certain "market-adjustable securities." According to the SEC, the proposed amendment is intended to reduce the risk of unregistered distributions in connection with sales of those securities. The SEC also voted to propose amendments to update and simplify the Form 144 filing requirements.

Under current law, Rule 144 deems securities acquired solely in exchange for other securities of the same issuer to have been acquired at the same time as the securities surrendered for conversion or exchange. The amendments adopted provide that the holding period for the underlying securities acquired upon conversion or exchange of "market-adjustable securities" would not begin until conversion or exchange. This means that a purchaser would need to hold the underlying securities for the applicable Rule 144 holding period before reselling them under Rule 144.

The proposed amendments would mandate electronic filing of Form 144, eliminate the requirement to file a Form 144 with respect to sales of securities issued by companies that are not subject to Exchange Act reporting, and amend the Form 144 filing deadline to coincide with the Form 4 filing deadline.

The public comment period will remain open for 60 days following publication of the proposing release in the Federal Register.

For more information, click here.

© 2021 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Release No. 34-90788: Custody of Digital Asset Securities by Special Purpose Broker-Dealers

Summary - The SEC issued a statement and request for comment regarding the custody of digital asset securities by broker-dealers in order to encourage innovation around the application of Securities Exchange Act Rule 15c3-3 to digital asset securities.

The statement sets forth the SEC's position that, “for a period of five years, a broker-dealer operating under the circumstances set forth in the statement will not be subject to a Commission enforcement action on the basis that the broker-dealer deems itself to have obtained and maintained physical possession or control of customer fully paid and excess margin digital asset securities for the purposes of paragraph (b)(1) of Rule 15c3-3. These circumstances, among other things, include that the broker-dealer limits its business to digital asset securities, establishes and implements policies and procedures reasonably designed to mitigate the risks associated with conducting a business in digital asset securities, and provides customers with certain disclosures regarding the risks of engaging in transactions involving digital asset securities.”

In addition, the SEC is requesting comment to provide the agency and its staff with an opportunity to gain additional insight into the evolving standards and best practices with respect to custody of digital asset securities. Such insights will serve to inform any potential future SEC action in this space.

The SEC statement and request for comment will become effective 60 days after publication in the Federal Register.

For more information, click here.

© 2021 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Release No: 33-10891: Modernization of Rules and Forms for Compensatory Securities Offerings and Sales

Summary - The SEC proposed amendments to Securities Act Rule 701, which provides an exemption from registration for the issuance of compensatory securities by non-reporting issuers, and Form S-8, the Securities Act registration statement for compensatory offerings by reporting issuers.

The proposed amendments to Rule 701 and Form S-8 are designed to modernize the framework for compensatory securities offerings in light of the significant evolution in compensatory offerings and composition of the workforce since the SEC last substantively amended these regulations, allowing employees and other workers to receive equity compensation from their company while maintaining important investor protections.

The proposal will have a 60-day public comment period following its publication in the Federal Register.

For more information, click here.

© 2021 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Release No. 33-10884: Facilitating Capital Formation and Expanding Investment Opportunities by Improving Access to Capital in Private Markets

Summary - The SEC amended its rules in order to “harmonize, simplify, and improve the multilayer and overly complex exempt offering framework. These amendments will promote capital formation and expand investment opportunities while preserving or improving important investor protections.”

The SEC indicates that a core component of the Federal regulatory regime is the requirement that all securities offerings be registered with the SEC or qualify for an exemption from registration. The registration process generally is designed for larger companies with substantial resources. As a result, many entrepreneurs and emerging businesses raise capital by selling securities in reliance on an offering exemption. This important capital formation activity ranges from raising seed capital for new businesses to growth capital for companies of all sizes, including those on the path to a registered initial public offering.

