January 28, 2019

Corp Fin’s Post-Shutdown Plan: “First Come, First Served”

Over the weekend, SEC Chair Jay Clayton posted a statement saying that the SEC has “resumed normal staffing levels and is returning to normal operations.” But this excerpt seems to acknowledge that getting back to full speed is going to take some real effort:

The leaders of our Divisions and Offices, in consultation with various members of our staff, are continuing to assess how to most effectively transition to normal operations. Certain of these Divisions and Offices, including our Divisions of Corporation Finance, Trading and Markets, Investment Management and our Office of Compliance Inspections and Examinations, will be publishing statements in the coming days regarding their transition plans.

As promised, Corp Fin subsequently posted its own statement – and said that when it comes to tackling its backlog, the general approach is going to be “first come, first served. Here’s an excerpt:

The Division of Corporation Finance is returning to normal operations. In general, we anticipate addressing filings, submissions and requests for staff action based on when an item was submitted. In other words, absent compelling circumstances, we expect to address matters in the order in which they were received.

Corp Fin’s statement also notes that although the Staff will be available to respond to questions, “their response time may be longer than ordinary.”  That shouldn’t surprise anyone. The shutdown has led to a big logjam in IPOs, and has thrown a monkey wrench into the 14a-8 no-action process. While those issues have gotten most of the attention, I can only guess at the backlog of ’34 Act comment letters and other ordinary course business that the Staff will have to work through.

In short,  the Staff has a big mess that it’s going to have to clean up over the coming weeks.  At the same time, private sector lawyers are going to be under a lot of pressure to get their client’s projects moving again.  Both sides of the table should cut each other some slack as we work through this.  We didn’t make the mess – but when it comes to the cleanup, we’re all in this together.

Check out this Skadden memo, this Cooley blog and this Weil blog for more information about Corp Fin’s grand reopening – including a discussion of IPO & shareholder proposal-related issues.

Registration Statements: What If You Pulled The Delaying Amendment?

As Broc blogged last month, during the shutdown, the SEC invited companies with pending registration statements to pull their delaying amendments.  For companies that opted to do that, the question becomes, “now what do we do?”  Here’s what Corp Fin’s statement says:

Consistent with the Division’s Questions and Answers in connection with its statement regarding Actions During a Government Shutdown, some registrants omitted or removed delaying amendments from their registration statements. We will consider requests to accelerate the effective date of those registration statements if they are amended to include a delaying amendment prior to the end of the 20 day period and acceleration is appropriate.

In cases where we believe it would be appropriate for a registrant to amend to include a delaying amendment, we will notify that registrant. We remind registrants that Rule 430A is only available with respect to registration statements that we declare effective and is not available to registration statements that go effective as a result of the passage of time.

So, the bottom line appears to be that if you’ve pulled a delaying amendment & the Staff has an issue with that (such as unresolved comments), they’ll let you know.  Otherwise, they’ll leave you to your fate – unless you add the amendment back yourself.

Tomorrow’s Webcast: “Controlling Shareholders – The Latest Developments”

Tune in tomorrow for the webcast – “Controlling Shareholders: The Latest Developments” – to hear Potter Anderson’s Brad Davey, Cravath’s Keith Hallam, Greenberg Traurig’s Cliff Neimeth and Sullivan & Cromwell’s Melissa Sawyer discuss the latest developments surrounding transactions involving controlling shareholders.

John Jenkins