March 9, 2016

SIC Codes: How Does the SEC Challenge Them?

The use of SIC codes – “Standard Industrial Classification” – provides a framework for classifying industries by a four-digit code. As noted on this Corp Fin page, the SEC uses the framework as a way to assign companies to one of the 11 AD groups that review filings within Corp Fin. When they register their IPO, a company will select its SIC code – mainly by assessing its primary source of revenue. Companies input their SIC codes when they set up their EDGAR account – and include it on the cover page of their initial registration statement. The SEC doesn’t assign them.Then over time, a company may decide to change its SIC code because the nature of its business has changed. Sometimes the SEC might challenge how a company wants to change that code.

Recently, we had a follow-up to a query in our “Q&A Forum.” The query (#5651) was answered in 2012, providing guidance about “how to ask the Corp Fin Staff to change the SIC code assigned to a company.” The follow-up noted how Corp Fin wouldn’t recently provide relief to a different company. The follow-up noted:

This mechanical application of a primary revenue test can lead to some surprising classifications. For example, Dominos Pizza (not my client) is assigned SIC Code 5140 (WHOLESALE-GROCERIES & RELATED PRODUCTS) rather than SIC Code 5812 (RETAIL-EATING PLACES). Therefore, searching EDGAR by SIC Codes will not necessarily generate issuers in the same business segment.

SEC Rulemaking Petitions: Political Contributions Lawsuit Revived

As noted in this blog by Steve Quinlivan, the lawsuit against the SEC for not acting on the political contributions disclosure petition has been revived…

SEC Rulemaking Petitions: Whipping One Up in Mere Minutes

The birth of the Internet eventually led to an explosion in the number of comment letters submitted on a SEC’s rulemaking proposal since submitting one nowadays is as easy as composing an email. Is that same trend finally extending to the art of submitting rulemaking petitions? I don’t closely track rulemaking petitions because it is quite rare that the SEC ever acts on them (despite what may be thought by those suing the SEC for not acting).

But I did notice that two petitions submitted a while back were shorter than what I have seen – this one that is 4 paragraphs long and this one that appears to have been transcribed by the SEC after receiving it in handwritten form (scroll down past the top page to see the handwriting)…

Broc Romanek