The SEC’s amendments are the next step in the agency’s efforts to improve the exempt offering framework for the benefit of investors, emerging companies, and more seasoned issuers. The amendments follow the SEC’s June 2019 concept release and March 2020 proposing release on the harmonization of offering exemptions and benefit from extensive public engagement. The amendments address gaps and complexities in the exempt offering framework that impede access to capital for issuers and access to investment opportunities for investors. The amendments generally:

  • Establish more clearly, in one broadly applicable rule, the ability of issuers to move from one exemption to another;
  • Increase the offering limits for Regulation A, Regulation Crowdfunding, and Rule 504 offerings, and revise certain individual investment limits;
  • Set clear and consistent rules governing certain offering communications, including permitting certain “test-the-waters” and “demo day” activities; and
  • Harmonize certain disclosure and eligibility requirements and bad actor disqualification provisions.

The amendments will be effective 60 days after publication in the Federal Register, except for the extension of the temporary Regulation Crowdfunding provisions, which will be effective upon publication in the Federal Register.

For more information, click here.

© 2020 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Release No. 34-90244: Customer Margin Rules Relating to Security Futures

Summary - The SEC and the Commodity Futures Trading Commission (the Commissions) approved a joint final rule that will “harmonize the minimum margin level for security futures, whether they are held in a futures account, a securities portfolio margin account, or a securities account that is not approved for portfolio margining.” The Commissions have joint rulemaking authority regarding margin requirements for security futures. In 2002, the Commissions adopted rules establishing margin levels for unhedged security futures at 20 percent. In light of the asymmetry in margin requirements resulting from the 15 percent margin level that has been established for security futures and comparable financial products held in a securities portfolio margin account, the Commissions are adopting the proposed margin requirement to set the required margin level for each long or short unhedged position in a security future at 15 percent of its current market value.

At this time, there are no security futures contracts listed for trading on U.S. exchanges. The final rule amendments, however, would set a 15 percent level for security futures if an existing exchange were to resume operations or another exchange were to launch security futures contracts.
This final rule is effective 30 days after publication in the Federal Register.

For more information, click here.

© 2020 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Release No. 33-10876: Qualifications of Accountants

Summary - The SEC announced that it has adopted final amendments to certain auditor independence requirements in Rule 2-01 of Regulation S-X. The SEC indicates that informed “by decades of staff experience applying the auditor independence framework, the final amendments modernize the rules and more effectively focus the analysis on relationships and services that may pose threats to an auditor’s objectivity and impartiality.”

The final amendments reflect updates based on recurring fact patterns that the SEC staff has observed over years of consultations in which certain relationships and services triggered technical independence rule violations without necessarily impairing an auditor’s objectivity and impartiality. The SEC indicates that these relationships either triggered non-substantive rule breaches or required potentially time-consuming audit committee review of non-substantive matters, thereby diverting time, attention, and other resources of audit clients, auditors, and audit committees from other investor protection efforts. The final amendments result in auditor independence requirements that will be used to evaluate specific relationships and services, with a focus on protecting investors against threats to the objectivity and impartiality of auditors.

Among other things, the final amendments:

  • Amend the definitions of “affiliate of the audit client,” in Rule 2-01(f)(4), and “investment company complex,” in Rule 2-01(f)(14), to address certain affiliate relationships, including entities under common control;
  • Amend the definition of “audit and professional engagement period,” specifically Rule 2-01(f)(5)(iii), to shorten the look-back period, for domestic first time filers in assessing compliance with the independence requirements;
  • Amend Rule 2-01(c)(1)(ii)(A)(1) and (E) to add certain student loans and de minimis consumer loans to the categorical exclusions from independence-impairing lending relationships;
  • Amend Rule 2-01(c)(3) to replace the reference to “substantial stockholders” in the business relationships rule with the concept of beneficial owners with significant influence;
  • Replace the outdated transition provision in Rule 2-01(e) with a new Rule 2-01(e) to introduce a transition framework to address inadvertent independence violations that only arise as a result of a merger or acquisition transactions; and
  • Make certain other miscellaneous updates.

