May 28, 2014

The SEC’s 80th Birthday: The Ice Cream Social Treatment

On June 5th, the 80th anniversary of the creation of the SEC will be celebrated with an ice cream social following the 15th Annual program hosted by the SEC Historical Society. The program is about “Corporate Governance in the New Century” and will be held from noon to 1:30 pm (and will also be webcast for those that can’t attend live). To attend live in person at the SEC’s DC HQ, RSVPs are due by this Friday, May 30th to

Given the grander – but also expensive – celebrations of SEC milestones in the past (loved the 60th anniversary celebration at the National Building Museum; skipped the 75th at the same location due to a high price tag of $250), I’m both grateful and curious that the SEC’s 80th will be celebrated with an ice cream social. Sign of the times, perhaps both in terms of budget and the SEC’s stature? For the 100th, maybe it’s gonna be a slow clap

Will the SEC Breathe Life Into The Defunct Resource Extraction Rules?

Here’s news from this blog by Davis Polk’s Ning Chiu:

While the battle over the SEC’s conflict minerals reporting rules have been the subject of much attention, less focus has fallen on the SEC’s defunct resource extraction rules. Since those rules were struck down in July 2013 as we previously discussed, the SEC has made no attempt, at least known publicly, to promulgate revised rulemaking in compliance with the Dodd-Frank statutory mandate.

While that may appear to be an ideal situation in some sense for companies, recently, Exxon Mobil and Royal Dutch Shell sent a letter to Chair White urging the SEC to provide some indication of the “probable direction” of SEC rulemaking.

As the letter explains, the companies are facing similar requirements under EU Accounting & Transparency Directives, which must be implemented by legislation adopted individually in each EU Member State by June 2015. The Directives would compel companies in the extraction industry to disclose payments totaling more than €100,000 that they have made to governments on a per-country and per-project basis, which resembles the requirements under Section 1504 of the Dodd-Frank Act that companies engaged in the commercial development of oil, natural gas or other minerals disclose the type and total amount of payments made, if over $100,000, to a foreign government or the U.S. federal government for each project and each government in order to further the commercial development of oil, natural gas or minerals.

The U.K. has publicly committed to be the first to implement the Directives, and has already issued draft legislation for public comment with the goal of adopting by October 2014. The two companies believe that if the SEC were willing to consider proposing new rules before this timeframe, the U.K. government could take the SEC approach into account in its own initiatives or defer implementation until 2015. Since the U.K. will be the first EU Member State to implement the Directives, it would set a precedent for other member states. The companies note that this would be important for purposes of “equivalency” between the EU and U.S. reporting requirements, which they deem critical in order to avoid an outcome under which multinational companies are required to file multiple reports in different jurisdictions providing essentially the same information but in different forms. They suggest that “an ideal solution” may be that compliance with reporting rules in one country would suffice for other countries. The letter urges the SEC to work toward publishing proposed rules in 2014.

Disclosure Reform: Separate Financials for Acquired Companies, Investees & Guarantors

Here’s some good info in this blog by Morgan Lewis’ Linda Griggs & Sean Donahue about the SEC’s review of the rules requiring separate financial statements or separate financial information under certain circumstances for acquired companies, investees, and guarantors as part of its disclosure reform project. In addition, as noted in FEI blog and Morgan Lewis blog, Chair White recently gave a speech indicating that the audit committee report was being evaluated for change…

For simplicity’s sake, I will continue to call Corp Fin’s project “disclosure reform” – rather than the new moniker assigned to it: “disclosure effectiveness.” It’s just much easier to say…

– Broc Romanek