December 23, 2013

An Early Christmas Present: Corp Fin’s Regulation S-K Study

Every year, I try not to blog during the week of Christmas. And it never happens. On Friday, the SEC released Corp Fin’s Study on Regulation S-K. This report to Congress was mandated by Section 108 of the JOBS Act. It’s 106 pages – but double-spaced.

Comprising nearly a third of the Study, I loved reading the history section of the Study. It’s like your life flashing before your eyes. Memories of learning about the Wheat Report and the expansion of the availability of Form S-7 (which was the first streamlined registration statement). Hard to believe that the initial version of Reg S-K only called for a “Description of Business” and “Description of Property.” It’s hard to believe it’s been nearly 20 years since the Task Force on Disclosure Simplification made its recommendations.

The next section of the Study provides the history of each Item in Reg S-K, along with a brief description of comments submitted on each item through the SEC’s JOBS Act page. Only 5 comment letters were submitted.

Starting on page 92, the final 15 pages of the Study is the section that everyone should read – about possible next steps & the Staff’s preliminary suggestions for further study. The study notes there are two approaches to disclosure reform: a broad comprehensive review of disclosures or a more targeted review topic by topic. The former approach would obviously be a bigger project that would take longer. The study identifies these 4 issues that should be addressed during a reform project: principles-based disclosure requirements; scalability for different types of companies; how disclosure is delivered & presented; and readability & navigability of disclosure.

Even though this is just a Staff study, the study’s preliminary suggestions may present some tea leaves about how SEC Chair White wants to pursue disclosure reform (eg. reconsider lengthy & technical executive pay disclosures on page 100). As noted in the SEC’s press release, Chair White has “directed the staff to develop specific recommendations for updating the rules that dictate what a company must disclose in its filings. We will seek input from companies about how we can make our disclosure rules work better for them and will solicit the views of investors about what type of information they want and how it can be best presented.” Once the inevitable slew of memos are out, I’ll be posting them in our “Regulation S-K” Practice Area.

Wachtell Lipton v. Carl Icahn

This Forbes article notes a lawsuit filed by Wachtell Lipton against Carl Icahn over a fee dispute…

Exchange-Traded Notes: Corp Fin May Seek Better Disclosure

This Bloomberg article indicates that Corp Fin’s Amy Starr may seek better disclosure from lenders about how they value exchanged-traded notes…

– Broc Romanek