The amendments will be effective 180 days after publication in the Federal Register. Voluntary early compliance is permitted after the amendments are published in the Federal Register in advance of the effective date provided that the final amendments are applied in their entirety from the date of early compliance. Auditors are not permitted to retroactively apply the final amendments to relationships and services in existence prior to the effective date or the early compliance date if selected by an audit firm.

For more information, click here.

© 2020 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Release No. 34-89963: Whistleblower Program Rules

Summary - The SEC adopted amendments to the rules governing its whistleblower program that are designed to provide greater clarity to whistleblowers and increase the program’s efficiency and transparency. Concurrently, to provide additional efficiencies, as well as clarity and transparency in the award determination process, the SEC’s Office of the Whistleblower published guidance regarding the process for determining award amounts for eligible whistleblowers. The SEC’s whistleblower program was created to incentivize individuals to report high-quality tips to the SEC and assist the agency in its efforts to combat wrongdoing and, as a result, better protect investors and the marketplace.

The amendments to the whistleblower rules are intended to “provide greater transparency, efficiency and clarity, and to strengthen and bolster the program in several ways. The rule amendments increase efficiencies around the review and processing of whistleblower award claims, and provide the Commission with additional tools to appropriately reward meritorious whistleblowers for their efforts and contributions to a successful matter.” Among other enhancements, the amendments provide a mechanism for whistleblowers with potential awards of less than $5 million (which historically have represented nearly 75% of all whistleblower awards), subject to certain criteria, to qualify for a presumption that they will receive the maximum statutory award amount. Other awards will continue to be evaluated consistent with past practice.

The amendments also affirm that award amounts are to be determined exclusively based on the application of the award factors set forth in the SEC’s whistleblower rules. In other words, there is not a separate (post application of the award factors) assessment of whether award amounts are too small or too large. The amendments further clarify that the SEC may waive compliance with the Tip, Complaint or Referral filing requirements if a whistleblower complies with the requirements within 30 days of first providing the information or of first obtaining actual or constructive notice of the TCR filing requirements.
The whistleblower rule amendments will become effective 30 days after publication in the Federal Register.

For more information, click here.

© 2020 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Release No. 33-10845: Adoption of Updated EDGAR Filer Manual

Summary - The SEC has published a new edition of its EDGAR Filer Manual. This new edition includes updates to Volume II of the manual and related forms. The EDGAR system was upgraded to reflect these changes on September 21, 2020.

This edition of the manual is effective upon publication in the Federal Register.

For more information, click here.

© 2020 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Release No. 34-89964: Procedural Requirements and Resubmission Thresholds under Exchange Act Rule 14a-8

Summary - The SEC has adopted amendments to modernize its shareholder proposal rule, which governs the process for a shareholder to have its proposal included in a company’s proxy statement for consideration by all of the company’s shareholders.

The SEC indicates that the amendments will “facilitate engagement among shareholder-proponents, companies and other shareholders, including preserving the ability of smaller shareholders to access the proxy statements of the companies in which they have demonstrated a continuing interest.” Under the rules, any shareholder may submit an initial proposal after having held $2,000 of company stock for at least three years, or higher amounts for shorter periods of time.

The rules also provide for a transition period so that shareholders who are currently eligible at the $2,000 threshold will remain eligible to submit a proposal for inclusion in the company’s proxy statement so long as they continue to maintain at least their current holdings through the date of submission (and through the date of the relevant meeting).

The amendments also update, for the first time since 1954, the levels of shareholder support a proposal must receive to be eligible for resubmission at future shareholder meetings, so as to relieve companies and their shareholders of the obligation to consider, and spend resources on, matters that had previously been voted on and rejected by a substantial majority of shareholders without sufficient indication that a proposal could gain traction among the broader shareholder base in the near future.

