December 3, 2015

“FAST Act” Nears: JOBS Act 2.0 Becomes a Reality!

Two days ago, House & Senate conference committee members agreed upon on a five-year transportation bill, H.R. 22 – now called the “FAST Act” – that contains a number of capital market provisions as I blogged before. The legislation is expected to be voted upon by the House & Senate today, with a final bill presented to President Obama soon thereafter.

In the bill, the capital markets stuff appears to consist of these four Titles:

– Title LXXI – Improving Access to Capital for Emerging Growth Companies (page 1258)
– Title LXXII – Disclosure Modernization and Simplification (page 1259)
– Title LXXVI – Reforming Access for Investments in Startup Enterprises (page 1269)
– Title LXXXIV – Small Company Simple Registration (page 1293)

These Titles include these provisions:

– Reduce number of days prior to the roadshow that the confidential submission of an IPO registration statement for an EGC must be made public from 21 to 15 (Section 71001, page 1258)
– Allow an issuer that was an EGC at the time it submitted or filed its registration statement for review but thereafter ceased to be an EGC to continue to be treated as an EGC until, with some limitations, its IPO is completed (Section 71002, page 1258)
– Ease the burden for EGCs during the confidential filing review phase (Section 71003, page 1259)
– “Summary pages” for 10-Ks permitted with cross-references to more fuller disclosure (Section 72001, page 1261)
– SEC gets 180 days to complete changes to Regulation S-K to ease burden on smaller companies & eliminate duplicative or unnecessary items for all companies (Section 72002, page 1261)
– SEC must conduct study about a complete modernization of Regulation S-K (Section 72003, page 1262)
– All kinds of stuff on private offerings & accredited investor status (see this Davis Polk memo) (Section 76001, page 1269)
– Forward incorporation by reference permitted for Form S-1 (Section 84001, page 1293)

A number of these sections require the SEC to adopt rules within 30-45 days of the FAST Act’s enactment. Doesn’t Congress know about the Administrative Procedures Act? It’s impossible to propose rules, receive comments & consider them and then draft final rules in such a short time-period. Some Corp Fin Staffers are going to have an exciting holiday this year. Gheesh…

ESG: SASB’s New Implementation Guide

Recently, SASB issued this Implementation Guide to help companies apply the SASB standards to drafting their 10-K disclosures, including to:

– Identify industry-specific sustainability topics most likely to be material to an investor
– Understand the current state of disclosure and performance on those topics
– Enhance existing reporting processes to more effectively disclose material information on sustainability topics

Auditor Liability: Grant Thornton Admits Wrongdoing While Settling for Ignoring Red Flags at Clients

Yesterday, the SEC announced a settlement against Grant Thornton and two of its partners after they ignored red flags and fraud risks while conducting deficient audits of two companies that wound up facing SEC enforcement actions for improper accounting and other violations. Grant Thornton admitted wrongdoing & agreed to forfeit approximately $1.5 million in audit fees and interest plus pay a $3 million penalty.

Broc Romanek