The amendments will be effective 60 days after publication in the Federal Register, and the final amendments will apply to any proposal submitted for an annual or special meeting to be held on or after January 1, 2022. The final rules also provide for a transition period with respect to the ownership thresholds that will allow shareholders meeting specified conditions to rely on the $2,000/one-year ownership threshold for proposals submitted for an annual or special meeting to be held prior to January 1, 2023.

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© 2020 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Release No. 33-10835: Update of Statistical Disclosures for Bank and Savings and Loan Registrants

Summary - The SEC announced that it has adopted rules to update and expand the statistical disclosures that bank and savings and loan registrants provide to investors, in light of changes in this sector over the past 30 years. The SEC indicates that the rules also eliminate certain disclosure items that are duplicative of other agency rules and requirements of U.S. GAAP or IFRS. The rules replace Industry Guide 3, Statistical Disclosure by Bank Holding Companies, with updated disclosure requirements in a new subpart of Regulation S-K. The rules are intended “to help ensure that investors have access to more meaningful, relevant information about these registrants to facilitate their investment and voting decisions.”

The SEC’s rules require disclosure about the following:

  • Distribution of assets, liabilities and stockholders’ equity, the related interest income and expense, and interest rates and interest differential;
  • Weighted average yield of investments in debt securities by maturity;
  • Maturity analysis of the loan portfolio including the amounts that have predetermined interest rates and floating or adjustable interest rates;
  • Certain credit ratios and the factors that explain material changes in the ratios, or the related components during the periods presented;
  • The allowance for credit losses by loan category; and
  • Bank deposits including average amounts and rate paid and amounts that are uninsured.

The rules will be effective 30 days after publication in the Federal Register and will apply to fiscal years ending on or after December 15, 2021. However, voluntary compliance with the new rules will be accepted in advance of the mandatory compliance date. Guide 3 is scheduled to be rescinded effective January 1, 2023.

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© 2020 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Release No. 33-10829: Temporary Amendments to Regulation Crowdfunding; Extension

Summary - The SEC is extending the effective date and applicability dates of our temporary final rules under Regulation Crowdfunding to facilitate capital formation for small businesses impacted by the COVID-19 pandemic. The temporary final rules are intended to “expedite the offering process for smaller, previously established companies directly or indirectly affected by COVID-19 that are seeking to meet their funding needs through the offer and sale of securities” made pursuant to Regulation Crowdfunding.
 
The temporary final rules are designed to facilitate this offering process by providing tailored, conditional relief from certain requirements of Regulation Crowdfunding relating to the timing of the offering and the availability of financial statements required to be included in issuers’ offering materials while retaining appropriate investor protections.
 
The amendments in this rule are effective from August 31, 2020 through September 1, 2021. The expiration date for the temporary final rules previously published May 7, 2020 is extended from March 1, 2021, to September 1, 2021. The temporary final rules apply to securities offerings initiated under Regulation Crowdfunding between May 4, 2020, and February 28, 2021.
 
For more information, click here.
 
© 2020 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Release No. 33-10825: Modernization of Regulation S-K Items 101, 103, and 105

Summary - The SEC announced that it voted to adopt amendments to modernize the description of business (Item 101), legal proceedings (Item 103), and risk factor disclosures (Item 105) that registrants are required to make pursuant to Regulation S-K. These disclosure requirements have not undergone significant revisions in over 30 years. The amendments the Commission is adopting today update these items to reflect the many changes in our capital markets and the domestic and global economy in recent decades.

Many of the amendments reflect the Commission's long-standing commitment to a principles-based, registrant-specific approach to disclosure. These disclosure requirements, while prescriptive in some respects, are rooted in materiality and are designed to facilitate an understanding of each registrant's business, financial condition, and prospects. The rules are designed for this information to be presented on a basis consistent with the lens that management and the board of directors use to manage and assess the registrant's performance. The modernization of Items 101, 103, and 105 is intended to elicit improved disclosures, tailored to reflect registrants' particular circumstances, which are designed will improve disclosures for investors and add efficiencies to the compliance efforts of registrants. The amendments are also intended to improve the readability of disclosure documents, as well as discourage repetition and reduce the disclosure of information that is not material.

For more information, click here.

© 2020 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Release No. 33-10824: Amending the “Accredited Investor” Definition

Summary - The SEC adopted amendments to the “accredited investor” definition, one of the principal tests for determining who is eligible to participate in our private capital markets. Historically, individual investors who do not meet specific income or net worth tests, regardless of their financial sophistication, have been denied the opportunity to invest in our multifaceted and vast private markets. The amendments update and improve the definition to more effectively identify institutional and individual investors that have the knowledge and expertise to participate in those markets.

The amendments allow investors to qualify as accredited investors based on defined measures of professional knowledge, experience or certifications in addition to the existing tests for income or net worth. The amendments also expand the list of entities that may qualify as accredited investors, including by allowing any entity that meets an investments test to qualify.

For more information, click here.

© 2020 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Release No. 34-89618: Rescission of Effective-Upon-Filing Procedure for NMS Plan Fee Amendments and Modified Procedures for Proposed NMS Plans and Plan Amendments

Summary - The SEC rescinded a rule exception that allowed a proposed national market system (NMS) plan fee amendment to become effective upon filing, prior to review and comment by investors and other market participants. According to the SEC, the new procedures require public notice of any proposed NMS plan fee amendment, an opportunity for public comment, and SEC approval by order before a new or changed fee can be charged. The SEC also modified the procedures for review of all proposed NMS plans and plan amendments, including fee amendments, to specify timelines for SEC action for each step of the process, adding certainty to the process for NMS plan participants.

The amendments will be effective 30 days after publication in the Federal Register.

For more information, click here.

© 2020 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Release No. 34-89394: Covered Broker-Dealer Provisions under Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act

Summary - The SEC and the Federal Deposit Insurance Corporation have adopted a final rule required by the Dodd-Frank Act clarifying and implementing provisions relating to the orderly liquidation of certain brokers or dealers (covered broker-dealers) in the event the FDIC is appointed receiver under Title II of the Dodd-Frank Act. The FDIC and SEC developed the final rule in consultation with the Securities Investor Protection Corporation (SIPC).

The SEC indicates that by statute, “the orderly liquidation of a covered broker-dealer must be accomplished in a manner that ensures that customers of the covered broker-dealer receive payments or property at least as beneficial to them as would have been the case had the covered broker-dealer been liquidated under the Securities Investor Protection Act of 1970 (SIPA).”

Among other things, the final rule clarifies how the relevant provisions of SIPA would be incorporated into a Title II proceeding. Upon the appointment of the FDIC as receiver, the FDIC would appoint SIPC to act as trustee for the broker-dealer. SIPC, as trustee, would determine and satisfy customer claims in the same manner as it would in a proceeding under SIPA. The treatment of the covered broker-dealer’s qualified financial contracts would be governed in accordance with Title II.

In addition, the final rule describes the claims process applicable to customers and other creditors of a covered broker-dealer and clarifies the FDIC’s powers as receiver with respect to the transfer of assets of a covered broker-dealer to a bridge broker-dealer.

For more information, click here.

© 2020 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Release No. 34-89372: Exemptions from the Proxy Rules for Proxy Voting Advice

Summary - The SEC adopted amendments to its rules governing proxy solicitations designed to ensure that clients of proxy voting advice businesses have reasonable and timely access to more transparent, accurate and complete information on which to make voting decisions. According to the SEC, the amendments “aim to facilitate the ability of those who use proxy voting advice—investors and others who vote on investors’ behalf—to make informed voting decisions without imposing undue costs or delays that could adversely affect the timely provision of proxy voting advice.”

The amendments condition the availability of two exemptions from certain of the federal proxy rules often used by proxy voting advice businesses on compliance with tailored and comprehensive conflicts of interest disclosure requirements. The exemptions are also conditioned on two principles-based requirements designed to ensure that:

  • Registrants that are the subject of proxy voting advice have such advice made available to them in a timely manner; and
  • Clients of proxy voting advice businesses are provided with an efficient and timely means of becoming aware of any written responses by registrants to proxy voting advice.

The SEC indicates that these conditions reflect certain observed market practices and are intended to ensure that proxy voting advice clients have access to information that is more transparent, accurate and complete.

In addition, the amendments codify the SEC’s longstanding view that proxy voting advice generally constitutes a solicitation under the proxy rules and makes clear that the failure to disclose material information about proxy voting advice may constitute a potential violation of the antifraud provision of the proxy rules.

For more information, click here.

© 2020 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Release No. 33-10765A: Updated Disclosure Requirements and Summary Prospectus for Variable Annuity and Variable Life Insurance Contracts; Correction

Summary - The SEC has published technical corrections to amendments to disclosure requirements and summary prospectus for variable annuity and variable life insurance contracts previously adopted in March 2020.

Specifically, this document amends Instructions 15(d) and 18(b) published in the previous release. Instruction 15(d) is amended to redesignate Note 2 to rule 405 of Regulation S-T as Note 1 to rule 405 of Regulation S-T, and Instruction 18(b) is amended to replace the reference to Item 3 of Form N-14 with a reference to Item 5(c) of Form N-14.

These technical corrections are effective July 1, 2020.

For more information, click here.

© 2020 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Release No. BHCA-9: Prohibitions and Restrictions on Proprietary Trading and Certain Interests in, and Relationships With, Hedge Funds and Private Equity Funds

Summary - The SEC and four other federal regulatory agencies finalized a rule modifying the Volcker rule’s prohibition on banking entities investing in or sponsoring hedge funds or private equity funds—known as covered funds. The final rule is broadly similar to the proposed rule from January 2020.

The Volcker rule generally prohibits banking entities from engaging in proprietary trading and from acquiring or retaining ownership interests in, sponsoring, or having certain relationships with a hedge fund or private equity fund.

Like the proposal, the final rule modifies three areas of the rule by:

  • Streamlining the covered funds portion of rule;
  • Addressing the extraterritorial treatment of certain foreign funds; and
  • Permitting banking entities to offer financial services and engage in other activities that do not raise concerns that the Volcker rule was intended to address.

The rule will be effective on October 1.

For more information, click here.

© 2020 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Release No. 33-10781: Temporary Amendments to Regulation Crowdfunding

Summary - The SEC announced that it is providing temporary, conditional relief for established smaller companies affected by COVID-19 that may look to meet their urgent funding needs through a Regulation Crowdfunding offering. According to the SEC, these actions will expedite the offering process for eligible companies by providing relief from certain rules with respect to the timing of a company's offering and the financial statements required. To take advantage of the temporary rules, a company must meet enhanced eligibility requirements and provide clear, prominent disclosure to investors about its reliance on the relief. The temporary rules are intended to expedite the offering process for smaller, previously established companies directly or indirectly affected by COVID-19 that are seeking to meet their funding needs through the offer and sale of securities pursuant to Regulation Crowdfunding.

The temporary rules provide flexibility for issuers that meet certain eligibility criteria to assess interest in a Regulation Crowdfunding offering prior to preparation of full offering materials, and then once launched, to close such an offering and have access to funds sooner than would be possible in the absence of the temporary relief. The temporary rules also provide an exemption from certain financial statement review requirements for issuers offering more than $107,000 but not more than $250,000 in securities in reliance on Regulation Crowdfunding within a 12-month period.

The relief will apply to offerings launched between the effective date of the temporary rules (publication in the Federal Register) and August 31, 2020.

For more information, click here.

© 2020 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.